In my Investor Profile Series, I use a question & answer format to share the stories of actual real estate investors at different stages of their investing careers.
This interview is with Justin Foster from Tulsa, Oklahoma. In 2020 Justin quit his secure, well-paying job to transition into real estate investing full time. Little did he know this would also coincide with the beginning of a pandemic!
But 1.5 years later Justin successfully made the leap, and in this podcast and written interview he shares all the details of how he did it and the fears and challenges he faced along the way. He also shares details of how he and his business partner market to consistently find multiple good deals each and every month.
Justin, take it away!
Listen to the Podcast Here:
Watch on YouTube:
I’m 33. Mandy is my beautiful wife – she’s 41.
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Do you have kids?
3! Theo is 5 Ellie is 4 James is 2.
What area of the country do you live in?
We live on a small farm in Broken Arrow, OK – right outside Tulsa.
Career/Source of regular income:
Real Estate business owner / Real Estate investments in SFH’s and small MFH’s.
What hobbies do you enjoy? What do you do for fun?
Reading, farming, Crossfit, going to the lake, rock climbing, cycling, fishing, hunting
A fun/interesting/little-known fact about you?
I’ve always been an adrenaline junkie of sorts and can tend to put too much pressure on others for the sake of adventure. I talked my grandma into skydiving with me when I turned 18. She loved it!
The rest of the Getting Started Interview questions are based on the steps I teach for getting started with real estate investing inside my online course & community Real Estate Deal School, which opens for enrollment each spring and fall.
1. Wealth Stage
How long ago did you begin investing in real estate?
4 years ago – 2017.
What was your wealth stage when you began investing in real estate?
Saver. I was 28 years old and pretty established in my career. We had some equity and savings built up in a personal residence and transferred a lot of that into our first investment – a triplex in Tulsa.
Has your wealth stage changed since starting investing in real estate? If so, what is it now?
I’m in the middle of a Growth stage with a full-time, active approach.
2. Real Estate Investing Strategy
What was the primary real estate investing strategy that you used to get started?
Long Term Buy and Holds
Has your strategy changed since then? If so, what is it now?
Yes. I now have a business that does wholesaling, wholetailing, and flipping. For long term rentals, we are doing more of the BRRRR method – or as I like to say – flipping the house to ourselves. I’m also doing a little lending as well.
3. Target Investing Market
What regional market do you invest in? Why did you choose it?
Tulsa Oklahoma. It’s where I live and happens to still be affordable. There’s great potential to buy quality long term, appreciating properties that cashflow pretty well from day one.
Do you have a particular sub-market or neighborhood where you like to invest within your market? Why do you like it?
I like gentrifying pockets in the suburbs and around downtown areas. These are usually older homes but the land is more valuable and I see more potential for appreciation in those areas.
Have you chosen a particular real estate investing niche to focus on, like a type of property (ex: single family houses), a certain price range (like A, B, C, or D properties), or a type of end customer (ex: student rentals)? If so, why?
B class single family residences – with some duplexes in there as well. The reason for this is because I can find distressed properties or property owners and still buy these at a discount. The value is good and the asset class is very stable in my opinion.
[Chad: If anyone needs help picking their own target market, here’s my guide to picking the ideal real estate investing market]
4. Investment Property Criteria
What formula or numbers do you use to decide if a deal is a good one?
Max Allowable Offer = After Repair Value X 0.75 (25% equity) – Repairs. If the house is in a very desirable area, I may adjust the discount some assuming I have the cash to invest in the deal to meet other criteria. From here, it’s a matter of how much cash I would leave in the property, how long the rehab will take, what the overall loan to value and return on investment will be. As a rule, I stay under 70% LTV on everything no matter what and am really shooting for 65%. I want each door to cash flow $200 minimum. I also have criteria that properties are in specific areas and are a certain type of property that I think will be quality in the long term
[Chad: For more on this topic, here’s my article about how to run the numbers]
5. Your Team
Do you have any “inner circle” team members like a spouse, business partner, or mentor? If so, how have they helped you to get started.
This is my favorite question. First, my wife Mandy is very sharp and very involved in our operation and decision making. She’s the constant grounding rod in my life and incredibly supportive of my go big attitude.
Paul Thompson is a full-time investor I connected with about 3 years ago and he has been a phenomenal mentor for me. We have become really great friends and talk shop weekly on the mindset and mechanics of investing in a mastermind he leads.
Chad Carson! I met Chad a year and a half ago when I decided to pull the plug on my W2 and get into real estate full time. Chad’s guidance and mastermind group gave me wisdom when I needed it most and helped clarify my trajectory as a full-time investor.
I’m incredibly blessed by my business partner, Joel. We teamed up a year ago and set out to scale a wholesaling / flipping business. We are partners on our buy and holds that come from that enterprise. Joel is an incredible leader, entrepreneur, and marketing guru. I would not be where I am without his relentless drive and wisdom.
What’s more, we have a team of 6 people that work for our wholesale business and each one of them are total rockstars. Olivia is our COO and she holds it all together.
What other team members have been crucial to help you get started?
My father and brother both have been sounding boards over the years and planted seeds about investing long ago that have since flourished. I have a business coach whom I won’t name but he’s been a complete game-changer. Finally, I have close friends and family that have been lending partners, and in many cases, advisors in some capacity or another.
