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Low Rise Apartment Buildings, Cash For Keys And More With Ryan Carr

Low Rise Apartment Buildings, Cash For Keys And More With Ryan Carr
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Table of Contents - Low Rise Apartment Buildings, Cash For Keys And More With Ryan Carr

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George El Masri [00:00:01] Welcome to the Well Off podcast, where the goal is to motivate, inspire and share success principles, and for the second time, I have Ryan Carr here today. Ryan was actually one of the first guests that I had. We recorded the episode at a Durham r.i meeting. And it was actually like sort of this outdoor space with all the fans running. So the sound quality wasn't too great. Hopefully this time it's a little bit better. But yeah, Ryan is a full time real estate investor in the GTA. He specializes in finding the highest and best use of property and coaching others to do the same. He's got a knack for finding hidden opportunities and he is a regular contributor to the Canadian Real Estate Wealth magazine. Ryan, as always, welcome and thanks for joining.

Ryan Carr [00:00:42] Hey, thanks for having me on.

George El Masri [00:00:44] Great. And normally what I like to do is ask you a little bit about your childhood, but I'm pretty sure that we've already done that. So this time, why don't we just get into it and see kind of what you've been up to lately and maybe just catch up a bit?

Ryan Carr [00:00:58] Yeah, yeah, awesome. Gosh, what have I been up to lately? So we've got right now 15 or 16 open job sites in various stages of development. So over the last will, say, 18 months, I still continue to purchase properties. I still continue to acquire. We're still constructing. You know, we're still buying materials. We're still buying property. Like business is still growing. Obviously, things have changed with covid and that's sort of part and parcel with the last 12 months. But overall, I think that life doesn't happen to you and happens for you. And we've got to find some silver lining out of this whole covertness and keep on moving forward.

George El Masri [00:01:33] Definitely. So 15 or 16 projects on the go at this time, you said?

Ryan Carr [00:01:38] Yeah, yeah. In various stages of development. So some of that means active construction. So I've got I've got full time staff on the on the T for employee side handling most of the construction, a little bit of back and office staff as well. And then of course, all the services and minor variances and land development deals that we're doing right now flow into that as well. So it's it's it's we're flow. There's a lot of fun.

George El Masri [00:02:01] Awesome. I know last time we were on the show, which was like two or three years ago, you were into a bit of wholesaling. You were doing a bit of vertical splits. You're doing a lot of different things. Are you kind of doing the same sort of thing right now where you're you're touching all these different parts of real estate investing, or are you focusing on a specific niche?

Ryan Carr [00:02:23] Yeah, yeah. So my my my biggest thing for me is I'm an opportunity guy and for me, I'm able to look at a lot of different deals and a lot of different areas of expertize and say, OK, I can find deals here, I can find deals here, I can find the old here. Right. And when I'm doing that, I'm able to kind of stay ambidextrous to the market and be flexible with the way that opportunities are coming through. So are we still wholesaling? Yeah, I wholesale a handful of deals every year. Am I still coaching? Yeah. I take on a couple of coaching clients every year. Am I still building infill developments. Yeah, I am. We've got I think we've got six residential projects teed up for the next little bit and then I got five or six for four or five low rise apartments coming down the pipe as well. So there's all kinds of opportunities out there if people know where to look and know what to look for.

George El Masri [00:03:10] Cool. So you're getting into infill developments, low rise apartments, I don't think you were doing low rise apartments last time we spoke. Zahra, is that a new thing?

Ryan Carr [00:03:18] Yeah. So this would have been in the last, say, twenty four months kind of thing. I've been I've been snapping up land. I did my first land development deal, which was Insull residential, just like duplexes, and that I bought the parcel in twenty eight seeing twenty seventeen, twenty eighteen somewhere in there. So probably right around the time that you and I had that podcast, probably right around there was when I started first kind of dipping my toe into the waters and finding out what infill development was like. And now yeah, now we just take it and started run with it.

George El Masri [00:03:48] So how do you get so familiar with all these different things, like not just anyone can buy a piece of land and start developing it, like it takes a lot of time to really understand that process and developing relationships with people in terms of like for your zoning requirements and all that. So how how do you do that? How do you manage to do so many different things?

Ryan Carr [00:04:12] Yeah, so when I'm looking at a land development deal, I'm looking at three very specific things. So I'm looking at the structure, the land, and then your own skill sets and time. Those three things are what I'm looking at. Right. And in terms of building a house or understanding zoning, it's no different than a lot of guys to get started in. They're doing basement apartments or flips. You know, you you slowly start to meet the right people. You start talking to the town, finding out what can or cannot be done, and then you find out what you like, you know, and if you put all of those things together, it starts to make a lot more sense and you start to form those connections with the people in the market.

