Table of Contents - Black Belt Real Estate Investing with Sensei Gilliland
Dave Debeau [00:00:00] I'm Dave Debeau hear another episode of the Property Profits Real Estate podcast and today a big treat. We've got a very, very astute real estate entrepreneur who's got tons of experience with that. Along with martial arts, which is an interesting combination, so let's say a big welcome to Sensei Gilliland. How are you doing today?
Sensei Gilliland [00:00:22] Hey, Dave. Pretty well, thanks. And I appreciate you having me on the show to share a little bit of insight on real estate investing with your followers.
Dave Debeau [00:00:29] Well, I did as well. So first things first. I know reading your bio, your background, your original background is martial arts. It is top notch martial arts training academies, actually more than one. You had a number of them still do. You still do. So you do multiple business entrepreneur. How did you get it all weird and wacky world of real estate investing?
Sensei Gilliland [00:00:52] Well, you know, right at high school, I opened up my first art studio and built them up to 11 were going on. Thirty three years of business now. But during that time, right around almost the mid 90s, I realized that, yeah, I love martial arts. It's great to make a living. I work part time. I get paid like a full timer, but it's not enough to build up a retirement. And so I also have my days and mornings for you because, you know, martial art programs and fitness programs always are after school and evening for the adults. And I needed to fill up my time. So I started seeking out other businesses and figuring out what do I want to do. And I was actually looking at quoin up carwashes and sum this up real quick. I love the up carwash profile because it's hands off, it's residual income. You hire a senior citizen at that time for a couple hours to clean up a lot and fill up the soap and such and really a cash basis. But when I'm learning about clean up car wash, there's a concept that I didn't understand and that was the process of real estate. Do I lease, do I buy, do I build to suit? What the heck does this mean? What is zoning? I mean, I had no idea. But here after diving in and figuring out the real estate part of it, I figured out this one thing, Dave, and that is that real estate calls all businesses. And then I switched gears and said, you know what? I don't need to be in the carwash business. I need to be in the real estate business. And from there, that's when we all start taking off your black votes. Investors.
Dave Debeau [00:02:22] Very, very cool, so, you know, a lot of people will say, well, jeez, if you got 11 martial arts academies. That seems like a good case, should probably be pretty good cash flow today and covid situation, but in normal times for sure. How are you able to juggle 11 different martial arts academies, plus, you know, actively investing, plus teaching, training, coaching people to go back?
Sensei Gilliland [00:02:49] Yeah, that's something that was a learning lesson on my behalf, because being young, right at a high school, through college, you know, I had my businesses and professors are teaching me about these different courses. And I'm thinking to myself, you know what? I'm making more money than the professor. What am I sitting here in college? Because college is not my thing. I'm more of a hands on type of guy. And I got into martial arts doing OK to doing very well. And then I pick up real estate and martial arts in the evening, afternoon program, real estate in the morning, early afternoon. I can juggle that. That's not a problem. I got to the point where the martial arts started growing and the real estate started growing. And I am a guy that's wearing all these different hats. I've got, you know, the receptionist hat on, the secretary hat, the marketing hat on the deal, analysis hat on the president half. Because this one this isn't my business card on the president right there, but I'm doing all these jobs. Well, I learned that there's an old saying in the Bible. Of course it's Bible, right. Says you got to delegate jobs. Moses couldn't do everything, delegate jobs. And that's where I had to train myself to do that because I'm a little bit of a control freak when it comes to doing work. And so I ended up branching off and delegating jobs pretty much under my own umbrella. And then when the Internet got big virtual assistants, got a lot of VCs spread out in the United States and abroad over in the Philippines, Spain and India as well.
Dave Debeau [00:04:18] There you go. Yeah, exactly. That's that's the key. Yeah. So, Sensa, why don't you tell us a little bit about what your real estate investing business looks like? What's your main bread and butter thing that you do with real estate?
Sensei Gilliland [00:04:32] Will you? Blackbelt investors has three arms to the business. First and foremost is investment opportunities. We provide investments to clients that I want to fix and flip or buy and hold. By far, it's the buy and hold investor that we service. The other part is education. We have nine different educational courses teaching them either to how to build a real estate business or how to build a rental portfolio. And then thirdly is consultation. We manage portfolios, so it's education consulting and investment opportunities for us.
Dave Debeau [00:05:04] The opportunities. Is that more like wholesaling or.
