85 – How to Analyze Deals and Become a Seven Figure Investor In the Bay Area with Diana George

One of the reasons we break records is because we’re not reinventing the wheel. We just look at the data and we go, “Wow. Okay, so so and so broke a record with this ,this, and that so we’re going to do the same thing.”

Hey everyone, and welcome to another episode of the Everything Real Estate Investing Show with Sean Pan. Today we have Diana George. Diana is a seven-figure investor in the Bay Area that focuses on luxury home remodels. in this episode, she’ll share her story on how she got into real estate investing and how to properly underwrite your rehab projects. If you enjoyed this episode, subscribe to the show and leave a review. We release episodes every Wednesday and Sunday and release the show notes on our site everythingREI.com. Enjoy!

Sean: [00:00:56] Thank you so much for being on the show today. Go ahead and introduce yourself and let us know who you are and how you got into real estate investing.

Diana: [00:01:02] My name’s Diana George. I got into real estate investing back in… I’ve always wanted to be an investor so I started in mortgages back in 2003, did really well. Then of course the market crashed. I would always talk to realtors on the phone and I thought well, wait a minute. I should be doing that. That’s like a better road to doing what I want to get into. So I got into real estate. It was a really hard time. I got my broker’s license in 2008. So everyone thought I was insane for doing that and then I worked at a private equity group and I worked as an analyst for them. And I was based out of Oakland. I had lived in Oakland at the time. I moved to Oakland in his 2005. After working for them I thought I should be doing this for myself. And so I started a brokerage called Vault Realty Group that focused on investors and investors loved it because there weren’t a lot of real estate agents out there that were focused on investing. And so what ended up happening is through that is I started rehabbing my first property in 2012, beginning of 2012. And then I started making a lot of investors’ money. One of my friends was like “Why are we making these guys all this money? We should be doing it for ourselves.” So I started rehabbing and eventually did my spec home. Which was you know, basically a house with sticks and I had to add plumbing and everything. That was my second rehab and I learned a lot and I just loved it. You know, I love the analysis and the acquisition side of it a lot. I hire people to manage contractors now because that’s my least favorite part. I think that’s everyone’s least favorite part to be honest. Some people are incredibly good at it. I’m not and I think it’s good to know your weaknesses and your strengths. But yeah, I just always have a passion for it and I love doing what I do. And so some people think I grind or I work too much but I don’t really look at it like that.

Sean: [00:03:04] So do you still do your brokerage now?

Diana: [00:03:06] I sold my brokerage in 2017 to Century21 and I primarily focus on investing, redevelopment, developing mainly rehabs. Century 21 is great because they’re very open to me having this investor side. And then I also do speaking engagements with them and I speak to their agents. I’ve always said I think agents would make the best rehabbers because they really especially those that really study pocket areas and are very good at studying designated areas or pockets or districts. And you know, there’s always a saying with me and my mentor he’s always said this, “When you buy the house you make the money. And then if you can add value to that, that’s a bonus.” But you know really when you buy something you want to make sure there’s equity in it because what happens so much right now is everyone’s telling themselves, “Oh, I’m going to buy this house and then in six to eight months from now it’s going to build equity.” But we don’t, you don’t know that. And so I always try to buy homes with equity and then I then by rehabbing it we’re adding a much larger margin. That’s why nowadays I do three to four projects a year, but the margins are 30-40 percent versus doing what I used to do was 10 properties, but I was doing 12 to 13 percent. So I call it working a little bit smarter, but then the other cool thing about it is we get to spend more time with design and luxury which I really enjoy because the design aspects’ a lot of fun.

Sean: [00:04:41] Where are you even sourcing these properties that you can get this 20-30 percent?

Diana: [00:04:46] Sometimes, I have 70% of our business comes from MLS and then the other 30 percent comes from agents off market. And so MLS is big. I mean a lot of people dismiss MLS, “Oh, it’s bidding wars. Oh, there’s never a good deal.” It’s not true. There’s a lot of gold mines in the MLS. I get pitched anywhere between seven to eight deals a day. And so I’m constantly like running numbers and looking at deals a lot of time. It’s not worth looking at and then sometimes you get it you find a piece of gold in that. The Hillsborough project, I found that project. It’s going to sound really silly, but I literally bought the least expensive house in Hillsborough. And even since then like we haven’t even… it’s just been a year of pulling permits and plans and architects and structural and geotech. And even in that one year, It’s gained $600,000 in equity, which is crazy. But then you have to think when you’re that paying that much interest, pretty much like you’re breaking even. So then what we put into it is what we make which is great. And so with our Oakland properties, an agent pitched it to us off market. Our Berkeley property, an agent pitched it to us off market. I had a Vallejo property that was pitched to me off market. But the Hillsborough property was on MLS. And so sometimes I go on the MLS and I find really good deals.

Sean: [00:06:15] Do you know why someone would sell for you know really low price if it’s on MLS?