George El Masri [00:04:46] Yeah, cool. What kind of numbers are you looking at with your, let's say, your low rise apartment projects right now? Are you targeting like a specific ROIC or are you do you have other goals in mind?

Ryan Carr [00:04:58] Yeah, I used to say I wouldn't build for any less than a 10 percent yield. So if you do a million dollar project, you make a hundred grand. Right. That's kind of the end. And the quick and dirty. Do I like to see more than that? Yeah, of course. I mean, it's it's important to make as much money as you can and still produce a nice product, and especially if you're going to keep these things like I like to keep whatever build. If you're going to keep it, you want to make sure that that's really good for the longevity of tenants and so on, so forth. But right now, with the way that the cost lumber is going right. And all the other building materials, that's a really hard number to put your finger on. And then with the cost of land, that's also another hard number to put your finger on. And then, of course, the value is the number that everybody wants. So if you bought a piece of dirt last year and you own that same piece of dirt today, you pick your market, whatever, but it's probably up anywhere between five and twenty five percent, you know, and I don't think anybody could have ever forecasted that rise just with the way that inflation is going. So it's it's a really interesting time to be a builder or in real estate as well.

George El Masri [00:05:58] Yeah, it is for sure. I actually I'm finding it really challenging to find opportunities because, like, I'm looking at a pretty wide range of of areas are pretty a lot of areas. And I'm having a difficult time like finding deals that make sense. A lot of them are really expensive and the cost will just isn't there to support. I'm talking about small multis. I don't know. Are you finding it challenging as well? Obviously, there are opportunities and there's always ways to create your opportunities, but what's on the MLS is kind of challenging it.

Ryan Carr [00:06:31] So I'm a big believer in good deals are found, great deals are created before. And if you can take a unit that's got five units and out of six unit or you can take an eight unit property, and instead of changing the density, maybe add more parking or dishwashers or add storage to raise the energy of the building, well, now all of a sudden you don't have to change a lot. Like you don't have to fight with the zoning officer to make sure that you're compliant, but you can change the bottom line, which then multiplies out. So, you know, if you take a dishwasher and add 50 bucks a unit over eight units, that's four hundred bucks a month and that's forty eight hundred bucks a year cap rate and all that stuff, that's how you can really drive value that way. So that's that's that's one opportunity. But I mean, I think I think any time any investor goes out into the market, if you just have a little bit more flexibility as to what you're able to take on. Right. Whether it's like and I don't mean you, I just mean in general. Yeah. Like if people are able to expand their mindset and expand their skills and say, hey, you know what, this is a fixer upper. I didn't usually do fixer uppers. Used to just, you know, maybe re manage the property to make my money, but maybe I'll take on a fixer upper or maybe you can make your yield and I'd better take that financing. You know, maybe you could just do something, do a land assembly that five years down the road will yield more than that building. Ever good to begin with, like trying to think creatively about the land and about that structure is a is a really good place to start.

George El Masri [00:07:49] Oh, definitely. And I hope the message didn't come across, like in the sense that I'm thinking that there are no deals to be found. I know there are lots of deals. And like you said, deals are made and especially right now because the supply so low, it's really important to be creative, like you're saying, and take advantage of ITVS of possible fine off market deals. Do whatever it takes to to get yourself something.

Ryan Carr [00:08:11] I just set up a deal yesterday, speaking of DTD and what I really love, the fact that we do these shows on the fly is that it keeps it really natural and organic. So like I did and now that we eventually need to be satisfied with the idea of ETB yesterday with a guy, I bought this property. I found it online, off market, private sale. You know, he posted it one day prior. I found it. I called him up and I said, hey, you know, I'm interested in your in your house. I'm going to go. But so he goes, OK, gives me that gives me details. I drove out there after, like, you know, 60 Minutes. We did a walk through the house. I said, boom, OK, this sounds good. What's your bottom line? We talked about that and I said we could carry financing on this. He goes, Yeah, you know what? I'm retired. I'll carry financing for you. So I tied it up at three percent. A vendor take back seventy five percent loan to value through our awesome deal for him because he's avoiding. You're not avoiding. He's deferring. Yes. Tax. Yeah, he's collecting a little bit more residual on the back end. He can take a property over in the event that I default, which obviously it won't. But I mean he understands that. He knows real estate. Right. And of course, for me now, I don't have to go and find financing. I've got the cash to do. Twenty five percent down. That's fine. And I'd rather pay the money to somebody in our local market or Indonesia or, you know, in our communities than giving it to the bank. Yeah. For sure how to do that.

