Embrace Change: Your Ultimate Guide to Smart Market Pivoting

Brett McCollum (00:00.652)
Alright guys, welcome back to the show. I am your host Brett McCollum and I am here today with Adriel Hsu and today we’re going to talk about pivoting in the market. So before we do guys, at Investor Fuel, we help real estate investors, service providers, and real estate entrepreneurs to 2 to 5x their businesses to allow them to build the businesses they’ve always wanted and allow them to live the lives they’ve always dreamed of. Without further ado, Adriel, how are you man?

Adriel Hsu (00:26.808)
Doing good, how are you, Brit?

Brett McCollum (00:28.32)
Doing good, man. Thanks for being here with me today. This is, I’m excited to talk with you, man.

Adriel Hsu (00:32.642)
Me too, thank you for having me on.

Brett McCollum (00:34.602)
Yeah, so we call it up a little bit kind of pre show got to know you a little bit what you do, how you’re doing it. And, you know, we mentioned pivoting and so we’re going to get into all of that before we do, though. Can let’s rewind a bit, catch people up to speed. Who’s a drill?

Adriel Hsu (00:48.472)
Yeah. So I was born and raised in California and then went to college in Atlanta at Georgia tech. And after I graduated college is when I started looking into real estate. So I just moved to Texas to start my first job out of college. But at the time I knew I wanted to not work that nine to five office job for the rest of my life. So that’s when I started looking into real estate investing. I looked into drop shipping, e-commerce and other stuff, but

I didn’t really understand it. It was maybe too tech savvy, too internet for me. But real estate is such a simple concept of, you know, buying it at a right price and then selling it for a higher price. And then that’s when I started just going all in on real estate.

Brett McCollum (01:32.864)
Yeah. Wow, that’s incredible. So you’re out in California, you graduate, that’s already a big leap to go from California to Atlanta. Yeah. Yeah, where in California are you from?

Adriel Hsu (01:42.38)
Right, some culture shock.

In the Bay Area, about 30 minutes from Oakland, 45 minutes from San Francisco. Yes.

Brett McCollum (01:48.06)
Okay. Okay. So big city is not so much of a shift. Because you know, Georgia Tech’s downtown Atlanta, right? So yeah, I have been so I lived in Georgia for quite a while. Yeah, so I’ve been through obviously been through Atlanta many, many, many times. And one of my favorite places I have to say if you’ve you’re you’re at Tech, so you know, it was the varsity. Dude, like, it’s

Adriel Hsu (01:56.247)
Right, so.

Adriel Hsu (02:02.264)
Okay.

Adriel Hsu (02:12.726)
Right.

It’s a Nikon.

Brett McCollum (02:16.296)
It is right. It’s like a man gotta get their chili dogs are the to me the best. Yeah. No, gosh, no, they’re terribly unhealthy. Let’s meet guys if you’re listening. They’re terribly unhealthy. That’s a disclaimer, but they are so good. And the line for it’s I’ve never been to the varsity when it’s not been like slam packed full of like, it’s amazing how busy it is. But anyway, so yeah, so you went to tech and

Adriel Hsu (02:22.7)
Yep, not the healthiest but super delicious and yeah.

Adriel Hsu (02:31.66)
Yes, but very good.

Adriel Hsu (02:37.787)
yeah.

Brett McCollum (02:44.747)
And I remember us talking, Prisha, what was your degree in?

Adriel Hsu (02:47.33)
Yeah, so I got a degree in environmental engineering and basically I got a job with Shell, the oil company, but they didn’t have any really openings for my degree. And they have a, they had a joint venture with Saudi Ramco and it was called Motiva. And they have refineries in Port Arthur, Texas, which is hour and half from Houston. And they kind of said, Hey, look, we can put you here if you want it.

Brett McCollum (02:50.252)
Okay.

Brett McCollum (03:10.604)
Okay.

