Jeff Hotz: Owning A "We Buy Ugly Houses" Franchise

LISTEN TO THE FULL EPISODE ON:

If you live in their franchised territory, inevitably you have seen billboards and commercials for "We Buy Ugly Houses" also known as HomeVestors of America, Inc. They are the leading home buyer in the country, helping more than 10,000 people sell their homes every year. What does it look like to run one of their franchises? Jeff Hotz is a top franchisee of the company, is based out of Columbus, Ohio, and has ran his franchise with HomeVestors since 2013.

Prior to being in real estate, Jeff served in the Marines and US Navy. Today he discusses how linking up with a proven franchise has helped him grow his investing business and his real estate portfolio, and how he's had to adapt and shift as the market has changed over the years. We also discuss their in-house lending and private money arm that has allowed him to acquire properties and execute on the 5 exit strategies for each property he runs across: Assign, Wholesale, Wholetail, Retail, and Rental.

 In this episode hosted by Mike Swenson, we discussed:

• How Jeff's military background allowed him to transition easily into HomeVestors
• Why Jeff pursued franchising as a way to get further down the road in his investing journey more quickly
• The process of seeing if franchising is a fit for you
• How franchises put their people to work together, share resources, and move forward appropriately
• How Jeff finds a win-win situation for everybody and makes sure to help out
• How HomeVestors in-house financing arm has allowed Jeff to grow
• The five exit strategies Jeff is able to use: assign, wholesale, whole tail, retail, or rental
• How Jeff wants growth not just for him but also for people around him to plan goals too

Timestamps:

0:00 - Intro To Jeff's Career
1:45 - What Led Jeff Into Real Estate
7:31 - Pursuing The Franchise And How It Works
13:29 - Benefits Of Being With A Franchise
24:01 - The Exit Strategies In Real Estate
26:42 - Back-End Financing
28:26 - Jeff's Vision Of the Future
35:59 - How To Find Jeff

FOLLOW JEFF:
https://www.linkedin.com/in/jeffrey-hotz-a557174b/
https://www.homevestors.com/

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Minnesota Real Estate

Read the full transcript here:

Mike Swenson
Welcome to The REL Freedom Podcast where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate. I'm your host, Mike Swenson. Let's get some REL freedom together.

Mike Swenson
Hey, everybody, welcome to another episode of The REL Freedom Podcast where we talk about building time and financial freedom through opportunities in real estate. And if you've been around, even not in real estate, you've probably seen these billboards around, we buy ugly houses, you've seen them around. And so people are probably curious, and you're like, What in the heck is the deal with that we buy ugly houses company. And so today, we're gonna dig a little bit deeper into that. So we've got Jeff Hautes, Jeff is a home investors of America franchisee based out of Columbus, Ohio, previous to that and musician in the military with a couple of different branches, and then got into real estate by becoming a franchisee a little bit here about home investors. So they have nearly 1200 franchisees in 170 markets nationwide. And so we'll dig into a little bit about that, but then to how you can accomplish your goals in real estate by partnering with a franchise you know, we've had a few franchise salespeople in the past talking about the benefits of instead of you know, forging your own path and figuring out and having lessons to be learned the hard way you can partner with somebody that's been there, done that and really leverage the systems and the options that they have. And so Jeff will talk about that a little bit today, too. So welcome, Jeff to the show.

Jeffrey Hotz
appreciate you inviting me on

Mike Swenson
why don't you just kind of share a little bit about your background? What led you to get into real estate and then talk a little bit to about why consider a franchise and then we'll we'll go from there.

