Ben got started with real estate investing in 2005, and was caught in the 2008 crash. He started educating himself more and went all in with real estate investing and education. He got started (again) by buying distressed bank owned properties and is still growing his business to this day. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
Ben Fredricks Real Estate Background:
- Real estate investor that specializes in bank owned and REO properties in bulk from auction
- Purchased and sold over 150 properties in the last year
- Offers seller financing to investors looking to grow their portfolio
- Based in Port Orange, FL
- Say hi to him at http://odellbarnesreo.com/
- Best Ever Book: Sell Or Be Sold by Grant Cardone
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TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? 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 of that fluffy stuff. With us today, Ben Fredricks. How are you doing, Ben?
Ben Fredricks: I’m doing awesome, Joe. Thanks for having me.
Joe Fairless: Yeah, my pleasure. Nice to have you on the show. A little bit about Ben – he is a real estate investor who specializes in bank-owned and REO properties in bulk from auction. He has purchased and sold over 150 properties in the last 12 months. He offers seller-financing to investors looking to grow their portfolio. He’s based in Port Orange, Florida. You can get a hold of him at his website, which is in the show notes. With that being said, Ben, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Ben Fredricks: Sure, man. I got started in real estate pretty much at the wrong time, 2005-2008, and I just wasn’t ready from an education and mindset standpoint, and obviously everything went haywire. I actually worked for Lehman Brothers at the time that the economy collapsed, and it was just the perfect storm. We owned rental property, and we started losing tenants, because they were losing their jobs, and the dominoes just fell.
After that, I really had to reassess what we were going to do, because I knew I had to get back into the game, but I really kind of decided at that point that I was gonna commit full-on to education, between books and podcasts like yours, good seminars, bad seminars, you name it… I just spent a lot of time feeding my brain after that… And really — this might sound kind of corny, but I became a really big believer in the law of attraction in The Secret, and I just kind of started putting out into the Universe what I wanted… And soon enough, I started to receive it.
I met my mentor, my current partner off of (believe it or not) a Craigslist ad, of all things, and it changed my life… But it changed it because I was actually ready for it at that point. After that, I took massive amounts of action and then found myself in this arena of buying distressed bank-owned assets in bulk, and that’s how I got to where I am today.
Joe Fairless: Best seminar you’ve been to and worst seminar you’ve been to?
Ben Fredricks: I don’t wanna throw anybody under the bus… I think the best seminar I went to was by a friend of mine named John Cochrane. He kind of gave me some great insights into wholesaling and what I needed to know, even though that’s not really what we do in the sense that we’re not finding motivated sellers to wholesale contracts… But he gave me a lot of insight on how to market and do some good things. And from bad seminars – I think people have been to enough bad seminars, and I don’t need to call anybody out.
Joe Fairless: With what John taught you about wholesaling, what specifically did you use to apply that to what you do?
Ben Fredricks: It was mostly a lot about the marketing. So you acquire a property, and then how are you going to get rid of it? How are you going to put it out in the marketplace so that you can flip it quickly, make a good profit on it, and give a good deal to whoever is actually buying it. So it was really kind of knowing how to put together the numbers, and then take in those numbers and making it an attractive deal to the marketplace. I think that’s where I got the most value from, learning from him.
Joe Fairless: And what are some tips for how to put those numbers together?
Ben Fredricks: Well, it’s an amazing day and age that we live in, so you can find just about anything you want online… Finding numbers from places like realtor.com, or iComps, and even Zillow. Zillow gets a bad rep of not always being accurate, but for the numbers that we do, it helps. Deriving numbers from those areas can really solidify what kind of deal you have, and then you know how to best price it. On these properties you don’t wanna always be at the top price; you wanna set your deal apart by coming in lower than everybody else, and that helps you know where to buy these deals as well.
Joe Fairless: 2005-2008 – you said you started in a very bad time, which, clearly, the economy collapsed in 2008, so I certainly would agree with that… You had a portfolio, it sounds like you lost that portfolio – is that accurate?
Ben Fredricks: That’s correct, yeah.
Joe Fairless: I imagine because of that things were tight financially to say the least, and you said earlier that you decided you would commit full on to education, there is a requirement usually of money in order to invest in your education — well, certainly with seminars, not with podcasts or things like that… So what made you decide to invest money into education when things were financially very tight with you and your finances?
