Deren Huang

Deren Huang is the Owner of Dash Properties, where he manages a rental portfolio of single-family homes. As an experienced real estate investor, he oversees 100 units and actively invests in industrial real estate. Deren first invested in real estate in college when he bought a townhouse and rented it to roommates. As a licensed realtor at Henry Hinds Realty, he works with inventors interested in single-family homes.

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Here’s a glimpse of what you’ll learn:

  • Deren Huang shares what he learned from his first accidental real estate acquisition
  • How Deren transitioned to a full-time real estate investor
  • Deren’s process for obtaining and closing real estate deals
  • The difference between a rental and an owner policy
  • What are the characteristics of a real estate negotiation?
  • Deren explains the benefits of owning residential and industrial units
  • Deren’s creative financing strategies
  • What are the different types of net leases?
  • The two categories of industrial real estate

In this episode…

The real estate industry is profitable, with a variety of opportunities to capitalize. So, how can you break into this field?

Deren Huang says that trial and error is the most effective method for gaining real estate experience. It’s beneficial to begin with a single approach before easing into other sectors. In the role of a bird dog, you can seek and acquire deals on dilapidated properties to solve fundamental problems for real estate investors. After taking on this role, you can form partnerships and obtain financing through lease purchases. Deren gained expert knowledge and achieved success in the real estate profession through several investment failures.

Join Mat Zalk in today’s episode of The Same Day Podcast as he talks with real estate investor Deren Huang, Owner of Dash Properties, about advancing in the real estate industry. Deren explains his process for obtaining and closing deals, the difference between a renter and an owner policy, and the various types of net leases.

Resources mentioned in this episode:

Sponsor for this episode…

This episode is brought to you by Keyrenter Property Management.

Keyrenter Property Management is a full-service property management company who helps their clients buy, renovate, and operate real estate assets.

They help clients build wealth while taking the headache out of property management.

That’s why, no matter what rental you have — single-family homes, condos, townhomes, or apartments — they can give you the management solutions you need.

To learn more about their services, go to https://keyrenterpmc.com/ or send them an email at [email protected].

Episode Transcript

Intro 0:05

Welcome to The Same Day Podcast where we discuss driving incremental business growth and other topics related to real estate, property management and entrepreneurship. Now to the show at hand

Mat Zalk 0:20

Mat Zalk come the host of The Same Day Podcast where I connect with top business experts in real estate leaders like Deren who’s on the podcast today. A couple of people that you might have heard of in the past that have been on the podcast Scott Reeves Chickasaw Community Bank, Lee Easton from AreroVision, Mike Basch Atento Capitol Vondel Burns she was great. Go back and look at some of the listening to some of the previous podcasts to get some more information on what people are doing moving and shaking in and around Tulsa, Oklahoma, Oklahoma City and northwest Arkansas. Today’s episode is brought to you by Keyrenter Property Management at Keyrenter Property Management. We are a full service property management company helping our clients buy renovate and operate real estate assets. We help our clients build wealth while taking the headache out of property management listen during you know better than anybody owning real estate is great but it can be a pain in the you know what we help our clients take the headache out of that ownership we manage those things for them so they don’t have to get midnight phone calls and H fac out of order calls in the middle of the day when they’re trying to enjoy a summer holiday or whatever else. That is why it doesn’t matter what rental you have a single family home a condo a townhouse and apartment we have the management solutions you need go to keyrenterpmc.com or [email protected] A big shout out honestly to bigger pockets for the initial intro. Deren and I met like I don’t know four years ago I was visiting Tulsa wanted to get involved in the real estate scene and Deren took me under his wing showed me around he’s working on awesome renovation projects. And and that kind of kicked it off. I saw it there recently again over at security bank because we love security bank, the two of us love security bank. I work with Josh Cohen, Lynette Lambert, and a bunch of other great people over the bank. And so we reconnected a quick intro of Deren who was first his first real estate investment was on accident. He bought a townhouse and rented out to roommates in college. Fast forward to now he’s got over 100 units under management is aggressively investing in the industrial space. Deren has got two kids, he’s got three a three year old like my three year old twins and a one year old like my one year old daughter, so got a lot in common. Deren really appreciate you being on the show. Thank you so much for being here.

Deren Huang 2:26

Hey, thank you so much, really appreciate it. Tell us

Mat Zalk 2:29

a little bit I was asking you about your about the condo that you bought. And you kind of alluded to not being that interesting of a story. It’s not interesting. We all have, we all love stories where we make a ton of money. I mean, in real estate, it’s basic, basic, occasionally you get a triple or a homerun and I love hearing those stories. I’m happy to talk about those stories in my real estate investing career. But sometimes it doesn’t go as as planned, right. And I think we can learn as much from some of these quote unquote failures as we can from some of the victories and education can be expensive. a four year degree at Harvard is now $220,000. Or it can be inexpensive either way, you learned a lot of money. He learned a lot. And you may spend a lot and may spend less tell us about this first acquisition that you did by accident.