Jeffrey Hotz
Right? You know, long, long ago. And this isn't like where it started. But you know, I my my mother was a real estate agent. And I remember going into the office and looking at the books, and I really always enjoyed touring a houses, I don't think the idea came of real estate came from that. But it's always been something that's kind of been there. But you know, look, I was in the military. And you know, I enjoyed it immensely. If anybody's really young, I don't know if there's any, you know, high school kids here. But I would recommend it's a great, it's a great life, it really gets you thinking about what makes sense to you and what you want to do in life, if you just don't know, I mean, some of us people were not the greatest in high school, right? So it didn't do that great of things there. I don't think my grades were really good. So I don't think college was a great option for me. But on the other side of that, you know, I always talk about my son. You know, right now I've got a five year old and he's gonna be one of those guys that I don't think school is right for him. But we have an ability, right? There's a lot of people out there that have an ability this way. And so I chose the military, which was great. I started out in the United States Marine Corps as a trumpet instrumentalists. And I did that for six years. But there's always this rumbling of real estate going on while I was in the military gave me a lot of time to read. And look, even though I wasn't in college, I was I attended a couple little online courses and started, you know, diving into what I can focus on real estate at the time, seemed to make a lot of sense from just the perspective of wealth, right? Wealth Creation, everything I read about wealth creation was real estate backing. So that kind of got my mind going. And it was like, you know, maybe I need to be an agent, maybe I need property management and rentals seem pretty cool. So I actually left the Marine Corps in 2006, getting antsy and got out of that, and was a real estate property manager in Washington DC for a year or so. And then found out that the you know, everybody knows what was going on in real estate 2006 2000 or so seven or so. Not a great time to be in real estate. So I went a different direction join the Navy. Same thing came up through that, you know, I was looking for more, I wanted more than just the paycheck that was coming through, I wanted to create something for myself. And real estate seemed to be the vehicle for that again, towards 2013 or so it's been 10 years now since I've been doing this, I think 2012 or 2011, I really started diving into how to invest in real estate myself. We were coming through a market crash, it seemed like a good time to buy into real estate again, I just didn't know how to do any of it. You know, bigger pockets is out there. And I spent a lot of time on that. And somehow I remember seeing the billboards we buy ugly houses, everybody seen them. Nobody really knows what occurs on the backside. And I stumbled into it and I franchise magazine I think and called and it seemed to be the right fit for me. Now I did go away from the idea for about nine months. And I spent that night nine months almost on bigger pockets. And I'm pretty sure I don't know there's a lot of people out there you guys do it, you're on your own and I just couldn't figure it out. I couldn't figure it out if I needed to actually have a yellow letter or lick the envelope or have a postcard and like I I just couldn't figure it out. So home investors seem to make a lot of sense with what they provided for me. It's not right for everybody. It is right for some and I think because of my military background, you know, I'm really good at an application, you give me something and you tell me how to do it, you know, here's the rules, here's what you do. And then I'm gonna figure it out, right. And there's some things that, just having that, you know, I always say, I'm like, I don't know what it is. Now, I used to say 16, time rifle expert was probably like 23 to 30, I don't know, substantial rifle expert right out of the gate, I never fired a rifle until I got in the Marine Corps, right. And the Marine Corps was able to hone that, and was given me the ability in order to fire that rifle at at an expert level with such a short period of time being able to hone it. And I think that's what I think that's what home investors does. And I think that's what helped them home investors, too. So that's how I joined home festers

Mike Swenson
what I think, yeah, for a lot of people, they like being able to be creative, kind of doing their own things. And for some people, it's like, just give me the blueprint. Let me follow it. And I don't have to reinvent the wheel. I don't have to overthink things, just follow the instructions and move forward.

Jeffrey Hotz
Yeah, yeah. And I think there's a lot of people that, you know, they do want to build something they do, they want to build their own brand, they want to, you know, create this thing that they created. And that's fine. Probably not right for the franchise model to fit in a box, there could be a situation where, you know, franchising could ramp you up to that kind of situation where maybe you're taking it out on your own and blowing it up to something, I don't know, we have franchisees that have, you know, 1800 rentals and do 200 houses a year, so I'm not really sure where else you go. But if you want your own brand, you know, that's where I see some people that are more, well, I want to do this, you know, I want to create my own brand specifically and have this thing that I can own. I'm absolutely comfortable not creating my own brand and living underneath home investors for what it's been able to provide. So right, if

Mike Swenson
you can accomplish your goals do I really care whose name is on the billboard is, you know, the money that comes in the lifestyle that comes in? Or the leverage that you have? You know, do you really care what the billboard looks like? Or you just follow the plan? Some people do, right. And that's fine. Same thing that I talked about, you know, when I was working on residential team and recruiting agents to the team, it's kind of like, hey, the team's not a fit for everybody. You've got to be the right personality, you've got to appreciate what's offered. And then really what's offered fills in the gaps of what you're looking for. And that really creates a good win win situation. We're looking for a win win. But yeah, team team isn't for everybody. Just like franchising isn't for everybody. But franchising can be a great opportunity. And I think it's something that so many people don't even consider, but it can provide a tonne of value. So talk about the discovery process there of pursuing the franchise and and how that works, because I'm sure people are like, I've never even considered a franchise or looked into a franchise and doesn't even work.

