Learn how to become a real estate deal junkie with Phoenix, Arizona based real estate investor John Williams.
Investing in real estate is commutative and John’s advice is to learn from doing. Don’t be afraid to get you hands dirty and learn the business of fixing property from doing it.
Finding deals is hard work and requires the fine art of hustling. First, carve out a niche in your market and learn how to source off market deals.
J&J Real Estate Holdings is always looking to achieve a win, win for both buyers and sellers.
Real estate investing is not a “get rich quick” enterprise. You have to be willing to learn something new everyday and stay hungry. Cash flow is the name of the game
John started with one single family home in 2001 and has scaled to managing over 1200 tenants and multiple mobile home parks.
Grow into the investor that you want to become in a manageable level.
Having a team and a good partner is invaluable in the real estate game. John advice is to look for a partner who has the same core values, set some outrageous goals and go for it!
You must have two teams: Team 1 – The Outer Team or the licensed professionals and 2) Team 2 – The Inner Circle – all of the people who support your real estate investing business.
You have to be an early riser to get the deals and be successful. Work hard, be fair and have integrity.
John Williams / J&J Real Estate Holdings
The Real Estate Locker Room Show Podcast
JC 001: Confessions of a deal junkie with John Williams
Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his team as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level off with new place to grow your real estate business.
John Carney: Welcome back to the Real Estate Locker Room Show. I’m your host John Carney coming at you from Cleveland, Ohio and today on the line from Phoenix, Arizona we have joining us in the Locker Room John Williams. John Williams is one of the founders of J & J Real Estate Holdings. J & J is a Phoenix based owner operated real estate company specializing in long-term cash flow properties. They acquire and manage single-family homes, mobile home parks and apartment buildings. Through a proven acquisition strategy and sound management, J & J locates and transforms undervalued and distressed properties into rehabilitated assets generating recurring income for its partners. J & J’s strategy is designed to succeed despite an ever-changing real estate landscape generating maximum revenues in both up and down market cycles. Managing everything in-house from acquisition to operation, J & J builds equity and generates revenues for their company and their partners. With a proven track record of improving the communities where they invest, J & J continually increases the value of their portfolio. John Williams was born and raised in La Canada California, and he graduated from Loyola High School in Los Angeles where he played football and then at the college level he played for Cal Poly in San Luis Obispo. After graduating from Cal Poly, Johnny moved to Phoenix to work with his partner’s father, who had a pre-existing property management in real estate investment business. John learned how to manage and acquire houses, apartments, office buildings, industrial buildings and mobile home parks in the 2-1/2 years he was working there. He also witnessed just about every scenario that you could possible imagine in the property management business and, with this new found knowledge, Johnny set off on his own to get wholesaling houses and opened up one of the largest wholesaling operations in Phoenix. John has been involved in more than 1,500 sales/purchases of houses (he bought his first investment property in 2001) and has been a licensed real estate agent in Arizona for 7 years and in 2008 Johnny and Joe partnered up and they opened the door to J & J Real Estate LLC. So, John, welcome to the Real Estate Locker Room. How are you doing today?
John Williams: Great John. Thank you for having me. I tell you this is actually going to be an exciting show. For one, just how far you and I have come since we first met and I started. It is really exciting for me to see you come full circle and achieve the success you have and for us to both be here today swapping stories about our times.
John Carney: So, we can dive right into that. You know, just like before you get into any type of exercises scenario, I like to ask a stretching question just to warm up here. It is sports related of course, because we are going to explore that intersection of sports and real estate today. Who is your favorite athlete of all times?
John Williams: I’m going to have to say, Dick Butkus. Like myself, he was just a hard-nosed linebacker. He didn’t have the best talent, but he made the best of what he had. He wasn’t from a winning Super Bowl regime, but he took what he had. And he certainly was an unstoppable force the years that he played. I’m the kind of guy who likes people that make the most of their talents, and not those who don’t always have the most God given talent.
