Ep. #17 - My First New Build House (Ground Up Construction On An Existing Lot) In Partnership With Garrett White

Intro...

Okay, okay, okay, today’s episode is not just about my first new build, but this is also the first episode of the Podcast with a guest. I know I've been saying that I will have guests on this show for a long time – since the first episode – However, forgive me, I've had a lot to say. My guest today will be my business partner in our first new build endeavor together, and he is a real-estate investor himself. His name is Garrett White.

Welcome to Episode No. 17 – My First New Build House (Ground Up Construction On An Existing Lot) In Partnership With Garrett White.

As you know, Blue Chariot is many things; Blue Chariot Properties, Management, Realty. This Podcast is brought to you by Blue Chariot Media, where there’s also Blue Chariot Homes, which is a partnership between me and my guest today, Garrett White. Blue Chariot Homes focuses on wholesaling, flips, and now new builds; basically aspects of real-estate investing where you typically buy and sell the property in under one year, which is considered a short-term investment.

Now, you know, I'm a buy-and-hold guy. I like rental properties, so, flips and pretty much selling anything is against my nature. But I'm not a fool. I fully realize there’s money to be made in wholesaling deals that are not right for long-term hold as a rental. And I know that it makes perfect sense to sell a home when pretty much it’s certain to sell quickly for top dollar, thereby creating more cash to buy more rentals, like sell one, buy three. But my primary focus is, and always will be long-term rental properties. So, I partnered with Garrett so that he can focus on short-term properties. This is great, as it allows us to leverage the same tools, systems and processes to acquire the properties, and then only what happens post acquisition is different.

Blue Chariot Homes is our partnership for short-term hold properties. And we’ll certainly come to own long-term rental properties together, eventually, as well. Garrett is also working with me on my latest endeavor – Blue Chariot Management – that I announced in Episode 12.

So, joining me on the show now is Garrett White. And like myself, Garrett has a business outside of real estate. Mine being Websites and Web-Hosting, and his is called Cryo NC. So, first, Garrett, introduce yourself, please, and then tell us about your business.

Garrett

Thanks for having me on. I'm really excited to be here today, and I've been listening to the previous Podcasts you’ve been putting out with great content, so, hopefully I can contribute a little bit.
But, a real quick background, I'm originally from Philly, went to school in D.C at Howard University. I met my now-wife there. Moved down here about five to six years ago, and I'm loving it down here. Up until then I was working HR for Bed, Bath and Beyond. I was miserable as J.T knows very well. I couldn’t wait to expand my wings a little bit, and take on my own personal ventures, one of which I wanted always to be real-estate. And so, now Cryo NC is starting to really get off the ground, and if you’re not familiar, it’s when you expose your body to sub-zero temperatures. J.T has been in there, once or twice, and felt the chill a little bit, but it’s about holistic wellness, and we’ll be expanding over the next year or two, and opening up a few more locations. So, if you’re in the Triangle, we’d love to have you come up.

Jonathan

Okay, so I’ll want you to mention later how those who are local to the Raleigh/Durham area can find you and stop by for a session at Cryo NC. And yes, I've done it. It is cold, but very relaxing, especially after a workout. But now, tell us, how did you get started in real-estate?

Garrett

Yeah, so, I got started with wholesale deals, and I would definitely say it was far more education than action. And so, I spent a lot of time Youtubing. There were some free DVD’s out there that certain investors have put out, so I was just learning a lot as I went. And in D.C, I kind of started at an ideal time where there was a lot of inventory, and also the economy was going up, so there were people to wholesale to.

Moving to Durham, I'm trying to re-create that. It was much more difficult when I first moved down here, because it’s a hot market, and there are a lot of seasoned investors who have been investing in this area for a long time. Coming into that from a completely different area, and not knowing the layout, it was very hard to re-create the same model in Durham that I did in D.C. I went to learn something else again, and wanted to find something of a mentor in real-estate, and that’s when I reached out and met you.

Jonathan

Okay, so we came to meet each other through Bigger Pockets, when I was about two years into my real-estate investing journey. How did you find me on the site? Or what brought me to your attention?

Garrett

Yeah, honestly, we probably started around the same time. It’s just that we went into different methods, with you, the buy-and-hold, and me, wholesaling. But during that time, I learned about Bigger Pockets, which is a huge forum. I could ask a million different people a million different questions, and you get honest feedback from a lot of different perspectives.

So, when I went on there around the time I reached out to you, I was looking for something specific in terms of a new way to approach real-estate; not just wholesale, but find people who have different resources and different perspectives. When I saw that you had posted about, I believe it was lease options that caught my attention, I reached out to you and probably about four to five other people who were local to Durham, just to meet over coffee. Out of all those people, we had by far the best initial view of long-term growth and goals to set, and when you told me about your vision for Blue Chariot, I knew I wanted to be a part of it.

Jonathan

Okay, yeah, I remember our first meeting well, and we’ve done a lot of learning together since then. Our partnership has evolved slowly, and it’s included additional education, attending events in Vegas and Atlanta, and other locations, to which we’ve travelled together for training. We’ve started marketing for deals, motivated sellers, and we’ve had some good opportunities come our way, but for one reason or another, nothing major materialized initially for the first couple of years that we tried to work together. Things are moving along now, but what would you say about relationship building and starting relationships with other investors or potential business partners?