Jeffrey Hotz
Right. Yeah. And you know, it's interesting, as my parents had a franchise that didn't work, right. And I don't know, I now do this now that I know more about who they are as a person. I think it's more about it didn't work, because they didn't work more than it didn't work. I think, you know, you have franchising that works for some and doesn't work for others. But it's interesting, because my dad told me not to do it. And, you know, I didn't listen. And I'm glad I didn't. But the discovery process, like I said, Before, I think, you know, you've seen all the billboards, and you know, it was in a franchise magazine, that's the point that I know, I wanted to do something bigger than, you know what I was doing. And it seemed like I was going down the path of business. But also real estate at the same time, I was looking at real estate agency and things like that. And I know that necessarily wasn't for me. So trying to find some happy meeting and with like business and real estate, and, you know, and in real estate investments specifically and just walked in to home festers, somehow called and there was a great guy, Kevin caulk, and I'll say his name, he's a real good friend of mine right now. The process of home investors when you call is not for us to sell you on it, you know, not for home investors that we want to make sure that it's the right fit. It's not right for everybody, you know, it's not like, and maybe there are some franchises and I'm sure there's a lot of systems out there where it's like, they'll just take everybody in that they want, you know, and I think that's the biggest struggle that you have, because you do want it to be the right person. And you do want it to be, you know, somebody that fits within the culture and does business the way that you want to do it. Right, that we want to do it as a company. So do we always get that right? Well, you know, it's not an exact sometimes we don't and sometimes people come in and that's unfortunate when that happens. And I think the writing's on the wall and they do figure out it's not right for them quickly. But you know, we are really asking a lot of questions about why is it you want to do this right? What is it what are you trying to prove? What are you trying to provide for your family? Maybe it's a monetary thing I would hope it's not I would hope it's something more than that. But at the end of the day, it is like we have this lifestyle we want to create because real estate is a wealth vehicle that gets us there. The other side of that entirely is you know, what is it that we want to do and how is can this help us kind of fulfil us so, you know, for me within home investors, I'm gonna say I was really nervous about it because I thought it was gonna be this like sneaky shady, like real estate car salesman, like, you know, slicked back hair tight, kind of, I'm gonna have to like, convince somebody to sell me their house at a discount. Look, the reality is, there's nobody out there that is going to sell a house at a discount if they're not willing to sell it at a discount. You know, it's Not sales, it's not trickery, it's not anything like that it really is just having a great discussion with a seller in order for to figure out a way forward. And if there isn't, if there isn't, you know, so just like for a franchisee when a franchisees comes in, it's the same process. It's why do you want to do this? And let me tell you all the reasons why this doesn't make sense. Right? And so I think I got attacked by all those reasons. It's like, well, you know, it's a lot of money. Okay, so what does it cost? Let's look at the costs. Well, you know, I mean, it's really stressful. Sure, it is. I mean, we have the, I always say, in real estate, I'm sure many of your people will agree, highest of highs and the lowest of lows, and sometimes within minutes of each other, right? You know, you're flying high, the days gone, great, the sun's out, and then all of a sudden, you get a phone call. And it's like, oh, my gosh, you know, does this work? And these are the things that go through your head immediately going from, you know, top of the clouds to Oh, my gosh, is this working? Is my family still going to be taken care of? Can I still do this business? Oh, my gosh, is the sky falling? Am I gonna lose my ass like that's in the military word for that called catastrophizing? So if you have those kinds of thoughts, you know that that's not the actuality. But that's what occurs, highest of highs and the lowest of lows and within minutes of each other. So we want to talk about that, and how investors talks about this. Because if you're not the type of person that has the ability to manage stress, look, we can help you with that. That's what's great about being on a team. So it's kind of up to you, if we have all, you know, you don't if you disc analysis, or Myers Briggs, or personality profiles, we have all different profiles, right? And some profiles are right for some things, and some profiles aren't right for other things. That doesn't mean that real estate isn't right. If you're not the optimal profile, we do have an optimal profile for real estate, right? If you're not that person, we're going to have other discussions about what is optimal for you. And can you put people in place or, you know, mentally? Can you work through situations in a better way, then? Maybe you don't think you were, you know, maybe your profile doesn't lend itself to? But these are kind of all the discussions that come up in that process? You know, is it right for you? Is it right for your family? What is your spouse think about it? And when we got to the end of all that questioning, I really couldn't figure out any reason why this didn't make any sense to me.

