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Brian Trippe Real Estate Background:
-President of Alabama Real Estate Investor Association, and a local coach/mentor
-Holds over 70 rentals, tax liens/deeds, buys and sells notes, sells homes with owner financing, and has a mobile home park
-Full-time real estate professional since 2012 and his main focus is wholesaling
-Based in Birmingham, Alabama
-Say hi to him at info@alareia.com
-Best Ever Book: Cash Flow Quadrant
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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff. With us today, Brian Trippe. How are you doing, my friend?
Brian Trippe: I’m doing awesome, thanks for having me.
Joe Fairless: My pleasure, nice to have you on the show. A little bit about Brian – he is the president of Alabama Real Estate Investor Association. He holds over 70 rentals, he does tax liens and deeds, buys and sells notes, sells homes with owner financing, and has a mobile home park. He’s a full-time real estate professional since 2012, and his main focus is wholesaling. Based in Birmingham, Alabama.
With that being said, Brian, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Brian Trippe: Yeah, that’s kind of crazy you named off all that stuff; it makes me sound like I’m a bigger deal than what I think I am… But I started with nothing about five years ago. No money, bad credit; I went to a little seminar and heard a little spiel, and I bought into it and just kind of took it from there. At the time I was a college basketball coach, believe it or not.
I made more money on my very first deal that I did in an entire year coaching basketball, so right then and there I just knew that I needed to make a change. I still love basketball, it is still a passion of mine, but I had just got married at the time, so I just had to stop kind of chasing that dream and start taking life a little bit more seriously.
Joe Fairless: You started with nothing, five years ago you went to a seminar – what was the seminar?
Brian Trippe: Rich Dad Education. I read the book a long time ago, and I’m not even joking, I thought Robert Kiyosaki was coming to town to speak, and I was gonna go, I was like “Oh man, I’m excited.” I get there and then they sell me into a package.
Joe Fairless: When I went to the three-day event for like $300 — I didn’t go to the $10,000 stuff, but I went to the three-day and that was incredibly influential on my career path. Is that the same one you went to, that $300 for a weekend?
Brian Trippe: Exactly. It cost me $200 at the time, and me and my wife went… And every time the guy that was up there – every time he said something, my wife would like tug on my sleeve and she’s like “We need to do that. Hey, let’s do that.” And I’m just looking at her like, “Are you kidding me?”
You know, what’s really interesting about it is it was a passion I never knew existed. Real estate – I just devoured every piece of content I could get my hands on, get my eyes on, listen to… I actually got a little book – it’s on my shelf right now, it’s called Find It, Close It, Profit. They just gave it to me as a gift; it’s about a 150-page book. I read that in one sitting, I was so interested in real estate… Because I didn’t know anything about real estate, and I just knew that it could be something.
The trainer that we had — I’ve got a lot of bad and good things that I could say about it, but the trainer that we had actually gave us a 15-day action plan and I just went and did everything he said to do and I ended up making $10,000 on my first deal.
Joe Fairless: Wow. In a month and a half… Let’s talk about that – it was your first deal… Then we’ll talk about other stuff, but first deal, 15-day action plan, coming out of the seminar; it took you about a month and a half to make $10,000 on it?
Brian Trippe: It was a wholesale deal, and to be honest, I had no idea what I was doing. Looking back on it, I made every single mistake possible, there’s no question about it. I didn’t know how to talk to a seller, I didn’t know how to talk to a buyer, I didn’t know how to put them together, I used the wrong attorney, the attorney didn’t even know what was going on, they didn’t even know how to do the transaction… I did everything — I was kind of like, “Yeah, I’m the owner of the property, that kind of thing.”
I’ve learned since to obviously be honest about everything and upfront about everything, but I just kind of did everything wrong, that I would not normally do, and just kind of fell backwards into it. That’s just kind of a testament to just kind of taking action and just going for it and just trusting the people that had done it before you.
Joe Fairless: You mentioned the wrong attorney – why is it the wrong attorney?
Brian Trippe: Well, I said the wrong attorney because they had never even heard of wholesaling; they didn’t even know what it was, they didn’t even know if it was legal, but they kind of like looked into it a little bit. I was just like, “Well, do you think you could do it? What’s the bottom line here?” and they said, “Yeah, I think we can do it” and by the time we actually got done with it, the guy goes “Wow, that was really cool! You just made $10,000, you need to show us how you did that!” [laughter] That was really cool.