Ben Fredricks: Yeah, I just didn’t see any other choice, and I knew that if I was gonna get back into the game, I couldn’t make the same mistakes again. Somebody once said to me, “The best investment you can make is into yourself”, and I really just tried to take that to task. It wasn’t easy, by any means. My wife and I did everything right, it seems, from the get-go. The properties we bought, we put 20% down, we maxed out our 401K’s and our savings, and it went terribly wrong… But what we didn’t account for was what happens if there’s negative cashflow… And we always just thought, “Well, we’ll make it up with our income if we need to”, and that was just stupid.
So not wanting to make the same mistakes again, there was really no choice but to invest in ourselves and then spend that money to get educated. So a lot of times, you’re absolutely right, it was difficult. I borrowed money from my 401K to make those investments in myself, and thankfully, they’ve paid off.
Joe Fairless: You met your current partner off a Craigslist ad. Will you elaborate?
Ben Fredricks: Sure. A couple years back I was at the point where I was like, “Okay, I’m ready. I wanna really dive back in.” I was working in financial services, I absolutely hated it, it wasn’t my passion, and I knew real estate was where I wanted to be, so I just started saying “You know what, I know people that are interested in being private money people, and let me see if I can put them together with people that have deals.” That’s really how I came about. I was essentially trying to be a syndicator. I said, “I will help you fund your deals. Reach out to me”, and that’s how I got a call. My partner called, and told me — funny enough, he said “This might be the greatest call you ever got.” It really was. I laughed at that time, but it really was. He changed my life.
Joe Fairless: And what were some steps after that call that changed your life?
Ben Fredricks: Well, I didn’t know what I do now really existed. I knew there were bank-owned properties, but I didn’t really know how people would be able to buy 30-50 deals at a time. So I went and met him for a drink, he was here locally in my market at his vacation property, and I learned about it. He said, “Well, you can come up and learn about it”, and I said “Absolutely.”
I came home and told my wife, “Hey, I’m going to this guy’s house in South Carolina, who I’ve just met and had one beer with, and I learned all about this business.” She looked at me like I was crazy, but it turned out awesome. It was really just taking a leap of faith and saying “You know what, this sounds like an amazing opportunity. Let me just take some action here.”
Joe Fairless: And was there a fee for you to go learn from him in that setting?
Ben Fredricks: Zero.
Joe Fairless: So what was his business benefit from meeting with you?
Ben Fredricks: I think his business benefit was saying “Hey, here’s a potential investor that can buy some deals from me.” That was his business – acquiring these properties in bulk and then having a big network of investors that would take these properties from him after he acquired them from the bank. I think he’s just a man that deeply believes in good relationships, and we hit it off. He’s like a father figure to me at this point. The benefit to him was saying “Hey, I might have a great relationship with somebody that’s hustling and wants to do big things.”
Joe Fairless: And how do you two – or the group, if there’s more than the two of you – structure your roles and responsibilities now?
Ben Fredricks: It’s run pretty much like a business where I focus mostly on systems – hiring, recruiting, people that are sales staff, things like that… Then one of my partners – he focuses on acquiring the deals and the properties; that’s his expertise. He’s been one of the biggest auction buyers in the last 40 years in the country. Then my other partner – he kind of runs the sales team and handles all of our distribution.
Joe Fairless: What’s “handles our distribution”?
Ben Fredricks: We have investors that we work with on a consistent basis, and he manages what they’re looking for, so we can help them find those deals.
Joe Fairless: Okay, got it. So high-level you’re responsible for the systems, and then another partner is responsible for bringing in the properties, and another partner is responsible for liquidating the properties.
Ben Fredricks: You got it, absolutely.
Joe Fairless: Okay, got it. How do you buy 30-50 deals at a time?
Ben Fredricks: Well, it didn’t start out that way. Initially it started out with buying two deals at a time. Then it took some time to work up to that. Really, what I wanted to do was just say “Okay, let me understand this process fully, let me do some deals, and then let me get very good at what we do, and then start taking that to the market.” Our first private money investor gave us about $150,000, and then over the last 12 months we’ve raised I think close to 3 million at this point. So it was really just doing what needed to be done and starting off, and then showing and proving that we can do what we say we do.
Joe Fairless: How long have you been doing this with the group?
Ben Fredricks: Close to two years now.
Joe Fairless: Two years. What’s been a challenge that you’ve overcome as it relates to the growth of the company?
