Home Inspector to Real Estate Millionaire By 27 with Tommy Harr

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. Brought to you by the HubSpot. Podcast Network, the audio destination for business professionals with great shows like Sales Evangelist. Today, we'll be breaking down how a home inspector became a real estate millionaire by 27 years old. To drop these value bombs, I am brought to Tommy Haar and to EO Fire Studios. Tommy is now a 29-year-old home inspector turned real estate investor. And by the time he was 27, he was financially free and a millionaire through real estate investing. So Fire Nation, we will be talking about the best way to get started in real estate.

0:40We'll talk about how interest rates are impacting rentals, but something to think about in this area. We'll also be talking about how to buy real estate without using our own cash and so much more. And a big thank you for sponsoring today's episode goes to Tommy and our sponsors. Marketing Made Simple, hosted by my friend, Dr. JJ Peterson, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Marketing Made Simple brings you practical tips to make your marketing easy and more importantly, make it work. A recent episode on whether vulnerability is a superpower in business is a must listen.

1:13Listen to Marketing Made Simple wherever you get your podcasts. Shopify is the global commerce platform that helps you sell at every stage of your business. Sign up for a$1 per month trial period at shopify.com slash onfire, all lowercase. Go to shopify.com slash onfire now to take your business to new heights. Tommy, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. What's up, Fire Nation? Tommy Haar, 29 at Columbus, Ohio. Something that people don't agree with is entrepreneurship takes a lot of time, a lot of effort, and just is harder than most people expect.

2:01So not often shared on the internet that way. Well, Fire Nation, that might surprise you coming from Tommy's mouth, considering the title is Home Inspector to Real Estate Millionaire by 27 years old. But I'm telling you, there's a lot of hard work. There's a lot of grinding. There's a lot of time put into where he is today. And there are, Tommy, a lot. And I mean, a lot of people in Fire Nation who have been interested in real estate for years, but they simply don't know the best place to start. So I want to break it down right now. What is the best way to get started in real estate today? Yeah, so the best way to get started in real estate, it obviously comes from where you're at monetarily too.

2:39So it's a balance of time, how much time do you have, how much money do you have, and what does that look like? So the best way, in my opinion, to start is what's called real estate wholesaling. So basically, it's a sales and marketing business, and you're looking for houses. So if you're driving down the street and you see a house that's boarded up, beat up, that person may want to sell and at a discount. So what you do is you put that house in contract, you sell it to another investor, typically for cash, and you make that middle money right there in the middle and you never own the house. So it's a great way to get in, a great way to build a business and create some active income to be able to buy real estate in the future.

3:16Now, let's not get too detailed here because we have a lot to talk about today, but walk us through your first ever wholesaling deal. Tell us from knocking on the door to the conversation, to the contract, to finding the investor, to the sale, the profit. Let's get into some details there. Yeah. So the first one that I ever did, so I probably stumbled around it for at least a year before I actually closed my first wholesale deal. And this was 2018, 2019, maybe. The texting services were brand new. So mass texting. So basically what you do is you pull a list from online so you can buy a list of public record data.

3:53And a big one is like absentee owners or high equity, meaning they own the house, but they don't live in the house and they have equity in the home, meaning they can sell at a discount. And I sent out mass text to that entire list. So I got their phone number, sent the text out. The seller came back and said that they were interested, ended up walking the house, putting the house in contract for$80 ,000 after some negotiations. What did they want initially? I think they wanted like 120. So 120 and then just talking them through it and showing them what was wrong and just reasoning with them after a while.

4:24Now, did you know how much they were into it? Like, did they owe any money? Like what did they, had they bought it for? Typically you will ask that, but I was so new at the time. I didn't even know to ask that question, but yeah, that's typically one of the first questions you ask is, Hey, do you own this free and clear? Do you have a mortgage? What does that look like? Got it. And so then what happened at that point when you got it down to 80, how'd you find a real estate investor? Yeah. So I was going to meetups there. So there's real estate meetups in every big city. If there's not one in your city, I highly recommend you making one.