George El Masri [00:09:30] And for for some of the listeners that may not have that 25 percent because for example, like some people might be in a position where 20 percent from the bank is better for them. Do you have any suggestions for what someone can do in that situation where they might be lacking some of the funds to put twenty five percent down if there's a VTP involved?

Ryan Carr [00:09:50] Yeah, well, if you have no money, I mean, you have to find the money from somewhere. And I think there's a big misconception in the market where people say, oh, I do a zero down deal, like, OK, it might turn out to be a zero down deal in the end because you buy it, you fix it, you get all your money back and then. Right. And effectively when you're done, you're in it for nothing to buy. A house still takes cash. So whether you borrow that cash from somebody else, I'm like an unregistered promote. That could be your twenty five percent. Maybe you take a cash advance on a visa. Maybe that could be a twenty five percent. Maybe you borrow from friends or family, maybe you take on a fifty fifty equity partner, they bring in the cash, they put the twenty five percent down like there's so many different ways that you can do it. Those are, those would be the quick ones off the top of my head. I'm sure they're so. Yeah.

George El Masri [00:10:37] And just out of curiosity, what's your plan with this property.

Ryan Carr [00:10:40] Yeah. So right now I've got to tie it up for ten days conditional. There's a duplex sitting on a lot. So what we will do or what I will do is either, I guess to simplify this, I'm either going to fix up the house or rent it out as two units or maybe even one unit depending while I redevelop the land behind the scenes selecting zoning or financing methods and then eventually whack it down and build something a lot better. Or maybe just hang onto it for a few years and see what the market does and kind of go from there. But yeah, I'm really open to any opportunities that this property has to offer, especially being such a big loss for sure.

George El Masri [00:11:19] And would you say you paid above market market value for the property or did you get it for slightly under over?

Ryan Carr [00:11:26] That's a great question. I would say it's subjective because it's a lot I think a builder developer would have more opportunity with it than an end user or first time homebuyer. So, I mean, it's not necessarily what you pay for the property, but what you can do with it when it's done right. So prime example, you mentioned multifamily buildings earlier. There's been times where I've gone out to look at a building and the seller's value, that building at a two cap. Yeah, Dukat is ridiculous. Everybody would say, who's going to buy a building at a time? That's insane. That doesn't make any sense. Right. The problem is that they're not valuing that building based on a to carpet market rents the value in the top based on what they want. Right. And using the dividing factor as the current rent. Yeah. Whereas if you did the thing up to market rent and use the to that, nobody could ever afford it. So when I'm looking at properties like this or like a building, you know, it's not necessarily what you pay prices, what you pay the values, what you get. So in the end, if there's yield there that you're looking for, that's when it starts to make sense. Sure.

George El Masri [00:12:28] Yeah, definitely. And so if you are in the if you are buying properties right now that are tenanted, are you assuming those tenants typically or are you trying as much as possible to get vacant possession?

Ryan Carr [00:12:41] I try to go vacant possession. If if you have to assume the tenant and the tenants. Awesome, then hey, right on. If it's like did the turnkey building or turnkey townhouse or like whatever people buy, I mean, and the tenants could then just keep on rolling, you know. But if you're going to fix it up and refinance or split land or take it down, vacant possession is always a lot better. It just saves a lot of hassle.

George El Masri [00:13:04] Oh, for sure. And if they're if the sellers aren't agreeing to it, are you still, like, typically moving? Forward and and kind of working something out with the tenants yourself, or do you just walk away from the deal?

Ryan Carr [00:13:14] Yeah, it becomes in dollars and cents game at that point. So, I mean, I'm a I'm a big fan of asking tenants to leave on their terms. And if they don't necessarily want to go right away, maybe you can give them a few bucks to cover their moving expenses or take a vacation they want to take or whatever. So this is obviously a good way to do it.

George El Masri [00:13:33] So why don't we discuss that a little bit? How do you approach that? Because I know everybody's a little bit different. What's your approach with the cash for keys process? Do you just have a conversation with them over the phone or do you send them a letter in the mail or do you offer a small amount up front and then maybe increase it later, see if they're being stubborn or how do you work?