Diana: [00:06:21] I think sometimes the market just beats them up and sadly a lot of people don’t realize this but agents can make or break you. I mean, they’re like contractors. They’re a dime a dozen. And you know, I don’t mean to say that to be offensive to agents but a lot of agents don’t know what they’re doing, especially when they get into a certain price point. You know, when you start getting into the price point of 1.2 million and higher you’re dealing with a different buyer. And a lot of agents, I don’t think a lot of agents understand who the buyer is in a market or who they’re dealing with. Sometimes agents give their clients bad advice because they don’t really know the market. A lot of agents just think, “Oh, I’ll just throw it on the market. The market’s so hot right now. This is easy.” And that’s why during the crash, I mean those of us who survived were those that really… you know, when you have a passion for something you want knowledge, right? Like you want to know the tenant laws. You want to know the ordinances that are happening and happening at the city of Oakland or Berkeley or whatever it is that you do your business. A lot of times when I owned my brokerage, I would interview the sellers for their listings and nine out of 10 times they would tell me, “Oh, yeah. Well, you’re going up against five other agents.” I go, “Okay!” And something as simple as,”Well, did you guys know there’s a Sewer Lateral ordinance in Oakland?” No. “Did you know we have the highest transfer taxes next to Berkeley?Berkeley and Oakland have the highest transfer taxes: $15 per thousand.” “No, we didn’t know that.” And so then,just not even selling. It’s just knowledge and when you give people knowledge, they trust you and they say, “Okay, I want to work with you” and so a lot of times that’s how we got our listings. And today, you know, we’ve unfortunately run into a couple of agents who listed our homes where they just didn’t understand the permit, the way permits work. And it’s like you can sit down and explain it to them. But if they don’t have a passion, they don’t really care. And sadly some agents just do this because they think “Oh it’s a paycheck”. And I mean who really is successful when you have that mentality? Even in rehabbing homes, a lot of investors, a lot of people are jumping in because they think it’s a paycheck and you can make some fast money. Yeah, you can but do you really have a passion for this because passion is what sustains you. Passion is what makes you truly successful. It’s what makes you go the extra mile. I think that makes a difference between those that have a deeper knowledge of things and those who just kind of you know, they just don’t care. They’re just in it for the money only. Don’t get me wrong. I like money. Don’t get me wrong. But I’m not greedy. I like money, but I’m not greedy; big difference. But I do am very up and up on what’s happening in Oakland right now: with the ordinances, with the buildings, whose entitling what, and I think it’s important to have that in the area you’re rehabbing in.

Sean: [00:09:24] Yeah just have good market knowledge of the place that you’re working in.

Diana: [00:09:27] Absolutely. Absolutely. And you’d be surprised how many people don’t. And I think that’s kind of a little bit disheartening. But when the market’s this hot, you have to expect that.

Sean: [00:09:38] Do you want to talk about your Hillsborough project? Like it is the first complete new home that you’re building?

Diana: [00:09:46] No, my second house was a spec but in terms of adding 2100 plus square feet, yeah, this is the biggest in terms of how much square footage I’ve added to a home. So in regards to that it’s big.

Sean: [00:10:00] So when you first saw it on the MLS, can you talk about why you thought this was an attractive property to pursue? Why do you think no one else was competing against you when you bought it?

Diana: [00:10:09] We were competing. We competed with a couple from China, but we ended up winning. It’s kind of a funny story.But I’m half Armenian and so the realtor was Armenian. I think we had kind of a connection. We ended up coming in higher anyway, but I think to him it meant a lot that I was a woman and I was doing what I was doing and you know, he wanted me to have a crack at that and that meant a lot to me. Sometimes being a woman works in your favor, most of the times in this industry it does not. So if I can have something in my favor, I’ll take it. But at any rate I saw the property, I analyzed it, I based the numbers off of if we could add a third story. And so we had to make sure that we were compliant with the FAR. It’s basically like your lot size versus how much square footage you can add to a home. And so we were told by our architects you guys can add 1556 square feet on the third story, do a master suite with a balcony, a bedroom and then another bathroom. And then we had 472 square feet downstairs that was not permitted that were turning into like escape / Scooby-Doo room where it’s going to be a secret shelf. And then you pull out a book and the whole shelf turns and it’s a secret room with like a wine cellar and cigar humidor and a private patio with a water feature. And so we’re turning it until like the, you know, like the woman / man cave. Very private room. I think that’s going to be an incredible feature to sell in an area like that because it’s luxury and I think people just get a kick out of that kind of thing. And so yeah when I heard, “Okay we can do this,we can make it into a six bedroom, five and a half bathroom with two half baths, and 4750 square feet.” I was like, “This is a winner. This is huge” So we went for it. And so we finally got our final condition approved on our permits this week. And then we walk it with our contractors next week, and we’re pretty excited this is probably going to break ground pretty soon here. So it’s exciting.

Sean: [00:12:30] That’s very exciting. So what’s the projection? You’re going to work on this for six months? Nine months?

Diana: [00:12:34] They projected 6 to 8. So I think it’s safe with contractors to say 9. You know how it goes.

Sean: [00:12:43] I bet it’s like perfect timing because nine months from now would be March of 2020.

Diana: [00:12:48] Exactly we’d be at… So if we started in August, yeah eight months would be April to May 2020. Yes. It’s perfect timing. Yes school year. Yeah, and my ARV was 5.8. But based on the property that just sold in the agent that we’ll be using in the neighborhood. We’re projecting 6 million. Yeah, but we’re going to go off my ARV because we like to be conservative and I tend to… It makes my partner happy too because then it’s like, “Oh my gosh. I thought we were only going to get this much.” It’s like, “Well, no, it’s because I was so conservative” And that ends up, you know, it’s kind of like under-promising and over-delivering which I enjoy doing.

Sean: [00:13:33] Sure they couldn’t be more delighted. Did you purchase this property using hard money?