4:53And it's just one of those things where entrepreneurs like to hang out with each other and talk about money, talk about business. So through those and also through Facebook groups, that was a main way to find my cash buyers at the time, was posting it right in a couple of Facebook groups. And I found my buyer right there. Fire Nation, one thing you just need to understand at the core is this. People that don't have money typically have time. And people that have money typically don't have time. So that's why you can use that arbitrage when you're at one of those ends of the spectrum. If you don't have money, your time is what you need to use that's valuable.

5:32And that's why when Tommy put in all of this grunt work and footwork and found a person and had the conversation and got them down to$80 ,000 and did all that work, that was time that a rich person or a person with a lot of money is not willing to put in because it's not worth their time because it's going to lead to a lot of dead ends. And so Tommy put in the time, sniffed it out, got the ball rolling, then found somebody with money. And he's like, you know what? I am going to pay more than Tommy put this on a contract for or had agreement to because there was a lot of my time that was saved and Tommy's effort that went into that.

6:10And then you can leverage that. And so at some point, Fire Nation, you flip the script and now you're Tommy who's a millionaire at 29 years old. And guess what? Now he's the person that can kind of go and have other individuals put in that grunt work. And he can kind of say, okay, now I'm going to take the deals that make sense that people are bringing to me in this scenario. So there's a lot of exciting things there. Anything you want to add to that, Tommy? No. So it's just kind of what I said in the beginning. It's all a factor of, do you have money or do you have time? Because you typically don't have both and you need to figure out which one you are.

6:43So if you have a really good job and you make a lot of money and you want to buy real estate, wholesaling is probably not for you. So you need to seek out those people that are going to do the legwork for you and you're paying for a service just like anything else. Interest rates are making everything a little more interesting these days. And I mean everything, not just real estate, but a lot of things. So let's dive into it. Can we still buy rentals with interest rates today? The big thing about this is everybody looks at real estate in terms of cashflow. So are you buying an asset today that's going to spit you out more rent than you pay your mortgage.

7:14Let's say you get a mortgage for a thousand bucks and you get$1 ,300 in rent, you're going to be cashflow positive a little bit with interest rates going up. Let's call it in the seven, 8 % range. It's dropped a little bit here towards the end of the year, but that's just one factor of buying real estate, specifically rental properties. You have great depreciation, so you can write off the income to your taxes. You can also get the appreciation long-term. And then lastly, with the interest rate situation, if you have enough equity, if you buy that property right and fix it up a little bit, if you have 20%, 25 % equity day one when you refi, you can refinance that property again in a couple of years and create your cash flow.

7:55So a lot of people don't think of long-term, but it's an investment. It takes a long time for these things to actually realize. So let's again kind of go through maybe a little mini example that maybe you've seen recently because these interest rates right now are just continuing to creep up. Maybe they're flattening off. Maybe later in 2024, they will start dipping down. But what does that look like on a real-world example? Yeah. So a real-world example, a couple months back, we bought a house in Columbus, Ohio for$80 ,000. We spent three or four months getting a non-paying squatter out of the house.

8:31So I took a couple months of holding time. But after we got them out, we spent about $30 ,000 in rehab. So we're all in about 110, let's call it 120. And let's pause right here for a second. So I know every state's going to be different, but what was the specific process you had to go through in Ohio to get that to happen? So basically you just go through basic eviction things. You put a three-day non-payment notice on there. You send that to an eviction lawyer. They'll file all the paperwork in the process for you and they'll kind of give you updates as you go. So I would highly, highly recommend And if you are managing your own properties, just get a very, very good eviction attorney on your side.

9:07And they'll kind of walk your step-by-step, hold your hand through the entire process. Got it. So you got the person out. Keep going. Yeah. So we got the person out. We put about 30 into it. So we're all in about 120. That property then appraised for$195 ,000 and we have it rented for 1600. So we have it stabilized. We have the equity. And now we're getting a refinance on this property. and I think the interest rate we got was 9.125%. So very high, not great, but we have that equity in that property. I think the payment PITI is right around 1400 bucks. So not a home run by any means cashflow wise, but I know when these interest rates drop, I can refinance because I have the equity and create that cashflow long-term, but I have the equity.

