Don’t Flip This Market: Ian Chait on Phoenix Buy-and-Hold Real Estate Strategy

Ian Chait (00:00)
My focus is actually lately it’s been on long-term holds. ⁓ You know, there’s, there’s not a lot of meat on the bones for flips right now. And our market is inundated with wholesalers and it’s kind of forcing the market down. I’m, I’m looking at opportunities. They might not, they might not have a good as cashflow as other projects, but I think the end game is, is huge.

Michelle Kesil (02:00)
Hey, everybody. Welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. And today I’m joined by someone I’m looking forward to chatting with, Ian Chait, who is a real estate broker as well as a real estate investor in the Phoenix area. So excited to have you here today.

Ian Chait (02:19)
Thanks, Michelle. Happy to be here.

Michelle Kesil (02:23)
Awesome. So let’s dive in. First off, for those not familiar with you and your work yet, can you share what your focus is these days?

Ian Chait (02:34)
focus is actually lately it’s been on long-term holds. ⁓ You know, there’s, there’s not a lot of meat on the bones for flips right now. And our market is inundated with wholesalers and it’s kind of forcing the market down. I’m, I’m looking at opportunities. They might not, they might not have a good as cashflow as other projects, but I think the end game is, is huge.

Whereas I might only make four or 5 % in rent, which is low in Phoenix. The appreciation will probably double.

Michelle Kesil (03:14)
And so how did you get started in the real estate industry?

Ian Chait (03:22)
Well, when I was a teenager back in Illinois and I grew up in a place called Northbrook, Illinois, if anybody ever saw Ferris Bueller’s day off, I went to high school with Ferris Bueller. And I had a little clubhouse around the corner to trailer park. was ⁓ nestled in between a salon and a Catholic girls high school, it about a mile from my house and we would hang out there.

party just to get away from our parents. And ⁓ one day the guy comes to me and he says, hey, I want to sell the trailer park. ⁓ know, I know even though you’re young, you got a little bit of money. Can you help me out? And I’m doing the numbers and the parks half full and, and, you know, it’s just, ⁓ you know, I liked it, but I, I didn’t know what to do. So I call my grandmother.

And she gets me in touch with somebody. And next thing I know that I’m part of this trust that I’m buying a trailer park with like $15,000 down. ⁓ I got my 15,000 back four months, within four months, I filled the place up and it was great. And for two years, it was a huge cash cow. And ⁓ unfortunately,

It was actually an English teacher at my high school. ⁓ he had, ⁓ kidnapped a couple of kids and, and, and killed them and kept them underneath the trailers. And

the police came in and, ⁓ know, six different departments. And I guess one of them was a, was a policeman’s son. And once that hit the paper, everybody was moving.

And, uh, you know, I came up with this thing, Hey, let’s sell people the mobile home for an extra a hundred dollars so you don’t have to fix it. So there I am watching, watching just my whole thing fall apart. But there was, uh, you know, a little company called craft foods, which is you ever had, uh, American singles or salad dressing. You probably, probably heard of them and they were expanding and,

And I was lucky they, you know, they tried to low ball me, but, you know, at 16 years old, pushed, pushed that board around pretty good and, made a good score and been having IRS problems ever since.

Michelle Kesil (06:48)
Okay, wow.

Ian Chait (06:49)
And that’s

how I got into it. And, ⁓ you know, I came out to Arizona to go to college that lasted a little past lunch. And I was a photographer and I was shooting houses for people. And this one guy, he had a rusty Civic in November. I shot two houses for him and Christmas he rolls up in a Porsche. And I’m like, well, this guy’s a yo-yo. could probably do this too. And,

I started studying the, the buying and selling of real estate more in Arizona was a really easy place to do it in the eighties. We had no qualified assumables. It was a downward market. If the people were nice at the open house, you charge them five grand cash to mortgage. If they weren’t, you charge them 10. And, uh, you know, it was possible to sell three or four houses a day. It was great. But, uh,

Yeah, I mean, it’s embarrassing to say I did better at 19 than I did at 59.

Michelle Kesil (07:56)
Wow, what an interesting journey you’ve had.

Ian Chait (08:00)
yeah. Yeah. But I, you know, I love, ⁓ my strong point during the last crash and I lost a ton of residential property during that crash. I was in the middle of, of about 40 deals, but we were able to pick up a 30 unit apartment complex from a receiver. It was a third empty and, ⁓ it was, ⁓ what I would call a D property in a C area.