Ryan Carr [00:13:55] Yeah, I think every situation's kind of different. I don't necessarily do it with the letter in the mail or an email, but I mean, I usually start the process with a phone call and say, hey, this is what's going on. You know, if it's a development deal, I'll let them in on a secret, like, you know, we're taking the building down. This is what's happening. Or if we're renovating, you know, we're renovating. The hydro is going to be off for two months. Maybe it depends on the situation. But I'll start with the conversation in general and just say, look, this is what's up. Have you thought about moving out or what are your plans for the next little while? Where do you think you're going to be? And they have a clear answer on that, then maybe you can help them guide be guided in that direction. And if they don't, which oftentimes they don't, then, you know, maybe, maybe, maybe a few bucks is the motivator there.

George El Masri [00:14:39] Sure. Yeah. Do you ever find that when you go down that path, some people just kind of get frustrated and they no longer really want to deal with you as much? Or that doesn't typically happen because of the way you approach the situation from the beginning?

Ryan Carr [00:14:52] Yeah, I've been in some pretty interesting tenant positions. And, you know, some some people are very receptive to getting paid and some people just stick their heels in the ground and I'll leaving here. You know, I've lived here for a long time and I can respect that, too, like it's their home and they have the right to do so. So it's it's a tough case by case, you know.

George El Masri [00:15:15] For sure. For sure. I was thinking about what you were saying earlier with the low rise apartments. Can you tell us what I know? We're kind of jumping back and forth here, but how many units are you planning on building in your in your building?

Ryan Carr [00:15:28] I'm going to in any one specific building.

George El Masri [00:15:31] Yeah, I like the low rise projects are working on now.

Ryan Carr [00:15:34] Yeah. I would typically like three or four units. Something really interesting that I talked about this a little bit in the past is that single family homes, duplexes, trifectas, things like that are relatively common in the market. Triplex is becoming more and more common with Bill, with a bill. One, two, eight. There's some intensification I don't want to wait, but Travelex is becoming more common because intensification is obviously really important. There's actually a dead zone between we'll call it like four or five, six units and about 15 units where if you built like an apex purpose-built, you're going to be paying all the fees and all the engineering and stuff of a 15 to 20 and a building. But you're doing that on the backs of only eight units. So you've got to be very strategic with the way that you go about doing a new construction on particularize, typical trifectas, reflexes, things like that. I had a fourplex proposed recently and again, I bumped into this this this issue where it was like, you know, you've got all this engineering, you've got all this planned control, you've got all these road whiting's and stuff that the city is going to take. Does it really make sense? And do you want to spend the time just to get an extra unit hammering out a couple of quick drive places side by side, splitting the lab, you know, doing a couple of really nice developments and maybe trying to bring to yield another way rather than fighting City Hall to get a little bit more density. So.

George El Masri [00:16:56] Well, on that note, what I've seen recently is there has been a lot of like these newer buildings where they offer either a duplex or a triplex and they say the basement's got a kitchen and wash them more often. So basically, it sounds like, based on what you're saying, that they're avoiding those development charges and they're giving the the the new owner an opportunity to spend just a few bucks to put in a kitchen and bathroom and potentially earn some additional income from the basement. Is that does that sound about right?

Ryan Carr [00:17:26] Yeah. I mean, it sounds right. It's no different than putting in a basement apartment. That's not legal. Yeah. You're still going to need certain zoning to qualify for a triplex and so on and so forth. Every city is different for zoning, but yeah, like you can go and put it, you know, put nine apartments into a house if you want. But what happens when the city bangs on your door and says, hey, take out those other seven apartments because you're only qualified for two? Yeah, for sure. All of a sudden your investment that you probably paid top dollar for is going to be in a tight spot. So I don't recommend doing that.

George El Masri [00:17:54] Well, in that situation where let's say you're you're saying that you're allowed to go with four units in that one where you decide not to because of the additional charges. You're allowed to go for units, but you're going to spend a lot more than if you own three units. Then would you be protected in that situation? Potentially, if you build a three with the roof in for the fourth and have the new owner build it? Because I'm assuming the land would allow for four units there.

Ryan Carr [00:18:19] The zoning. Yeah, you got it. You had I think at the end of the day, you got to build for what you want. There's there's certain people out there and certain builders who are very crafty and clever and creative with the way that they circumvent laws and get caught and don't get caught. But I think when you're going through the Flightplan process. Yeah, like if you say I have this much parking and my building is going to look like this, and these are all the things that I'm doing. You know, in two years when some zoning compliance officer knocks on the door and says, why do you have a fourth man in the basement that wasn't on the plan? Yeah. Well, what's your credibility worth? You know, you call it you call the town the town says you're supposed to do. It is just so messy situation. So I think I've always been a relationship. First guy. I'm a I'm a huge advocate for that. And I think that that would just kind of be a bit of a bit of a scar.