[Chad: For more on this topic, see Your Team – the Main Ingredient of Stardom]
6. Financing & Cash
What type of financing did you use for your first deal (or deals)? And was it difficult to obtain this financing?
On my first deals, I put a down payment and got conventional loans.
Do you plan to continue using this financing in the future? If no, what financing is next? Why?
Maybe further in the future. Right now we are using private money and buying properties at a discount, fixing them up and refinancing to package commercial loans. This is so that we can scale but doesn’t come without risk. We are also doing some creative financing deals such as Sub 2.
Where did you get the cash for your first down payment, fix-up money, and reserves? How much did you need to raise?
When we bought our triplex, I had $75K from selling our house in Colorado when we moved to Oklahoma. A close family member loaned me $30K for the rehab and I gave them first lien on the property. I ended up putting in another $5k in my cash in the deal and refinanced out $95K on a 30 year fixed loan. So we left about $15k into that property
7. Deal Finding
How did you find your first deal(s)? What was the owner’s situation that motivated them to sell?
I bought my first properties almost exclusively off of older, tired landlords. A few of them were on the MLS. I bought a package of 10 houses from an older landlord that was thinning out his portfolio. I met him through a wholesaler.
Did you try any deal finding strategies that didn’t work?
Well the MLS has become a deal finding strategy that no longer works for me. I’ve since bought properties from other wholesalers as all as becoming more of a deal-finder to source our own off market deals.
How many potential properties did you look at and/or make offers on before buying your first deal?
At least 20. I spent about 3 months searching very hard.
[Chad: For detailed help on this topic, check out my course Real Estate Deal Finder and get 30% off using the coupon code THIRTYOFF-DF-GSI]
Your First Real Estate Deal
What were the basic numbers like purchase price, remodel costs, rent, resale price (if applicable)?
My first property was a triplex. The purchase price was $75,000 and remodel was $35,000. All units were 1br/1ba layouts. 2 units downstairs were larger with an efficiency unit upstairs. The 2 downstairs rented for $650 / month and the one upstairs rented for $450 / month initially. Gross rent came out to $1,750 / month. We sub-metered the electricity but do have to pay water and gas for the property which comes out to be about $90 / month on average.
What were the biggest struggles and challenges on the way to your first deal?
Confidence in knowing if it would work along with finding and managing contractors. I was fortunate in this deal that I was able to use a friends general contractor who did a really good job on the property pretty much turn key.
What has been the overall effect of this deal on your life? Lessons learned?
This was a great deal for us both from an appreciation stand point and cashflow standpoint thus far. The triplex is near Tulsa University and close to downtown so the neighborhood has seen a lot of transition in the last 5 years. This has pushed up property values more than the average property as well as rents. Having said that, after buying more properties, I would have considered more carefully about property quality in balance with cashflow and ROI. The property still needs new siding and while we were able to get some more life out of it by scraping and painting it, I know I will have to replace that in the next few years. We’ve also since had to reinforce the triplex with piers to stabilize it as well. These were things I looked over or didn’t realize when I bought it. Overall though, I’m very glad I did! This property kicked off our investing career into real estate and it’s been a great deal for us.
Final Tips & Recommendations
What books, blogs, podcasts, and/or YouTube channels have helped you to get started or do you just find extremely valuable? (Can be categories in business, investing, or life/philosophy – other than a sacred book)
- Coach Carson REDS course and Podcast!
- Ready Investor One Podcast – Paul Thompson
- Building Wealth One House at a Time – John Schaub
- Optimize.me – Brian Johnson
Any big mistakes you’ve made that others should avoid?
Lots of them. Perhaps the biggest mistake I’ve made recently is hiring the wrong people. It was really more than that, I received a really good prescription of who to hire recently from a very seasoned businessman in my field. He outlined ALL the criteria. I went against that / made an exception and hired someone that simply wasn’t a good fit. It cost us a lot of time and heartache but we eventually pivoted and found the right person for that seat.
The real lesson there is that when someone experienced tells you “do it this way…” just do it that way and don’t think you’re smarter than people that you know already have hard knocks knowledge. It’s of course important to surround yourself by people who have real wisdom first. Then it’s important to listen to it! In fact, this can save you years of struggle just by following models that are proven to be successful and not trying to recreate the wheel.
Anything else you’d like other current or aspiring real estate investors to know?
One of the best things you can do in real estate, whether you are starting out or a seasoned investor, is to know why you are doing what you are doing and let that be a driving force. Once you know your “why,” then it’s time to take massive, imperfect action!
[Chad: Thank you Justin for sharing your story and wisdom with everyone! I appreciate your time and I’m inspired by your progress and the places you’ve already gone and will continue to go.]
If you have any comments or questions for Justin please leave those below in the comment section.
A Journey to FI says
Chad, this episode was awesome. I’m also in the Oil & Gas industry so I can relate to Justin’s story. Kudos to him, the O&G industry pay well but at the end of the day it’s about investing and putting your time toward something that I s meaningful to you. I still see REI as a side hustle/hobby and have mostly done Turnkey REI coupled with a partnership on less than a handful of properties. That has worked well but long term I would like to scale while preserving my job. Not sure how that will go but for now I feel somewhat stuck. Anyways, great episode and appreciate the conversation.