As the title suggests, Logan was an undrafted NFL player who worked really hard to make it to the league. Once his time in the NFL was over, he had to reinvent himself from an athlete to…what? Real estate investing was the answer for him, as it is for many of us if you’re listening to this podcast. Hear his story of making the change and what he does with real estate investing. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“When you’re buying something that’s almost 150 years old, you really need to take an expert in there with you” – Logan Freeman
Logan Freeman Real Estate Background:
- Real estate mentor, investor, developer, and agent
- Has completed over 120 transactions in less than one year
- Ex NFL player for the Oakland Raiders
- Based in Kansas City, MO
- Say hi to him at http://livefreeinvestments.com/
- Best Ever Book: Capital Raising by Richard Wilson
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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, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Logan Freeman. How are you doing, Logan?
Logan Freeman: Phenomenal. Energized, thriving and focused today.
Joe Fairless: Wow! Alright, then I need to step up my game, because you’re gonna bring it, clearly.
Logan Freeman: I’m gonna bring it!
Joe Fairless: A little bit about Logan – he is a real estate investor, developer and agent. He has completed over 120 transactions in less than one year. Ex-NFL football player for the Raiders. Based in Kansas City, Missouri. What position did you play?
Logan Freeman: I was an offensive lineman. So I went out as a center, and I ended up playing a little bit of guard. I’ve lost 100 pounds since then, Joe.
Joe Fairless: Nice! And where did you go to college?
Logan Freeman: University of Central Missouri. It’s just East of Kansas City. A Division II school.
Joe Fairless: Well, congrats on getting to the league from a D2 school. What an accomplishment.
Logan Freeman: Well, thank you. It wasn’t from being talented, it was a lot of hard work, and a lot of work ethic… But it was a great experience for me. It really was.
Joe Fairless: If you can give the Best Ever listeners a little bit more about your real estate background, just how you go to this point… And then we’ll go from there.
Logan Freeman: Yeah, I think that’s a great place to start. After college, like you said, I was picked up as [unintelligible [00:03:20].11] for the Raiders. I was out there for a few months, not very long… But after I was cut from the Raiders, I had to kind of look at my life and reinvent myself. I had identified as an athlete my whole life… So I said “Well, what do I wanna do?” So I really started studying and trying to figure out where I wanted to be and what I wanted to do.
I got into sales, I worked at a startup company, I worked at a larger organization… About 24 months ago I was actually fired from that larger “comfortable” and (what I thought was) safe organization here in Kansas City.
So I was fired, I had some great mentorship and leadership from my wife. She started an LLC for me. I started a very small consulting company, and I got into real estate full-time. Like we spoke a little bit earlier, William Robinson, who is my real estate mentor and business partner, took me under his wing and I came in as a director of acquisitions for his firm. I’m no longer with those guys, but I learned a lot, and I got to complete a lot of transactions by representing a 40 million dollar fund here in Kansas City.
Joe Fairless: Wow. You were fired from the job… Why did you get fired?
Logan Freeman: Well, the company brought on a private equity firm. I was one of the younger, more expensive salespeople, and they came on to try to (what I’ll call) trim the fat a little bit, and apparently I was the fat. So I got let go along with about six other individuals, and six months later they actually let the whole sales team go. So I was ahead of the game, which was actually in my favor, and I was kind of working towards getting into real estate anyways full-time… I was already halfway to getting my license at that point.
Joe Fairless: Alright, you’ve completed over 100 transactions in less than one year… Is that since you’ve left the first real estate company you were at?
Logan Freeman: Yeah. When I was working with William here in Kansas City, in about 9-10 months we did about 120 transactions. And the bulk of those were for our funds that we represented here in Kansas City, but I built my buyers list to over about 130 individuals from out-of-state clients, just off of Bigger Pockets, networking and LinkedIn. Well, a little bit less than half of those transactions came from other clients, as well. That was all of last year, so I haven’t been doing that since then.
Joe Fairless: Okay, and what are you doing now to make money?