Diana: [00:13:38] We did. Yeah. Always. I use Iron Bridge. I’m going to plug them unashamedly. They’re awesome. And I love working with Richard Kami and Gerard. They’re awesome. I’ve been working with them for seven and a half years. They’re great. Yeah.

Sean: [00:13:55] So you’re probably, I don’t know, I’m assuming are you using 10% down or you doing more because this is like a longer-term project?

Diana: [00:14:00] 10% down and I think much of it is because of our experience and how many projects we’ve done with them. And so we have an incredibly good relationship with them. But you know, we’ve had other lenders offer us the ten percent as well. So it is a big project but in the scheme of things, I mean, it’s like any other project we’ve done except for we’re adding a third-storey. That’s the only big difference. So the vulnerability point will probably be there for about three weeks. Which means you know, when the house is fully exposed and you have sheer wall that’s exposed. But once you get past that vulnerability point, it’s like any other project.

Sean: [00:14:44] Yeah, but what I mean is like it’s a two-year project. So you’re holding onto hard money for two years. That’s hard.

Diana: [00:14:50] That is the hard part of it. Yeah, that’s rough. I mean I projected it for two and a half years just to be conservative and so and I padded the interest as well. I padded a lot of things. I padded the budget. So you have to be conservative and pad. A lot of times with investors I see them get a little overzealous and they don’t pad enough. Or they think oh I can get it done for this much. It’s like, “no, you can’t” especially nowadays the price of everything has gone up exponentially. I mean when I started we were rehabbing at $35 a square foot.

Sean: [00:15:29] No way!

Diana: [00:15:30] Insane. Yeah, I mean we were picking up Victorians in West Oakland for 150K and rehabbing at 35 bucks a square foot. So I beat myself up for not holding some houses. But you know, shoulda, coulda, woulda.

Sean: [00:15:43] Well then again you probably wouldn’t have scaled this quickly if you held on to everything. You do need a working budget.

Diana: [00:15:49] You’re absolutely right and that’s kind of the thinking back then. I was still very new so I needed the capital, you know. I didn’t start working with Iron Bridge until my fourth or fifth project. So it was hard. I mean and even back then like some of the hard money lenders like when it was all starting, some of them would come in and say, “You know we’ll give you a hundred percent but we want a 20 or 30% equity share.” I don’t know if they still do that today. But that was really big when I was starting and we never did those. But those guys were big back then. There was a lot of companies doing that at the time. And hard money was always coming from, Florida. You know now everyone in California is, I mean everyone and their grandmother has like a hard money shop. You know, it’s just a very different playing field than it was back then. The landscape has changed quite a bit.

Sean: [00:16:47] Are you also getting financing on the construction side too?

Diana: [00:16:50] I do. I raise capital. So I raise capital for that and then we pay our investors an annual percentage. And so our investors loved working with us. Like for example, I raised 1.2 million last year for our projects and then all of our investors were just paid back last month. That’s why I seem a lot lighter.

Sean: [00:17:13] Yeah, I’m sure. What kind of return are you giving your investors and do they put on the property as a second or how does that work?

Diana: [00:17:22] We do a promissory note then they come in and they get 10% annually. Some of them do want to be on the deed of trust and some of them just say, “We trust you. We don’t need to be on the deed of trust but we do want to sign promissory note.”A promissory note in California is a legally binding instrument and acts as a guarantee. I know in the lending business they say there’s no such thing as guarantee. But it does in fact act as a guarantee and it does promise the client, the investor that we will pay them back. And so, you know knock on wood we’ve never had any issue with paying any of our investors back. I’ve raised five million in the last four and a half years and we’ve always paid our investors back on time. Many times we say it’s 12 months. Many times we pay our investors back in nine to ten months and we don’t prorate it. So we give them the full 10% return.

Sean: [00:18:22] Wow! So it’s not tied to a specific property. This is kind of like an operating budget that you can use for any project you have.

Diana: [00:18:28] Absolutely. There’s some clients that are a little bit more… they will request that and sometimes we will do that for them will put them as a secondary to the loan. So Iron Bridge would be first, they would be a secondary and then we would be third. But I pad things so much to where even if there was a 20% drop in the market, our investor would get paid and we may get scraps or get nothing. But at the end of the day, I can build myself back up. I don’t want to have a bad reputation with an investor. So I always want to make sure my people are paid back. Because your reputation is everything. You don’t have that then you know.

Sean: [00:19:09] Yeah because you always make the money back. But reputation once it’s gone, it’s gone.

Diana: [00:19:13] Exactly and that’s you know, so I tell a lot of investors it’s just not worth burning that bridge. And so I’ll eat, I’ll be fine. I can rebuild. I’ve rebuilt before, I’ll rebuild again. I mean, I don’t want to but if it had to come to that, you know, I can do it again. It’s fine. But like I said, it’s more important for me to have my investors be taken care of because they have been the second part of growing our business. So, you know, they’re a big part of what we do.

Sean: [00:19:44] Do you mind if I go into more detail on that? About how you recovered from that?

