Ep #417 – Gabriel Hamel – How to Buy Multifamily with No Money Down
Here is some of what you will learn:
- Why seller financing is good for the seller
- Solving problems for success
- Advantage of narrowing your seller search
- How to build relationships in multifamily
- Developing your private money lenders
- Measuring your time freedom
- The secret of giving back
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Full Transcript Below:
Ep #417 – Gabriel Hamel – How to Buy Multifamily with No Money Down
Hi, my name is Rod Khleif and I’m the host of “Lifetime Cashflow through Real Estate Investing” Podcast and every week I interview multifamily rockstars. We talk about how they built incredible wealth for themselves and their families through multifamily properties. So hit the like and subscribe button to get notified every Monday when a new episode comes out. Let’s get to it
Rod: Welcome to another edition of How to Build Lifetime Cashflow through Real Estate Investing. I’m Rod Khleif and I am thrilled you’re here. And I know you’re gonna enjoy the gentlemen we’re interviewing today his name is Gabriel Hamel and he has 175 units and lives in Eugene, Oregon and has some great strategies around seller financing and some other things that are dear to my heart. So you know let’s get to it. Welcome to the show my friend
Gab: Hey thanks for having me Rod. I appreciate you having me on
Rod: Absolutely. So listen you know we didn’t talk about this before we started recording but I would like to dig into a little bit about you know our conversation about self-improvement and you know motivation and things of that nature and I didn’t have a chance to pre frame that for you but before we go anywhere, why don’t you tell my listeners a little bit about your story you know kind of give us a kind of how you got into real estate you know if you can, if you’re started out real estate or you ended up there you know just going there
Gab: Yeah sure so in 2002, I read Rich Dad Poor Dad for the first time and you know prior to that I was in high school. I had joined the Army National Guard my senior year of high school in 1999 and then coming out of high school in 2000, I really didn’t have a lot of direction of what I wanted to do with my life and around 2002 picked up Rich Dad Poor Dad, prior to that I really didn’t think I liked to learn or cared much about education and I realized it just, I hadn’t found a subject that interests me so I picked up Rich Dad Poor Dad, first book I ever read word for word cover to cover that I didn’t want to put down and shortly after that in 2003, I got deployed to Iraq for about a year and the whole time over there I’m telling all my friends all the guys has deployed with, I’m coming back and I’m gonna build this real estate empire and they kind of laugh and you read a book what makes you qualified to do this and I came back in 2004, bought my first house in 2005, I went to the bank at 2005 and that’s of course during the subprime. I had no job and the bank approved me for a loan, 100% financing
Rod: You could fog in the mirror. You could fog a mirror you could borrow money back then right
Gab: Exactly exactly and that’s what I did. And so that first house, I rented out two of the rooms essentially house hacked it and lived for less than I could live anywhere else and in 2006 I went back to the bank. I also opened up a nutrition store around that time. I went back to the bank and they approved me for another no money down loan and at that time I’m thinking this is easier than the books. This is this is too easy. 2007 I went back to the bank kind of the same thing but they said hey this time you need 5% down and I said hey that’s doable. Well now it’s 2008, by 2008 I shut my store down because it wasn’t making any money. My first son was born and I go back to the bank and said hey I want to get another one of these you know no money down loans and they said hold on things have changed a lot you need 30% down. You actually need a job and an income of some sort to qualify none of which I had and so I had to come up with something new. So you know I wasn’t college educated. I didn’t have a degree of any sort. So I took a bunch of jobs, help wanted ads on Craigslist and things of that sort and eventually ended up in a minimum wage job in a high school special education class. And about three months into that job you know and my heart goes out to those kids and that was not my dream job by any means. So about three months into that job I am literally cleaning up human feces that a kid had thrown around the stall thinking it’d be funny and I started thinking about my goals and I thought, hey I have to get serious about my goals and dreams of being financially free through real estate otherwise I’m gonna end up at this this job for the rest of my life. And so I spent the next several months every single day just searching for investment properties and had to find a creative way to finance those since I wasn’t banked financeable and I found a seller who was willing to carry the financing on two duplexes side-by-side. So it was four units and it replaced, it made almost to the dollar in cash flow and I was making at that job. And so I finished out that school year and I stopped working right then. That was about 11 years ago
Rod: And it’s been real estate ever since?