Logan Freeman: In September of last year I kind of looked back at the year that we had had. I’d walked over 650 single-family homes and small multifamily properties, underwrote all of those and made offers on about 450 of those… And I was watching the margins continually get thinner, and thinner, and thinner. So I couldn’t just honestly continue to make offers for my clients. It just didn’t feel like the margins were there. So in September I started to dive into real estate syndication in larger asset classes.
I flew down to a few events, I bought a bunch of books, I really started to educate myself. One of your books is on the shelf, I’m looking at it right here… And I hired a mentor, as well. Michael Blank – I’m sure you’ve met Michael before…
Joe Fairless: Yup.
Logan Freeman: And I decided that I was gonna go syndicate multifamily apartment complexes in Kansas City. Well, my naivety didn’t lend to me not knowing that a lot of other people were already doing that, and you really had to find a good project to actually syndicate and make sense.
I didn’t stop though, I continued the hustle, and really networked my tail off, and we completed a couple transactions on the syndication side. I was successful on that piece… But right now, what I do on a regular basis is I’m a broker here in Kansas City on commercial and multifamily properties. I work on transactions above 750k, and for your listeners in Kansas City – yes, you can get quite a bit for that still. You can get probably 10-15 units for that in Kansas City. So I do that.
I’m a general partner on about 4-5 projects a year here in Kansas City. That might be a commercial mixed use development, it could be a multifamily property, and it might be actually in the hospitality space as well.
And then the third part of it is I do this whole process — I’ve been blessed to meet some very awesome individuals in the private equity and family office space… So I co-GP with other sponsors and help them with their capital stacks on the debt and equity side. So that’s what I do on a regular basis right now.
Joe Fairless: You’re a jack of all trades.
Logan Freeman: A little bit. I try not to be, Joe, because I don’t wanna chase too many rabbits. But with that being said, a lot of the things that I do have a lot of great parallels to them, so they can play off of each other a bit.
Joe Fairless: Yeah, I could see that. I wanna focus the conversation on what you’re doing now, but I do have a follow-up question whenever you were looking at 650 homes and made offers on about 450 of them.
Logan Freeman: Sure, yeah.
Joe Fairless: When you make that many offers, 450 of them, I imagine you have a pretty refined process… What would you say your offer, when you make it, has in it, in terms of language, or clauses, or your approach, that someone who makes a couple offers a year doesn’t have in it?
Logan Freeman: That’s a great question. One would be actual terms. The price is the price, and we never really moved on our price. But we offer incredible terms for sellers. We were really solving the pain points of closing these properties fast, and not doing traditional inspections. When William was taking me through the houses and I was learning this process, he showed me — because he’s been in over 10,000 homes… He showed me exactly what I needed to look for. And did I miss some things at the beginning? Sure. But we were very diligent on not making offers on any property that we hadn’t seen before, for our clients… And then also walking those properties and estimating those rehabs.
So I would say that the track record that William had in the city – we could show proof of funds of the money in an account, and then I never just had an offer that I would send off to a listing agent. I would call the listing agent, I would tell them what the terms were gonna be, here’s why we’re making the offer where we are, and I would try to build some sort of rapport with that listing agent.
What I learned through this process of making all those offers is that those listing agents actually have a lot more pull than anything else in the transaction. Yes, there’s still terms and price, but that seller is really listening to that listing agent. So if you can somehow position or find out a piece of information, we could tweak our offer to make them a little more attractive to people, because we do have a competitive landscape in that asset class.
Joe Fairless: And what’s an example of when you speak to the listing agent, that you hear something so you tweak the terms?
Logan Freeman: This is a great example – we were working with a client and they were looking to acquire a property; they didn’t really have a timeframe… They weren’t needing to place any money or anything, so they were patient, which was great, which gave us some options.
So the seller – they had accepted an offer, or were getting close to accepting an offer, but they hadn’t identified their next property quite yet. And I said “Well, that’s not a problem. Maybe we can talk to the buyer and see if we can do a sale-leaseback for a certain amount of time.” So that closed the deal. We gave the seller the option to stay for 90 days after the close of the property, at fair market rent values, and we took ownership 30 days later, because they found another house. So just being flexible on a term like that really can help you set your offer apart from others.