George El Masri [00:19:06] No, it's good. I appreciate you sharing that because I'm sure a lot of people will look at those opportunities, the ones that are on MLS with the roughen and say, wow, that's pretty cool. I can just spend another fifteen thousand dollars or whatever and put a kitchen in bathroom and I can increase my cash flow. But you're right, if somebody does come knocking on the door, then you're going to be in big trouble. And there's there's always a chance that someone's going to come within a year or two years of you owning that property.

Ryan Carr [00:19:31] There is. There is. It happens. And if you're going to go and spend, I don't know, pick a number one hundred thousand bucks to build out a third unit in a basement or somewhere, you don't want to protect that. I do. I really do. I don't want I don't want to shoot. And I think that's how people should look at it.

George El Masri [00:19:48] And I know you've done a lot of additional units and properties. Have you come across a situation where you've bought a nonconforming or kind of illegal a property with an illegal unit and then you kind of messed around with it to make it conform?

Ryan Carr [00:20:04] I do. I do. So I've actually got one like that right now. So I'm a I'm a big advocate for highest and best use. And I'm looking at in this case, I'm looking at this probably saying, OK, what is the highest and best use of this? So, again, I go back to my three principles, land structure and my own skill set. Some time I'm looking at this thing and I'm going, OK, we've got like a two storey building here. It's got a nonlegal third unit in it's two units or legal, which is great, but the third unit isn't. What am I going to do? Do I cut the roof off and build, build, hire? Do I build an addition at the back? What do I do. Yeah, well in this case it's a little triplex. I'm going to actually tonight I've got a committee of adjustment hearing to get a minor variance to recognize the third unit. So that will give me based on the comments and feedback I've received. That will give me zoning compliance. Right, so the zoning is already there. I needed to modify a couple of parking space sizes and things like that to make sure that I conform with the neighborhood. So we'll do that then. I'm looking at the density. The density complies. And based on density, I actually could have got four units. But again, I bumped into the same situation where there's like a lot of bureaucracy and politics behind getting that fourth unit in this particular situation. So I said, OK, keep it at three, let's keep it simple. Must recognize the third unit will build it out to meet fire code and building compliance. And then I got a legit try flex building code.

George El Masri [00:21:26] Is that something you went and reached out to the city or the town about, or was it because there was some sort of complaint or something like that?

Ryan Carr [00:21:34] No, it was me. I was proactive on it. So when I bought it from the current homeowner, this person was having a really hard time with the tenants. The tenants weren't paying the bills, covid, whatever the story is. So I said the person said, look, I'll take it over, but here's what I need. I need X, Y, Z. Give me all of the information that you have from the people that live here and on the property itself. And then from that I said, well, we got a nonlegal third unit, you know, where can I take it? I made a few phone calls and then I said, OK, this is this is what I think I'm going to do and how I'm going to proceed. Yeah. And then did it go did put in the work, got down, put to work.

George El Masri [00:22:10] It sounds like when you find opportunities you capitalize right away. Zaret like let's say you find an off market deal and you go, I'm assuming you will do some research up front before seeing the property. And then when you see it, do you bring an offer with you right away or do you normally, like take some time to put things together and and then talk to the owner?

Ryan Carr [00:22:32] I never leave my house with a handful of things. You get your phone, your wallet, your keys and a blank purchase agreement. Nice. I never leave the house without a building purchase agreement because I never know when the phone rang and I got to go snatch something up a yeah, I just it's just it's just habitual for me to do that. And that's what keeps the kind of pressure like that.

George El Masri [00:22:52] So then what's that process like when you go to see an off market deal and you're dealing directly with the owner and then they've walked you through the house, do you say, hey, can you hold on five minutes, I'm going to go to my car and write you an offer? Is that kind of out works?

Ryan Carr [00:23:06] No, not really. I usually just do it right there on the spot. So, I mean, I'll ask them what their comfort level is. I never want to be that presumptuous. Like a real estate tycoon. It comes swinging in there and says, Oh, I'll buy your house was not me. I want to find out what their comfort zone is. And I want to say, like, if. Like, if I'm. If. How do I even word it, because it's always on the fly. I was like. So it's just like, you know, I basically just say to them, like like what you what are you looking to get out of today? You know, we kind of set those expectations up front. And then when we get to the end to say, are you comfortable putting this down on paper? Can we write up an agreement? You want to talk to your spouse? Like, what do you what do you need? But I always try to establish that. And as long as we're working within their comfort zone, I can be flexible to it because, like, I can whip off a purchase agreement in ten minutes means nothing to me. It's just math. But for a lot of people, it's not like that. It's very emotional is a sure thing. So I need to be sensitive to those constraints.