And, ⁓ we fixed up the third, filled up the units and then started fixing up other units and, and raising rents. and yeah, four years later, ⁓ we got into a fight with my partners and, the property was sold and everybody made out. Okay. But, ⁓ you know, I really liked doing stuff like that because, you know, the neighborhood kind of needs that.

You know, I love walking into a neighborhood and, and the whole street gets, equity. ⁓ I’ve done that in residential. I’ve done it in multifamily, but, yeah. So the opportunities are really, you gotta look, but they’re out there today.

Michelle Kesil (09:22)
Yeah, absolutely. And how did you get into investing? What did that journey look like?

Ian Chait (09:30)
Well, ⁓

I made a lot of money and I didn’t want to pay tax on it. So, so I invested in different things. You know, I learned my lesson in the stock market. And yeah, I went back and I was, man, I wish I had my Bitcoin still. I had it in 08 and I needed the money. So I sold it. But,

You know, I was always doing something, you know, I was in the music business for a little while, so I was always on the road

know, I didn’t make a lot of money at it. So I had a, I had to some passive income. And that’s one thing that that trailer park and my teenage years taught me was, you know, buy something that you could rent and make some money on.

because the rents go up. And even if you have a mortgage on the property, it’s going to stay the same.

So if you can get in and even break even in five years, you’re going to be positive, you know, probably five to 6%. And after that, it’s a gravy train.

Michelle Kesil (11:06)
Yeah.

Ian Chait (11:24)
Just don’t pick something up that needs daily maintenance.

Michelle Kesil (11:29)
So are you more in single family investing?

Ian Chait (11:33)
Not right now. I like it because it’s simple. do teach people how to invest and that’s what I like to start them off with. Maybe a fix and flip, maybe a fix and hold. It’s funny, lot of people out here in Phoenix, have relatives that just, they’re having problems.

They need that uncle to rent them a house at a decent price. it’s kind of keeps it in the family. It’s kind of nice. And you’re doing your family a favor. ⁓ It’s good karma. There’s a lot of karma in the real estate business I’ve seen.

Michelle Kesil (12:24)
Yeah, and so what type of investment strategies do you typically use?

Ian Chait (12:31)
Because, like I say, right now I like the long term. And I probably shouldn’t because at my stage of the game the finish line is a little closer than the starting line is. ⁓ you know, I guess if I get in a deal that won’t make me any money for 10 years, I guess I’ll still be around for 10 years. So that’s a good thing. That’s a good thing. Gives me something to look forward to. ⁓

Yeah, there’s, ⁓ you know, there’s nothing like buying a dilapidated lot or dilapidated house and renting it. And you’re not going to make a lot of money, but you know, somebody buys the lot right next to you. That was a retail store and somebody’s buying the lot on the other side of you. they’re going to, they’ve got permits to either do a mini storage or a apartment complex and they’re willing to pay out to no.

and you make all that money on the appreciation.

Michelle Kesil (13:36)
What do you feel are some of the main keys that have allowed your business to be able to grow and run successfully?

Ian Chait (13:44)
The COVID interest rates were very good to to ⁓ to wheel and deal. I’d like to see those interest rates go down again. ⁓ it looks like they’re going down. you know our our government pays that interest rate too and I don’t think I don’t see how they can afford paying paying four or five percent on 10-year treasury bonds and

You know, so the whole thing, uh, you know, could change or it could just, you know, lower rates and people start borrowing money. But I think with what’s going on in the world, we’re going to see a little bit of inflation. So now would probably be an excellent time to buy, to get in.

And I’m not just saying that because I’m a real estate broker. Um, and, know, I’ve been the first one to tell people, Hey, Hey, you’re better off for a couple of years. And then let’s look, look at this.

when it comes to single-family stuff.

Michelle Kesil (14:53)
Are you also investing

in multifamily or commercial?