9:55See Fire Nation, this is where you can really play the waiting game when you find the right properties, get it at the right price. And you know that, hey, when the time is even better in the future, because at some point, you know, everything is cyclical. What goes up will come down. What is down will go back up. This is a cyclical world that we live in. You can jump on the better opportunities. And then, hey, maybe you're going to lock in, you know, a four or 5 % interest rate at, you know, 15, 30 years, whatever that might be. And now you're like, okay, now I'm really sitting pretty on this.

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13:49And that one of the benefits of real estate is the leverage that you have and using other people's money, so to speak. Now, we talked a little bit about that before the break, where you were able to go in and even at a little over 9%, you were still able to get that interest rate and have a$1 ,400 loan on a month-to-month basis. But because of the equity you have as an appraisal 195, you know in the future that, man, you're going to be in a refi and be in a pretty sweet situation. So talk to us exactly how we can buy real estate without using our own cash. Because either maybe number one, we don't really have a ton of cash.

14:26Or number two, we don't want to tie it up. It's all lever, right? So if you use your own cash, you can, I'd say you have a million in the bank. That can only buy you maybe two or three properties at a time in Columbus, Ohio. Columbus, Ohio is not an expensive market. So being able to find really, really, really good deals and give that opportunity to somebody that has money, whether it's in a 401k, self-directed IRA, you can get a home equity line of credit, cash, whatever it is. So let's take that example I just gave you to$80 ,000. I could have bought that with my own cash, but we took it to what's called a private money lender.

14:59They lent on the purchase and they also gave us the renovation of that property. So they cut us a loan day one of$110 ,000. And what we did is we went off to the races, we fixed it up, and then it was worth 195. So it allows you to scale your business efficiently, effectively, and not constrain your cash reserves. And also at the same time, it gives you predictability. So being able to, as long as you can find really good deals and underwrite them properly, it's pretty low risk on that end. So that allows us to do 15 or so, maybe 20 of those at a time, instead of using our own cash and being tapped to two or three.

15:38See, Fire Nation, this is what can happen when you have the experience, when you know the process, when you know the steps, which is why we're having this conversation. Let's dive a little deeper, Tom, because I'm just curious, what would you want Fire Nation to really know around this topic, especially if they're in that camp where they're like, hey, I agree. Maybe I do have one or$2 million, but I don't just want one or two properties. I want to really leverage that. Or I don't have that much money at all, but I really want to start getting into this game. So at the end of the day, there is risk involved.

16:07So it's an investment. It's an investment for the person. So you have to understand nobody really cares about what's in it for you. You have to explain to the lender what's in it for them. So the biggest thing for them is that they're secured by a real tangible hard asset. They're not investing in stock. They're not investing in crypto. They're investing in that individual property. So what we do, let's go back to that $80 ,000 example. I took it to a guy I met through networking. I gave him a note in a mortgage, a Cognovic promissory note. So basically I'm signing personally on this property and I'm signing as my business and I'm putting a mortgage on that house that ties him in first lien position.

16:48Meaning that if Tommy Hard goes belly up bankrupt and whatever may happen, which is all possible, right? Because it is investing, then he has first right of refusal for that property. So if I don't pay him back, he forecloses on me and he now takes back the asset and it's discounted because he can also review and underwrite that deal as well. It's not like valuing a stock where nobody knows what they're looking at. It's real estate. Everybody knows somebody that knows how to evaluate real estate. So that is what's in it for them. And they make double digit returns. So we're paying anywhere from 10 to 14 % annualized returns on these investments.

17:25Fire Nation, I hope you're starting to understand that this at the end of the day is a game. It's an investment, it's risk. It's a real game, but it's a game you can play when you know the rules that again, could end up going against you, could end up going for you. If you're willing to put in the work, you have a better chance of having the type of success Tommy's had, opposed to just kind of walking around blind, just hoping that everything falls into place. Now, you believe, and this kind of goes back to your experience, that by first becoming a home inspector, you were able to become a good real estate investor.

18:02Tell us more. Yeah, man. So I'm a big proponent on career capital. So what you do in the past is going to work in your favor or against your favor in whatever you want to go do. So I graduated college in 2017 and my dad's been a home inspector for 20 years. So I jumped into his business. He was a one man show and I learned how to be a home inspector. Now that's not the sexiest business. It's not the coolest business. You don't go around the bar talking to women and say, I'm a home inspector. And they love that. Right. So as time went on, I was starting to meet investors and I was seeing that they didn't really know construction, but they knew numbers.