Sensei Gilliland [00:05:08] Yeah, so I'm a wholesaler at heart. I started the business, my very first fix and flip in nineteen ninety five remotely. I'm in Southern California, my property was in Fort Myers, Florida, because I couldn't afford to buy in Southern California anything that we bought here for the same house in Florida, we had to add an extra digit to that number. So I started out somewhere where, OK, people are buying and selling and it's affordable in my pocket. And I did it traditional way, just like you read all the books or listen to the tracks. Eight tracks tell you, hey, let's go find a good deal. Money will flow to it. Go get good credit. Go put your down payment with the traditional lender. I did all that. And so I was fortunately successful, a lot of it luck because I didn't know what I was doing and I just know buy low, sell high. So I started out. My business is rehabbing, buying, fixing and flipping properties and I still do that today. In fact, I was looking at my spreadsheet today. We have thirty two properties under rehab right now and so that is kind of my bread and butter. But I soon learned that I was missing a lot of opportunities because when you're a fix and flip or that you abide by a certain type of criteria, no one is affordability. And then you have your areas of where you want to buy properties, then you want at least three bedroom, one bath. So you have a certain criteria where you frame your business around. But if I had a property that was in a condo that was just a studio as a rehab or a fixer flipper, that's something I would pass on because that's not in my wheelhouse. I'm focused in a bedroom community, but why pass on it when it makes a lot of no sense? So then I start picking up wholesaling back in nineteen ninety seven and I learned everything inside and out about wholesaling. And so now when it doesn't fit my criteria, I flip the contract to somebody else and I cherry pick the ones that I do want to rehab. And then I said wait a minute here. What about those properties that lack equity? What if they only have 20 percent, 10 percent no equity? The what if they're upside down in equity? Is there anything that we can do with those because people are just short sell those or just hang on to them and struggle? Well, then that's when I stepped in to purchase options and I really started focusing my efforts on subject to financing sandwich Lisa's sandwich subject to contract for Deedes Lane installment contracts. So what I've really done back in the 90s was build a business really surrounding, you know, buy and sell strategies. If it's got a lot of equity. Great. Let's recap it. As long as it's a property that I know I can resell quickly, if it's a property that I know that I can't resell quickly, but it has equity. And maybe in a neighborhood that I don't want, let's wholesale it. And then if it's something that lacks equity, great, I can still flip the contract and make some money off of it. So now what I was able to do by wholesaling and by purchase options is eliminate the lender, whether it's a private money, hard money or conventional lender and boosted by our allies. What ended up happening? I was all about buy and sell, but there's a point, hey, you know, you can't be wealthy buying and selling property. I don't care who you are. It's a great vehicle to create cash. So then we start parlaying that money over the buy and hold side and doing the rentals starting back in nineteen ninety nine.
Dave Debeau [00:08:20] So what do you what do you help about when it comes to buy and hold. What kind of properties are you guys. Single family homes. Multifamily has been out but everything.
Sensei Gilliland [00:08:29] Yes. I'm not a commercial investor with industrial properties or hotels and things like that. I'm residential, strictly residential. So yeah by far it's like playing Monopoly. If you guys have ever played you by the cheap properties first, the cheap properties that make dollars sense with a good exit strategy. And those are typically houses right there stepping stones to get to the multifamily, to get to the six plex, to get the 12 units, to get to the one hundred units. And so we deal with houses from single family all the way to a large apartment complexes. But most of our investors buy houses because they're easy stepping stones and also offer the best exit strategies.
Dave Debeau [00:09:05] Yeah, that makes a lot of sense. Very cool. Well, I mean, you've got a very well rounded base of experience, that's for sure. And it sounds like. Yeah, you've got you've got all the different pieces going. So you're based in Southern California. I am nowadays. I mean, if you got 30 some flips on the go, probably not in California, I could be wrong. Are you still doing this at a distance all over the country?
Sensei Gilliland [00:09:29] Yeah. So I am doing it. I've got a service called Remote Rehabs, and we're the second oldest company in California to our research providing turnkey rentals in different states. And so I'm kind of like a slow nomad. We find undervalued markets that have the potential to become a robust market that has a history of good resale and appreciation. So a lot of investors are always at or most investors always after cash flow. Right. That's kind of the golden word there. I want cash flow, but I don't invest in areas just for cash flow. I can find that anywhere I can find cheap properties that cash flow anywhere for me and my clients, I want to make sure that we get the most bang for our buck. And so I seek out undervalued markets. They have the potential to grow. And with that we find properties in markets that are not only undervalued, but have a double digit cash on cash, return for rentals, and then also offers appreciation. Because when you put the ingredients of cash flow appreciation, tax benefits, that's the combination needed to build wealth. And so I only focus on those type of markets. And yes, right now we've got certain markets across the states and here in California where we've got those properties that are in rehab, California, we strictly just fix and flip or wholesale. We don't do any rentals here right now whatsoever. When the market crashes, we'll come back.
Dave Debeau [00:10:50] That makes sense. Very, very interesting. So it sounds like you're doing a lot of stuff, right? Did you have any major learning experiences along the route or is that a straight up trajectory?