Mike Swenson
Yeah, well, and I think a couple things that you said are really important, you know, number one, it's a process to see if it's a fit, just like I was kind of talking about with the team. Because yeah, if, if you're not the right fit, then you're not going to have a great experience, the reputation, it's like any, you know, retail, or otherwise, any interaction you have with business, if you don't have a great experience, you're gonna tell however, many times more people than if you have a good experience. So in the same way, that franchise is kind of the gatekeeper, you want to make sure you're letting the right people in, that it's going to meet their needs. And that's what I've really appreciated, you know, meeting with some of these franchise, people that helped to place people in franchises, it is about fit, right? It's about Yeah, is it going to accomplish my goals? How much time do I have available? Because there's all sorts of different options and opportunities out there? And then does it really fit kind of, yeah, me as a personality, what I like spending my time on, gotta make sure that that stuff matches up to have the best likelihood of success. Otherwise, yeah, you're, you're not gonna want to just be like, Hey, I gave him my money. And now do whatever I want you to do. It's not like that you're looking for a partnership,

Jeffrey Hotz
we don't want you to come in and immediately wish you wouldn't have done it. That's the reality.

Mike Swenson
So talk about some of those things that instead of kind of figuring it out yourself, the things that the franchise offers to you, or some of those benefits of being a part of that versus trying to do it yourself.

Jeffrey Hotz
Yeah, I mean, that was where, you know, you talked about bigger pockets and stuff like that, and just trying to figure out how to get people to call me right. You know, I think, at the end, it really, that's literally the story of me getting frustrated, because I couldn't figure out if I'm supposed to lick the envelope, if it's actually supposed to be yellow, or if it's supposed to be a postcard. And you know, I'm kind of a numbers guy. So I don't know where the metrics make sense, and it didn't seem like it was going to work for me to just throw money at something and hope for the best. So, you know, that's where this kind of, you know, you look at numbers, and you look at metrics, and you look at KPIs, and like there was already kind of a structure in place here for that. So within the franchise, you know, you sign the the agreements, and you come in as a franchise, a lot of it, obviously, is education, especially, you know, I came in without any experience in real estate whatsoever. So that's a that's a tall order right there, but they have a lot that can truncate that. But in the meantime, you know, there's already marketing in place, you know, you've already seen the billboards and we're already targeting sellers that are in need to sell for whatever reason. And so right out the gate, you're going on appointments, or you're meeting with people that maybe want to, you know, you would be an opportunity to buy a house and who knows could be at whatever discount it ends up being, but that's, you know, and systems, being able to track that CRM systems, you know, all the technology and then certainly the resources that you have around you, from your council of franchisees. One thing that's a little different about home investors and other franchises is the territory is literally the market. So I'm here in Columbus, Ohio with 13 other franchises, we all share Columbus. So, you know, we Don't leads come from everywhere, right? And we know you, we want to work within the median home price here and there, but we never know where they're going to come in, we share a pot of advertising, we all contribute to that pot of advertising and the amount of money that you put into that pot gives you the percentage of leads that you want, you know, hopefully you're tearing your business and have some goal planning in there to figure out what makes sense. And but we all work together, you know, is it just shared resource list? Contractors, anytime we come up with issues, we even trade, buy and sell houses from each other. You know, property management, we've got a property manager we have, we have some mortgage guys that kind of tell us what's going on in the mortgage industry, we kind of, we've got agents that tell us what's going on in the street. So when we get together, it's a great sharer of information across a tonne of platforms to have an understanding about what's going on in the market. And you know how to move forward appropriately, because you could buy and sell in any market, it's just a matter of how to go about doing it. And certainly that changes daily, right? So coming

Mike Swenson
from residential real estate, right, as a residential real estate agent, we're all taught to get the highest price possible, right? We're going to sell your home for the maximum amount of money with the least amount of time with the fewest amount of hassles, right? Those are the three things that sellers want. Well, then, when I moved into the investment space, I realised it's not all about the highest price, a lot of times, it's about convenience, it's about situations that come up, not everybody wants to list their house. And so I kind of had a hard time being in residential real estate for so long wrapping my brain around the mind of the seller there because all the sellers I talked to always wanted the maximum on money, you know. So talk about that piece a little bit. And, and once again, yeah, you're not trying to be everything to all people, you're trying to find the lead that fits what you provide. So talk about that conversation, you know, maybe where this would be a good fit for somebody to sell with you guys.