Joe Fairless: Absolutely. And you mentioned that you’d walk the units with your mentor at the time, and he educated you on what to look for… What do you look for when you walk the property?
Logan Freeman: When we were walking properties, we would always start on the outside. This is probably odd for a lot of listeners, but landscaping can really, really start to add up when you have to trim trees here in Kansas City. Trees can get really expensive, because we have a lot of snow in our metro area. When that snow is on those limbs, things start falling, and when you’re a property owner, you don’t want them falling on people, or on their cars.
So we would start on the outside of the home, we would look at fence lines, we would look at how the property was sitting on the actual parcel itself, where the water was gonna be running to or running from, was there enough [unintelligible [00:11:37].21] coming from the foundation that was gonna keep the water away from it… Because we have basements here in Missouri and foundations are a big, big issue.
Then I could look at a roof and tell you if [unintelligible [00:11:47].28] bubbling, or if it looked like maybe the roof had three or four layers of shingles, which is actually illegal… So I was looking at roofs, I was looking at windows, conditioning units on the air conditioners, looking at foundations… William taught me how to look at a foundation and be able to actually use my fingers on where the foundation and the siding come together, and you could kind of actually do a little trick to be able to see if a foundation has shifted over the years.
Joe Fairless: How do you do that?
Logan Freeman: There’s two parts; there’s the actual foundation of the home, and then there’s the walls that are sitting on top of that foundation. Well, on the houses here in Kansas City – a lot of them are brick. So where the brick starts, you can kind of put your finger underneath that brick, and you start on the middle, maybe say you have one finger that you can put underneath that brick and that foundation. Okay, great. Go out to the sides. If that has moved to two or three fingers, you know that there has been some shifting on that foundation, and that top layer of the house… And I’m not a construction guy by any means, but what I can do is do a test like that, because William made it really simple for me.
Then I would go inside, and then you can actually look at a few things on the inside, too. Maybe there’s some boards in the basement, and they just had to renail them. Or actually drill more screws into them because they’re pulling off of the foundation – well, that’s because they moved over the years. So that was one test that we did, on the foundation, at least.
And the going inside… You have to estimate your flooring, your paint, your appliances, your granite, your cabinets – all of those things. So that was not really big ticket items. The big ticket items are your roof, your foundations, the exterior landscaping… If you have the paint the property, that can kind of add up, too.
So we had just a checklist, we made it really easy. We had a checklist that we would go through. And yes, it was monotonous, yes, it took a lot of my time, and by the end of it I thought it was silly for me to be doing that checklist, but it was important because we had a lot less misses on the rehab estimates when we would go to actually do the repairs on the property, than we did if we just were taking notes by hand.
Joe Fairless: Great stuff. Thank you for sharing that. Let’s talk about — you said you did a couple on the syndication side, using your words. What deals did you syndicate and what was your specific role?
Logan Freeman: My specific role has always been on finding the property and then finding the equity for the properties. A previous guest, Paul Nagaoka, was on your show a few — I don’t know how many back… You do this daily, so it’s been pretty far back. But the two syndications that we did complete were bed and breakfast hotels, so I don’t really want to talk about the same thing as he probably talked about.
What I’d like to maybe talk about is how I’ve done a couple joint ventures with my clients instead, on a few properties… If that’s okay, Joe.
Joe Fairless: Yeah, sure. Just real quick though, and then we’ll talk about the joint ventures…
Logan Freeman: Okay.
Joe Fairless: Best Ever listeners, if you wanna hear the details of these deals, it sounds like you can listen to the interview I did with Paul. How do you spell his last name?
Logan Freeman: Nagaoka. Paul Nagaoka.
Joe Fairless: Alright, cool. If you can search “Paul Nagaoka and Joe Fairless”, I’m sure that interview will come up. So did you find those hotels and then you found the equity for them?