Diana: [00:19:48] Sure absolutely. There’s no shame around that. I mean, I think some people get embarrassed about talking about that. I don’t at all. I mean I was a 27 year old making way too much money in mortgages and thought “This is how it’s going to be.” And you know the subprime crash happened and it was devastating on a lot of people. It was pretty devastating. I lost my home. I lost my job at the time. It’s like I would go to a brokerage and then two weeks later they would shut down. And I would go to the office to pick up a check and the place was empty. And like there was one place where it was like they owed me $14,000. I was so excited because it’s like now you’re like a starving artist, right? And I go in there to pick up my check. I’m so stoked like “Okay, I can pay off these bills. I can pay this off.” And I walk in and it was like papers are all over the floor, chairs are gone, like chairs are upside down. I was like, “Oh my gosh!” You could tell they ditched the place overnight like they just owe somebody money and they ran. And I remember at the time reading this article that was saying 50 brokerages were shutting down a day in California at that time, and so it was a hard time. It was a really hard time. The person I was with at the time left me. So, you know, it wasn’t an easy time in my life. But I am one of those people that I think it’s important to embrace pain or embrace whatever you’re going through because nothing helps you grow more than discomfort. No one ever grows in comfortable situations. No one. I’m sorry, I don’t care who you are. Nobody grows up in a comfortable situation. Your life has to be uncomfortable in order for you to grow. And perseverance, dedication, not to be cheesy, but I mean really that’s what separates those who make it to the top and those who sink. And you know, I came from immigrant parents so I watched them come to this country, didn’t even know the language. Just busted their asses. My dad was a bus driver when he came here. Now, he’s a chemical engineer who’s a consultant now for PG&E. He was running a chemical engineering firm they sold and then now he’s a consultant. My mom went to ESL classes. That’s English as a second language when my brother and I were in junior high. And then started her own skincare company. And so I have one parent that’s an entrepreneur and the other one is a more traditional corporate atmosphere. But watching them was I think it was huge for me. You know, I watched their sacrifices. I watched how hard they work. They just never gave up. They gave zero Fs, you know what I mean? Like so when you grow up with that, you kind of think like they gave me an awesome life, you know, they put me on the playing field. I have to step up and so, you know at the end of the day, I mean I was really touched by your story when I read it on Facebook. I think it takes a lot of courage to come out and say this is what happened. And you know what you’re going to be better for it. If you can embrace that, you’ll be better for it.

Sean: [00:23:22] Yeah, thanks. I mean I did it mostly so that it wouldn’t own me. Right? I didn’t want someone to be like “hey, did you know Sean blah blah blah?” Well, I’m like, “Yeah, I told everybody.”

Diana: [00:23:43] Right so you control the narrative.

Sean: [00:23:43] You control the narrative exactly.

Diana: [00:23:43] Yeah, and that doesn’t define who I am. That’s something that happened to me, but it doesn’t define me. What defines you is how you handle the situation and if you handled it like a boss then that’s kind of how it goes. But yeah, I’m grateful for that experience. If I could go back in time, I would want that to happen to me again because it made me very grateful, it made me way better at saving money. Now I’m like a little squirrel. I like horde everything. You know, it made me very different on how I perceive things and I’m so grateful for that experience.

Sean: [00:24:08] I’m pretty sure it makes you mentally stronger too. Like you’re not scared of what most people would be scared of.

Diana: [00:24:13] Yeah, a mean you have to take risks, right? They always say risk-takers become millionaires. If you don’t take any risks, I mean I’m very calculated with my risks, but the saying says “no risk, no reward.” So those who take risks often see rewards. Sometimes you get smacked. It happens. But you know, we have to be really calculated with how we take our risks. I’ve thankfully never lost money on a deal because I think my experience made me really, really, really cautious moving forward. And I help other investors too. Like other investors will call me and like, “What do you think of this deal?” And I’ll say “No don’t do it” or “Absolutely you should do that” But you know, I think it’s just it’s hard especially nowadays because I think so many people want to get into this and things are, everything’s so expensive. And a lot of people are getting taken advantage of too. So investors just have to be very weary of… I think it all starts with analysis is my point. It’s like everything starts when you buy a house, so you just have to make sure your numbers are tight. I always say whenever you’re feeling emotional or scared, look at your numbers, look at your bottom line, and that’s what always lets you know that it’s going to be okay. Don’t veer from the numbers because that’s when I see people kind of lose it.

Sean: [00:25:34] So what did you do to get out of that hole, to get out of that rut?