John Carney : Right. I mean you can’t always be the fastest strongest guy in any competition, but you can definitely work as hard as you possible can with what you have. Right?
John Williams: Absolutely. It is all about making the best of what you have.
John Carney: Sound advice. Can you tell our listeners how did you get started and why real estate? What turned you onto that?
John Williams: I always like to build things as a kid. Building was tangible and I could see the process from start to finish—whether it was building blocks or model kits. I knew I wanted to do something that would be hands-on but still retain that competitive nature with a team environment. Most of my friends and a lot of family members were in the brokerage business. Getting out of college I asked myself what I wanted to do and who I wanted to be? I didn’t want to trade time for dollars selling stuff for other people even though that’s a great business to be in. I just knew that I wanted to go where I thought the masses weren’t. I was fortunate enough to get an opportunity and was hired right out of college by one of my greatest mentors, “Big John.” Who moved to Phoenix to run his operation. Eventually he had a real estate company with approximately 2000 units. And just threw me into the fire, and it was trial and error, and then doing. So, it’s been a, really how I got started.
John Carney: You learned by doing. From some of our past conversations, I think it is great. I love the story that he had you working with the workers so that you learn the business from the ground up. Can you elaborate on that just a little bit?
John Williams: Yeah. You know, I tell a lot of people today that I contribute my success to those 2-1/2 to 3 years working with Big John and Ben and really learning everything from the ground up, as you say. I spent at least a day a week coming in in work clothes and working side by side with the maintenance crews, you know, turning apartments, turning mobiles. You name it, it has happened to me. From walking into an apartment that has been vacant for a month and having, I don’t know, 5,000 cockroaches fall on top of me in my hair and down my shirt. The not so pretty side to the business—I have seen it and done it. But really I needed to know all those things for me to be a better manager, owner, etc. I needed to know how many gallons of paint it took to turn an apartment. I needed to know how much time it would take these laborers and managers to do something. So, you know, I jumped right in and luckily was there the way that they kind of taught me was—you are going to learn everything about this business. And, really that is what I owe a lot of my credit to today.
John Carney: So when you were a young guns coming out of school, you were a linebacker playing at the college level and there is a certain amount of discipline that comes with maintaining your spot on the team. Did you tap into that—that discipline that you had growing up, playing sports, and, especially the college athlete once they put you to task in their business in Phoenix? Did you see a correlation between that sort of training—that physical and mental training and how you were able to thrive and grow a business that you have today?
John Williams: Yes, absolutely John. I think being in competitive sports, especially in college, but even more especially being a linebacker, it is one of those things where get a task and I turn it into a game to see how quickly, how good, I can finish the task and really just kind of be veracious out there. I would be on the field back in my glory days, which was a long, long time ago. But I find a lot of the real estate investors that I rub shoulders with are also former athletes themselves, because just have that competitive nature that really helps us thrive in this business.
John Carney: I think that you almost need to have that competitive edge right now, I would say, in this market. I just moved back to Cleveland as you know and everybody wants the same thing. Right? What is the brief when you talk to an investor? Does it go something like this. “I want the lowest priced property in the best area with the highest return for cash flow and capital growth.” Right?
John Williams: Oh yeah.
John Carney And so everybody wants that. And I mean it is a battlefield out there trying to get deals, at least here in Ohio.
John Williams: Oh I will tell you that is a dog-eat-dog world. But I will say that Maricopa County is probably one of the most cutthroat counties in the country as far as real estate. We have got some of the savviest investors. We also have probably the most sophisticated tax and data recording systems available, which also makes it the cutthroat market that it is. So, absolutely, everybody wants the best of the best of the best. In this business if you are not hustling, you are not getting the deals.
John Carney: So, what are a couple of good hustling tips We have some listeners out there that might be listening to the podcast, driving in their car or going for a jog and saying I want to get into this game. I am educating myself. Or they are already looking for that next deal and they have noticed that their market is now way more competitive than when they started out. What are some recent tips that you have? What are any strategies that you have come up with that are helping find those deals that your business and your investors love?