Joe Fairless: You never wanna be teaching the counsel what you’re doing, that’s always a bad sign. It’s okay to teach real estate agents sometimes, “Hey, this is the type of deal I’m looking for.” I had to do that on my property, but holy cow, teaching the actual legal counsel – that’s a whole other set of–
Brian Trippe: And I’m teaching him something that I didn’t even really, fully understand either. [laughter]
Joe Fairless: That’s pretty good stuff. You said you didn’t know how to talk to the buyers and sellers – what were you saying, compared to what you would say now?
Brian Trippe: Well, I wasn’t being 100% forthright. I’m sitting here saying that I’ve got the money, I wanna close on this property asap. I’m telling the eventual end buyer that yeah, it’s my property, and I’m selling it. Really kind of illegal, to be honest with you. You can’t really do it that way and be legal, and I just didn’t know any better… But I think through doing is how most of us learn the best, and man, I’m telling you, that one deal gave me confidence. I wanted to just go out and do more deals; it gave me a little bit of experience, and it was a really, really good thing.
I don’t know that if I hadn’t done a deal that soon, I don’t know how serious I would have taken this whole real estate thing.
Joe Fairless: Yeah, you built on the momentum.
Brian Trippe: Yeah, for sure.
Joe Fairless: You’ve got a mobile home park – please talk about that.
Brian Trippe: Yeah, I love it. I’ve been listening to your podcast a little while and I know that one of the questions is the best investment you ever made… This mobile home park is the best thing I’ve ever done in my entire life when it comes to real estate. Mom and pop owned it, they called me off a WeBuyHouses bandit sign, and they said “Do you buy mobile home parks?” and I was taught a long time ago “Don’t ever turn anything down”, so I said “Maybe. Let me take a look at it.”
I ended up talking to this guy for about six months. He wanted way more for it than what I thought it was worth…
Joe Fairless: What did he want, and what did you think it was worth?
Brian Trippe: He wanted 1.3 million, and I thought it was worth about 900k. I ended up getting it for 760k. I put 60k down, he owner financed the rest of it. The payment on it is pretty high; I always ask this question to any seller, “What do you need to make this deal work?” and he just needed $6,000 a month to live, for what he felt like was the rest of his life. So I said “If I give you that $6,000/month you need to come down to my price”, and $6,000/month equates to a 12-year mortgage, so I’m paying this thing off – I’ve had it for about a year and a half now; I’m [unintelligible [00:08:37].02] I’ve got so much equity in this thing; I owe about 600k on it right now. I’ve turned it around, I think it’s worth between 1.1 and 1.2 right now, and on top of all that, I’m cash-flowing it between $4,000-$5,000 a month.
Joe Fairless: Good for you, congratulations on that! That’s fun to talk about, and listen to. It had to be a learning curve…
Brian Trippe: The mobile home park?
Joe Fairless: Yeah.
Brian Trippe: I’m gonna give a huge shoutout to Frank and Dave, the mobile home park gurus. I don’t know if you know who they are or if you’ve spoken to them…
Joe Fairless: Yeah, I’ve interviewed Frank on the show.
Brian Trippe: Frank Rolfe – yeah, he’s come on my podcast as well. He is a super, super down to earth, great guy that gives so much value. I took their course, which is dirt-cheap compared to real estate courses. I took their course about two years before I actually bought this thing, because I wanted a mobile home park. I was kind of sold on the idea of owning dirt and not having to own trailers, not having all the maintenance requirements that come with all that; I just wanted to own dirt, and I was kind of sold on that from my very beginning stages of researching real estate in general.
So I’d always wanted one, and this one just kind of fell in my lap, and it’s been the best thing that I’ve ever done in real estate.
Joe Fairless: You took the course, but then implementing content that you read and watch is a lot different in real life, because there’s a lot of grey between the black and white… So what was the grey area that you had to fill in as you went?
Brian Trippe: I think it’s like anything – you don’t know anything until you’re actually doing it. Theory is fine, some of us go to college and we learn a bunch of theory, but none of it really matters until you get out in the real world. A couple of things I took away from the coure was if you’re new or you’re an inexperienced mobile home park investor – city water, city sewer. If you have city water and city sewer, you are gonna get yourself out of like 90% of the trouble that you could possibly get yourself into. By not having well water and not having sewage treatment plans and septic tanks and all that garbage, if you’re new you can easily, easily get into big time trouble and get way over your head.
The biggest problem that I identified with this park right off the bat was that the previous owner was not charging for water. Even though it was city water, they came up to the road, the park owned the whole water system, and everything was individually metered, he just wasn’t reading the meters.