Jeffrey Hotz
Right? Yeah. And you know, that's the reality is I don't think some real estate agents realise that there's an undertone, there's a there's a market that occurs where people are just willing to for time and convenience, are willing to sell and leave money on the table. I mean, we do it day in and day out, think about it, like, I sell something in my front yard for $10 Instead of trying to make $20 or $30, or $40. Or sometimes I just give stuff away for free, where somebody else is going to take that and then sell it right? This is

Mike Swenson
a task. Right? It's definitely go through that process.

Jeffrey Hotz
Yeah, how much is your time worth. And, you know, for me to deal with that and make $10 more doesn't make sense. And we have situations, I mean, it runs the gamut, really. And to be honest, the majority of the time, it really, really is sellers in need, where they need to figure out how to get to the next situation, right? So they're willing to leave some money on the table for it to be happy to be quick, to be easy to be painless. i We do have a lot of sellers that just literally simply don't walk people through their house, you know, and especially during COVID, that was a lot of it. You know, they were comfortable with the discount. And they were more than happy to sell us with great reviews just based on the fact that they didn't want people through the house. And I think that's a hard struggle for some people out there. And realtors and real estate agents. Look, if you've bought your house 30 years ago, I mean, they don't generally care about getting peak for the market. The reality is for us, it is an investment company. And we do mean to make money. So there's only an amount, but the risk we take on is a mess. And I think that's the one thing that people don't understand about this, like the market could crash tomorrow, I think it was 3500 houses that home investors had in 2007 Don't quote on that. I don't know. That's what I've heard like 30, some 100 houses throughout franchisees and I know, there's probably a lot of people out there that had property during 2008 2009 or so when the market tanked, which were all of a sudden worth almost could be half of what they bought them for. Right. So that's the risk that we take on. And I think there are a lot of sellers, you think of even from car dealers, you know, you trade your car into the dealer for less money than it's worth just for the ability to have it. Have it happen easy, we really do try to find a win win for everybody, you know, we take on recently, we bought a house last week with a non performing tenant sellers out of town. You know, he bought it 1020 years ago, the tenant had been paying him $300 A month up until like a year ago, and he just felt bad, you know, so just kind of let her ride it out. Now, you know, we took on that property at a price that worked for us with the risk and we're actually just letting her stay in there for a while until she figures out a way forward. Like, we're not trying to be an investment company that's just gonna be like, Well, you gotta get out now because we bought it like, I'm not going to do that. Like I really do believe in this, like, what goes around comes around, I want people I want to, I want to be this person, I want people to respond back to me the way that I'm responding to them. Right. So, you know, we're going to help her out. We're going to get her to a point that hopefully and she is we're looking at options and we're trying to use some resources that we have, we certainly have a heck of a lot more resources to deal with situation like that. Then somebody that's out of town that hasn't lived here in Columbus for 10 years or so or whatever it was that he was, but it's that's that's the type of sellers we have. We have inherited situations where the kids just don't want to deal with it. You know, and they're okay and comfortable with the money that they get on the table and sometimes like it's not a small amount of money like we're not going low for the sake of going low on Often, I'm paying the highest I can actually go and actually even pushing the envelope on the risk sometimes, you know, based on what I feel like, you know, is the market going to keep moving forward one way or another. And that's kind of where we are right now we're providing I feel like really strong offers in this market right now here in Columbus. And then there's the other situations where we have a lot of people that just don't know where to go. So here's the situation. And when I say it pretty often with sellers, like even we can give you a million dollars, which, in Columbus, Ohio, is we're not giving anybody a million dollars for houses. But even if I could give you a million dollars, you know, the cash right now? What are you going to do after that? And they're like, I don't know, I'm like, see? Let's figure that out. What is it that you need, and I'll tell you, I've rehabbed cats, I found a place for a bird once, we bought cars for people, we've bought houses for people, we've trade houses. Man, I know, franchisees that have bought trailers and finance, that are bought other houses and finance that we walked away from two houses recently, where we were able to wholesale it, you know, I didn't make anything on it, because of there just wasn't any room for me in it. But if we can help that person out, you know, then then that's the benefit of this, our intention is to move that, you know, move that lead through the system, it's not necessarily to purchase the property, like we know only we know that a small percentage of the leads that come through, we're going to actually purchase. So we don't really even focus on that what we focus on is going out having a great conversation with the seller in order to understand, you know, how it is that they want to move forward? And what is it that they want to do? And we try to figure out if there's a win win, and I would say we're the first people usually that say, you know, you sound like this sounds like it's right, for a real estate agent to come list your house more than a real estate investor. Am I hearing that? And if that's the case, then sometimes we get those, and that's totally fine. I mean, if they want market price, or you probably hear this a lot. I mean, they're don't want to pay the realtor fee. Okay, well, I'm going to be much lower than that. So why don't you keep going down the path of listing with your realtor? Because you're gonna make more money that way? And if it truly is the money that you want, I'm not a good fit at all, having been