Gab: And it’s been real estate ever since yeah
Rod: Let me ask you a question. Let me ask you a question, do you think do you love real estate?
Gab: I love it yeah
Rod: Yeah and I think you know the truly successful people, and guys if you’re listening, if you don’t love it for God’s sakes learn to love it or go find something else to do because life is too short not to do what you love. Well so let’s talk about seller financing. I know that’s a topic that you’re, a conversation you’re really good at that’s strategy so let’s talk a little bit about seller financing strategy if you don’t mind. Let’s go deeper on that
Gab: Sure yeah for me was really out of necessity and so I had I read something casually about like hey if the bank says no, there’s other ways to purchase property. I read about hard money and private money. I didn’t know anyone with money at the time, didn’t have anyone within my circle and so I thought, hey what’s the seller financing thing and I started researching and so what I did, I ended up getting on Craigslist every day and I would type in keywords like seller financing, owner financing, and owner carry, seller carry, and most days things didn’t pop up and I just did this day after day. And what I found was there was an ad and a woman was actually advertising seller financing because there’s a lot of advantages as the seller as well as the buyer to carry the financing. And so she was offering terms that seemed pretty pretty fair and I’m running through the numbers going, hey what am I missing? This is this is new to me what am I missing and as I really dug into the numbers, I thought this this will work and it did. I still own those properties today they’ve cash flowed from day one and it’s a strategy of continued to use so that was 2009 and so all of 2009, 2010, 2011, 2012, 2013, I started purchasing smallmultifamily properties. Two’s, four’s, 8 unit type properties with seller financing
Rod: Nice nice. So let’s go a little deeper okay because sometimes you know people are sometimes intimidated by seller financing. Now you know when in many cases it’s the absolute best solution for a seller particularly if they’re retirees you know I talk about this all the time you know if you find a property that’s owned by a retiree and you know it’s fully depreciated and you know if it’s a retiree they’re not going to take their money and put it into a high-risk investment. It’s gonna go in the bank and you can show them that he’ll you know the bank’s paying 1%, you’ll pay 3, 4, 5, 6, 7 percent and they only pay taxes on the amount they receive every year. It’s really for a retired person is the best way to go in my opinion. What do you think?
Gab: No absolutely. In fact every seller financing deal I’ve done is exactly that scenario. It’s men and women in their 60s and 70s, who have owned the property, it’s depreciated out, they’ve owned it, 30-plus years, they are really good people but they have self-managed, most of the time they’re burnt out, they’re tired of being landlord, they don’t want to lump sum of cash to go put in the stock market or to put in the bank or to actively invest. They want cash flow. They want that passive income and so I look for properties and still do that are poorly managed, under rented, and have some deferred maintenance so there’s upside for me but I’m able to solve a problem for these sellers. And so they’re happy to essentially become the bank. They earn an interest and they get a steady paycheck every month
Rod: Now listen you you’ve mentioned a couple things that I want to put exclamation marks on. One thing is you solve a problem and guys, the most successful people in the real estate business are problem solvers. They wear a problem-solver hat and they look to solve problems. So that’s clue number one from Gabriel here. The second thing is you made a comment that I let slide by and I don’t want to say every day you were in Craigslist looking for things. Guys, if you’re willing to do what others aren’t, you’ll be a success. And that’s an example of that. Awesome I love it. So let’s talk a little bit I mean I know you’re in the you mostly in the smaller multifamily correct? you know plexes, what’s your largest?
Gab: Correct. Well I’ve moved into some mobile home park space okay. And so my larger units are in that space but as far as the true multi-family. I have some mixed use multi-family stuff that’s 15-20 unit
Rod: Okay there you go okay and so I think we talked about seller finance strategy. Did you want to add anything to that or was that pretty much it?