George El Masri [00:24:02] And how do people respond to you? Because you're asking a lot about how what they want and how they feel and their needs. You're you're asking about their needs. So how how do people respond to that?

Ryan Carr [00:24:12] Typically, some people are great and they just tell me, like, hey, this house is messed up and I don't want to fix it, so get it out of my life. And I'm like, great, I can I can do that. We both have very clear goals. Yeah. And if if the math works, then we're cool. Sure. Some people are very committed and they don't tell me and then you try to pull that out of them as best as possible and as respectfully as possible, because a lot of people, when they're selling their houses, are in a tough spot. Sure. So if you can understand and comprehend it and make it work, great. But if they don't tell you at the end of the day, I mean, if just don't want to tell you, they don't have to tell you it's their house and it's their products. I'll try to work as best you can.

George El Masri [00:24:48] Yeah. And just off the top of your head, you know, approximately out of like ten opportunities that you get, how many of them do you buy or how many of them make sense?

Ryan Carr [00:24:58] Yeah, I'll look at one hundred deals a week. One percent of deals are actually deals with ninety nine a crap like really crap and one percent is like a baby. And then I'll go look at that. But I mean on the whole I don't even know how many houses I buy a year. I've done over fifty deals now so it doesn't houses the year one a month. Yeah. Think just, it just depends. Depends on the times. On the opportunity.

George El Masri [00:25:21] Yeah. And when you see your, your, you're analyzing 100 deals are weak. Are we talking about like MLS deals off market, everything combined or just off market.

Ryan Carr [00:25:29] Everything combined. Yeah. Yeah, yeah.

George El Masri [00:25:33] Cool. That sounds about right. I think I would say probably the same for me. One in one hundred probably makes sense. Yes.

Ryan Carr [00:25:39] Yeah I, I'm not an ego driven guy, I'm not a I'm not like a social media character. I'm not you know, for me to go out and say like I bought a thousand houses or I, you know, I've got this many doors, like I don't care man. I don't care. Like, how does your portfolio perform if you have one hundred units, but they perform like shit because, you know, none of your tenants are paying. Well, that doesn't serve anybody other than an ego, but like who cares about that. So for me I'm like I'm a slow and steady wins the race kind of guy. Yeah.

George El Masri [00:26:08] And it seems like you're the quality of your of your products pretty good.

Ryan Carr [00:26:11] I want it to be nice. Know, I saw I saw a speech I'm going to say a year ago, probably before school, but maybe year and a half. And it was like the guy's name was Rick Summers through through the again and again he was like his thing was like nice units, nice tennis, nice round. That was his model. Like, Dumble makes a lot of sense.

George El Masri [00:26:31] Yeah. Yeah.

Ryan Carr [00:26:33] If you read crap then you're going to get crap and they're not going to pay you to just spend it on eBay.

George El Masri [00:26:38] Yeah, for sure. One last thing on this topic. How much time does it take? How much time are you spending analyzing deals to look at those hundred a week.

Ryan Carr [00:26:50] Like 30 seconds,

George El Masri [00:26:52] like 30 seconds per deal. Yeah. Are you doing the back of the napkin type of thing? I'm a napkin no guy, bro. Yeah.

Ryan Carr [00:26:59] Yeah. Did we talk about that on your last show?

George El Masri [00:27:02] I think so. I think so, yeah. Or I may have seen you talk about it at Turramurra as well. We may have touched on it, but. Yeah. What is it again. What's your what's your calculation again.

Ryan Carr [00:27:13] Yeah. So I think people could probably find a video on it on YouTube. I might have done one over the years but yeah it's you need four line items to understand really how that deal is going to perform. Right. So you need your resale price, the transactional cost, your renovation cost and your purchase price. So if I work it from top down, it's the if you take the resale price and you multiply that by point nine one. OK, so for example, one hundred thousand dollar house ten point nine one ninety one percent or in this case ninety one thousand nine percent represents a transactional cost. So you got like five percent plus just for your realtor, one and a half percent for your closing costs on the way in Legal's on the way in and out. So roughly nine percent. So you take your your one hundred thousand times point nine one, you're back at your renovation's, you're carrying cost and once you paid and that's going to spit out a positive or a negative number. OK, nine out of ninety nine out of one hundred dollars. It's like negative sixteen thousand negative fifty eight thousand. You're like, oh jeez, what did I do wrong? And the answer is you probably didn't do anything wrong. You probably did it right. The problem is that most people in the market don't talk about all those failures. So you think you're supposed to think that every deal is a deal, but it's not like it's just not. And obviously, the more positive the number, the more profit you're going to make and the more money that you could pull out to verify if that was your goal. Right. If you're going to flip it, you flip it.