Ian Chait (14:57)
I have a couple of, fourplexes, which,

that’s considered residential in Arizona actually. And the, the FHA treats it as such. do a pretty good, good investor loans. and, you know, I’m, I’m, I’m kinda like the, they’re right next to each other and, ⁓ we’ve, ⁓ nicknamed the apartment complex felony arms.

because in Arizona here, if you have a criminal background, you are not going to be rented a place. And this is something that, you know, of course, depending on what the offense was ⁓ and how long ago it was and interviewing the person, we’ll put them in there. you know, I got to say, because their supply is so limited,

that they’re willing to pay a premium. So, you know, I might get an extra 20 % out of that property because I’m lifting the background restrictions.

I looked at an industrial warehouse that they were looking to make it a dormitory for sex offenders. And that was something I just couldn’t get into. The numbers were great. If I was looking at it on a piece of paper and they didn’t mention how they were gonna make all this money, I probably would have thrown some money into it.

You know, some crimes are worse than others. Unfortunate.

Michelle Kesil (17:28)
Yeah, absolutely. And what are you most focused on solving or scaling to next?

Ian Chait (17:35)
Uh, I want to get, uh, I’m going to get a bigger apartment complex. I want to either, um, and there there’s deals like I was just talking to the city of Tucson, which is about a hundred miles south of here. Uh, they, have grants to buy dilapidated properties and, and rebuild them and, and do the low income housing thing.

And, yeah, I think I might, ⁓ my partner on a few deals with the government. ⁓ you know, those, those bids are a little tricky, but, you know, I probably won’t get anything the first round, but, ⁓ I’ll know what I’m doing for the second round. And that’s what I’ve been focusing on that and, and, you know, teaching fix and flips and.

And also telling people that they got to read those hard money notes because some of them are wide open. You know, you miss a payment next thing you know, you’re paying 30 % interest. so yeah, warning, warning people so they, they at least think they know what they’re doing when they do it.

Michelle Kesil (18:50)
Yeah, absolutely. And are you looking to continue scaling into more investments?

Ian Chait (18:56)
Yes, absolutely. Now is, I wish I had more money. If any of your viewers are looking for investments, we’re going to be putting together a fund down here in Phoenix and we’re going to go after some pretty undervalued properties. And I think now is the time to do it. in 90 days, we might be too late.

So that is what my focus on is, is finding some money.

I used to do business with a group of guys and as you get older, they were older, they were all mentors of mine and one that’s left is 85 and he’s not investing in anything. And unfortunately the other guys, a lot of them were World II veterans and they just got old and passed. that ⁓ was one mistake I made that the grandkids don’t like grandpa’s guy.

Michelle Kesil (20:08)
Yeah. And what advice would you give to an investor that’s looking to get started?

Ian Chait (20:16)
Be careful, but don’t be afraid to partner up with somebody that knows what they’re doing. you know, for me, I see people, ⁓ you know, partner up with a group that I’m involved with and you know what, getting a half a pie with somebody that knows what they’re doing is a lot better than, you know, as they say, losing your tuchus, ⁓ because you didn’t know what you’re

Usually multifamily or rental properties, you’re to be able to work your way out of it. You have to have some staying power if you make a mistake. But, you know, it’s always good to go in with people that know what they’re doing and they can teach you in that, you know, I mean, I have 45 years experience in the real estate business and, you know, that’s all I’m worth. But,

It is good experience. I’ve seen it all. I’ve seen crashes. I’ve seen bidding wars. I’ve seen 12 % returns and I’ve seen 2%.

It’s just, ⁓ you know, like I said, I lost a lot of homes in the crash of, of 08 and I’m going to lose twice as many when I, in the next crash, but I don’t see it happening anytime soon.

Michelle Kesil (21:43)
Yeah, absolutely. Thank you for sharing.

Before we begin to wrap up here, if someone wants to reach out, connect and learn more, where can people find you?

Ian Chait (21:59)
Either at my email, is Ian, I-A-N like [email protected] or [email protected] or 602-308-4800. My phone number.

Michelle Kesil (22:20)
Perfect. We’ll appreciate your time and your story. Thank you for being here.

Ian Chait (22:25)
No problem. No problem. Thank you for having me. I always, I always like to hear the sound of my own voice.

Michelle Kesil (22:33)
Glad you were able to do so and share some wisdom.

Ian Chait (22:37)
God bless.

Michelle Kesil (22:41)
And for those tuning into the show, if you got value, make sure you have subscribed. We’ve got more conversations with operators like Iain who are building real businesses and we will see you all on our next episode.