Gab: No, the other thing I would say is when I first started buying these properties with seller financing originally I thought, oh my gosh I have to go educate you know everybody on why this is such a great scenario because these sellers were walking away happy. I was happy. It was that true win-win and a question I get asked more often than not is how do I talk a seller or convince a seller to carry financing and I never, I’ve never had to do that. And so one thing I think it’s real important that’s really helped me is rather than trying to educate the entire population of what seller financing is, if someone’s in their 70s and they’ve never heard of it and it’s a new topic it could sound very strange and so rather than trying to educate people on what seller financing is, I decided I would spend my time energy just getting in front of enough sellers that already knew what seller financing. And then the conversation was more about, hey what are the terms? because a lot of these people have either bought with seller financing or are already comfortable or have done it before and they already understood the advantage. So I wasn’t having to explain or talk them in anything
Rod: Okay well that’s you know and that said it still doesn’t hurt to have to be able to have that you know in you know in your pocket if it pops up and really it’s really just showing them in dollars and cents hey take your money from this deal, you’re gonna end up 70cents on a dollar once Uncle Sam takes their chunk. You put that in the bank, here’s what you’ll make in cash flow okay. Now if you work with me, I’ll give you a down payment so you know I’m serious and I’ll pay you 4, 5, 6, 7 percent interest and you’re only going to pay taxes on what you receive every year. So here’s your payment from me, three or four times what you’re going to get from the bank. And so you know it’s kind of an easy conversation candidly but another thing I want to ask you about that I speak about, that I’ve utilized when I’ve done seller financing is seller bonding you want to speak to that at all?
Gab: I’m not super familiar with that
Rod: Okay that’s the term I used for working on the relationship first, the property second, particularly with elderly sellers, how you build that relationship, it’s not about you know a slam-dunk sale, it’s about building a relationship. In fact I think you have an example of one that you built a relationship ended up with a property after like 10 years or something
Gab: Yeah several examples of just how important relationships are and in fact a lot a lot of times when I’m talking with a seller I’m not I’m not taking the approach of some hard salesman. I’m going in there finding out if I can give them as much as what they want as possible and make the deal work, I’ll do that. And that’s the good scenario but I have a couple examples. The first different than what we talked about before but the very first person that I ever paid off when I refinanced out of the seller financing, the seller got a pretty good lump sum and she said to me and we had built a relationship over the last several years and so you know she was happy with getting that monthly check and I’d made payments on time every month and so we built up a good a good relationship there but when I paid her off she said, hey what am I gonna do with this cash? And I very casually said, hey you can lend it back to me on a deal and she kind of laughed thinking I was joking but a couple months later, she realized well geez I don’t want to go put this money in the market. I don’t want to go actively invest and then she called and said, hey are you serious about borrowing that money on a deal? And I said absolutely and because we’d already built that relationship and that trust she felt very comfortable lending now and essentially becoming a private money lender on several more purchases
Rod: Sure yeah that’s awesome right there. Awesome example awesome example and I did the exact same thing. So I loved it great example. So yeah building relationships, so you know I know that’s a topic that you take very seriously which is why you’ve had so many seller finance deals and you know I basically from stage talk about seller bonding but it’s the same thing. You’re building a relationship, you’re focusing on the relationship first, and I’ve done phenomenal deals seller financing nothing down you know in fact I had one where I didn’t make payments for a year because I said listen I got to put the money back in this property cuz you know it’s a piece of you know what and yeah it was a truth and I bonded with them and so I did it and that’s the that’s the beauty of seller financing. But I want to circle back to something else you said you you said you want to try to get them their price. Well the beautiful thing with seller financing is you can pay more if you can adjust other things in the deal yes?