Sensei Gilliland [00:11:02] Well, you know, it's funny that you see a straight up trajectory because nineteen ninety four, when I started this business, we were just coming out of a recession right here in the States. I mean in nineteen ninety five is when I did my first flip. So from gosh from nineteen ninety five to twenty seven I was like the world's best real estate investor. Two thousand eight rolled around and so that trajectory went like that. Well you know what, I did a lot of properties from that time in ninety five to 2007 and I was doing extremely well and really built up the business. Twenty eight. I don't care who you were in real estate. If the phone rang, it was either for someone to complain or, you know, you hear crickets in the office. But 2009 me and a couple of buddies reinvented ourselves and we actually flip more property from 2009 to 2014 than we did from 1995 to 2007. And so, yes, the learning lessons in real estate, there's several, but I'll just pick out maybe one or two big ones for me. And no one is being able to adapt to any market it any time I run real estate clubs or I used to. I retired them three years ago and our clubs ran for 16 years. And I had three different clubs in Southern California, one in Scottsdale, Arizona. And when 2008 rolled around, we had a total of one hundred twenty three real estate clubs in Southern California. It dropped down to nine and I owned two of them. So the question is, where did everybody go? See, they were very linear in their marketing or real estate marketing strategies, marketing not just for advertisement, but to be able to extract off market deals and or maybe just very linear in their strategies. And many people back then was just selling preconstruction. But for me and a couple of others in Southern California that were able to continue in business is because we knew how to adapt to the market like a Navy SEAL. You know, we understand our market. We understand the perimeter markets. We understand the strategies. And when the market shifts, whether it's good or bad, we know how to quickly adapt. And so I found that many made the mistake not knowing how to adapt to the market. And for me, that was a learning a lesson not so much in real estate, but in another business I had had I I'm not going to say it was lazy with it because it wasn't. But I wasn't prepared to adapt. And so that business tanked when the recession hit. And so for everybody listening today, you don't need to be, you know, a master in one niche. You I say master one niche. And when you've mastered it, add on another masters degree in that real estate niche because you don't want to be a jack of all trades and a master of none, and you don't want to spread yourself too thin. But if you're out there wholesaling or fixing or flipping or maybe you're on the buying old site, great master that niche, but then master another niche that would complement it, but also contrasts it. So that way when the market shifts, you're prepared to take advantage of the opportunities that are out there and also prepared to take care of what you've already built up.
Dave Debeau [00:14:09] So just out of curiosity, when when you know what hit the fan and you go, what what strategy did you move into or read things to?
Sensei Gilliland [00:14:20] OK, so so the 90s, all the way up to the early 2000s was a lot of flipping and wholesaling strategies. 2002 to 2007 were more the providing investment opportunities, the buy and hold investors like we're doing today. Twenty eight to nine rolled around. We went right back to wholesaling, but wholesaling in different ways. We did a lot of auction properties where we became an auction bidding service, provided investment opportunities really to the custom home builders that were no longer building custom homes. So they went back to their grass roots and started fixing small single families and reselling them to first time homebuyers. The second thing was knowing purchase options, knowing because you have a lot of people, the properties from 2003 to 2007, but they didn't have any equity in their properties and then the values dropped. So then they were upside down. So your real estate agents say, well, short sale or do a deed in lieu or just foreclose. And those are poor, poor strategies. There is a time and place to do that. But if I can help that investor or home buyer turn that around by offering forbearance plans and offering some sort of creative structure like a subject to or Sandrich lease option, take a negative to a positive, then it save their credit and allow them to go rent a house or an apartment to their standards, because if they let that slip into foreclosure and lose their whole portfolio, then they're. Stuck and they're renting something that they don't want to rent, they can't get a credit card, they can't travel because they need a credit card. They're screwed, basically. So the purchase options of subject to financing lease options, contract for deeds that really came into play. And to be honest with you, the only way I can really build up my rental portfolio is two ways. I either pay all cash or I focus in acquiring properties from homeowners and investors using these creative financing strategies. And I don't know about you, but I would rather keep my cash liquid and write off as someone else's debt but own the asset. Yeah, definitely, yeah,
Dave Debeau [00:16:30] makes a lot of sense since time flies when we're having fun. People want to find out more about you and connect. What's the best way to do that?
Sensei Gilliland [00:16:39] Yeah, you can just Google my name. Google Blackbelt investors go to Blackbelt investors dot com to learn more about my company. But if you're interested in investment properties, go to remote rehabs, dot com and you can view kind of life transactions, what we're doing right now.
Dave Debeau [00:16:54] Awesome. Good stuff. Thank you very much. It's been great hearing your story and congratulations on everything that you've accomplished.
Sensei Gilliland [00:17:01] I appreciate it, Dave. Hey, would your listeners be interested in a free gift?
Dave Debeau [00:17:05] I think they love free stuff. Who doesn't? I still do a lot of free stuff for sure.
Sensei Gilliland [00:17:11] Well, I think that's worldwide. Hey, if you guys are interested, I offer a one time free consultation, 30 minutes, whatever you want to talk about. I'm great when it comes to finances and romances. But anything beyond that, forget about it, too. If you're interested in an ROIC calculator, send us an email and let us know that you're coming from Dave and we will get you up that calculator to where you can start plugging in numbers and figuring out if it's a good fix and flip or a good rental for you.
Dave Debeau [00:17:38] Sounds good. Thank you very much. All right, everybody, take care and we'll talk to you on the next episode. Bye bye.