Table of Contents - A Multi-faceted Approach to Real Estate with Jose Jafferji
Dave Debeau [00:00:09] Well, hey there, everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast, I guess today all the way from Torana is a very experienced estate entrepreneur who's been in the business for over 10 years. He's got a variety of different things that he's involved in, real estate wise, long term buy and hold, even starting to get into some development deals. So, Jose Jafferji, welcome to the call. Are you doing today?
Jose Jafferji [00:00:34] Awesome. Thanks for having me and appreciate you contact me to have you on your show.
Dave Debeau [00:00:41] My pleasure. So, Ozzy, right now we're in the midst of the whole covid thing, the lockdown, the quarantine. How is this affecting you real estate wise?
Jose Jafferji [00:00:51] You know what? It's nobody has a crystal ball on what's going to happen. But I think as a real estate investor, I have a long term view of things. So, you know, in about a year or two years especially, I think things will go back to normal. It's a short term uncertainty that a lot of people are into. But overall, we're all going to go past this.
Dave Debeau [00:01:14] I agree. So tell us a little bit about your real estate investing strategy. What's the main thing that you focus on these days?
Jose Jafferji [00:01:23] So I have a multifaceted approach to real estate investing, you know, take into account income as well as wealth building. So I know in terms of income, my primary strategy is flipping properties and we also do some wholesaling as well. So I have several projects going on all at once. Of course, with the with the whole thing, we're a lot more cherry picking what we buy and we wholesale the rest. And then in terms of a long term by long term wealth strategy, it's you know, we always use the word strategy, which is to buy, renovate, rent, refinance. And we've done that with single family homes to multifamily apartment buildings. So currently working on a I have a deal on a contract with 13 unit apartment building.
Dave Debeau [00:02:16] Very nice. So how do you see the whole covid thing affecting your flipping business and the wholesaling business?
Jose Jafferji [00:02:26] Yeah, so we just have to be extra vigilant and into account a little bit of buffer when we're negotiating. We can use that as a leverage when I'm sitting down with one on one with all the sellers. So these motivated sellers, you know, they're already in a predicament. They're going through a tough challenge. We will able to solve that problem very quickly, obviously. But right now, the market is slower. So we we're going to step in to help them, but we got to take into account extra percentage buffer in case the market does turn. So we still are going to be OK.
Dave Debeau [00:03:06] Yeah. So what I mean, nobody knows. But what do you kind of looking at as a buffer these days for post covid? What do you what do you
Jose Jafferji [00:03:16] look, I would say, you know, like at least three percent or so, we were three to five percent. Ideally, we want an extra discount. We would be, for example, our buying strategies, usually 80 percent of after repair value. So we always work our numbers backwards. So I put it down on paper value, subtract your innovation costs. But now we're going to try to do maybe around seventy five percent, maybe seventy seven percent, something like that. So even if there was a slowdown in the market, we would still have enough room if we were to sell it as a discount. We're going to have a much better product and the rest of so but still, even considering that we can sell at a discount and walk away with a good profit,
Dave Debeau [00:04:03] yeah, that makes sense. So I have to put a little bit more of a buffer there in case the market doesn't bounce back. So they want to us a little bit about how you first got into real estate investing in the first place.
Jose Jafferji [00:04:15] Yeah, so I started working as an engineer in my corporate life. And after about eight years or so, you know, I knew I wasn't going anywhere. I started looking for some other job opportunities. And I also started looking into some network marketing and eventually, you know, thinking about a long term. I also had a retail business and none of it really started to make sense. And I was left with real estate. I made the most money in real estate. It felt the most stable to me. So that's that's you know, I went full time into real estate about seven years ago. I never looked back since.
Dave Debeau [00:04:55] Nice. Very nice. So what was it that kind of sparked that initial interest in real estate? So many people say they read rich dad, poor dad or they had a friend or family member was.
Jose Jafferji [00:05:06] You know what? I wish I had a more creative answer, but that was exactly what it is. It was my so my dad was a businessman and my uncle was a businessman. Well, and they both had a great influence on me. So I knew that I wanted to be my own boss. The only thing that made the change was after reading, which I put out, and specifically the cash flow quadron, I knew that I had to have a business and I had to invest in something in order for me to leave my corporate world. And that's exactly how I ended up in real estate.
Dave Debeau [00:05:41] All right. So say you come from an engineering background. I imagine you're a very analytical kind of guy. Probably pretty good with the numbers crunching, the numbers and all that kind of stuff. In addition to that, what would you say is as Kissack, you would call it, what do you think is your unfair advantage when it comes to real estate investing?
Jose Jafferji [00:06:03] You know what? My wife and I both like business partners as well. And she always tells me that I'm the more of the visionary guy and I'm not the operational guy. And so we have a good working relationship in terms of I am the one that makes the strategic decisions know I have the vision for the future, but she's the one that deals with like, for example, we have in-house property management as well. So she does more of the operational side.
Dave Debeau [00:06:35] I got a good setup there, my friend. She has. Yeah, the tenants of toilets. Yeah, exactly. So your wife is your third marriage? That's what I believe.
Jose Jafferji [00:06:46] Yeah, that's true. That's true. Absolutely. I couldn't agree there more.