Logan Freeman: That was when I was searching and underwriting all this multifamily property in Kansas City. I know the city really well, and I have a weird hotel and restaurant management background. I started sweeping floors and doing dishes in hotels and restaurants when I was 14 years old, and I actually have an undergrad in that. So somebody sent this property to me and said “Logan, you might just take a look at this. I know you’ve been working really hard to find a property to purchase and you’ve got some good equity behind you… Why don’t you take a look at this and see if it can make sense?” I said, “Okay, great.”
It was on the Kansas City Plaza, which is a great dining and entertainment district here. The real estate alone is worth I feel like what we’ve put it under contract for, not the business.
So we’ve found that property, sent to me from just a broker friend who was a residential guy, and he obviously was doing his marketing to try to get rid of it. I requested some financials, started to look through them. They looked very similar to multifamily financials from the standpoint of looking at the T-12s and operating data.
There were a few different things in there which you have to kind of unpack, which is different types of tax, or occupancy, or the cyclical nature of the shorter-term rentals that I had to wrap my head around… But I owned some other Airbnbs here in the city, so I took that data to my current manager and we worked through that, and I felt really good about it. So I was able to think about this holistically.
Then I found the right partners that I felt like could be the operational team for this project… Because I’m not gonna live in a bed and breakfast hotel and be the operator; I can’t do that. A lot of people that have passed on this project said the same thing. Well, I said “Well, ding-ding-ding! That’s an opportunity for me to solve a problem”, so I started networking and asking people who might be able to do this, and I found the right partners to actually come into the project with me on the general partner side, and then also figure out the operational piece.
So now the brokerage and the partners that I work with – we actually manage these two boutique bed-and-breakfast hotels in-house, and we’re actively going to work on acquiring our third one. So I played the role on a lot of things upfront, because this was my first project, that I was really trying to put together from a syndication standpoint… So I [unintelligible [00:17:08].20] and then I tried to really present it in a way to the right partners that “This isn’t gonna be as tough to manage as you think it is. You already have a portfolio of 1,000 units. We can utilize some of the same resources”, and so on, and so on.
This is the deal that kind of put me on the map in Kansas City for the syndication piece. And then I also raised all the equity for it, as well.
Joe Fairless: So let’s talk about the joint venture project.
Logan Freeman: Okay. The joint venture project that I’m really excited about – still going through it right now…
Joe Fairless: But you haven’t closed on it?
Logan Freeman: No, it’s closed. We’re just renovating it.
Joe Fairless: Alright, cool.
Logan Freeman: Unfortunately, the renovation is taking a lot longer than I put on my proforma. But this project I’ve found off market through my consulting company. One of my clients was buying product from this building, and he said “Logan, this building is awesome.” He told me where it was, I went and toured it, I sat down with — her name was Judy; she’s over 85 years old, not in the best health; their family had owned property for close to 70 years. It was built in 1888. We’re in a property that’s in the crossroads in Kansas City; we’re seeing this big resurgence of commercial multifamily [unintelligible [00:18:21].27]
So I talk to her… I had an investor who was just looking to purchase something in Kansas City on the multifamily side. But I was reading a book at the time, and I think it was Matt Faircloth’s book; I can’t remember exactly what it was… But I was learning about the syndication and how to structure a project. I was reading out of this book, and I said “Hey [unintelligible [00:18:42].28] do you think that if we structure this project 80% to you, 20% to me, do an 8% preferred return etc.”, and I went down the line, I was reading out of this book… “Do you think that would make sense for you?” And he kind of looked at it and he goes “Yeah! I think we can do that. I need some boots on the ground. You’re putting in a lot of sweat equity. I need to run these other things now…”
So for six months I negotiated this million-dollar transaction that needed–
Joe Fairless: What is it? You said an off market building, but I’m not sure what it is.
Logan Freeman: It’s a 12,000 square foot commercial building in one of the hottest areas of Kansas City, and it has three levels.
Joe Fairless: Was this like a warehouse, or…?