Adriel Hsu (03:14.646)
And I figured, okay, first job out of college, can’t, you know, really be that picky middle of nowhere. But I decided, okay, you know, I’ll go there. And then that’s where I drove from Atlanta to Port Arthur, Texas. And that’s where I started my nine to five job. This is in 2016, January, 2016 was when I started. And that’s the same time I started really digging into listening to bigger pockets, you know, other real estate type of podcasts or. Internet resources and started learning about real estate.

Brett McCollum (03:44.192)
Gotcha. So, and I’m sorry to keep kind of digging back to it a little bit. So what was the job? What was your first job there? What did you do?

Adriel Hsu (03:48.205)
You’re

Yeah, so basically I did environmental compliance and so they’re an oil and gas company. It’s really just basically seeing what the legal limit of how much we can pollute and making sure we don’t pollute above the limit. So there wasn’t much engineering involved. It was more just trying to make sure that however we’re operating the refinery is within the limits of the EPA and TCEQ, which is the Texas Commission of Environmental Quality.

Brett McCollum (04:06.198)
Wow.

Hmm.

Brett McCollum (04:20.502)
Mm-hmm.

Adriel Hsu (04:20.694)
and just making sure, we’re not polluting too much.

Brett McCollum (04:24.716)
So, and I’m trying to, cannot remember, I know it’s gotta be around the 2016 time. When was the big oil spill? Do you remember when that was?

Adriel Hsu (04:33.497)
Uh, which oil spill? mean, there’s a lot of oil spills. Okay, yeah, that was before 2016, but yes, that was…

Brett McCollum (04:36.192)
The big one, BP one, it? That was pretty, I know, I was like, can’t remember when it was, but I bet, and I was thinking like, bet there’s what you were doing is probably enlarged because of a lot of the, you know, aftermath of that sort of thing. Yeah. All right. So then you started digging into the bigger pockets thing. You started doing that. I’m going to say at risk of saying something a little bit forward. OK.

Adriel Hsu (04:51.97)
Right, right.

Brett McCollum (05:04.972)
Most people don’t just go, well, let me start listening to Bigger Pockets. What kind of, how did you get to that mentality? Was it always something you have any history from it, like family stuff? what made you get it?

Adriel Hsu (05:18.818)
Yeah, so there’s no history. I do remember when I was a kid, my dad would pick up, this is back when they had those booths with the real estate magazines back before Zillow and Haar. My dad would always just look at houses, just picking up those magazines in the streets of San Francisco and stuff. And like I said, I was looking at side hustles slash alternative ways to make money besides my job during my internships during college.

Brett McCollum (05:23.372)
you

Brett McCollum (05:37.449)
Thank

Adriel Hsu (05:46.86)
So I had already looked at stuff, like I said, e-commerce, drop shipping and real estate. that’s kind of, you know, you always hear real estate makes the most millionaires and it’s been around forever. So I kind of decided, Hey, let me look into this more. And then that just off Google searching ended up coming across bigger pockets. And then eventually ended up reading rich dad, poor dad. So that’s kind of all kind of happened more or less while I was searching for what, what else can I do?

besides working 40 years at a nine to five job.

Brett McCollum (06:20.03)
Right, right. Yeah, and that’s why I was wondering because I went to work and now I’m an investor. There’s always a story to be had. How long were you working there in Port Arthur before you said, you know what, it’s time to go full time?

Adriel Hsu (06:27.725)
You

Adriel Hsu (06:39.054)
Yes. So I worked there for five, just over five years, just under five and a half years from 2016 to 2021. And I was basically working my day job during the day and then real estate on nights and weekends. And it worked out pretty well when I first got there, because like I said, uh, shell had kind of just pushed me there because they had nowhere else to put me. And even though I passed, you know, the hiring stuff and the people there after finding they weren’t hiring at the time, the environmental department.

Brett McCollum (06:52.95)
Yeah.