Gab: Absolutely. I found that sellers are usually stuck with a down payment interest rate or price that but never all three. And so for me starting off at a necessity, I did out of necessity, I didn’t have a large down payment. I didn’t have down payments so most of the deals I did from 2009 through thirteen were all no money and low money down deals. I would give the seller a fair price but the terms were really good and I’d rather get an okay price with great terms and a good price with bad terms and so and that’s the key I mean you mentioned you did a deal where there was no payments for the first year. There’s not a lot of banks that are gonna say okay to that but that’s seller financing, that’s as creative as you and the seller are willing to get and so that right that’s the beauty of it right there
Rod: Love it love it. So let’s see, let’s move, let’s talk for a minute about are you still buying actively buying right now?
Gab: Yeah I am actively buying. My most recent purchase was what we had talked about earlier I could going back to how important relationships are. So there’s a developer in town and I in about ten years ago I just I really admired his work. He was just building these new beautiful modern buildings and I had reached out to him simply because I admired his work and I wanted to know who was this guy, what’s his story, how is he building these things. And so I reached out, we sat down and we stayed in contact over the years I mean maybe met up you know once a year and I was watching what he was doing and he was paying attention to what I was doing but the importance of the relationship and really I went into that I wasn’t trying to get anything from him. I wasn’t trying to sell him anything or buy anything but about a decade later, he reached out and said hey a friend of mine is selling a single-family home the town over, are you interested? And I said you know I’m really not looking at single-family home what I’m looking for is value-added multi-family and value add mobile home parks and letting him know specifically what I was looking for his response was, hey I have a mobile home park and I said would you be interested in selling it? He said absolutely. I said, are you interested in seller financing it? He said, absolutely. And it just goes back to you know ten years before, I had no idea he was gonna sell me one of his properties and it just a true a true win-win he’s you know he’s a sophisticated investor but his time and energy is on building A class you know property. So the mobile home park
Rod: Will be an albatross right, maybe a screw around his neck you don’t want to screw with it he’s gazing back doing bigger things
Gab: Yeah exactly
Rod: Love it love it. Listen, you know it’s funny I just interviewed a friend of mine, Glenn Gonzalez and it’s very almost identical story bigger numbers but 10-year relationship with a guy did him right and he ended up buying 1,700 doors from him and it’s like you know the power of relationship. I love it. So let’s talk for a minute and now you also and by the way guys you’re thinking why are we talking about this for duplexes, triplexes, four-plex, 10 units, mobile home parks, guys, I’ve you know one of the people in my mastermind who I walked helped through a couple of larger seller financed deals you know has 500 doors now. These are larger deals you can absolutely do it on larger deals as well. So that’s why we’re talking about it. But let’s talk for a minute now about time freedom I know that’s something you take very seriously. So why don’t you talk about what that means to you and how you’re creating it
Gab: Yeah I felt like the idea around time was just in time freedom was just not a conversation that was being had. And so early on in my investing career, I was really focused on the money and building wealth and as I got a little deeper with myself and this is some self-reflection and why I wanted to be wealthy? why I wanted to be financially free? what it really came down to was I wanted to own my time. I wanted to do what I wanted, to do when I wanted, to do it how I wanted to do it, I didn’t want to boss. And I would get in conversations with people and often successful people that were building you know these big businesses and it almost always came back to time you know they were invested in real estate because they wanted more time with their family or they wanted more time to focus on their health or they wanted to contribute and give back to the community in some way and the money, you know nobody I met said hey I want to swim in a big pile of money, it was all tied back to time and whatever he could do if they had exactly freedom of time you know and so and I’ve watched people build businesses that actually have done the opposite where it takes so much time away and so I just think it’s important to kind of have that in your mind of you know asking yourself on even a daily basis, how does this activity truly affect my time? is this giving me more time freedom? or is this activity actually taking time away from the reason I was building this in the first place?
Rod: Right and then you look at it one step deeper you might say, do I even have to do this, number one. Number two, can I leverage it to someone else? number two and you know and push things off your plate I’m in the midst of that myself personally right now like I’ve got an interview later today that I frankly didn’t want to do and I’m doing it and I should have said no and I you know I get interviewed on other people’s podcast probably seven or eight times a week now. And I need to say no more often as well. So this is resonating with me. Yeah now you’re obviously really healthy you’re really juiced and motivated talk about where you get your motivation from. I know you’ve got a wife and two boys but how do you stay pumped and motivated to keep kicking butt with this business?