Logan Freeman: Yeah, it was an old belting and supply company building. So it was just a big kind of warehouse that we’re doing a total reposition on.
Joe Fairless: Okay, alright. Cool.
Logan Freeman: So I was able to figure out the highest and best use of it. I am a commercial broker, so I can figure out the leasing part of it… And I have a lot of good connections on the construction side. So we’re building two Airbnbs upstairs, that are gonna sleep 8-12 people.
Joe Fairless: Wow.
Logan Freeman: And there’s about ten wedding venues in walking distance. And weddings in Kansas City have blown up. I call it funny money. When there’s weddings involved and you can solve a problem — maybe the bride’s party will stay on one side, and they can all get picked up in the same bus, right out front. And it’s in a hot area, and then they can just drive around and take all their pictures. There’s nothing in that area that serves that many people. And then I have 6,400 square feet of commercial space that I’m leasing out right now.
So that was one way that I did a joint venture with one of my buyer clients and turned them into a joint venture with little to no money into it on my end.
Joe Fairless: What’s the 6,400 square feet gonna be used for?
Logan Freeman: Joe, I wish that I had that already taken care of… And here’s a good nugget for your listeners. If you’re doing a commercial project, make sure that you have a tenant in mind with the commercial building. I knew we had six months to do this renovation, so I’ll find the tenant, but it feels really good to know that you have a tenant in your backpocket, ready to put into a building. So if you can ever do it from that standpoint, buy a building and then try to go find a tenant, it’s a lot more fun that way. But we’ll find it, I’m confident; I’m touring the building very regularly right now.
Joe Fairless: How much did you buy the property for?
Logan Freeman: We bought the property for $775,000, which is right around $75/sq. ft. The one next door to us — these are a big row building, Joe. There’s just this big line of old buildings that were built at 1888… So we share a party wall. And the door or the building next to us is about half our size, so they have the 6,400 sq. ft. floor place, and they sold that unoccupied to a user for $256/sq. ft. So when I looked at the map, I said, “Even if I had to put $125/ft into this property, I still have $65 worth of equity”, and I think I can do better than $265, because we’re gonna be bringing in a lot of income and we’re gonna have an investment property, not an end user.
Anyways, that’s what we bought it for, 775k. We were estimating about 880k in the renovation, and I have a call today actually to go over our revised budget, and that’s just under 1 million dollars. So we’re off a little bit, and that’s when I get to come out of my pocket and fix the situation, because the bank’s not gonna give us more money… But when you buy a building that was built in 1888, that’s to be expected, I guess.
Joe Fairless: Yeah.
Logan Freeman: Fortunately, it’s not gonna kill the deal, but it’s definitely not the juicy 10-cap that we thought it was gonna be… But we’ll still do okay on it.
Joe Fairless: So what are some of the 100k-ish things that snuck up on you?
Logan Freeman: One of them was that the whole building actually had to be tuckpointed. When we went under contract it was winter time, and the building didn’t look as bad in shape as we actually thought, because — well, there was a lot of coverings on all of the interior walls, and things. Needless to say, we actually had to rebuild the whole parapet wall, because the wall started to fall down on us on a Sunday. My general contractors know not to call me on Sunday; I don’t work on Sundays. But they called me three times in a row, and we had to do an emergency shutdown because bricks were falling on the South-West Boulevard, one of the busiest streets in the city.
Joe Fairless: Dang…!
Logan Freeman: So I said “Okay, yeah. Well, I guess we’d better do something about that.” So we had to end up tuckpointing the whole building, which was quite a big expense for us. The second piece was that there was extensive termite damage that was not uncovered, even though we had a termite inspector come out; they missed it. It was covered with a lot of stuff, and it was deep down, so we had to replace a ton of floor joists actually, for that piece of it.
And then this last part of it is that actually the water supply line coming into the building, since we are changing the use of the building, we have to put a sprinkler system in. Well, the water supply line we have is not quite big enough to support the water supply that’s gonna be needed for that sprinkler system, because we have residential upstairs now. And now we have to shut down South-West Boulevard in Kansas City, which is a hefty price tag for us to do that. So those are the three things.