Deren Huang 3:14

Oh, my gosh, this was so long ago. So this was in college years. Basically, the story is, I was renting a room with a roommate. And the way that the landlord had set it up is he was renting it by room to the specific school. So I just did math in my head, not really knowing too much about real estate or anything like that. But I was a broke college kid. And I was like, How do I save more money? You know, this is one of the this is how to grow wealth and saving money and making money. So I just counted, I was paying 300 bucks. My roommate was paying 300 bucks guy across the street, or across the hallway. 300 bucks. And there’s a guy in the basement. I think he was paying 400 bucks. So I just did math in my head. And then I looked up on Zillow. And it showed that the townhouse condo had sold for 50k. So I just basically with no you know, nothing, no bigger pockets, like we had alluded to nothing along those lines. I just took, I think $1,200 and divided 50 grand by $1,200. And I was like, Oh, that’s a really great return, I should be in real estate. So that summer, basically I put an offer on a townhouse just like the same kind of community. And I was like, Yeah, this is gonna be awesome. I’m gonna save my money on rent, which is $300 I’ll rent it out to a couple other people, and I’m just gonna make bank but what actually happened was the opposite. I didn’t take into account like I said, I was so green. I just thought that you know, the purchase price divided by how much rent you’re going to get is your return. You know, I didn’t know anything once again, I was like, I think 19 years old. It’s like there was an HOA, there’s insurance. There’s taxes, you know, utilities, different things along those lines that you have to account for it. And basically, for I became a resident manager for free My parents, my parents actually bankrolled that one. They said, I was like, Hey, listen, this is what’s happening. You can save 300 bucks a month, you don’t have to pay for my rent. And I think they were just trying to push me and be good parents. But I think they knew in their head like, this is not the correct way to underwrite things.

Mat Zalk 5:17

But I love that is such a great move to have them. It might have cost them a little bit of money, but they did taught you a great lesson and you developed a lot. I love that. So what ended up happening? You kept it for a little bit or what happened?

Deren Huang 5:29

Yeah, so kept it throughout college. I thought it was going to land in that city, too. But I actually landed here in beautiful Tulsa. So my wife is originally from Bixby area. She was in Kansas City, that’s where that townhouse was, and that’s where we went to school, she transferred back to Oral Roberts. And so I had to chase her to get her to marry me. And, like me, we got two kids now beautiful kids that I really enjoy. So, you know, I thought it was going to stay there for the, you know, for the three years that I had it, you know, I rented it out room by room, then I gave it over to a property manager didn’t do any screening didn’t know, you know, like, oh, property manager is actually licensed. I’m pretty sure this guy wasn’t licensed, just did everything incorrect, like I did for you know, the underwriting of the property. So yeah, basically, probably Yeah, I don’t think he’s licensed. But he was just a handyman. I was like, Great, I’m saving some money, you know, this guy is just going to be able to do the all the all the repairs, and he’ll be able to see the money, moved to Tulsa wasn’t really thinking that much about it, you know, received a couple of drawers, but at the end of the day, it was just not really great for me. And you know, at that time, I wasn’t trying to vocationally be in real estate. I started a new job, you know, gotten engaged, different things like that. So it wasn’t on my mind. Unfortunately, we put it on the market, and basically just broke even on it. But the experience and all the mistakes. Can’t really put a price to that. Yeah, totally.

Mat Zalk 6:57

I bought my first property in Boulder, Colorado years and years ago, prior 2015, I guess, because my sister was like, we should buy a property and I was like, I have a little bit of cash. Let’s buy some property. So we bought it for 435, which was pretty big. And for an investment property is pretty expensive. And then, like some months, they forced us to buy the electrical, the solar panels on top, which was another 30 grand, which I didn’t really anticipate we’re here for 465. Then a couple of months goes by and the back of the house just starts cracking off. I just had done a renovation on the back of house without being permitted. And it wasn’t done properly. So that cost us another 80 grand. And so that was my first experience buying real estate. It was pretty painful at the time, but real estate’s forgiving, and it does teach you a lot now, you know, my sister who managed that renovation of the two bedrooms and a bathroom knows a lot more about construction. You know, it’s still cash flows. I think that property cash flows really, really well actually, we probably had more cash in it than we want but it cash flows. We get now like $4,700 a month in rent and we probably paid $27 to the bank BTi. So does does pretty well. But it can feel it can feel very painful at time you learned some lessons, but real estate’s forgiving, so good. That’s a good I would say that’s a great story. If that’s considered a failure, may that be the extent of your failures in life because that’s a getaway got away pretty scot free scot free and maybe you paid a couple of $1,000 for a great education. What so then you transitioned and what was the what was the process like transitioning through to a full time real estate career and what are you doing now?

Deren Huang 8:24

Yeah, yeah, so basically, right out of college, you know, looking for jobs. I landed and once again I just moved to Tulsa. And I was like well, I got to support you know, I got to show you know the in laws that I can make money something Yeah, yeah, exactly. And so I actually got a job like the first one it was just door to door so I was like I’ll just take whatever I can get. I was terrible at it. Oh my goodness. You know, there’s just so many things that was wrong with it wasn’t trained correctly. didn’t have anything along those lines. Just basically bashing my head. I was selling water softeners

Mat Zalk 8:58

Oh, that’s a tough gig but you can get your sales chops on that thing like

Deren Huang 9:02

that. Oh, yeah, for sure. For sure. Definitely gave me confidence to get maybe and then I transitioned basically after that sales job into Uslu regional carrier here I was doing business business sales for you know, all wireless wireless connections for the company.

Mat Zalk 9:20

And then And then What started with what started to kick started your your transition in real estate.