John Williams: I was fortunate early on to get a few good mentors that taught me the foreclosure, pre-foreclosure, distress seller and various others, including trusting salesmen. The typical investor is going to find a real estate agent, say go find me a good deal. They are going to go search online and figure out what they think is a good deal even though they may not be an investor themselves. And, really, it depends on the market you know. For example, right now, if you want to find a good deal on the MLS in Phoenix, you are really not going to find one. If you do, they are few and far between and they are being swept up by guys like me or even guys better than me who that is what they do all day long. So my advice is to really carve out a niche and that is going to be in the way you market yourself and to find these sellers off market. So, everything we do is off market direct to seller. Meaning I am not waiting for a seller to call an agent to list it to go on the MLS so I am free to serve everybody else. Most of our deals that we do are direct marketing to sellers direct. So we don’t have any competition or very little and we are able to negotiate much better that way and find the deals that make sense for us.
John Carney: To elaborate on that, talk about how that is sort of a win, win for everybody.
John Williams: It is a win, win for everybody. Going through the traditional selling of using agents, there is definitely ups and downs. But in those cases, there is a reason why the property is going to be below market value. And that is because it is either in need of repairs, the seller is in distress and needs money or there is a timeline involved. Because we are able to offer cash and that may seem pretty shaky because everybody says they are a cash buyer these days. But we offer them some other options besides just a low-ball cash offer. But in the end they are not paying real estate commissions, building cost repairs. We are not paying that either and we have a nice happy medium where we meet and able to get deals going much quicker because there are less people involved.
John Carney: Yes, and that is a good system that you have at J & J. Now, it didn’t evolve overnight. You touched on the fact that you had great mentors. But, let’s talk about the timeline. You went from working to your own wholesaling operations, owning your own investment shop with partners. For people starting out or just new to the business, you have to give them a timeline. When I talk to investors, people want immediate gratification. I say you can have a little bit at a time, but you have got to map out a ten-year plan and be consistent and be dedicated. So, could you shed a little bit of light on that?
John Williams: Yes. First of all, this is not a get rich quick business to be in. I moved here in November of 2001. So that took me almost 16 years of being in the Valley. I think I bought my very first house, which was a HUD repo, probably 60 days from moving here. So I was kind of just eager to get into it and, hopefully, had the partners that would provide the capital and I provide the knowledge, know-how (or so-called know-how as I was learning as I was going) and provide the blood, sweat and tears to get some deals done. And along the way I have learned a lot of things. You know there has been highs and lows. I have lost everything almost twice. Which really I figure was somewhat necessary. Failing to learn what you are not good at to fix it. So, yes, 16 years later I am here. We are still hungry and learning every day. And yes, it takes bumps along the way before you can really find out your niche and what you are good at and, yes, that is kind of the story there.
John Carney: So, what is J & J working on right now? What is the jump out of bed in the morning project that you guys have in your sights?
John Williams: You know, the funny thing is, my partner and I are both deal junkies and that is kind of what we live, eat and sleep is deals. So we look at everything. We are very fortunate that now we are to a point where we have a healthy base of over 1,200 tenants that we own and manage, so it gives us a little bit of flexibility to not—like in the early years, we were begging and borrowing just to pay mortgages, etc., to buy new stuff. So we have the flexibility there, but really we are looking for taxable properties. Our favorite asset class right now is mobile home parks. And that is probably just because what I started out in. My partner Joe, his father is huge in that and owns over 65 parks in Maricopa County and Pima County and Canal. And that is kind of what he was raised on and myself and we love it. We are good at it. Our team is good at it. We really just look for those and then everything else makes sense. A 150 house package came my way and, oh my God, that actually looks like it might work. So, you know, we get excited about deals when it makes sense.
John Carney: I understand on a basic level the mobile home park model. I am more through our family business understand multifamily apartment buildings. So that is what I am on the hunt for. But mobile home parks—it can’t be something where you wake up in the morning and say: “You know what? I think I am going to be a real estate investor. I want to buy a mobile home park”. You had mentors, but I am now hearing from more and more people about the mobile home park business. How would you get started in something like that—safely I suppose?