Joe Fairless: How much does that cost?
Logan Freeman: I think it’s coming in right around $39,000.
Joe Fairless: To shut down a street?
Logan Freeman: Yeah. And then the system itself another 90k. We had budgeted about 75k for that, so we’re over 45k-50k on just doing that part of it…
Joe Fairless: How long are you shutting the street down for?
Logan Freeman: It’s gonna be at night, and it’s only gonna be for legitimately 4-6 hours… But since it’s a boulevard in Kansas City, I have to now work the parks and recreation department as well as the city; we have to coordinate this whole thing… And it’s just this whole mess, because it’s a nightlife area, so that part of the area doesn’t shut down until 3 AM anyways, and so it’s just — they have some calculation that we have to abide by… And I was like “Really? That’s what you think that’s gonna be?” and they said “Yeah, I think that’s what we’re gonna do.”
Joe Fairless: How much is it again, to shut it down?
Logan Freeman: It’s about $35,000 to shut it down.
Joe Fairless: $35,000 to shut it down for four hours.
Logan Freeman: Yeah. Unfortunately, those are the things that crept up on us and ate up our contingency really quickly, and it’s a great lesson learned for me for future projects. Even though I thought I had a lot of experience, when you’re buying something that’s almost 150 years old, you really need to take an expert in there with you.
Joe Fairless: What’s your best real estate investing advice ever? You’ve already given a lot of great advice, by the way, but – the best real estate investing advice ever?
Logan Freeman: Joe, I’m gonna say that you need to be quick, but don’t hurry. Slow down to go fast. What I mean by that is just be patient. Real estate is a get rich slow game, not a get rich fast game. If you speed past something, it’s gonna come back and catch you. So I would say be quick, but don’t hurry.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Logan Freeman: You bet!
Joe Fairless: Alright, let’s do it! First, a quick word from our Best Ever partners.
Break: [00:25:49].10] to [00:26:28].11]
Joe Fairless: Best ever book you’ve recently read?
Logan Freeman: Capital Raising by Richard C. Wilson.
Joe Fairless: What’s the best ever deal you’ve done?
Logan Freeman: I’m gonna say the best deal that I’ve done is yet to come. However, I’ve found a commercial mixed-use property for a client in Westport, and I was able to put a tenant in the building during our due diligence phase. He was cash-flowing from day one, and I helped him turn one long-term rental into a short-term rental, and skyrocketed his net operating income for him.
Joe Fairless: Best ever way you like to give back to the community?
Logan Freeman: I started a non-profit foundation here in Kansas City called CareKit KC, and we help the homeless here in Kansas City by packing drawstring bags full of food, water, shelter, things that they need… Bus passes, and things like that. We do about 3,000 kits a year. We have these big packing parties, and it’s really great to see people walking around with our green drawstring bags. That’s how we give back.
Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?
Logan Freeman: You can find me all over the social medias, but the best place is probably my website, which is LiveFreeInvestments.com.
Joe Fairless: Logan, you gave so many good tips and lessons learned… I’m very grateful for our conversation. From looking at homes, and looking for things that could be read flags, fence lines, degrading, the foundation, how to check for foundation, at least in your area, the roof bubbling etc. And then talking about the joint venture that you have done, or are in the process of being in… And some lessons learned from that, where [unintelligible [00:27:59].09] and the termite damage, which — I mean, come on; termite damage – they should have found that thing. But I don’t wanna pour salt on an open wound. The water supply line, as well as perhaps a Best Ever listener hasn’t come across having to shut down a city street, and maybe they didn’t know there would be costs involved… So just talking about that. I think you’re the first person in like 1,800 episodes who ever mentioned the cost for shutting down a street for doing work… So you made a record today on this podcast, so congrats to you on that.
Thanks for being on the show. I hope you have a best ever day, I really enjoyed our conversation, and we’ll talk to you again soon.
Logan Freeman: Thanks, Joe.