Deren Huang 9:25

Yeah, so basically, in that job I actually did really, really well. Seems like business businesses probably more my suit not necessarily business consumer on a hot day in front of the door when they don’t know you. So I did really well. I was like top 3% of my my company for maybe the short season. I was there. I think I was there for about two years. But I was still on a retail scale schedule. So you know, us closing up shop, you know, Black Fridays were big days, you know, we had to work holidays and that just really wasn’t what I was looking for in a sales position or a position in general. And so naively inspired by Chip and Joanna Gaines, I was like, Oh, if they can flip houses, I could probably flip houses too. And I was like, oh, you know, you can be a real estate agent too. So, you know, I demise in my head, like just, I was like, Oh, I can be like an agent. And then I’ll flip houses on side and blah, blah, blah, blah, blah, and, you know, basically convinced myself to get the license. And so that was the transition thinking, Zales would be able to, you know, go forth, and to transfer those skills. And so yeah, I got licensed in 2016. Great.

Mat Zalk 10:36

And that’s the tried and true story. I mean, sell some stuff, earn a little bit money, buy something, flip it make a little bit more and then eventually transition into buy and hold, I guess, right. And that’s, that’s where you actually build the wealth, you can make some money, doing some other things, but building some wealth, you know, in in, in the long term. So you’re you’re really good at finding deals. When I you know, when you and I were first connected, you were I knew you as the guy that had a ton of deals, you were sending out emails, with great little Google Doc, little Google Drive, I guess, you know, links, so we could check out the photos. How did you start getting deals under under contract? Some of them you bought some of them you flipped as we just said, but But how did you become known as the guy that has deals? And how did you? How did you

Deren Huang 11:23

get deals? Yeah, so that kind of just goes back to my sales background. So when I first started in 2016, as an agent, I thought I was just going to do retail, I was like, great, I want to do you know, to show people that want to buy houses, not necessarily the investor side. And so I did really well, it was doing a lot of the, you know, fundamental basics of lead generation, cold calling letters, different things along those lines. And then, you know, since I was, didn’t have kids, as you know, kids take a lot of time, you know, building out, building out, you know, just like, how do I analyze deals, how do I do this, and that’s kind of where I came came across bigger pockets, their resources are amazing. And they just basically lay out in a very systemized and analytical way, you know, what is investment property, how to flip properties, different things along those lines. So, yeah, the deal finding kind of came later into that just because at first it was the retail experience that I wanted to provide. So basically, what had happened is, man, this is on bigger pockets, I would just find the people in Connect, find their email, find their phone number, and basically, you know, just cold call investors. Luckily, there’s not one, one guy named Curtis and he goes, Yeah, why don’t you just follow me along for this weekend and I’ll show you kind of the projects that we’re doing. And so you know, that’s part mentor part you know, just being open and you know, this community of investors it’s actually really really open. That’s what I found and you know, same thing for me to kind of pay it forward just because you know, there’s so much paper knowledge that you can have but not like real life experience until you find someone so that guy named Curtis he was like, hey, follow me around I’m doing a couple projects this is kind of my Buy Box and if you find anything like this, send it my way and I’ll close it I was like oh you mean I don’t have to show you 20 houses and pretend like the you know you love the wall colors and you know the granite and blah blah blah blah blah and I was like oh this is actually more my speed. Let me try to find this find these deals and so yeah, that is kind of what started the whole entire thing

Mat Zalk 13:33

and then how did you transition now you’re buying industrial but before you bought industrial you are actually I mean Curtis you must have shown Carter some deals he you know you guys close on a couple that he closed on a couple that you showed and maybe get you a little a little bit of comfort for finding those deals for bird dog and and bird dogging is such an important it’s such an amazing skill it’s also super super important in what we do because the MLS will show you a partial picture but the some of the best deals are had you know off market just just by literally bird dog just hunting up a phone number and talking to people and saying I can help you I have a problem. You need cash now and I can help you solve that problem. Let’s say once you once you started bird dog and for him you know you talked about one of your first deals that you found you’re too scared to buy it right and then you said to me earlier you know you don’t need to be perfect to jump in which is such an amazing quote because you don’t need to be perfect to jump in. You know that look before you leap. I guess old adage is is so common you hear it but I actually just say close your eyes and then jump because there’s stuff that you don’t know there’s stuff that you won’t know and if you if you analyze too much you subject yourself to analysis paralysis and you’ll never sign on the dotted line you’ll never actually get a D transferred over to you so tell us about your first deal and being too scared to buy it.