Diana: [00:25:38] I went and got my broker’s license in 2008 and everyone’s like “You’re insane” And then I thought I want to be an investor. So the best way to be an investor was I joined this private equity firm called McKinley and at the time they were a 10 million fund and we were up against another 10 million funding Waypoint. Now Waypoint’s like a billion-dollar hedge fund. I think their third in the country. Difference between Waypoint and McKinley is McKinley flip-flip-flip-flip-flip and they were not pulling permits, they were getting red tagged left and right. So I ended up leaving because I hated the quality of their work. And Waypoint was holding and pulling permits and doing things to code. When I left McKinley I did gain a wealth of knowledge. I gained a ton of knowledge because I worked with a really strong analyst there. He was a really sweet guy. I work closely with him. I saw how he did things. You know, he was very detailed. You don’t go past freeways. If you’re in a certain pocket area, you stay within that pocket. When you’re in suburbs like Walnut Creek or Concord, you can do a mile radius, that won’t make a big difference. But when you’re in urban areas like San Francisco or Oakland or Berkeley, you have to be specific to district because I’ve seen a lot of investors get burned that way. So then in 2010, I started and I left the company and I started doing Trulia leads and I started doing the San Francisco market. I was working with buyers. And in 2011 I started feeling the market pick up and then I saw Twitter come in into the Mercantile building on 10th Street. And I thought “Oh wow Twitter’s coming in?” and I was like “This is going to open the floodgates for all these tech companies” and then my thinking was they’re eventually going to pour into Oakland. Because in my mind, I never understood why Oakland wasn’t more desirable or popular than it was. I mean, it’s beautiful climate. It’s like centrally located. It’s a six-minute, at least eight minutes on the West Oakland BART train, the bridge and it’s awesome area. So I opened a brokerage in Oakland and we focused on investors. And I remember my first month we closed, I closed eight deals and I completely got myself out of debt. And then with the money I had left, this is when I talk about risk. I’m finally breathing again after four years of losing everything. And what do I do? I go into my first rehab, put every darn penny into that rehab and I’m like, “I’m going to make it or break it right now.” And I’ve already been down for 4 years. So here it goes, right? And it just took off, you know, I took off. And I remember doubting myself even when I was running my own numbers. I’m like, “I don’t know if I’m going to get this ARV.” And then but at the time I started also working with Dean Higa and Joe Mets, and I pitched them their first deal. And I remember they were both kind of little squirmish about it because they weren’t used to Berkeley and we made a little over a hundred thousand on that deal. And Dean and Joe were so generous that they kind of shared me with all these investors and the next thing I know it was like the floodgates were opened. I was successful on my rehab, I was successful with their rehab. And you got to think like at that time people were doing maybe 40 to 60 thousand dollars on a rehab. No one was doing six figures. So that was a big deal when that went down. And investors started calling us left and right to work with us. And so I started project managing their deals. I would do their design for them. I would hire contractors for them. And eventually it was an education of rehabbing because I started doing between my deals and their deals, we were doing maybe like 15-20 rehabs a year. So it was a quick education for sure. It was accelerated.

Sean: [00:29:45] Yeah. Wow, that’s an amazing story. I mean, it seems like your experience at that investment firm really helped you out with getting really good at doing your analysis.

Diana: [00:29:56] Yeah, I always tell everyone it starts with analysis; like you have to start there. The other scary thing about agents, I don’t mean to like bash on real estate agents because I mean I was one for years. But you know I worked with agents who are very investor savvy and there’s a few of them out there that are just incredible to work with and they’re great. The difference with them is just the way they run numbers, the way they run comps. They send me reports. They give me the full-blown analysis. Then there’s some agents out there who were like, this is a killer deal and they try to sell you on the emotion of how cute the neighborhood is and like this tree that’s a hundred years old in the front yard. Like that’s great. But what do the numbers say? And so people have to be careful with agents because they can also manipulate comps. They can pick comps; they can cherry pick. And so that’s why I always tell investors, “You have to know how to do your own analysis. You cannot count on somebody else to come to you and say, ‘you’re putting, you’re pouring a lot of money into this.’ “Some people pour their life savings into it. How can you not double-check and analyze your project or your property and say “okay their analysis is spot-on” or “Yeah. I don’t know how they got that number. This is way off”. And 9 out of 10 times when I talk to investors who lose money it’s because they counted on the number their agent gave them. “Well, my agent said I was going to get this”. “Did you run the numbers yourself?” “No.” “All right. Well, that’s what happens.” I mean, it’s a bummer but I can’t drive that point home enough. I still get calls to this day of like this happening to investors and it just breaks my heart.

Sean: [00:31:42] So how would someone go about learning how to do analysis? Because I don’t see many people doing that or teaching it at real estate meetups and stuff.

Diana: [00:31:50] I do it at my meetup site. I kind of like do a one-on-one on it. It’s just really about focusing on pockets, not going out so far and trying to make something work. I hate to say it but you almost have to look at it really cynically and pessimistically like make it work until it doesn’t. And so a lot of people kind of have this approach of it’s a gold mine. You can’t go into thinking it like that. I immediately go in thinking this is going to be a piece of crap. Let’s see if we can make this work. So my approach is a little bit more cynical. But another thing is people have to be really careful like, you know, Zestimates and Zillow. It’s like, “Oh my gosh!” When people tell me that I’m like, “Stop, just don’t go there. Stop.” Redfin, I can’t believe I’m even saying this but Redfin’s actually been pretty good to doing that kind of thing. I think the only thing you have to be careful with Redfin is they pull from the same IDX as real estate agents do. They pull from the same MLS and IDX. Zillow does not. Zillow’s on another platform that doesn’t make any sense and that’s why their algorithms are off and their numbers don’t make sense. Redfin actually pulls from our MLS. So even if you’re not a licensed real estate agent and you’re a person who rehabs and you’re trying to look at numbers, Redfin can actually be really helpful if you know how to use it properly. I always go to MLS. I’ll probably always keep my license just so I can have that access because MLS is the best place to kind of search and do like a really strong analysis. I mean, I look at everything from, okay these three comps how many offers of these three comps get? Oh so-and-so got three offers. So-and-so got five offers. So-and-so got two offers. That’s 11 offers. Okay, so now I know that out of those three homes, 8 buyers lost and they’re looking in my area. So now I know I have eight people I know of in this pocket that could potentially buy my house. And you kind of gauge competition. The other thing is like, another part of analysis, people don’t do this, is who’s your buyer? If I’m in the Temazcal in Oakland, my buyer’s going to be San Francisco executives. No doubt. They’re going to be sales directors. They’re going to be… if you’re looking in maybe like Eastmont, maybe you’re like in middle management. Who’s your buyer? Who’s your buyer? Who’s the person buying your home? How do you relate to that individual? Even with design. Design comes down to analysis, believe it or not. If I look at nine homes in an area. Why did this house sell for 40% more than the other houses? Oh, okay, they added like black windows with white paint. Or okay, they did hardwood versus laminate or whatever it is. You have to figure out why did someone break a record in a neighborhood and emulate what they did. So you break a record in the neighborhood. One of the reasons we break records is because we’re not reinventing the wheel. We just look at the data and we go, “Wow. Okay, so so and so broke a record with this, this, and that. So we’re going to do the same thing.” And our last three projects all broke records and that’s because we’re not reinventing the wheel. We’re just looking at what MLS, what the data is showing us.