Ben Fredricks: When you start acquiring a lot of properties, it does become cumbersome if you’re managing — like, right now I think we have close to 120 properties in inventory… So managing the day-to-day on those things, getting them signed, getting pictures and getting them uploaded to the website… It’s a lot of tasks that come along with it. And then you’re also managing the business itself, so it’s not an easy day-to-day thing. We have a hell of a lot of fun doing it; there’s certainly a lot of work that goes on behind the scenes… And we still don’t have it perfect, Joe. There’s so many things I miss the ball on when it comes to social media and things like that that we have to improve, but it’s a daily thing that we try to get better at.
Joe Fairless: What’s one thing that you’ve made the most improvement on as it relates to that?
Ben Fredricks: I think it’s making the transaction somewhat easy. We’ve hired a virtual assistant, so people can effectively and quickly do a transaction almost through our website. They can make offers and apply for financing and things like that directly on the website. That in and of itself cut down a tremendous amount of time in our day that was being spent reviewing offers and paperwork and all that stuff. So it’s really just trying to find those little time-saving pieces.
Joe Fairless: Is there a software program that you’ve purchased in order to do that?
Ben Fredricks: No, I had that developed by a website expert, so to speak, and I just told them what we wanted. They did it all through WordPress; that’s all technical stuff I have no idea about, because I pay somebody else to take care of it.
Joe Fairless: Ditto. What is the investment to pay someone to take care of that?
Ben Fredricks: It wasn’t much, actually. We interviewed a couple of people to do a website, and the first couple of quotes were ridiculous. They were like $15,000-$20,000, and this website I think we got done for about $3,500.
We have some little ancillary deals we constantly are working to improve it, so we might spend a hundred bucks here, a hundred bucks there to get some tweaks done to it, but overall it was pretty affordable.
Joe Fairless: Are there a lot of bank-owned properties still out there?
Ben Fredricks: Oh, my god… There’s tons. The banks were so slow, and there’s still inventory that’s just been sitting there because the banks haven’t gotten to it. So yes, there’s a tremendous amount of opportunity. And a lot of the stuff that we buy, people will look at it and say “Well, that’s a leftover. Nobody wanted it.” And somebody wants it, believe me. We wouldn’t have a business if somebody didn’t want it.
Joe Fairless: What’s a typical transaction?
Ben Fredricks: In regards to what?
Joe Fairless: Like a bulk purchase… What’s a typical bulk purchase that you all buy?
Ben Fredricks: Okay. Last month we got, I think, 44 properties, and I think we spent somewhere around $650,000 on that particular package. It just varies from month-to-month, and depending upon where we buy. Ohio, Michigan, Missouri, places like that in the Midwest – there’s just an abundance of deals that are available, that we can pick up for a couple thousand a piece.
Typically, our average deal is somewhere around 15k-20k.
Joe Fairless: Do you remember the last transaction that you all did?
Ben Fredricks: The last transaction… Well, we do quite a bit of them…
Joe Fairless: How about the most recent transaction where you remember some of the numbers and specifics? I just wanna learn about a recent transaction you’ve done.
Ben Fredricks: Sure. Well, today I was just working on an owner finance deal, and that was a triplex that we picked up in Mississippi for about 18k. We sold that on an owner finance note to a local investor. They’re putting $5,000 down, and it cashflows for us about $600/month for the next 15 years.
Joe Fairless: Wow. Where did you say that is?
Ben Fredricks: That’s in Mississippi.
Joe Fairless: That’s in Mississippi… You are not in Mississippi, you are in Florida, so how did you come across it?
Ben Fredricks: This was on a bank-owned asset. Typically, what will happen is the bank will come to us because they know we’re gonna buy, and they’ll say “Hey, we have these particular assets. These are kind of what we’re looking for out of them”, and then we can make the bids accordingly, based on what we think we could get for the property… Sort of what I was telling you about before, where we think if we could price it well enough to make it a competitive deal… So yeah, that’s pretty much how we get the deals.
Joe Fairless: Based on your experience, what’s your best real estate investing advice ever?
Ben Fredricks: I think my best advice ever is if you fail, don’t be afraid to get back in the game and take massive amounts of action, and be different. I think someone else wise once told me “There are riches in niches.” I see so many investors doing the same things as other people, just trying so hard to find the perfect deal… Just start doing deals. If you can just start doing deals, taking massive action, working hard, you’re gonna find ways to be successful. That’s probably the best advice I can give.
Joe Fairless: Are you still focused on committing to your education?