Deren Huang 14:43

Yeah, so once again shout out to Curtis again, he just kind of took me full cycle just a rental property a burr you know whatever you want to call it renovation to and so you know when I saw that I was just like well let me just try to copy paste it but instead of his Buy Box, you know, let me try it in some other area. So once again, you know, I had found him some deals, and then he kind of showed me his paperwork of like analytics and just like, hey, listen, I think you can rent out for this much. I think this is the renovation. And guess what, you know, the bank is gonna give me back the money using, you know, a refinance strategy. And I was like, Wait, is that real? And he’s like, yeah, let me just show you the bank docs that I just signed. And I was like, Hey, you bought this one for like, 75k, or I sold it to you, for 75k. We found it together, you put in 25. And it appraised at like 140. And you pulled out all your cash, like, yep, that’s the good name of the game. And I was like, Okay, let me try it myself. So this one is really funny, I found this one for sale by owner on Zillow, those really can’t be found anymore. But this was in 2016. And, you know, for me, the way that he had done it was he had used his cash. And so I was like, Well, I have all my pennies sent up, like, I can only buy a $40,000 property. So I looked, and I found a Ford, it was actually this for 60 grand. And, you know, I just started writing offers, and I said, Hey, listen for whatever is close to 40. Let me just write for you. And so that one actually landed, and then I ran it through the calculator, and I showed it to him, I called around, got some quotes. But this is just so funny, I kind of smack myself now, but I had called the insurance. And they had quoted me for a owner’s policy, not a rental policy. And so when I plugged that into the calculator, I was like, Oh my gosh, that eats up all my cash flow. That was the only metric that I was using at the time. So I was like, Oh, I, you know, it doesn’t fit my criteria, even though you know, hits my Buy Box, and the equity is going to be there. And you know, all these different wealth builders or real estate, because I was just focused on cash flow at the time. So I was like, Oh my gosh, that eats all my cash flow. And I just got so scared. And once again, back to the quote, like, you don’t have to be perfect, I probably would have figured it out. If I would have jumped in, like, Oh, this is an owner’s policy, I need a renters policy or rental dwelling instead of a, you know, actually insured for all the things that you have. And I definitely would have figured it out. But I just got so scared that I just up who wants it? Who wants it? And I basically just wholesaled it for $1,000. So I only made $1,000 on that house that I’d found and negotiated and done everything and you know, but Yeah, unfortunately, it’s probably worth triple that maybe even quadruple that now.

Mat Zalk 17:24

So he lost, he lost a little bit on that one. But again, good learning good, good educational experience. What’s the difference between a rental policy and an owner policy? Is it just the depreciable? roof and the and lower deductibles? Or what

Deren Huang 17:35

is it? Yeah, so the Owners Policy kind of insured and all your personal property too. So yeah, that added a lot to that. But at least in that specific one, I’m pretty sure that you know, they had a lower deductible. And it was like, you know, kind of hit up to the max didn’t know that you can like, you know, either set the number or take 80% of the appraised value by the State Farm or, you know, whomever. And you know, once again, your personal property on top of that,

Mat Zalk 18:00

too. So yeah, so a couple of things. We use Chris law over at State Farm, He’s great. He’s awesome. I love him, he doesn’t my personal stuff, or vehicles, the whole thing, but on your on your on your home, on your own personal. What do you say the owner policy, I think that’s the case, like they don’t do a depreciation of the roof, they’ll they’ll they will do if you have a 20 year old roof, they’ll still pay for a new roof. So that’s a big difference. And it cost them a lot more. So they charge a lot more. And then lower deductibles, I don’t know the personal property inside the house. For sure. The other thing that State Farm doesn’t do that we as like a, I don’t know as a reputable company, they won’t, they won’t go to certain levels, and some other companies in town will which is very useful when you’re buying really really decrepit old properties that you’re going to renovate to insure them during the period, like State Farm won’t let you go below us, I think as you said, 80% of the of the replacement cost of the entire house. So if they look at it on on their core logic system, and they say, look, it would to build this brand new, if it went up in a huge fire, it would cost 180 grand, they won’t let you insure it for 25. Because you just bought it for 25, knowing that you’re gonna put in 100 of, you know, new materials and everything else. So that’s you gotta go to foremost, or some other companies that are willing to let you basically write your own policy and they say, Look, if it burns, I’m giving you 20 grand, you know, whatever it is. So that’s an important distinction. But I didn’t I had not forgotten I had not remembered that an owner policy is much more expensive than a than an insurance than a rental insurance policy. So you buy it, you buy this house, you start you flip this house make 1000 bucks. And then where did you? How did you, you know, Garner muster up the courage to buy the next one whenever you did?

Deren Huang 19:30

Yeah. And so once again, I was my my knowledge and you know, the experience was limited just because it was just him. You know, I was just in a very specific BuyBox only being able to afford $40,000 at that time. Then I learned about construction loans. I learned about hard money, private money partnerships and different things like that, and started networking on a really normal basis. And so kind of getting back to your first point of finding deals if you’re the person finding deals. You know, you usually can hopefully partner with people too. You either with the capital side or the experience side, because you have what they want, you have what most people want, which is a good solid deal or, you know, whatever the case might be. And so as just that experience kind of got deeper and the knowledge and all the education, kind of get further and further plus then with, you know, human resources, whether it be partners or other people, department managers, bankers, different things like that, that is kind of what shot me towards the, you know, in the stratosphere.