Brett McCollum (07:07.116)
So,

Adriel Hsu (07:08.226)
So I came in, they’re like, well, there’s nothing really for you to do because we’re fully staffed. and they were like, new graduate, he doesn’t know anything. So I had a very easy role, let’s say my first, you know, four or five years at the company. And that, you know, so was stress free. I wasn’t working overtime. And really I would actually do real estate work at work because my work stuff I finished in a couple hours and then go, well, there’s nothing much for you to do. So instead of just, know,

Brett McCollum (07:36.46)
sitting on your hands. Yeah.

Adriel Hsu (07:37.214)
scrolling on my phone, yeah, sitting at my hands. I would learn about real estate or, you know, look on Zillow and just do small stuff, working on the real estate business at work. And yeah, and that’s kind of kind of how I kept working there because it wasn’t that stressful in terms of time commitment. And I was getting, you know, all the benefits and it was basically a six figure salary also. So it was kind of I was living off the income for my day job.

Brett McCollum (07:54.604)
Mm-hmm.

Adriel Hsu (08:04.398)
And that way the money I made in the real estate business, I could reinvest it a hundred percent back into real estate to grow faster or take more risk because if I did lose money, hey, I had a safety net to fall back on.

Brett McCollum (08:08.748)
Wow, yeah.

Brett McCollum (08:15.318)
smart. was what was the first your like first transaction and like what was it wholesale or the flip? What did you do first?

Adriel Hsu (08:21.069)
Right, so…

Yeah. So, you know, listening to bigger pockets, everyone says you need to get an off market deal to get a good deal. Right. So that was kind of ingrained in my head and I started out doing direct mail. So I started out sending letters and I was getting letters back and in my apartment mailbox is getting full and I was learning, you know, how to basically market. And it took me six months. I was doing direct mail, getting leads in, and I’m sure looking back now, some of those leads are probably deals.

But I just didn’t know any better on analyzing. I didn’t have MLS access and here in Texas being a non-disclosure state, right? It was all a guessing game for me. And it was just kind of a struggle. But like I said, I was using all the extra money for my job to pay for a direct mail. And at the same time, I was going to real estate meetups in my area just to network and connect. And I actually ended up getting my first deal from buying it from a wholesaler from my local real estate meetup group.

Brett McCollum (09:20.906)
Wow, good for you.

Adriel Hsu (09:21.932)
I was spending six months on direct mail marketing and ended up buying a deal from a wholesaler, not even for my own marketing. Yeah.

Brett McCollum (09:27.55)
I that happens, right? Yeah, but also, I mean, think it’s the, yes, you were doing the marketing and doing the work, but I’m a firm believer that if you weren’t doing that work, that deal would have never come in front of you anyway. yeah, exactly. It wasn’t like that just happened. You didn’t happen upon it. You were putting in work that led to that. I take a very extreme view that says, yeah, your marketing still worked.

Adriel Hsu (09:40.62)
Right, you make your own luck, kind of.

Brett McCollum (09:56.746)
Like it did, you know, that’s my thing. You know, cause you’re like, well, it didn’t get the R away from the mail, but it did. Like it’s called the law of reciprocity. So yeah, man, good for you on that. So you did your first deal. Was it a flip or did you buy and hold? What’d you do with it?

Adriel Hsu (09:58.39)
Right.

Adriel Hsu (10:06.37)
Right.

Adriel Hsu (10:14.062)
Yeah. So since I was on bigger pockets so much, everything they preach on bigger pockets, at least back in 2016 was the burr strategy. So I figured, okay, I’m just going to do a burr strategy. And this house was a full gut renovation. And the reason I even bought it was because when he, the wholesaler sent me the contract price, it was for $17,000 for the house. And on the county appraisal district website, just the land value alone on the appraise value was 24,000.

Brett McCollum (10:29.132)
on your first one.

Brett McCollum (10:36.469)
Okay.

Adriel Hsu (10:44.056)
So I figured, okay, worst case, like at least I’m getting it cheaper than the land value. I mean, the house probably should have been a tear down looking back on it, but I ended up doing a full rehab and then was basically about $100,000 all in. Bad contractors, stuff like that. You know, the typical things you’re going to go through trying to flip or renovate houses as a beginner. And then did a cash out refinance, you know, straight from the book, from the birth strategy.