Ben Fredricks: All the time. I’m a podcast junkie. I’m up at [4:30] every morning for the most part, listening to podcasts like yours, reading books… It’s become an addiction to me. Once we get the taste of “Hey, self-improvement… I feel better about myself, the condition that I’m in”, you can’t stop it, because if you stop, you start to slip back into those old habits of not feeling so great about yourself. So yeah, I cannot stop; it must continue.
Joe Fairless: And what are a couple resources…? Perhaps I should have saved this for the Lightning Round, but who cares…? What are a couple of resources that you recommend?
Ben Fredricks: As far as mindset?
Joe Fairless: Yeah.
Ben Fredricks: Well, as far as things that have helped me, Tony Robbins has been tremendously instrumental in my ability to have a better mindset… And Andy Frisella… Guys like that have helped me tremendously.
Joe Fairless: Andy who?
Ben Fredricks: Andy Frisella. Those guys have helped me a lot when it comes to getting my mind right. And then as far as any books – A Man’s Search for Meaning, or The Alchemist… Those are my two favorite books and they’re quick reads that I’ll go back to and read a day or two if I’m feeling like I need to pick up…
Joe Fairless: Now we’ll do a lightning round. Are you ready for the Best Ever Lightning Round?
Ben Fredricks: Fire away.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:18:48].21] to [00:19:39].13]
Joe Fairless: Best ever book you’ve recently read, that you haven’t mentioned already?
Ben Fredricks: Well, right now I’m reading “Sell or be sold” by Grant Cardone. I’m thoroughly enjoying that… So that’s a good one.
Joe Fairless: Best ever deal you’ve done?
Ben Fredricks: I knew you were gonna ask me this question, and I don’t know if I could pick just one deal. It’s kind of like asking “Which one is your favorite kid?” I think I love doing a deal so much that I think my next deal is always the best deal I’ve ever done. I wish I could answer that more directly, but we’ve done so many this past year, and each one is like my baby, I feel like.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Ben Fredricks: I think early on we were so eager to sell a deal that we probably were negotiating from a point of weakness, and I knew what the property was worth, so I think that’s an area where I’ve vastly tried to improve. I think just being so eager to do a deal, a lot of times… I’ve probably left a lot of money on the table over the years, but that’s okay; I think in the end if people get a great deal, they’re gonna come back and buy some more.
Joe Fairless: I’ve heard some conflicting statements there… You said you’re getting better, but then you said it’s okay, because that’ll come back around…
Ben Fredricks: Yeah, I try to walk a fine line there, Joe, because I do want to make a good return on investment, I do wanna make good money, but I do wanna give somebody a great deal, so it’s an inner fight that I’m having on almost a daily basis. And you know what, I’ll tell you straight out – that’s kind of why I’ve put my partner in charge of the sales, because he’s a little bit tough as nails kind of guy when it comes to that stuff, other than me. He was in the auction business for 30 years, he’s heard and seen it all, so I say “You know what, why don’t you deal with most of that, and I don’t have to feel so bad about leaving money on the table?”
Joe Fairless: Yeah, we structure our company similarly… Because I have a similar mindset that you have, and my business partner is much better at negotiating than I am, because he’s just got a knack for it.
Ben Fredricks: It’s good to know your weaknesses sometimes, so you can focus on your strengths and then delegate out the things that you’re not so good at. That’s part of being in business, I guess.
Joe Fairless: Best ever way you like to give back?
Ben Fredricks: I’ve thought about that a lot this year, and one of the things that we wanna do is start to donate some properties. I would love to do that, so if any of your Best Ever listeners are knowledgeable in this area or run non-profits, I would love to hear from them. And then also, I love talking to new investors and kind of opening their eyes to the possibilities. My mentor and my partner is giving me everything without it costing me anything, and I know I have to pay that forward, it’s my duty. So I don’t wanna be the guru course guy; I would rather create a tribe of people that understand how to do deals, and then they can create a life for themselves.
Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?
Ben Fredricks: We’re branded pretty much the same around the web, so you can reach out to us at OdellBarnesREO.com. We’re at Odell Barnes REO on Facebook, and Instagram, and YouTube.
Joe Fairless: Well, thank you so much for being on the show and talking about the challenges you had at the beginning of your investing career in real estate, and then how you focused on the education, how you got in touch with your current business partner, and how you all are operating your business and how you structure the roles and responsibilities based on skillsets, as well as some specific resources that you’re using and have used, that have helped you out.
Thanks again for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Ben Fredricks: Thanks, Joe. I appreciate it.