Mat Zalk 20:29

So, if you have a deal, the money will come. In my experience, I mean, deals are so hard to come by, if you have the deal, the money will come. So if you don’t have money, and you’re out there bird dog, and you’re just trying to make your first foray into the industry, and you’re, you know, you’re working a job. And on Saturdays and Sundays, you’re running around just as they say driving for dollars, I think it’s the bigger pockets term, maybe the real estate terminal, you find a deal, do not be afraid, called Deren, he will find somebody with cash for you. Because a good deal is hard to come by. And and you’ve got the core asset, right, you’ve got it, you’ve got your eyes on the core asset. And the cash, which has been abundantly has been abundant and cheap for the last decade or more, we’ll find you and you’ll be able to put something together. And I would say I mean, what do you see if there’s a cash partner and a deal partner? And they you know, a cash partner just wants to be the cash and the deal partner says, Look, I’ll I’ll I found the deal. I’m willing to renovate it manage that? I mean, is it a 5050? Split that the ownership What do you generally see in an operating agreement between two people like

Deren Huang 21:28

that? Yeah. And that’s what’s lovely is that it’s all negotiable. So sometimes it’s just, hey, listen, I want to fix 789 10% on the money and know that, you know, that’s usually held within a mortgage, but sometimes it is, you know, within the operating agreement, 5050, or something along those lines. I think for the couple partnerships that I had, when I was first starting out, I would only want to bring in about 25% of the downpayment, but then still retain 5050. So I was being able to leverage a little bit more, but still put in a little bit of money. And so that kind of worked well, for those beginning partnerships.

Mat Zalk 22:03

I mean, for anybody listening or watching this, I think you will, you know, go to friends and family and say to them, I’ve got this killer deal here, the numbers, you know, here’s some sensitivity I’ve run in case the rents are lower, the costs are higher or whatever. You throw out any ideas that you’ve got Mr. Cash partner, Mrs. Cash partner, and then let’s do this thing, you can get it done. So you you ended up buying some real estate, you now own 100 units under management, which is super impressive, exciting, good for you well done. That’s basically in five years and six years, maybe you started in 2016, you kind of push through, but tell us how you transitioned from owning residential units to industrial. And then let’s talk about, you know, the benefits of owning industrial visa vie the residential side, which is where we live and keyrenter.

Deren Huang 22:46

Yeah, yeah, so residential is amazing. And just kind of the story that how it kind of progressed is, you know, for me, the way that I learned is through example, and so once again, really thankful for everybody that kind of paid it forward. And once again, it’s one of those things, I’ll just say this really quickly, I don’t really know too many people that are shady within the business that last a long time. So you know, if you do have a fear of like, Oh, they’re going to snipe my deal, or whatever the case may be? No, like, they’re probably not, because their reputation means a lot more than, you know, $20,000 that you could bring to the table. And so that’s just another pain point that some people might have and some fear that, you know, is not really warranted. But yeah, basically through 2016, you know, I was just helping investors. So I transitioned from retail, and then investors to them, Hey, I’m just only helping investors as a licensed agent, sometimes wholesaling. And then I picked up my first rental property in 2017. And I was in Broken Arrow. And I did a lot of creative financing, just because once again, I was limited in my capital. So this one was bought with a lease purchase. Yeah, so I found this one, for sale by owner. At the time, I hadn’t been doing too much marketing, I had been cold calling different things like that just in the agents, Agent business to retail business. You know, that’s one way to drum up some business and lead gen. So this one, we I had tried to sell it a couple of times, they were you know, a couple $1,000 off, they’re like, Well, you know, he wants 75 I want like it for 70 or something like that. And it’s just really frustrating because I was like, this is only $5,000 You’re gonna make it up, you know, and so really frustrated with the whole entire experience. And I said, You know what, let me just do it. Because I could probably do this. I have enough spirits now. And I can use one of the wealth builders real estate, which is leverage, right? So I went to the owner and I said, Hey, listen, it’s not selling and you can’t find anybody, and you’re not going to be able to do this yourself. So what I’m going to do is I’m going to rent it for you for my meet for a year at $500 a month. I’m going to fix it up and you can see all the receipts you can see you know, all the work being done. And then after one year, I’m going to buy it for the 75k that you want. And so I use creative financing for that one. Made a lot of mistakes. didn’t do too much. So there’s termites there was, you know, gas lines and you know, water heater and everything imaginable that you needed to fix you did. And I went over budget. And you know, I thought it was going to do some of the work myself. And I didn’t just because I’m not handy. But once again, using that creative financing, and then taking charge of like, Hey, I’m not relying on someone to make offers or, you know, if their underwriting is a little off, or something along those lines. You know, I was trying to push it. And so that kind of began 2017. I picked up a couple more in 2018. And then I was like, Okay, the next goal for me is to become full time to where I’m not helping out investors or wholesaling, that I’m just doing everything in house for myself. And that was in 2018, and 2018, that I, you know, transitioned out. And that was largely in part because I bought a portfolio of single families, I think it was about six to seven. And you know, that was a really big deal, trying to put it together. So, yeah, residential, has been a blessing and amazing, I’m still trying to do a couple of deals, maybe three to four per year, but not as much as I used to, which averaged, you know, 10 to 12 per year,

Mat Zalk 26:08

I would say, beautiful. We had Kurt Volker on the on the show recently, and he was talking about the birth strategy, which is what you’d refer to also, as I’ve done with Curtis, a little bit of him explaining it to you. And we talked about, you know, what if your budget goes over what if you have termite damage, he bought a property with termite damage, he saw the, the up in the attic, that the that the sill plates were okay. He didn’t know about the plate on the floor. He knew he could replace studs, but he was uncertain. And so he wrote up, you know, he wrote it, he gave him a TR, basically, it said, I need about $10,000 off, it ended up costing him by luck, only $1,000 to remediate the termite damage. So he ended up 9000 ahead in the transaction, which was really good for him, but sometimes you don’t know. And you don’t. It’s scary. And you, you know, you come out on the on the on the losing side of the numbers at some point, but again, real estate’s forgiving, you got to jump in at some point, and, and whatever else, you know, the rest becomes history. And it’s it all gets made up over time. But what other creative financing strategies have you employed to get deals done?