Mike Swenson
on kind of both sides. Yeah, you kind of see the client probably speaks to you, based on really what they're looking for. Because sometimes people think cash offer on my home, well, I just saw my neighbor's house sold for this, on the open market, we're exposing it to all buyers. So if I could get a cash amount for that, that would be great. Right? Know what you're what you're getting, and also a certainty, right? Because how many times has it happened where you know, somebody goes to sell their house, and something falls through whether it's through the inspection or through the financing. And so also the beauty of what you offer, it's, it's not only the convenience, but it's also the certainty of, if I tell you, I'm gonna buy your house, I'm gonna buy your house. So once we kind of get through that process, there's not going to be really anything that kind of comes up that's going to, you know, fall apart. So you've got the kind of the, the certainty of the deal as well as the convenience of the deal as well,

Jeffrey Hotz
correct? Yeah, I would say 90% of the time, when we're making an offer, when I'm making an offer to a seller, it is non contingent, non contingent, except for their ability to perform, which means I've walked through it, we're comfortable with the investment, we're taking the risk, I don't need to go in it again, I don't need anything to happen, the only thing it's contingent on is your ability to sell it to me. And if they show up at closing, then we're closing, you know, so there is like a, and there is the you know, 10% where, you know, maybe there's well in septic or something we can't see or some situation that we need to have some kind of contingency in there for our understanding. But the majority of these are really, you know, I can't speak for everybody, but the majority of these really are non contingent in a way where, you know, we come out once we look at the property, we understand the investment, we have the ability to manage the risk, and it's moving to close,

Mike Swenson
what happens after that. So you sign on the dotted line, they sign on the dotted line it close. Now, what do you guys do with it?

Jeffrey Hotz
It depends, really, I mean, we do, you know, I've done we have enough, we say five exit strategies within home investors, right. So we have an assignment contract we have our wholesale is where we buy it, and we don't do much to it, maybe we clean it out, we call that a wholesale, we have a whole tale, which is maybe we fix up some of the larger items. And then we have retail, which obviously we know what that is and and rental investment, you know, as you move up that exit strategy chain, I think you can see that the risk of the investment increases, also the margins generally increased because your risk is increasing, right. So those are the generally the five exit strategies, and I do use all of them. But you know, I don't do assignments a lot anymore. We do close on all pretty much everything. I think I did one assignment last year, we just not, you know, and I'm speaking for myself, I mean, that's not homevestors wide. We do have all those strategies, some some areas lend it to be more of maybe a wholesale or an assignment or rent area than something else. But you know, it's for our model. We do fix them up pretty nicely. I would say it's somewhere between wholesale and retail, we put it out for the open market. You know, I've got a great crew that does fantastic work. And that's just primarily my strategy besides the ones that we hold for rent. So we do have rent portfolio as well. And so that's that's generally what what happens on the other side.

Mike Swenson
But that gives you an opportunity to kind of choose your own adventure, what do you want to do based on the strategies offered, and you can operate your business different than the franchisee down the street? Because you get to pick up the types of properties that you want to pick up? So how many? How many rentals? Do you typically like from a percentage standpoint? How many of those are you picking up along the way?

Jeffrey Hotz
Um, it's probably 30% of what we do in any given year, a lot of people ask, you know, is it that you buy for you keep one or two, you buy two and keep one, it's not that I'm not smart enough, apparently, to figure out a model on that. The reality is, I think maybe for others, it's what's occurring around me and what comes on the plate. You know, recently, we had a good one that came on the plate that just made sense and hit the figures hit the numbers where I just readjusted what we were going to do with other properties, it's a little more fluid for me than I think maybe some other people I've heard, all based on what we have come in through the margins of those and you know, what we have coming in and pipeline, but probably about 30% of what we do is rent, the rest of it is retail wholesale. And that's that constantly changes to you know, it's a little bit less on the rental side than it was last year. And certainly if you know, I think not 2019 was a larger rent amount hold than here. But you know, we're finding just within Columbus, Ohio with is, you know, still hot as a market is this is it's just the numbers just don't seem to be working out. You know, we can only get houses for what we can get them for. So that seems to be just