Gab: Sure you know I continually just try to fill my fill my life with things that are meaningful and important to me. And so for me that is my family and my health and the building wealth and you know contributing in some way. It’s why I like to go on these podcasts and it’s why take you know short video calls of people just you know I want to be able to add value in people’s lives make a positive change and that keeps me going
Rod: Love it man. Absolutely love it. And you know it’s funny guys you know I always do a little pre-interview before I bring somebody on and I say you know what’s your outcome for being on the podcast how can I help you? you know because we don’t really promote on this podcast he said he just want to add value and I’d really really admire that brother. So you know that’s really dear to my heart as well
Gab: I appreciate that thank you
Rod: Yeah I know it’s the truth and that’s how I try to operate as well and you know it’s just. I will tell you, you know when you operate from that place of giving and trying to make things better, power moves to you honestly the way God to universe whatever you believe works and so you know it really is is you know it’s altruistic but it ends up benefiting anyway you shake it. Now let me ask you this, what’s your what’s your favorite quote?
Gab: Gosh my favorite quote, there so oh my gosh so many so many quotes today that I love. The first one that came to my mind was, “Whether you think you can or you can’t, you’re correct” I love that one gosh I don’t know
Rod: I don’t put you on the spot. I didn’t prep you for this. So let me ask you this you know and I love asking this question, you know I know you’re 37, if you went back and told your 21 yr old self with what you know now, real estate specific, what might you do differently or tell that younger version?
Gab: I’d say build more meaningful relationships and so you know I think early on I felt very much like a lone wolf. I didn’t know anyone that was doing it and really lived a fairly private life as far as what I was doing. I didn’t really share with a lot of people what I was doing and I and I realized other people in the space, I can’t look at them as competition you know you can learn from people. I think it’s important to get around people that you can learn from, that you can teach, that helped motivate you and keep you accountable. And I think that’s really important just it goes back to the value the value of relationships
Rod: Love it and you know I do sold out live events all over the country. We’re doing about for a year now. We just had a big one in LA six hundred plus people and the next ones in Orlando and I get people coming back and back like two, three, four, five times to my events because this business is a team sport it’s all about relationships and you know there’s more people on the hallways sometimes than there in listening to me which you know is it’s a great thing honestly because really this business is a relationship business. And so I love you know being able to facilitate that. It was absolutely, I got goose bumps walking through the hallways at my LA event because I’d never seen so many people networking in groups of three or four. It was just freaking awesome
Gab: So the conversation is really high
Rod: Oh yeah and people rave about it. I mean that’s one of the big pieces and by the way guys it’s rodinOrlando.com and we are selling tickets like crazy so it will sell out we had to turn people away in LA so and it’s still early bird pricing – depending on when this airs it should still be early bird pricing likely because this will they’re pretty quick. So let me ask you this, why do you think people fail to succeed in real estate?
Gab: Yeah I think it’s fear. I think people that fear hold them back. So I think you know, I talk to a lot of people that have that that initial desire. They want to do something. They want to make that change. They have the desire but I think the important part is the execution. So we all get that taste of want and desire or this dream but I think the taking the action part is the important part not letting fear hold them back from doing what they really want to do
Rod: Yeah I spend quite a bit of time actually at my live events on this. We have a limiting beliefs exercise. We have a lot of work around, of course goal setting around creating an identity that you want to aspire you, to pull yourself into, and fear is a big one. You know fear or limiting beliefs. So many people walk around with them. Well listen brother, I really appreciate you being on the show and where your hearts at and it’s a real pleasure to meet you and I hope we stay in touch brother. Thank you for being on the show
Gab: Yeah absolutely. Thank you for having me on. I appreciate it
Rod: Absolutely brother. Take care! See you
Gab: You too. Have an amazing day thanks!