Deren Huang 27:10

Yeah. And just to kind of mention that Yeah, time, time, and real estate is a big factor. Because once again, those people were kind of bickering over $5,000. Now that house is worth $160,000. And even when it did go over budget, 10, grand, 15 grand, that was all made up within time, and then it could be picked down, you know, by the loan and stuff like that. Beidler. And

Mat Zalk 27:31

your rent rate is now you are renting that for 900 at a time now, it’s already 1500 I suspect. That’s yeah, nature of the market inflation and hard assets being a hedge against that inflation.

Deren Huang 27:43

Yeah, and once again, that was kind of the the thought process when that one I knew going in, like, hey, most people would not pay an extra $5,000. I don’t mind spending $5,000 in a place that I know, which was broken arrow and you know, a lot of people would be like, Yeah, I would love to invest $5,000 in in Broken Arrow. So taking charge and knowing you know, hey, not every deal is going to be I pull out all my cash. But yeah, you want to invest in places where you want to? And yeah, once again, so creative financing. Yeah, that’s kind of something that I’ve been doing a lot, just because at the time, I had not, I didn’t have that much capital. And so. So that one was a lease purchase. I’ve also done you know, for example, another story, this is when I was kind of marketing and not really taking on clients, I did a lot of yellow letters, and I’m sure you’re familiar with those, but basically hitting anybody with equity up just to get, you know, a relationship started. And so this one, she was actually going through a pretty bad divorce. And what had happened, actually, hopefully, I don’t, hopefully, this is a kitty share. But she said, Hey, listen, hey, you’re going to have to, you know, do another lease purchase with this one, just because I haven’t situated everything with the, with the ex or the husband soon to be ex husband. And so she said, I don’t want anything to do with this property. You know, I’m you know, all these memories are blah, blah, blah. So you know, emotionally was there, that’s a great well, let me do this for you, let me lease it out for you. And you’ll you can make some cash flow on it. And you know, I’m going to take care of all the renovations all the repairs, your taxes, your insurance, different things like that. So you actually make an income during that time. And then from there when when everything kind of gets situated then you know, when when the chips fall where they are, then I’ll just buy it from you. And so that was a really amazing, you know, way to be creative and in in real estate to not like muddy up all the waters and actually fix a problem for her. So other other things that I’ve done as a seller carry backs, those are probably one of my favorites. Just because if you can add value and it’s not speculative. You’re able to leverage up and just get even better returns. And so as you can tell I’m no I’m a big fan of leveraging in Using you know, any and all wealth builders towards your, for real estate towards your net worth. But yeah, this specific deal a seller carry back once again to let me kind of rewind is if the seller has equity or seller financing. So I’ll kind of explain both of those. So seller financing is, you know, if a seller owns a property outright, they’re actually becoming the bank for you. So for example, you know, I bought a house and broken arrow, he wanted a little bit much but you know, he owned a cash. So I said, Hey, listen, if you carry this, this, the mortgage back, what I’ll do is I’ll pay you a monthly income and you’ll be able to get, let’s say 20 $30,000 upfront, but then I’ll be able to give you that monthly income in three years, I’ll pay it off refinances Public Law. And so I was able to make a deal happen that way, basically, it’s when the seller becomes the bank for you, they hold the mortgage, they hold the note. And, you know, in some cases, you know, you can get a better rate, a better amortization, you know, a better fixed period and different things like that.

Mat Zalk 31:03

And that’s great for owners to that don’t want a huge tax hit, if they know that they’re making a lot of money today, but three years, they’re gonna be retired. Because often when this happens, right, people want to start offloading their portfolio because they don’t want to manage properties anymore, they’re getting into retirement age, they want to spend more time on vacation with their family, etc, they’re willing to take the hit in a future year where they, you know, don’t have as much income and therefore won’t pay as much tax on on the sale of the

Deren Huang 31:25

property. Yeah, and then once again, being creative in actually him getting his number, but then me being able to leverage out a little bit better and get better terms to. So that’s a seller financing a seller carry back is basically the seller becomes a bank for you. But it’s in the second position, it’s usually not for, you know, the majority of the loan, it’s usually for anywhere from, you know, 510, sometimes even 20% 30% of the actual purchase price. And so for example, a same example house for $100,000, instead of carrying back $80,000, or carrying $80,000, that he would want to only carry, you know, 10,000 or $20,000. Usually, in that case, they don’t own it outright, but they can kind of either have their you know, their returns, or whatever the case may be, and then actually gain interest on that, too. So one example of that was actually took down a five package deal using a carry bag, nice, she was just really firm on a price, hey, I want $400,000 I want 400,000 It’s like, I’m sorry, it’s not worth that much. But, you know, if you were to carry back this and blah, blah, and so it got a little complicated, but you know, after communicating, and you know, just like, hey, you know, it’s worth it, you know, if you work with me, you’ll get this, you will get it, it’s just not now. So you know, if you’re willing to work with me, you know, give me three years, four years, then I’ll be able to do this for you and stuff like that. So the deal is five units, I picked it up, she carried back actually a large amount like $100,000. So I didn’t actually have to come out of pocket any. And part of them were rented out part of them, I had to kind of do a little value add. And basically throughout the years, whenever a vacancy would come up, I would just use the cash flow to to renovate it. And that worked out really well. And once again, she got her price, but I got my terms. So it’s just another time on the table. So we did interest only 3%. So it’s pretty low, for three years actually paid it off early because I you know, I had improved the property. So so much. And you know, she, she was really, really happy with the deal, she got a price I got my terms, I got control of the asset, bumped up rents, and then renovated the things that I needed to get the valuation that I needed to and paid her off early. And she was very thankful for that too. So