Sean: [00:35:19] I like how you talked about all these things. I never even noticed it. So I’m learning a lot right now. I never looked at offers made. It’s like a cool point. There’s people out there. Who is your buyer pool looking for a house in this neighborhood? And then of course like who’s your ideal persona? Who’s gonna buy this house? And what kind of features do they want in this kind of home?

Diana: [00:35:38] Exactly and that’s when you kind of understand like, “Okay, well what broke the record? Okay. So these buyers are looking for this.” Like the big thing right now and I know that sounds ridiculous, but a lot of these investors were just kind of throwing Mulch and doing these desert landscapes. Buyers hate that. If you look at everyone who did concrete or desert landscapes, they did okay. Now look at the houses that did grass. Okay. I know we live in California and everyone who’s an environmentalist is going to get down on me about, you know, water consciousness, but fine. Here’s the thing, if you look at backyard with grass and fire pits or vegetation, those houses slayed. They went, you know 400-500,000 over asking which is pretty normal in Oakland right now. So what is it about grass? I walk my properties on open houses. Sometimes I like to hear what people say. And one of the number one thing I always hear is, “The smell of cut grass reminds me of when I was a kid like playing baseball or softball. Oh, you know when me and my sister used to play in the backyard, I mean my brother used to play in the backyard.” It reminds you of being a kid playing in your yard, and you know, everyone rehabbing is trying to be fancy. “We’re going to do desert plants. We’re going to do this.” No one wants that. They want the simple yard with cute grass, some fruit trees if you can afford that, sprinkler systems, fire pits, and you know, vegetable boxes. We do this on all of our properties and people love it. The number one thing we always hear is, you know, “we loved your backyard. We love the backyard.” And it’s actually a huge selling point, this grass. I mean who would have thought but it is.

Sean: [00:37:26] Yeah, I mean, it looks good too. That green contrast on like say brown fences or you know, whatever fence color you have. It looks… it pops.

Diana: [00:37:33] It does pop. It looks really pretty too. Absolutely. And if you have kids or a lot of people have dogs, to them it makes sense. What’s a dog going to do with a desert plant backyard? You know, if you care for your little kids, it’s like you don’t want your kid touching cactus or whatever. It just doesn’t make sense. And so, you know, the big thing too recently was like all these designer tiles which I’m not a fan of. But it’s not about me right? It’s about what my buyer wants.

Sean: [00:38:05] What do you mean by designer tiles?

Diana: [00:38:06] You know these tiles that are out right now that have like these designs on them or like they’re like really funky. And everyone’s going gaga over it. And so we put them in niches in our bathrooms. Made it look like like artistic Deco and kind of gave it a pop. People love it and personally, I would never do it in my own home. But I always tell investors, “You can’t look at it like ‘what am I doing?’ Like you should add a little bit of your flavor to it no doubt. But again fall back on the data. What is the data telling you to do? What what’s the data saying is going to bring you the most money?” And that’s what investors should do. If you’re in this for profit, that’s absolutely what you should be doing.

Sean: [00:38:50] So what are you doing to understand the market trends and getting that inspiration?

Diana: [00:38:55] So part of it is like going to new developments, seeing what builders are doing. That’s a big one builders always set trends. I love to go see what other investors are doing. I go walk their properties. There was one house I walked, it was so pretty, in West Oakland. And it had this awesome wainscoting and I was like, “Wow that looks Victorian.” But they did it in a modern way. And the crown molding was done in a very modern way. It looks really cool even though it was a Victorian. They really modernized it but kind of broadened the flavor of the Victorian with wainscoting and crown molding that doesn’t look like the 1920s. It looked like today. So you get good ideas from other investors too, and builders. I’m really big on magazines, like I love architectural digest. Nowadays you can just go on Instagram. I’m a huge IG person and I’ll add… you know, I followed Dwell and Architectural Digest and interior designs and Million Dollar Listings. And you get really good ideas from those places. The secret room idea was actually my partner’s idea. You know, her whole thing was like “We need something in a six million dollar neighborhood that’s different than everybody else.” And you know the agents we spoke to in the area we’re like, “That’s definitely going to be different. That’s cool.” They loved it.

Sean: [00:40:18] It’s going to show so well. I mean, like little kids running around like “Oh my god Dad buy this house!” And then yeah, this is pretty cool.