George El Masri [00:28:41] So I saw this calculation. You're saying you use this for your like your buy rental re five deals as well, or is this specifically for Flip's?

Ryan Carr [00:28:50] Yeah, I do it for every deal.

George El Masri [00:28:51] Yeah, every. So basically in the situation where you're doing it by like a burr, if you're negative sixteen thousand, is that indicating to you that after you've refinanced you're going to have sixteen thousand left in the property?

Ryan Carr [00:29:06] That would indicate to me that if I were to flip that property I would be negative sixteen thousand in equity so I would have to pay to sell it right now on a per the calculations a little bit different because you're not factoring in. Yeah, right. But you know what, you might get dogged on the appraisal a few percent as well. Yeah. Yeah. So if you use that number and you're you're positive. Fifty thousand for example, and your down payment was roughly fifty thousand, you're probably going to be into that deal for roughly no money.

George El Masri [00:29:35] Yeah, exactly. That's pretty cool.

Ryan Carr [00:29:38] Give or take. Give or take. Yeah. It's just like I don't know, I probably said this a thousand times. People can go and do spreadsheets all day long and that's great. But it's just not like I want to know now I'm going to be any good. What's the average basement apartment cost? How long is it going to take me to do? Six months. OK, 20 grand and carrying seventy five K for a basement, five for the cellar for this negative equity. No, next.

George El Masri [00:29:59] That's awesome. All right. So, well, we covered a lot of good things here. I wanted you to tell me a little bit about your book.

Ryan Carr [00:30:08] My book? Yeah. The husband does this playbook coming out. Spring market twenty twenty one. So not too far, actually. Yeah. Cool. Yeah. Yeah.

George El Masri [00:30:16] So what is it. Obviously highest and best use is what you're covering, but what can people expect from from your book.

Ryan Carr [00:30:23] Yeah. So we touched on a little bit here. I break it down into three sections. So the highest and best use of the land, the highest and best use of the structure and of course highest and best use of your own skill set some time. Those three things are how I look at every detail, every detail. What can you do with the dirt and what can you do with the building that's on it? The effects of the effects of the wholesaler and what are you good at? And I give you example, like if you if you take a farmer's field and that farmer has hundreds of acres, what do you plant on those acres? Keep corn and soybeans. When apple trees, you put cattle on the land, you do nothing and just let the grass grow. Maybe it's a sod farm. Is it in a really good part of town or you're ahead of the proverbial blade where one day you're going to put a condom on? What do you what do you do with that dirt? What is the highest and best use of that crop? And how many tons per year can you get on that crop? Right. I'm doing the same thing with real estate and I try to outline that in the book and and really bring it all back so people can digest it and do it for themselves.

George El Masri [00:31:21] Sure is. Just out of curiosity, was Quentin like somebody who you kind of mentored you a little bit at some point or because I remember I was being coached by him and he would always emphasize highest and best use. So I'm just curious.

Ryan Carr [00:31:36] Yeah, that's awesome. That's awesome. No, I never did any formal training under Clinton or any any coaching or mentorship. I actually met Clinton through we buy houses sign and I was parked of the stop sign one day and I look over and this is like we buy our house for. Yeah, those guys and and I'm like, well, what is this? Just kind of getting into real estate. So I called the sign and I forget if he answered or if he called me back. But but nonetheless, we got on the phone together and he said, well, you know, I don't sell any of these houses because I wanted to get on the Biola. I don't sell any of these houses. I keep them for myself. But why don't you come out to Durham area and meet the rest of the group? And I think there was maybe, you know, 50 people that would come up to the meetings at that time. And now it's hundreds. And just the guy, just the salt of the earth. You know, I've learned a lot over the years from him just sitting in the crowd and understanding his perspective. Yeah, but to answer your question directly, no, I never did anything. All right.

George El Masri [00:32:29] Fair enough. OK. The other thing I was going to ask you is, do you have a buyers list for aftermarket deals?

Ryan Carr [00:32:36] I do. I do. So you know what? If people want to go to the highest and best use dotcom and sign up for the book, if any of this stuff interest you, you can also sign up for the buyers list in the same click. You can get on both.