John Williams: Yes John. It is definitely not a business you want to wake up and just dive right into. There are certainly ways for people to get involved in mobile home parks right off the bat. And that is going to be your cleaner, nicer, probably age restricted parks, where really you are just buying a cap rate, not equipment. I am kind of putting a quarter in a gumball machine you are going to get out of return. Once again, we go with the masses that and we buy distressed parks, typically family parks. And these parks need work. A lot of time we become developers because we have to go in and rearrange the entire layout of the park—bathroom utilities, mixed tenants, which a lot of times half the park could be that. In our eyes, one rotten apple could spoil the whole bunch. It is really fun and no park is the same, but I can tell you that ours were just huge projects. My partner and I now still have two parks that we have never been paid a dime on because they are still in the rehab phase and some of these we have owned for 3-4 years and that is just the name of the game. We are willing to sacrifice now and not make a penny for years to know that someday that is going to be stabilized and that is going to be paying a monthly check to our mailbox no matter what.
John Carney: Just throwing off to cash flow.
John Williams: Absolutely. You know, just to go back to your question about how would somebody get started? I would suggest breaking it down to a micro level and just buying a single manufactured home. There are deals out there. One of the first videos I ever watched back in 2002 was a guy, Monty Scruggs, Deals on Wheels. You can buy homes that are in existing parks and you can basically sell those to new owners, create some paper, get a few of those, collect down payments on each, get a few of those and then get yourself an income stream. You can even go on further to buying your own lots and putting a manufactured home on it and either keep it is a rental or sell it on terms. But I would say those are two good ways to get started at the micro level and then kind of build from there. Looking back at our experience, everyone we started from was one house or one condo and then turning it for one 4-plex and selling that and moving up to an 8-plex and then a 32-plex. I just recently sold a 32-plex for a $900,000 mobile home park. So, really it is just a natural progression and once you feel like you have mastered a certain area of expertise or at least got really good at it, they you move onto the next. And you keep growing and just building your game.
John Carney: Sound advice. Growing into the investor that you want to be at a manageable level. Something I talk about and that comes up in just about every episode. We talk about the team and critical players, but would you say, you talk about your mentor and you have a business partner, Joe, and you guys both work well together. Would you guys say that it is the two of you working together? Can you talk a little bit about the value of partnership and shouldering the responsibility with someone who has a little bit different skill set but the same passion for the same mission.
John Williams: Absolutely. Having a team and a good partner is invaluable. I would not suggest anybody going out there and trying to do this on your own. While you may feel that you are making the entire pie, I can tell you that you will be left out on opportunities, as well as, who wants to be on top of the mountain by themselves. So, yes, I have had numerous partners over the years. Without really giving much thought about why we are getting into partnership with that person, just to find out whether it was eight months or a year later that it didn’t work. My advice is that you really have to look hard at the person who is going to be your partner and make sure that you both have your core values and both of your expectations are on the same page. And if you can find a partner that does work well with you, then stick with it and set some really assume crazy goals and just go for it.
John Carney: Absolutely. And I think that part of the experience, part of the real estate game, so to speak, is about fine-tuning your team over time and finding good partners. You have got to have them. I can’t say that anything you do in life, especially in real estate is going to work out the first time. But once you do find those people that you can build long-term relationships, my experience is that it has been golden. I always like to sit back and review any type of business relationship that didn’t go to plans. Those are lessons that you take with you and, obviously, apply as you move forward. I don’t expect it to happen, but I have got a better system personally for evaluating who you are going to be spending a lot of time with. Right?