Diana: [00:40:27] I hope so. I hope that’s what happens. But yeah, I mean, it’s neat to kind of see. That’s a lot of where we get our inspiration. That’s where we get it from and I am always been someone that was really really modern. I love modern design. Some people aren’t into that but that’s something I really love. So for me to redesign a home and make it modern. Like the last two houses we did was challenging for me because it was French provincial and then it was a craftsman that was built a hundred and nineteen years ago. So we made it modern but we had to kind of keep the integrity of the old character of that home as well. And so it was really cool to execute that and watch that come to life. Sometimes people want to go super modern, but then they’ll do these aesthetics that is more contemporary. So it’s important as an investor, if you don’t have a design eye or understand what design is, you should hire somebody. You should hire a professional to do that for you. Because I’ve seen some investors call me and they’re like, “Yeah, I’m going super modern” And then I look at their tile and I’m like, “Herringbone Carrera’s not super modern. It’s more contemporary modern. It’s not going to fit your aesthetic.” And so that’s another thing is that it has to make sense because a lot of buyers in expensive price points,I mean, let’s be real they know the difference with this kind of thing. So you have to know the difference. And some people if you’re in a lower price point it won’t matter. But if you’re in a higher price point, if you want to go into luxury, these are the little nuances you have to know about.

Sean: [00:42:10] Absolutely. What does an interior designer…How much do you pay them for their services?

Diana: [00:42:15] What we do is we have an employee and she’s a design and construction background. And so she works as an employee for my company and it’s great because we all bounce ideas off of each other. And you know, one of the things I tell a lot of investors is if you make good money, you should hire people in place to handle your operations or your design, the things where you’re weak. Because let’s be real all of us have weaknesses. To sit here and say we can wear all the hats is ridiculous. And for me someone who’s a little bit of a control freak it was hard for me to delegate, but I read this book by Jack Welch and he’s like if you learn how to delegate you will quadruple your income. You’ll do 10 times your income. And that really made me think because when I think about a lot of investors I talk to them I’m like, “Do you know what your hourly rate is?” They’re like, “No”. Like, “You don’t know how much you make an hour as an investor?” They’re like “No.” I go, “Okay, that’s problem. number one” Like this is when I go back to analysis like you just have to go back and study everything about yourself. And so I know what my hourly rate is. So why am I spending five hours at the city of Oakland pulling permits? That’s a waste of my time that I’m throwing money out the door. What I should be doing is hiring someone who’s getting paid less than my hourly rate and they’re at the city of Oakland. Now, I’m doing something else that’s making me money. And people have a hard time with that. But listen if you’re making this much money an hour, then you can sacrifice 15 an hour here or you know 30 an hour here, and now you have a team of three people and you’re delegating tasks. One person’s doing operations. One person’s doing project management. The other ones doing project design. And now you have more time to take that hourly rate. If you’re making 300 an hour, now you’re going to pump yourself up to four or five or six hundred an hour. And so that’s what I tell investors is do you know what your hourly rate is? How much do you make a year and break it down by how many hours a week you work. And be honest with yourself and say “Okay this can’t…” I mean if you want to be a one-man show, I know a lot of people who want to do that, I was like that for years. And now that I have an employee, I’m like, I don’t even know how I did it without her, you know. It really will help you scale. It will make you personally happier. You have more time for yourself. Now you get some me time or whatever everyone’s saying is like time for yourself. These are all important. Burnout’s real. If you burnout, you’re good to nobody not even yourself. So having a team I think is incredibly important or just hiring someone to take on some tasks for you that you shouldn’t be taking on.

Sean: [00:45:06] So do you only have that one employee working with you?

Diana: [00:45:08] Currently, yes, and then the goal is we’re probably going to scale. Or we’ll probably going to be scaling like the next six months to a year.

Sean: [00:45:16] And what are those money-making activities that you were referring to that you should be spending your time on versus going to Oakland for a permit?

Diana: [00:45:23] Exactly. It’s like for example, like I could be looking at other properties. I can go out to networking events. I could be having lunch with another investor. I can go out and syndicate more money. I mean, there’s a list of things as a someone as investors that we can do to bring in more capital versus you know, sitting at a city and at a permit department for four or five hours. Or you know going to Home Depot and buying switches or outlets. You know what I mean? So these are things we’re why am I doing this? This is a waste of my hourly rate. You’re burning money. There’s so many things you can do to offset that and then build your business so you can keep more of your income and grow your income.

Sean: [00:46:09] Very nice. So what’s next for you?

Diana: [00:46:13] Oh, jeez. Well, my partner and I are actually were going to be splitting apart. So she’s going to take Artemis and then I’m going to be starting a company. Not revealing the name yet. So that a hundred percent sure. But we’re going to partner on Hillsborough. So Hillsborough will be our project together and then I’m going to be, my employees and I, are going to be venturing off. I’ll be starting a new company. And then I’m going to be focusing on multi families and luxury more. But I have a six unit in the works. I have another project in the Oakland Hills. And then I’ll have Hillsborough. So I have quite a bit on my plate in addition to everything else going on.

Sean: [00:46:55] So your multifamily, is that here in the Bay Area?

Diana: [00:46:57] Yeah, it’s in Oakland. It’s a six unit. We’re going to be rehabbing it. I’m going to hold it. We’ll see how long I hold it for. I’m very like impatient with holding even though I should. So I’m going to be holding it. You know watching a lot of these meetups with Neil Bawa and just reading about where the rental market’s going, it really makes sense for investors to hold. So I want to start holding and building a passive income as well. So I’ve always been told flipping gets you rich but holding gets you wealth. And so that’s kind of where I want to take my next level. That’s where I want to take my business is, into multifamily and holding and going after some larger units.