George El Masri [00:32:49] OK, well, with that said, I'd like to jump into the next section, which is the random five. So I'm going to ask you five random questions and you're going to tell me the first thing that comes to mind, number one. All right. What's the best meal you've ever had?

Ryan Carr [00:33:08] Teddy's chicken parmesan in Oshawa.

George El Masri [00:33:13] OK, I don't know much about Oshawa, but chicken parm is always good

Ryan Carr [00:33:17] if you go through town. Let me know and we'll go there.

George El Masri [00:33:20] OK, sounds good. What superpower do you wish you had?

Ryan Carr [00:33:25] Geez, superpower. Never having to sleep, OK?

George El Masri [00:33:31] You don't enjoy sleeping.

Ryan Carr [00:33:33] I think I could get so much more done if I didn't have to. Yeah, but I do enjoy sleeping.

George El Masri [00:33:36] Yeah, sleeping is so amazing.

Ryan Carr [00:33:39] I love sleep. But you know what? When you're fired up about something and you want to you want to rock and roll it, sometimes we get night.

George El Masri [00:33:45] Yeah, for sure. What question would you most like to know the answer to.

Ryan Carr [00:33:53] How does gravity truly work?

George El Masri [00:33:57] Yeah, you got to ask, what's that guy's name, Tyson, something I forget. Neil deGrasse Neil deGrasse Tyson. Oh, yeah, yeah, yeah, that's pretty cool. Yeah, yeah, I'm sure you would know the answer to that. OK. Number four, how would humanity change if all humans life expectancies were significantly decreased, let's say, to around 50 years? Wow.

Ryan Carr [00:34:22] Wow. It's funny because when you look at the history of time, that's where we came from, a lower life expectancy. I think I think you get probably less than what you would get more done in a shorter period of time. So I think your efficiency would have to go up in order to quantify the same amount of

George El Masri [00:34:40] the way you're thinking. You know, I'm sure some people would say people would work less. Just enjoy life. You're thinking, no, you've got to work more efficiently now.

Ryan Carr [00:34:48] Yeah, you've got to work more efficiently. Yeah.

George El Masri [00:34:51] And number five, what success principle do you live by?

Ryan Carr [00:34:56] Success principal, do I live by? Well, I got all these quotes on my wall, so let's pick one. What's the upside potential and what's the downside risk? Every deal I look at. I ask myself those two questions

George El Masri [00:35:12] upside potential and downside risk. Yes.

Ryan Carr [00:35:15] Yeah. How good can things be if they go really well and how bad can they be if they don't?

George El Masri [00:35:20] So do you quantify that or do you just kind of just think about it?

Ryan Carr [00:35:25] I always quantify it, yeah. Not the numbers. Highest and best use, just the generic gut feel. I always quantify that. I think if it's if it's a math related problem, like finances while you make money or you lose, it's binary.

George El Masri [00:35:38] Yeah. Have you ever lost? Have you ever lost money on a deal?

Ryan Carr [00:35:42] I haven't. No, I haven't. I've been very fortunate and very diligent when I buy. And I think that truthfully, I'm glad that you ask because this is an important thing. So I'm very diligent when I buy. And I think that a lot of people build big businesses and they have to fill that funnel. They have no choice. They have to fill the funnel because they have staff and overhead and they need the volume. Right. And when you do that, sometimes you have no choice but to fill your funnel with less than less than choice properties just in the game of real estate. Yes, because you have to keep the machine going. Right. And if your volume is such that at the end of the year you're still making money overall, then yeah, you can fire one or two crappy deals in there. And it doesn't really matter because it all turns out in the end and your net margins are your net margins. Right? For me, I was always more of a lower margin or higher margin, lower volume type of business, and I still continue to be. And that plagues me like every day, I think. Could I be doing more? Do I need to be doing more? Would that make me happy? Would that make myself happy? How does that look? So, you know, I haven't lost money on a deal. I've come close on a couple of deals like, oh, jeez, you know, but that's that's kind of how I that's kind of how I see my business right now. And that's how it's done in the past.

George El Masri [00:36:57] For sure. Yeah, that's great. Yeah. Well, I think we covered a lot here and I appreciate you sharing all this. I think the last thing would be how do people reach you and what services do you provide.

Ryan Carr [00:37:09] Yeah, sign up for the book at the highest and best use dotcom. That's the best way to get an unbiased list to up the book and all that stuff that interests you when it comes out and otherwise. Info at our car investment dotcom is is my name.

George El Masri [00:37:24] Sounds good. Right. Thanks a lot. Appreciate you sharing your time here today.

Ryan Carr [00:37:28] Thanks for having me on. All right.

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