John Williams: Yes. And there are two teams. The first team is going to be all your license professional vendors that you need to have in your corner to make you successful, which is your title agency, your contractors, your realtors, etc. And then there is your inner team which is even more important and finding out what everybody’s core competency is. I can tell you right now that we have been able to develop this great relationship with people who we have done business with for years and, for example, the new partnership we have for our wholesaling business is a guy I have known for many years. You have met him John. He works and he sells properties. So, good. Partner, you take over that side of the business and we will fill this in on acquisitions. We get deals giving you sell and we are back out there looking for more deals. Strategic relationships like that really allows us to leverage our time and knowledge and really exponentially grow.
John Carney: That is sound advice John and thank you for pointing that out. It is combining skill sets. I have never thought of that in my notes here. You kind of have your first team, the licensed professionals, and the outer team, the second team, the inner circle. That is a great way of looking at it. I have never thought of that before. Gold! All right, let’s get into what we are calling the fourth quarter questions. What sport did you love playing as a kid and what lesson did you learn from playing that sport?
John Williams: My siblings and I were very fortunate that we played all the sports growing and nail it down to football, basketball and volleyball in high school and track. And then to football in college. I would say football was my favorite and the lesson I learned is I wasn’t very good when I first started and I was timid and shy and I got the crap kicked out of me a few times. The lesson there was to get the heck up and get after it. You know what, it doesn’t matter if your opponent is bigger, stronger, and faster, you can always find a way to overcome and that was part of the biggest lesson for me.
John Carney: Love it. What sports do you participate in today? What are you doing right now? You are not padding up and going and playing tackle football on the weekends are you?
John Williams: No, far from that. I am lucky if I can do much these days. I have a pretty beat up body from my years of sports. So really, I like work with a personal trainer, which has really gotten me in better shape so that I can lead a normal life. Definitely coed sports and weekend sports is out for me and I spend my time playing a little bit of golf, swimming, and I am really enjoying the outdoors more so than sports these days just because of all my former injuries.
John Carney: Gotcha. What is your favorite book—what book do you keep coming back to. Or have you read something recently that you are telling everybody about. What is on your shelf?
John Williams: I am not a huge reader. What can I say, I love pictures. I have read all the classic real estate books, Think and Grow Rich, The Richest Man in Babylon. I will tell you a few that I just recently bought and I just got into. I am pretty excited about them just because they were referred to me by some other real estate entrepreneur real estate friends of mine. One is “Secrets of the Millionaire Mind” by T.R. Becker, and that is really just kind of mastering the inner Zen as well. I like it so far. I just got into it. The second book I am reading is called “Flection” and this is basically a book for improving your systems in business and really getting a grip on your business. That is kind of what I feel, where we are today. Now it is time to look at all of our systems and strategies and team and figure out how to get us to the next level.
John Carney: We are all about the next level. Leveling up. So, real estate is a business where they have one or ten thousand doors. That is how I look at it and I know you look at it. Whether you are looking at entrepreneurs for motivation or athletes for motivation or anyone for motivation is there one quote that resonates with you that you look to for motivation. Especially when you get that call that the new house you just renovated is flooded. What are you thinking?
John Williams: I just read a quote yesterday that said something like that. Some people wait for quotes to get them motivated. The rest of us just go out and do it. I love quotes. I get a thought of the day every morning and those just get me going. One of the quotes that I would say epitomizes what we do in real estate is “Good things come to those who wait, but only things that are left by those who hustle.” [Abraham Lincoln] Right there, you can sit back and wait to get some stuff, but only after the stuff that I left behind because I was hustling. That motivates me because the sky’s the limit in real estate and it is just a matter of how hard you want to push yourself, how hard you want to work, how many deals you want to do, how many houses, how many properties do you want to own? You just get to go out and hustle. As much as we want or as little as we want, depending on what we are up to.
John Carney: So, just like playing a team sport or individual sport, I personally love the come from behind victory story. Could you share a quick one of those?