If you’re just charging everybody $40/month for water, if you’re just getting charged a flat fee for water, you just leave the post pipe running; water’s not valuable to you, so you just do whatever. What I found was the average water bill was about $100/month is what they were using, but they were only being charged for $40. As soon as I corrected that and I fixed about 30 water leaks… I learned all this through that program that I did. As soon as I did those couple things, I just increased the value of this park almost by two times.
Joe Fairless: How many lots were at the park?
Brian Trippe: 59 lots, and there’d been 100% occupancy since June of last year, so almost for a full year.
Joe Fairless: And you bought it a year and a half ago, you said?
Brian Trippe: December 2015, yeah.
Joe Fairless: What were some of the first things you did other than the water approach?
Brian Trippe: Water was by far and away the biggest deal. I raised rents on day one.
Joe Fairless: How did you justify that to the people who were complaining about you doing it?
Brian Trippe: There were two complaints. The lot rent was $155, market rent was $250, so I brought it only $20 and I told everybody right off the bat, “Do you want me to go up to $250 today, or do you want me to go up $20/year for the next four or five years?”, so everybody agreed they wanted to do $20/year for the next five years, and that’s fine.
Joe Fairless: It’s like saying “Do you want a million dollars today, or do you want a dollar for a million days the rest of your life?”
Brian Trippe: [laughs] But I was very honest and forthcoming with them. I said, “Listen, your lot rent – you’ve been getting away with super low lot rent for a very long time, you’ve been paying only $40/month for water and sewer, but you’re using $100/month on average, so a lot of things have to change”, and everybody in the park completely agreed.
I came and I cleaned it up — which there’s no accountability, it was just stuff everywhere, just garbage everywhere, a bunch of vehicles on blocks and all this stuff that I had to get corrected. They saw me, I was coming in there, I did it myself. I came in there with a team of a couple of people, and we went in there and worked on it and they saw how much I was actually putting into the park. From a time standpoint, I was there, addressing their concerns, and they respected it. I don’t wanna say they liked me, but they respected it.
Joe Fairless: What has been the most surprising part of owning the mobile home park?
Brian Trippe: Oh man, I don’t wanna say it’s easy, but it’s kind of easy. It’s been kind of easy. In the very beginning it was really hard. It took me about three full months of being there almost every day, but I don’t really know how to answer the question. I’m kind of on cruise control; even though it’s only a 20-minute drive from where I live, I’ll go check on it only once every couple of weeks, once a month, just because I’ve got an on-site maintenance guy, and he texts me everything that’s going, “Hey, this guy’s doing this.” He texts me pictures, and I can kind of address things from there. It really has just been a really great investment.
Joe Fairless: You have 70 buy and hold rentals – is that correct?
Brian Trippe: I’m actually approaching about 80 doors right now. Just full disclosure – I include the 59 mobile homes in that.
Joe Fairless: Well, they have doors, so that makes sense.
Brian Trippe: That’s right, that’s right.
Joe Fairless: Okay. So are those single-families, the eleven?
Brian Trippe: Yeah, I’ve got single-families and I’ve got an office building as well where my office is, that’s kind of like a strip mall. I was kind of taught this from the beginning, and this is what I teach as well, when I teach; I’ve got the REIA and I’ve got the podcast (I do all this other education), and what I was taught and what I teach is you either need to wholesale and take those profits and buy passive income, or you need to fix and flip and take those profits and buy passive income.
You’ve gotta have an end goal in mind. You can’t just go and wholesale forever, or fix and flip forever. It’s the very rare guy that can do that. You’ve gotta have some sort of end in sight, and for me the passive income piece — I love commercial, I love multifamily, I’m in the market right now for an apartment building, but I’m kind of on the belief that we’re about to take a little downturn, so I really haven’t bought a whole lot lately. I’ve just been kind of stockpiling cash and just waiting for the right opportunity.
Joe Fairless: And the podcast that you referenced – is that AlaReia Masterclass?
Brian Trippe: That’s correct, we started a REIA, we call it AlaReia. We’ve got the AlaReia Masterclass Podcast – it’s completely specific to Alabama real estate, and then obviously goes with our meeting; we have our meetings once a month, it’s the second Thursday of every month.
I do a little daily show on our YouTube page as well; you can just search AlaReia.com… I’m kind of creating this cloud of real estate education that’s specific to Alabama, and in particular Birmingham. We’re going to [unintelligible [00:15:29].21], we’re going to Montgomery and some other places, but I have a huge passion for affordable real estate education in our area, and just kind of helping and teaching our community.
Joe Fairless: What type of investing — because you’ve done tax liens, buying and selling notes… What’s your least favorite or has been the least successful for you? Fixing and flipping, wholesaling, or whatever?