Dave Debeau [00:06:50] Yeah. Very nice. So Jose, what about financing your deals? I mean, if you're doing flips, that's a very capital intensive process. Birds are very capital intensive processes. If you're buying properties anywhere near Torana, just buying a property is a capital intensive process. What do you do when it comes to capital? You got to sell, finance, everything, or do you work with investors as well?
Jose Jafferji [00:07:18] Yeah, we definitely work with investors. We typically don't do like a lot of joint venture types of structures. We're more of a you know, we use private capital and give investors a fixed return. Some of the deals we do, which are more longer term, like multifamily, we will give them a a smaller percentage and then a bonus when we refinance for Flip's is strictly private capital, giving people a fixed return. And so far that has been an absolute great strategy for us, has worked. Really well, so pretty much all of our portfolio
Dave Debeau [00:07:56] with private capital, what what does that mean?
Jose Jafferji [00:08:00] So, yeah, just a straight return is what we provide to our investors, so a straight fixed return is what we give to our investors. So we have very few deals where we have equity partners. It's all just, I guess, call it debt partners.
Dave Debeau [00:08:17] OK, so you bring on an investor and let's say they put in one hundred thousand dollars and you offer them X percent return. Correct. Yes. Correct. For for Sakuragi. So typically especially for Flip's probably short term type loans. Are you looking at.
Jose Jafferji [00:08:36] Exactly. Yes.
Dave Debeau [00:08:37] Six months kind of thing. Is that right. OK, right.
Jose Jafferji [00:08:40] And most people, you know, they end up reinvesting that money and they get it's always a passive investment form. So they get monthly payments from us. They know exactly what they're going to get. There's no surprises. So it just keeps it a lot cleaner. And we find it you know, it's worked well for us sometimes.
Dave Debeau [00:09:00] So for people out here, you know, we got a lot of real estate investors kind of getting started or they're at the point where they've self financed the first few properties. Now they've run out of capital to buy more. How did you get started? When it comes to finding investors and raising capital,
Jose Jafferji [00:09:19] the best ways to start off with friends and family, you know, the safest way to safest way as well. And of course, you want to have a successful track record before that. So it's easier to convince them, however, you know, and then you can start moving into their friends and family. Like, for example, you know, a lot of people have a lot of home equity that is untapped. So we provide them with a much like double the return that they're getting from their hillock. And so it's home
Dave Debeau [00:09:51] equity line of credit,
Jose Jafferji [00:09:52] correct? Yeah. So a lot of people, we use the home equity line of credit, give them a much better return than what their they're carrying charges are. So it's a win win situation and it's really untapped equity that they're not utilizing.
Dave Debeau [00:10:07] Yeah, that makes a lot of sense. So when you're working with those kind of partners, what do you typically offer them for security or collateral?
Jose Jafferji [00:10:16] So it depends on the deal. We have structures like it's just a straight promissory notes with other deals we have. They're putting a first mortgage on the property and then sometimes we have second mortgages as well. So that's their collateral.
Dave Debeau [00:10:32] Yeah, that makes sense. So you say, yeah, it's a good idea to reach out. Start with your what I call your inner circle of friends and family members. Once you've got a bit of a track record, once you've got a few investors under your belt and they're happy with how things are going, then you can expand that by getting testimonials and referrals, which is what it sounds like you're doing, correct?
Jose Jafferji [00:10:54] Exactly.
Dave Debeau [00:10:55] Yeah, very smart. So you've got a combination. It's interesting, you've got two strategies that focus on creating chunks of cash and cash flow for today. So you're doing flips and through doing wholesale deals. And then you also have a portfolio of long term buy and hold properties so that you can be building up your net worth over time. Did you start off that way or what did you start off with, first of all?
Jose Jafferji [00:11:26] Yeah, we started off because my wife and I were both employed. So we focused firstly on wealth creation. So we used to buy, buy and hold strategy, long term rentals. Pretty much every single project that I've ever bought or worked on has been a sort of a sweat equity move. So we always did some renovations to it. We always improve the property and we were able to use the Bush strategy, which is buy, renovate, ranch and refinance and repeat the process over and over again. So we we've done that over 50 times now. And so we're able to recycle that capital and move on to the next deal. But the other strategy is just to add to that where we started getting into some smaller residential development projects as well. So we have some new builds that were supposed to start about a month ago because, of course, it's going to be some delays there. And then we have another subdivision development project as well, which is approximately two years away that's going to create extra income for us. And we'll probably put that back into a multifamily deal.
Dave Debeau [00:12:39] Smart. Well, Jose, congratulations on all that you've accomplished and all that you and your wife, your competitive advantage are doing. Yes, absolutely. People want to find out about you and what you're up to. What's the best way for them to find out?
Jose Jafferji [00:12:56] Yeah, so I have my my blog, an investor website. I used to do a lot of blogging and videos on there, which is savvy, savvy, save by real estate investor dot com and can also reach me on the other website, which is my my corporate website is savvy real estate. Not a
Dave Debeau [00:13:15] perfect Osei. Thank you very much for being on the podcast.
Jose Jafferji [00:13:18] I appreciate you, Dave, for having me on the show and I hope you'll pass this covid thing very, very quickly.
Dave Debeau [00:13:26] Likewise. All the best to you and yours. All right, everybody, thanks for tuning in and stay tuned for our next episode. Take care of. Well, thanks very much for checking out the property profits podcast and you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review it. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.