Garrett

You said it perfectly. It’s about the relationship. You can’t focus on the transaction or just the deals that you’ve done previously. It’s about getting to know that person. You typically work with people that you like that you can get along with and have clear communication with. I think the number one sustainer of our relationship is that even if these deals that didn’t go the way we wanted them to, we had clear communication and understanding going into them. So, any problems that arose, there wasn’t a problem between you and I.

And so, I recommend that for anybody who’s looking to do business with other people. Make sure you’re honest, and make sure you’re very crystal clear on what you’re looking to get out of the deal, and try to predict any downfalls that can happen, and already have that language in place, so there’s no confusion or issues moving forward.

Jonathan

So, you think it’s a good idea to develop a friendship with a potential partner before you become involved in business with them?

Garrett

It’s not 100 % necessary, but I think it does add to the comfort-ability of the conversation. We’ve done racquetball, we’ve travelled for these conferences, we’ve been to different family outings, and I think that just helps to be able to build the business portion as well to the point where we’re now successfully moving forward with the project.

Jonathan

So, would you say that having been beaten down in racquetball multiple times by me made our friendship better for business proposition?

Garrett

I think your memory is a little fuzzy on those competitions, but competitive competition has always helped team bonding, and all that good stuff, so I do think it has helped and we’re better for it.

Jonathan

Okay, I see what you’re saying. But yeah, I do think that the relationship that we developed was initially based upon friendship, and a mutual respect for what the other person was doing and was capable of doing.

Garrett

Absolutely.

Jonathan

And then everything just kind of fit together, but there were some difficulties getting going on which venture to move forward on.

Garrett

And I think that was from our backgrounds. You have a buy-and-hold background, and I was more of the upfront-money with the wholesaling. And so, while I was pushing for short-term deals, you were looking at long-term, and so, again, building the relationship and understanding why you were looking at it one way, while I was looking at it a certain way and trying to make the best out of every situation. I think that’s why we had a learning curve to get to this deal now.

Jonathan

Do you think our age difference might have factored in there as well?

Garrett

Yeah, we’re in two different spaces, financially. And as I'm trying to build up my war chest, so to speak, you’ve been on the path that’s already gotten you to a point where buy-and-hold made more sense, and I just wasn’t ready for that.

Jonathan

So, now, we’re doing a new build house which I'm just completely proud of every time I drive by it. But let’s talk a little bit about some of the prior projects that we tried to do. One of our first attempted flip projects together died due to black mold being present in the property, and not being able to get the lender required insurance for that reason. I'm going to talk more about that specific project in a coming episode.

Garrett

So, the same reason that the new build project is able to take flight and that black mold property wasn’t, is that we don’t have the same team in place. We have a great GC working on the new build, but at that time we just didn’t have the right people to take on that size of a project. Everything is relative. I think right now, if we put our minds to it, we will be more than comfortable to take on a six figure plus rehab. But at the time, that just wasn’t the case.

Jonathan

And then another of our attempted flip homes, it was actually after we got further into it that it became obvious that we had greatly underestimated the required rehab. So, we ended up selling that house to someone who had more extensive rehab experience than we had at that point. It was something we, or maybe just I, wasn’t comfortable with at the time, and it was basically a knocked-down new build, something that at that time we had never done, nor had we done a six figure rehab at that time.

Garrett

Yeah, you’re right. I don’t think either one of us was fully comfortable with that project at the time, and getting out of it unscathed was the best way to go. And now we’re doing a new build, and if that same project came along today, we would be just fine. Yeah, it was just timing.

Jonathan

But then in the year following those failures, I took on some personal projects that did involve six figure rehabs. So, I gained that experience, and then we built our connections of lenders and contractors and subs, giving us the confidence and connections to take on some more aggressive projects, which brings us to where we are now; doing a ground-up construction, new-build house for sale, together.

Jonathan

So, now we’re doing a new build on Carver Street, in Durham. This is our first new build, of which I expect there will be many more. It’s a spec home on a vacant lot next door to a duplex that I own.
So, one day, Garrett calls me, and he’s looking at a home listed for sale, and puts me on the phone with the listing agent. I don’t recall why, but that specific home did not work out. But I asked if he had anything else available, and he mentioned an unfinished potential duplex on Carver Street for $155,000. It was a three bedroom, one bath house, with a potential fourth bedroom if a closet was added. And it had an unfinished attic that had started to be converted into an additional two bedroom unit, but what little had been done, it really needed to just be all ripped out and done over again professionally.

I went back and forth with the seller of this property for months, but ended up buying it for $130,000, including the adjoining vacant lot. I completed a six figure rehab on the property to make it a four bedroom lower, and a two bedroom upper duplex. And now we’ve started our first new build project on that vacant lot, which was essentially free because it was thrown in as a part of the prior purchase, and so this is the start for the joint venture on our first new build together with Garrett and myself.

So, Garrett, tell me about the new build process. What’s been going on so far?