Brian Trippe: Yeah, I would definitely say fix and flip is — I don’t wanna call it weakness, it’s just not something I like. I just don’t like doing it, I guess because I got started wholesaling and seeing that instant check, versus holding something for 4-6 months, and then you could open up a wall and find this or that… I just feel like there’s so much risk to it. I do 2-3 a year, but managing the projects becomes just a bear, and it’s not something that I like doing very much.
Joe Fairless: Yeah, maybe if I had the skills to fix and flip (which I don’t), maybe I would… But just from all the interviews I’ve done, wholesaling by far is smarter, in my opinion, than fixing and flipping, because of what you said. The limited liability or zero liability that you have in terms of financial commitment, as well as the velocity of money that you have when you wholesale, versus a fix and flip… You don’t make as much usually, but you certainly don’t have the grey hairs and the headaches and the risk that’s associated to it.
Brian Trippe: Yeah, absolutely. And you can do as many as you want at the same time. You don’t need a certain amount of money to do two, three, four, five wholesale deals at a time, like you would for flips.
Joe Fairless: What is your best real estate investing advice ever?
Brian Trippe: I’m a big believe in honesty and integrity. I’ve built a reputation… I’d rather give up some profit in order to preserve that. I’d just say, walk in integrity, walk with honesty, and do your business the right way, ethically. There’s no way I would have been able to build this REIA — we’re young, too. I mean, we’ve five months old. We’re averaging about 75-80 people right now, we hope to have 100 at our next one, but there’s no way that that ever could have happened if I would have smeared my name, if I would have given up integrity for profit, stuff like that. And there are people that do it. It’s so cutthroat, real estate investing locally, and I’m sure it is nationally, as well. It’s so cutthroat, and it’s so competitive that I just take that equation completely out of it.
I don’t wanna compete with anybody, I wanna collaborate – I say that all the time. I don’t believe in that, I don’t believe it has to be that, I just believe 100% with honesty, integrity, and then the chips will kind of fall as they may.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Brian Trippe: Let’s go.
Joe Fairless: Alright, let’s go. First, a quick word from our Best Ever partners.
Break: [00:18:14].11] to [00:19:12].29]
Joe Fairless: Best ever book you’ve read?
Brian Trippe: The Cashflow Quadrant.
Joe Fairless: Best ever deal you’ve done?
Brian Trippe: The mobile home park, no question about it.
Joe Fairless: Best ever way you like to give back?
Brian Trippe: Through REIA, it’s my baby right now. I’m doing everything to nurture that thing and to grow it and to do it the right way. I’m not bringing a bunch of sleazy sales people… It is genuine real estate education. There’s a huge need for it in this area, and I’ve got the support of a lot of the big-time local real estate investors. They come to it and support it, and there’s no way that I could have been able to do that without their support. So no question about it, the REIA, and just real estate education in general.
Joe Fairless: What’s a mistake that you’ve made on a transaction that you haven’t talked about already?
Brian Trippe: I have made a couple of mistakes – I think we all have – but I haven’t made just the massive, tens of thousands of dollars mistake. I’m very conservative.
A couple of mistakes that I’ve made is I’ve gone into some areas – even within our town, even within Birmingham – that I didn’t know as well; I thought I knew them, but I really didn’t, and I would go ahead and make a purchase and it’d not really be worth what I thought it was, after the fact.
I’ve done that a couple of times, but you’re talking about losing $3,000-$4,000, not tens of thousands.
Joe Fairless: How can the Best Ever listeners get in touch with you?
Brian Trippe: You could definitely connect with us anywhere; you can just search AlaReia. The best way to reach me is my e-mail address, info@alareia.com. Go to AlaReia.com. You can go to our Facebook page, which is /AlaReia. You can look us up on YouTube… A lot of great ways to see what we’re doing here in the Alabama real estate market.
Joe Fairless: Well, Brian, thank you for being on the show. Thanks for talking about the mobile home park case study certainly, and also your start with the Rich Dad, Poor Dad seminar and how you got going, did that 15-day action plan, made 10k on a wholesale deal, made a bunch of mistakes along the way too, course corrected since then, that’s for sure… And I liked the case study with the mobile home park in particular, because we got into a very successful deal that you did for the first time in terms of asset class, and your approach, and how you got up and running. Frank Rolfe has been on the show before, and he just provided a bunch of really good information on mobile home parks. So Best Ever listeners, you can go to BestEverShow.com and search maybe “mobile home” and Frank’s episode will come up.
Thanks for being on the show, Brian, thanks for sharing your best ever advice, and we’ll talk to you soon!
Brian Trippe: Awesome! Thanks, Joe.
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