Mat Zalk 33:49

a couple of things. One price is only one part of the negotiation, there’s so much other, there are so many other terms of negotiation that you know, can can still make the deal work and be win win for everybody. That’s number one. Number two, you know, the common theme throughout all of your stories is that solutions are where you’re going if you’re thinking about being solution oriented. Again, price is only one part of that negotiation. So think about what else a person a seller wants. And you can help them create the solution for that, whether it’s getting out of a property because they’re going through a divorce or needing to have a period where they’re making a little bit of income, but we don’t know what’s gonna happen with the property, whatever it is solution orientation towards finding a good positive outcome for everybody. So then you transition to an industrial there’s only one other person that I know that’s in industrial Daniel Regan, a good friend of mine was at price family family properties for a long time has a side portfolio. He’s now left and he’s doing something else but what what was attractive to you about industrial and How’d you even it’s just a it’s a it’s a part of the business that we don’t talk about a lot because we’re in the residential side. How did you get involved in what’s what do you love about it?

Deren Huang 34:56

Yeah, so the next step for me was commercial real estate. And so I was like, oh, had the most talked about the the biggest asset by dollar amount is actually multifamily. So it just makes sense for me as a single family, you know, a small multifamily kind of operator to get into multifamily. And so, you know, for the past, I’d say a couple of years, you know, I’ve been trying to cut some swings, you know, the financing is really attractive, and, you know, just learning all about it. But, you know, there’s so many other pieces of commercial real estate that’s really not talked about. And, you know, maybe it was just because I was in the circle of influence of, you know, multifamily and different things like that. But I said, Wait, you know, as I did research on every, you know, commercial property, industrial really stood out to me, because it really is kind of almost a Nigma. There’s not a lot of people talking about it, you know, bigger pockets doesn’t talk about it. They talk about, you know, multifamily and mobile home parks now, Brandon. And so I was like, Okay, maybe there’s an opportunity there for me to learn and become an expert. And from that be able to maybe dominate also. So that’s one thing. There’s, there’s kind of an information disparity. Second thing is now that I’m in industrial real estate, the majority of people are older. So if I project out, like I said, you say, you know, a lot of investors, you know, a lot of people but there’s only like two people that you know, that’s in the industrial space, right? So if I project out my career on a 3040 year basis, I’m going to become not old person that is in industrial real estate and an expert in the market. Right. So me and Daniel, so I have to, I have to hook up with Daniel Regan and just like him will be people in Tulsa industrial, controlling,

Mat Zalk 36:37

dominating real estate, and industrial in Tulsa.

Deren Huang 36:40

Exactly, yeah. And then the third, third thing, I would say, our net leases, oh, my goodness, net leases you, you have made your career in taking care of headaches. I am kind of wanting to get away from headaches. And so net leases are my way of getting out of headaches.

Mat Zalk 36:58

To explain what a net lease is a triple net lease, or are other types of net leases. And then I also want to understand specifically what is industrial for those of us that don’t know, how you categorize industrial? What does that actually

Deren Huang 37:10

mean? Yeah, yeah, that’s great. Yeah. Um, so net lease is our man, they’re so beautiful. And it seems so foreign to us, as, you know, residential. So basically, triple net leases. Stanford net, net net, so triple net, each net kind of corresponds to a an expense. So in these leases, it’s very common in industrial and sometimes in retail, that the tenant pays for the property insurance, the property taxes, and then common area maintenance. Those are those are nuts. Yeah, those are the three nuts. So, you know, it actually sounds pretty absurd. But whenever I rent out industrial property, I get to charge back the tenant, the property insurance, the property taxes, and then you know, say I mowed the lawn, or you know how to fix the gravel driveway or something like that, I can charge him for that. And then also, you know, if he clogs the toilet, I’m not getting call, he has to do that himself, he has to unclog it himself. So that’s really, really powerful. And it’s really, really nice, too. So you had mentioned calls in the middle of the night. I’ve done that, and I still am doing that. But yeah, I love triple net leases, because I don’t have to do that anymore.

Mat Zalk 38:22

If you get a phone call saying my toilet is clogged. You say? Why don’t you find a plumber on Yelp and call that plumber and

Deren Huang 38:28

get it handled? Exactly.

Mat Zalk 38:30

I love that. I love that. So what is industrial? What? What is the category include?