John Williams: Yes, this wasn’t so much as a come from behind as thinking it was going to be a disaster to turning into a huge success. In 2009 when the bottom dropped out of the market and Phoenix, the apartment market truly failed the day after. And the first 4-plex I ever bought, John, was a boarded up 4-plex in downtown Phoenix. Not a very good area, was boarded up and I bought it for $24,000, which was $6,000 per door, which was ridiculous. I am sure it was probably one of the cheapest 4-plexes I bought that year. I bought it thinking the building was great, it was so cheap, and then coming to realize you get what you pay for. We unscrewed the plywood, broke into the thing, there were no keys, it was uninhabitable and realized the cost that it would take us to get where it needed to be to rent it out. The funny part is once we got this place rented out, the type of tenants we were attracting were the worse of the worse. We were actually threatened to be killed by our tenants, which is kind of a funny story. We didn’t get hurt, and we ended up buying the next three contiguous 4-plexes, packaged them all up, put a wall around them, kicked out everybody bad and what we thought would be a quick flip we just sold this last year and we made a huge profit and exchanged that into a new mobile home park which is going to net us thousands of dollars a month. It was a great story where we thought we picked a lemon, stuck with it and it turned out to be one of our huge successes.
John Carney: There you go. That is a great story. Thanks for sharing that. We have to stick with it to get across the finish line. Lots of obstacles in the race. Do you have any habits or anything you do to train for success? We have talked about reading books or listening to books on tape, but is there anything that you think is important when you are running a business and you are investing in real estate to kind of check out for yourself and/or get into that flow state where you are really focused.
John Williams: That is one of those questions John that we could talk for hours on and what is going to help in your success. But, as far as habits go, it is the little things that you do day in and day out that is going to bring you success. And that is getting up before the competition because I don’t care who you are and where you are, there is always somebody that is getting up earlier, sending out more letters, and going house to house knocking on doors. Someone is going to be doing something bigger, better more of them than you and trying to steal your success and your deals. So, it is really the little things you do. Really, we try to be fair and try to be very interested in our team, in our co-workers and even our tenants. We want to make sure that everyone is happy, and this goes back to the more you give, the more you get back. So, really always be willing to have a vested interest in others and their success and that will come right back to you tenfold.
John Carney: Perfect. More great advice from John Williams—waking up early. You have to be an early riser to get the deals and get your hustle on. We have said it before, it givers gain. Be willing to give something to others and not expect immediate gratification from that. Be an all-around good guy, right Johnny.
John Williams: Absolutely. You have got to be a good guy. I would say integrity is the number one thing you need in this business starting out. As you know, relationships are what all this is about. If I didn’t have all of my contacts through all the years I wouldn’t be where I am. All you have in this business, especially starting out when you have nothing, is your word and integrity and that is what helps you build those relationships.
John Carney: Alright. Well, thanks so much John for taking the time to join me in the Locker Room today and share those gold nuggets of advice with our audience. Where can people in the audience find you to carry on the conversation online, social media, website. Where can we connect with you if there is someone interested in learning more from John Williams.
John Williams: We do have a website, jjrealestateholdings.com. Don’t judge us by our website. It is really not finished. But, now that you mention it, we probably should get on that and seek out some other relationships to help us with that business that we are week in. So, I would say jjrealstateholdings.com. We have a bunch of other exciting new things we are working on in building a new company with some new partners, with real sale houses and Chris Simon which we will eventually have on the website.
John Carney: There you have it, to connect with Johnny and J & J Real Estate, look up there website which will be listed on the show notes, iTunes and my website. There you have it folks. I truly hope you picked some actionable advice from Mr. John Williams today. Make sure to check out the post-game report on I-Tunes and while you are there, please subscribe to the Real Estate Locker Room show to insure that you never miss out on the pro tips from our guests. The mission here is to help you elevate your real estate game. If you like what this show is about, I would be grateful if you would leave a 5-star review on iTunes so that other like-minded real estate investors can find us easier. Visit johncarneyonline.com for links and additional content associated with today’s show. While you are there drop your name into our e-newsletter sign up form so you can keep in touch with us and receive more real estate investing insight, tips, tricks, hacks and other good stuff. Remember to stay focused on your goals, have fun, stay in the game. I am your host John Carney. Until next week, work hard, play hard and profit hard. Thank you.
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