Mike Swenson
the other thing that uh, you know, a lot of times people doing the the cash offer piece, you know, the to the end user, they don't realise that cash offer isn't necessarily Jeff's bank account, writes the check. And I've got all the money sitting there. It's I'm willing to provide you an offer. But there's financing that happens on the back end, where there's some certainty. So talk a little bit about kind of how that back end financing piece works on those deals, because I know, it wasn't, hey, I'm open as a franchisee. And now I'm just stroking checks for cash, you know, as you go,

Jeffrey Hotz
right? When I came in, there was only I mean, how investors was like, almost the only lender besides private money, right? So you know, and then that's changed over time. And we have a tonne. Now home investors is the majority of the lending, I get right through her investors, they have an in house lending company. And, you know, I've seen multiple iterations of time, in the last 10 years that I've seen other companies drop out COVID was a big one, we had a lot of people leave people at the table, if we're, if I'm signing a non a contract, that's pretty much no guarantee, I gotta make sure that thing closes. So in Jeff's world, that means that I know I have the money, I also know that the financing the funding that I'm putting through through homevestors is is going to work out, you know, as long as I'm hitting certain metrics and parameters, and I'm within a certain box, it's going to work. And that's that's been that's been key. I mean, back in 2013 14, you know, unless you knew a lot of doctors, which I didn't at the time, so, you know, a bunch and I knew a bunch of jarheads in the Marine Corps, but that probably wasn't gonna give me a lot of money. So I, you know, hoped that there was a big selling feature for home investors is the in house lending that they have, and they haven't, it hasn't changed since it's, you know, it's been constant. And in any market, they will continue to lend, which has been great.

Mike Swenson
You know, now that you've, you've been with home investors for 10 years, how has your your business changed, you've obviously picked up rentals along the way. So kind of talk about that, that 10 year journey and kind of where you see that going in the future?

Jeffrey Hotz
Um, man, it has been one hell of a ride. I'll tell you that. And I actually did move markets a couple of times, I probably didn't say that. You know, I did start in Cleveland, Ohio. My wife actually took a job in Chicago. So we were over there for a couple years. And I've been here in Columbus since 2017. So for six years or so, man, it's been six years, right?

Mike Swenson
I always say real estate feels like dog years. You know, like one year real estate is seven years.