18:38They knew how to find deals. And they were always coming to me asking questions about, Hey, Tom, like, what do you think about this? What do you think about this? So I was teaching them about some of the construction aspects as I was learning and I was giving, bringing them value. And in return, I was asking them what they knew. Right. So I was basically an old school, like, Hey, show me what, you know, I'll show you what I know. And that ended up making me an amazing real estate investor because we talked about wholesaling in the beginning. I got to meet all these wholesalers in my town. I got to understand their systems because I was now a piece of their system and their puzzle.

19:11So they were ordering inspections and I was that person. So I would go talk to the sellers, ask them how they put the deal together. And I was just asking a million questions. So learning that and then learning just sales. So my dad never had any marketing. He had never had any system, never was on Google. So at 22 years old, I just had to basically figure out how to grow a business from no backbone, I would call it, and just work my way up. So it was a mix of a lot of good things. Fire Nation career capital. I love that phrase. I hope you're really taking that in and understanding, hey, you have knowledge, you have skills, you have experience that you've acquired thus far in life.

19:50How can you, how will you use that going forward? Now, Tommy, we've talked about a lot of awesome stuff. Give us the one key takeaway that you really want to make sure Fire Nation gets from our conversation today. The one big thing that I tell everybody is, especially if you want to invest in real estate, it takes time and don't deviate from a bunch of different things. So if you want to wholesale, learn wholesaling, build it, build the bridge, don't quit before it's done. Because everybody gets on the internet, they see people like me posting, hey, you can flip, you can wholesale, You can do Airbnb.

20:23You can do multifamily. But you can't do all of them at the same time. You have to, have to, have to learn something, master it, systemize it, build a business, and put the right people in the place before you go chase the next big thing, right? So make sure you spend the time, the effort, really the time to build it and build it properly. Now, Tommy, Fire Nation has been taking notes. They're excited. They understand there's a lot of opportunity here. if they wanted to connect with you, they wanted to learn more from you, what call to action do you have for Fire Nation today? I post free content every day on my Instagram.

21:00I go live on Instagram every Monday. It's TommyHarr05. A lot of real estate content. So whether you want to flip properties, whether you want to wholesale properties or hold rentals, I give a lot of information on that. And then beyond that, I built a community of nationwide investors. It's called The Real Side of Real Estate. So a lot of people on the internet don't share the real side, I like to call it. So the failures, the hardships, the things it really takes to become an investor. And we're putting all those people with the same mindset in the same room to be able to learn and grow together.

21:33So if you want to join the community, I'd love to have you. And one more time, where are they going to go to find out more information? It'll be in the link in my bio on Instagram. So Tommy Har 05. And that's H-A-R-R, Fire Nation. and you're the average of the five people you spend the most time with. You've been hanging out with TH and JLD today, so keep up that heat. For links to everything we talked about, visit eofire.com. Just type Tommy in the search bar. The show notes page will pop up right there. And Tommy, thank you, brother, for sharing your truth, your knowledge, your value with Fire Nation.

22:06For that, we salute you and we'll catch you on the flip side. Absolute pleasure, brother. Thank you. Hey, Fire Nation, a huge thank you to our sponsors and Tommy for sponsoring today's episode and Fire Nation. Successful entrepreneurs accomplish big goals. That's why I created the Freedom Journal to guide you in accomplishing your number one goal in 100 days and we're talking step-by-step. Visit thefreedomjournal.com and I'll catch you there or on the flip side. Marketing Made Simple, hosted by my friend, Dr. JJ Peterson, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals.

22:41Marketing Made Simple brings you practical tips to make your marketing easy and more importantly, make it work. A recent episode on whether vulnerability is a superpower in business is a must listen. Listen to Marketing Made Simple wherever you get your podcasts. From their all-in-one e-commerce platform to their in-person POS system, wherever you're selling, Shopify's got you covered. Sign up for a$1 per month trial period at shopify.com slash onfire, all lowercase. Go to shopify.com slash onfire now to take your business to new heights.