Deren Huang 38:36

Yeah, so industrial real estate. It’s actually, you know, just some statistics. It’s actually the largest per square foot commercial asset in North America. And that might be United States. I think it’s in North America, too. So I’m not sure. But yeah, you can double check on that for me. So what is it? And why are? Why is nobody actually talking about it. So I categorize industrial properties in two categories. One is warehouses. So that’s kind of like position to distribution, and logistics. And then on the other side is manufacturing. So that is, you know, think about anything that manufactures either maybe a weld shop or plastics or you know, paper products, too. And so the best way that I can kind of explain it is to our investors. If you think of a warehouse, think of Lowe’s, Lowe’s is really high ceiling metal building its position to consumers. But they have these racks. And basically, they can get any and all materials because of the distribution logistics. Now usually those are on a busy corner on a busy street so it’s positioned to the public. But that is kind of the style of building that you want. And then if you take it further, one more up the chain. You know, how does that Lowe’s office Sunday first get all their other stuff? Well, there’s a distribution center in Dallas. That’s just basically a really big warehouse. It’s not open to the public. But basically it just connects all the Lowe’s with all the materials that they need. So that is, you know, a big boy, you know, warehouse on a local level. You know, I just took down a deal that is a used appliance shop. You probably heard of them, j&j appliances. Wow, I love that. j&j are huge. Yeah. Yeah. So they’re huge. They have a couple retail locations to retail locations. And so how do they get their used appliances to those retail locations and, and then they do fix them at that location, too. So it’s part manufacturing part warehouse. So you know, that doesn’t see the public, the public doesn’t see that warehouse, but they’re fixing it, and then they’re cleaning it, and then they put them on semis or box trucks and then get them to their retail locations,

Mat Zalk 40:44

and you retain them as a resident as a as a tenant in that property, or have they gone. That

Deren Huang 40:48

one was, yeah, that’s a short sale leaseback and, you know, once again, don’t want to get further, but that particular deal, they’re actually moving because they opened up their second location. So they have warehouse space in there. But this one is 22,000 square feet. So it takes a long time to move. That’s especially you know, if they’re fixing it, and logistics and stuff like that. So that one’s a very short lease. But yeah, I get a great asset at the end of it. And yeah, once again, same same name dropping in Tulsa,

Mat Zalk 41:18

I love it. I love it, I love it industrial the industrial space, we just don’t I just don’t have a ton of people that do it in my network. I do have a friend that does. He likes the cinderblock construction, with 510 15,000 square feet of warehouse in the back with a small office up front. So they say look, the conditions basis is limited. We run our the admin side, the scheduling side of like an HVAC business out of the front. And people you know, rarely do people come in and say hi to us. Rather, we’re distributing all the product that sits in a warehouse. And then we’re deploying the vans, the trucks, the people that might report to duty at 8am or 7am, or whatever it is, we send them out. And then we you know, we have a small staff of two or three or four people on the front end or just you know, handling, billing, scheduling, etc. So I do have a friend that does that. And he swears by it. It’s the only thing ever he’s ever done, he owns a ton of that space. And again, loves that where people aren’t calling him, they might call him to solve something if the roof blows out during, you know, during a tornado and he needs to address it with insurance, but he’s not getting involved otherwise in any of the day to day operations of their of their real of the real estate component of their of their business. I love it. Deren, tell me a little bit, what are you reading? What are you ingesting in terms of content? How do you make yourself smarter in any of the spaces that you operate?

Deren Huang 42:33

Yeah, so right now, basically, at the very beginning of my career 2016 2017 I had read every book on real estate, and they kind of tell you the same thing. And you know, luckily, I read enough of those to get into the game. Right now I’m reading a lot about business books, and just kind of rereading a lot of different things. So right now, it’s who not how, so I’m kind of developing my leadership skills, and trying to empower other people to do what they’re really good at, whether it be creatively whether it be administratively. You know, for me, I’m kind of a big picture person. And you know, I understand the research component of it very well. So that’s kind of what I’m reading right now. Just trying to help my team lead them better, and become really good at hiring people and retaining talent to so who not how is what I’m kind of digging into right now.

Mat Zalk 43:23

I love leadership and growing your team, I really appreciate that we’re doing the same thing I can’t enter it is it’s hard. It is not easy at all to take to take other people, and imbue them with the same sense of responsibility and core values and, you know, make them do what you do what you have done. So well. Definitely a big challenge. Deren, where do people find out more about you? If they want to connect reach out? Network? How do they find you?

Deren Huang 43:50

Yeah, so I love to connect with people. Once again, I try to pay it forward just because you know, there’s a really big factor of mentorship and you know, you can learn from all my mistakes and you know, give give my expertise. So I made a specific backlink on my website. Usually I’ll just say my website, which is my name, Derenhuang.com. But I made a specific site. It’s Derenhuang.com/Tulsa. I’ve opened up a couple of Thursdays and Friday lunches, so anybody can book a lunch for me for free. And I just love to connect with them. And that just links you to a calendar invite. And so yeah, I would love anybody and everybody once again, specific to Tulsa, I don’t want to really travel to somewhere else. But yeah, that is going to be the best way to connect with me. And I’d love to connect with anybody in everybody.

Mat Zalk 44:37

Derenhuang.com/Tulsa,

Deren Huang 44:39

forward slash, whatever this is, right. Yeah. Deren Huang,

Mat Zalk 44:44

owner of 100 units and a bunch of industrial. We really appreciate you being on sharing your expertise. Until next time, thank you.

Deren Huang 44:51

Thank you.

Outro 44:56

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