Jeffrey Hotz
Yeah, it's a lot. I mean, you know, I tried to keep my hair really short, not just from the military, but because there's a lot of grey there, and most of it came out in the last 10 years. So I can say, yeah, it is a lot. I've learned a hell of a lot. You know, I started with no experience in this wanting to create wealth. We've had double the amount of rentals at one point that we have today. And I think it's like, you know, franchise, not just franchisees, but real estate, real estate investors come in to this and it's like, sky's the limit. I just talked to a guy yesterday, more, more, more, more. You know, that's who I was. You know, I think I wrote down how investors asked you all the time, how many houses do you want to buy a year? And I think I put 101 And the reason I put 101 because the guy next to me put 100 So I was like, Well, I got to do more than that guy. You know, the reality is I think I did 12 houses my first year. And that's not a bad amount. Right? So it I think what you what you look at and especially with you YouTube and all this stuff that's there. Now, you know, you see, like I said before, you see people that are doing just a mass amount, amount of activity, and you're like, Well, I gotta, I gotta TEDx this thing, I gotta, like, you know, I gotta go bigger, I gotta like, this is crazy, like, I gotta get there. I've, I've seen the back end of some of those, not all, I think there's some great investors out there. And certainly with an investor, we have guys that do 200 houses a year, and they're great. They have a great business, but I think it's more about I've learned a lot about myself and what I want, right? So like young Jeff, with the Ferrari and all that, I mean, look, I could, I could do that. But I don't want that, like you. So the growth happens not just within the real estate, but because of the people on around and hopefully around great people that start to get you thinking about what you really want. And what really makes sense to you that you start looking at this from the perspective of your goal planning changes, completely, like five, let's say three years ago, all of a sudden, the goals change to less. And to actually almost less on all accounts like we started, we say call the herd like getting rid of crap rentals, because I'm like, I'll just make it a rental, like one bedroom house with a terrible foundation. Like it's like, in a not great area. I mean, that's always gonna be a problem child rental. Like, I'm like, maybe I just focus on the good stuff, focus on the goals of in retirement, what does that look like? What do I really want in my life right now, you know, as you get older, like, I'm 43 now. So you cross that 40 threshold? And it's like, man, what do I really want to do, and like, the stress city that I had, like, day in and day out, like I kind of wanted to figure out a way to get rid of, and I've been almost in the last couple years, I think because I've honed it a little bit more. And there's been less of an anxiety there to produce, like, it's just been, it's been great, like, these last couple years have been great. And that COVID was a part of that. And that was a stress monster for a little while. But, you know, I felt like I was in a good place. And, you know, we've learned a lot. So, you know, coming from the beginning, it was, you know, assigning and wholesale and learning and really learning and, you know, moving up into a little bit stronger, rehabbed starting to look at metrics and margins. And, you know, starting to look at the team, I have around me a little bit more with accounting and bookkeeping and my own personal team, I have a part time coordinator, which we call a coordinator. It's an office manager. And I have my acquisitions lady and I have a crew of small crew that does the rehabs, and we're pretty, I think that's pretty consistent. A lot of investors franchise, we're very conservative, and we're very tight on our overhead, we don't have a huge teams, not not the majority, I would say, our overhead being the highest amount of overhead we have is our certainly our ad spend, and bringing those leads in. But that's kind of been the journey here. And now I don't know I'm in a pretty good place, we're looking at now that we're a little bit lower on the rent portfolio, like peppering those back in, I think I do want to grow that I probably want to double that again, but we're going to look at management and you know, all those things, that, you know, does it make sense for me to do that, or is my time better spent doing something else like running or hanging out with my kids, or we've got a second home, down on a lake. So I want to spend more time there. So you really start looking at these things. And sometimes adding in complexity just doesn't really make a difference for your margin. You know, I think property management is one of those, I don't manage my properties, I think a lot of people think they want to control it. And I know that there's waste and I know there's loss that occurs, and I know there's expense. But for me, in order for me to do it appropriately. And I think a lot of people, you've got to take on a lot. And it's an entirely another business, it's not just something you can kind of maybe tack right on to something. So there is a situation that I'll probably go that route at some point. But it's it takes a while takes time. And right now I'm totally happy paying for somebody else to do it and deal with the toilets that backup in the middle of the night. I was

Mike Swenson
gonna say that's often when I talk with people about even early on looking to start with investing, you know, picking up that first property or two or three, as like, Look, do you really want to have your time get sucked into managing the properties? For some people, they might enjoy doing it, they might not want to pay that cost? But the reality is, is why don't you think about having somebody that that's all they do, do it and free up your time to go focus on growing your portfolio versus managing the properties and figuring out how to do a lease or figuring out you know what to do when somebody's not paying and how does that work? Well stay in your lane, let those people do a great job of that. And then that allows you to go do a great job of growing your portfolio.

Jeffrey Hotz
Absolutely. And I would say the other thing to that is like always understand that you only get somebody 80% of the way, it's never going to be the way you want it to be. It's never going to be 100% But you have to be comfortable with the 80% now if somebody's not 80% You probably want to find somebody that's 80%. But, you know, know that there's going to be 20% You're going to have to live with or deal with and that's okay. say that

Mike Swenson
that's the price you pay for not being just property management company. You got to be okay with that, right? You got to be okay with some loss. It's just gonna happen. It's okay. Real estate agents are you tired of letting the busyness of life get in your way from achieving your real estate investing goals, I'm super excited to announce we've created the real freedom investor agent tribe, it's a place for you to come get educated and network with others so that you can make sure that you're hitting your real estate investment goals. So find out more on our website real freedom.com Click on the store link, we've got a membership we've got a mastermind group and some private coaching as well. Check it out, I've priced it super low. The goal is to get you in not have price be a determining factor to keep you from your goals. So come check it out, schedule a call with me and we're happy to see where your real estate journey is gonna take you Yeah, for people that want to you know, that they're interested to learn more about maybe becoming a franchise or just kind of talking to you about real estate investing in general. How can they do that? Yeah, I

Jeffrey Hotz
love talking to people. Regardless, Jeff dot hosts, H O T z at home investors. H O me v s t o r s.com. You can reach me right there.

Mike Swenson
Awesome. Well, thank you so much for sharing your story. Like I said, I know so many people have seen the billboards and they're curious to know, how does that work on the back end and and see the value that they provide you and so sounds like things are going really well. And it's really helped you kind of get where you want to go in your career and congratulations on that and best of luck to you in the future.