Sean: [00:47:44] And when you say luxury, you mean more projects like Hillsborough?

Diana: [00:47:47] Yeah. Absolutely. I love the project. I think it’s important to keep rehabbing and turning over. I don’t like the word flip. I guess that is the term that we have to use though.

Sean: [00:47:58] Renovation.

Diana: [00:47:59] Yeah renovation. I mean we completely gotten start all over but I mean another thing is, you know, I’m taking baby steps right now because I’m conservative. But you know, I’m doing six units now then I want to jump to maybe like a 20 unit then maybe jump to like a 50 unit. It’s so funny because a lot of these people I talked to who do 50, 60, 100 unit buildings, like once you do 4 or 6 or 10, it’s the same as doing a hundred. The only difference is capital and how you manage your capital so.

Sean: [00:48:31] Yeah, you buy it. You somehow convince the tenants to leave whether through cash for keys or whatever means. Renovate units, increase the NOI and then now it’s worth more money.

Diana: [00:48:41] Exactly. And so I tend to go after multi-units that are 30 to 40 percent below market rate in rent. And cash for keys actually has worked out very well for me in the past. So it’s kind of the direction that we’re going in.

Sean: [00:48:58] I wonder if you can finance cash for keys?

Diana: [00:49:02] That’s a good question. That would be great. But if you refinance it to a Fannie Mae loan technically, you’ve kind of are like bundling it all up into your finance, right?

Sean: [00:49:13] If you paid first then you renovate and you cash out refinance.

Diana: [00:49:16] Yeah. Then yeah. I guess like you are kind of financing it. You’re right. It’s actually a good point. Yeah, you are.

Sean: [00:49:24] Interesting concept. So if you can go back 20 years and talk to yourself, what kind of advice would you give?

Diana: [00:49:30] I would tell myself to hold more in your earlier stages. Hold more properties. My one mentor used to say for every three flips hold one. And I would have told myself to listen to him. What’s the point of having a mentor if you don’t listen to them. That was pretty foolish.

Sean: [00:49:47] Do you want to give a shout out to your mentors?

Diana: [00:49:49] Yeah, I’ve had a few of them. Anders Fang, Jamie Bahrami, Dean Higa. So yeah those guys have been awesome. Those guys have all been really awesome people I learned from. And I still communicate with. I think Jamie I haven’t communicated with because it’s my understanding he moved to Newport Beach and now he’s like rehabbing townhomes or he’s building townhomes out there. So he went really big scale. But yeah, you know Anders is awesome because he’s out here in Millbrae and he does ground up projects luxury. He’s very much into the luxury game. So I like to learn from him and walk his properties and see what he does. He’s very ahead of the curve when it comes to design. He has a great eye for design. And then Dean is just someone I’ve always loved because he’s just very down-to-earth, good guy, and he’s always willing to share advice with people. You know him and I are very kindred spirits. We kind of have this, you know, abundant mentality. It makes me laugh when investors like horde ideas because I’m like, “Nothing you have is original. Like nothing I’m doing is original. Everything . The only difference between how I do things and other investors do things is the way that I organize and I execute. That’s the only difference. There’s really no difference and I’ve shared with you what I’ve done. I mean my execution always boils down to for me is analyzing data. Like I’m a big believer in that. The information out there, numbers don’t lie. You know numbers never lie to you. People do but numbers will never lie to you. So, you know, I’m a big believer in that.

Sean: [00:51:35] Some good advice. Do you have any last thoughts before we end the show today?

Diana: [00:51:38] No, I really appreciate you having me on. You know, you’re someone I’ve seen in the market like in the scene for a while and I’ve always been inspired by you and I was really touched by your Facebook post like I said. And I think you’re just incredibly courageous and I think you have such a great message and I love that you’re doing the show and I’m grateful to be on the show.

Sean: [00:52:04] Oh, no. It’s my honor. Yeah. So how can people get in contact with you?

Diana: [00:52:11] So our website for now until I move on is www.investwithArtemis.com. And then my email and my contact information is on there. But my email is Diana@investwithArtemis.com.

Sean: [00:52:28] Thank you so much for your time today.

Diana: [00:52:29] Thank you for having me.

Sean: [00:52:31] Yeah, I hope everyone listening to the show understood your message about how you need to analyze data. That’s like the only thing that matters really. So get good at analyzing data and you’ll be successful as a real estate investor.

Diana: [00:52:41] Everything falls into place. If you can analyze the data everything else will fall into place because then you’ll know where your contractors need to be budget-wise. Just everything just falls into place from a numbers perspective. And so yeah, absolutely just analyze the data. Don’t get distracted by anything else, just facts.

Sean: [00:52:59] Alright, thanks a lot.

Diana: [00:53:00] Thanks. Sean.

Sean: [00:53:01] Take care.

Diana: [00:53:02] You too. Bye!

Here are some of the key takeaways from this episode. You need to know your strengths and hire out your weaknesses. Passion helps you go the extra mile and get to the next level. You need to be extremely diligent with your analysis and you need to be conservative with your numbers. Make sure you know your numbers and run them yourself. Don’t just rely on what your agent say. You need to keep up with the latest trends. Follow popular accounts on Instagram and check out what builders in your community are doing. Builders set the trends. Remember, this is a business. You don’t pick the things that you want in your house. But pick what your ideal buyer would want. I hope you all learned a lot. You can find the show notes on our site everythingREI.com. Thanks, and have a great day.