Garrett

So far it’s been great. I’m loving the process so far. I can't remember the exact connection, but we had come across a general contractor, and he made us extremely comfortable out of the gate. He had the floor plan, every expense down to the nail, and just made it very easy for us to get started. Straight-forward again, communication is key, and it’s been awesome.

We’ve had one little hiccup in terms of a well that needed to be remediated, so we had an outside company coming in and doing that. There’s a little bit of junk left over on the property that the current tenants are responsible for, and that should be cleared up as we speak. Other than that, the construction’s been going as scheduled as promised, so I'm extremely happy.
My role has been as a project manager. I stay in constant communication with our GC, and relay that information, so we’re good on our side.

Jonathan

So, what kind of house are we building?

Garrett

It’s going to be a spec home; three bedrooms, two and a half bath, just shy of 2,000 sq. ft. And so, it’s a nice open floor plan, and I'm just really excited to get it on the market, which is plan A, with your need for dual exit strategy, which I respect. It will also be a good rental home if we decide to keep it as a buy-and-hold.

Jonathan

And so, this project is basically a no-brainer. Everything fell into place to make this an ideal scenario, but how are we going to continue this? How are we going to repeat it? What’s our next project going to look like?

Garrett

So, it comes down to, I think, relationships again; keeping a good relationship with our current GC, and expanding our network, so to speak, with different lenders who might be able to come in on those deals. We’ll be targeting several different pipelines to acquire more lots, and hopefully we can get lucky again with a purchase of a property that includes a lot again. But using probates, motivating sellers, and any means that we can come across a sweet, hard deal that we got on this lot, and just continue to repeat the process, it looks like. It’s going to be a great win for us.

Jonathan

So, we still do pretty extensive marketing in the area to find motivated sellers through direct mail and online means, but do you see us ramping that up and being successful with getting those types of deals even in this aggressive market we’re in now?

Garrett

Of course. Again, it’s a really hot market, and a lot of investors are here, so, you have to find a way to stand out. But in general, with this project under our belt, it opens up the budget for more marketing as well. It allows us to do on a private, and joint, venture together to advertise for different types of deals. I definitely want to get into more buy-and-holds after this, but I'm loving this process so far. We’ll see where it goes.

Jonathan

So, Garrett and I will continue our partnership on short-term hold properties, be they rehab, to flip, or new builds, and we’ll certainly get into long-term buy-and-hold properties as well. Garrett’s also a part of my property management company; Blue Chariot Management, where we’re not only managing my own properties, and will become his properties eventually as he adds to his portfolio, but also providing property management for third-party landlords. And we’ll also continue working to bring on investor funds. I'll be doing a show soon on working with private lenders.
So, I see great things coming for not just myself, but for Garrett White, and for Blue Chariot in general. And I'm proud to have Garrett be a part of Blue Chariot and what we’re trying to do here. So, Garrett, is there anything else you wish to state about your personal business, Cryo NC? And how should we reach out to you if we want to get frozen?

Garrett

I’m excited to grow Blue Chariot as well. Property management, I think will be a great opportunity for the both of us. I'm excited to continue to grow that.

When it comes to getting frozen, though, whole-body cryo therapy is definitely our focal point, but we will be having a grand opening of our first full office space, which will include a couple of other modalities, such as infra-red sauna, Normatec massage therapy, as well as localized cryo therapy, which allows us to give cryo facials, spot-treatment for any achy backs, knees, elbows, anything like that. But also, body contouring is going to be our next big draw, which will allow us to be able to take off some inches off of the waist, reduce celluloid, and it’s really good to get those beach bodies back together for you. So, I'm definitely excited to open up and have that come this fall. But in the meantime, if you just want to get a whole-body cryo therapy session, we do have a satellite office in North Raleigh, off of Falls of Neuse Road. Feel free to check out our website at http://www.cryonc.com.

I’m just excited for everything that’s come this year. It’s going to be pretty fun.

Jonathan

Thank you, Garrett. Thank you for being on the show, and I can't say enough about the fact that you went out and started your own business. I commend you for that. It’s a risky endeavor, and a lot of people can't do it. But the fact that you did, I hope everyone goes out and supports the business. It’s a great service that you provide. It’s certainly something that you should try out if you’ve never done it before. Cryo therapy is really cool.

Okay, well, that’s it for this episode, and we’ll certainly let you know how the new build endeavor, on Carver Street, in Durham, turns out. I also expect a lot more from the partnership of Jonathan Taylor Smith and Garrett White.

We’re always open to partnering on a deal. So, let us know if you have a property that you’d like to sell, or something you’d like to run by us as far as what we might be interested in buying, or partnering with you on.

I love entrepreneurs, especially young individuals who, instead of going out and getting a job and working for someone else, like most people do, they actually take that big risk of starting their own thing. That’s why I've always recommended that everyone have some business. It’s just the best way of supplementing your income, and it gives you the money that you need to be able to do other things like invest in real estate. It’s not the easiest route, but it’s the most rewarding. So, go out and get yours. Garrett is certainly getting his, and he’s an example of what you can do if you really put your mind to getting out there and taking a risk and trying to do something else.

Outro...