Brett McCollum (10:49.312)
That moment’s over there.

Brett McCollum (11:00.181)
Okay.

Adriel Hsu (11:12.814)
with a local credit union. And then the biggest, I guess, eye-opening part for me was when I was trying to lease up the property. It was such a headache, such a time drain, doing showings, people flake. You know, I was trying to save a penny and said, I’ll self-manage it, it’s just one house. And then ended up finding a tenant, they moved in, but a month or two later, their jaw relocated them and they had to break the lease and move out.

Brett McCollum (11:21.334)
Mm-hmm.

Brett McCollum (11:40.708)
wow.

Adriel Hsu (11:43.086)
And then back again to the whole leasing and showing thing. And I finally said, look, let me try to sell this as a rent to own. But, you know, technically that’s illegal in Texas. I think after the 2008, 2010 Dodd-Frank thing. So it had to be a right of first refusal instead of rent to own. Basically giving them, you know, first dibs on if I ever sell a property. And luckily I, you know, I got a great tenant. had an older, was an older couple. They just had a small dog. Kids were gone.

Brett McCollum (11:59.286)
Yep.

Adriel Hsu (12:13.23)
Credit score was terrible, but that’s the whole point of doing rent to own. And they were there for four years, never always paid rent early, never had an issue unless something crazy happened. Like one time the freeze, a freeze came and all the pipes pursed under the house. But besides that, they’re a great tenants and they actually did end up buying the house. I know a lot of times these rent to owns, the tenants don’t ever really qualified to buy it.

Brett McCollum (12:22.496)
I’m

Brett McCollum (12:27.648)
Thank

Brett McCollum (12:32.118)
somehow.

Adriel Hsu (12:42.53)
but eventually they did, so yeah, that’s how I.

Brett McCollum (12:44.78)
That’s really rewarding too though, right? Yeah.

Adriel Hsu (12:46.848)
Right. And I never was planning to sell it to anyone else, even though it was a right of first refusal and I could have, you know, put it on the market and just gave them first dibs. I kind of knew, hey, they’re not bothering me. They’re paying the rent on time. Whenever they’re ready, I’ll sell it to them. Or if they move, then hey, I’ll sell it on the market.

Brett McCollum (13:03.572)
And then they did, I love the fact that they did though for that’s great. So you learned a lot on that first one, man. That’s you went through a lot of things on that, but all right, let’s start fast forwarding a little bit here. So you’ve done your first deal, you’re dipping your toe in the water. Eventually, you you’re working at this nine to five for, you know, four or five years, you said five years. And now what year is it in your full time?

Adriel Hsu (13:10.283)
Yes.

Adriel Hsu (13:27.822)
So I guess this would be coming up on year four on the full time. Because I quit in June of 2021. And then, yeah, we’re coming up on it in 2025.

Brett McCollum (13:32.756)
Okay.

Yeah.

So you go full time at that point in time, let’s say the June, 2021, now that you’re full time, what did the business look like? What were you focused on?

Adriel Hsu (13:48.558)
Yeah. So at that time, you know, the market was very hot in 2021 and I had just picked up two multifamily properties in 2020. So I was stabilizing those properties. One of them was a full gut renovation on a 21 unit here in Houston. And I picked that up near the end of 2020. So in the summer of 2021, the renovations were in progress. And at the same time, the wholesaling and flipping was still going on.

Brett McCollum (13:53.258)
Yep.

Adriel Hsu (14:18.282)
And I’ll backtrack a bit. after that first deal, how I mentioned the headaches of leasing up and property management, I ended up deciding to pivot to just flipping houses because I figured, Hey, this a hundred bucks a month cashflow is not really doing much for me, especially since I’m making, you know, six figures at my job. So let me just start flipping houses and build that capital up faster. You know, little did I know appreciation and all that was working in the background, but

I’ll still ingrain on bigger pockets. Hey, never buy for appreciation. Appreciation is just a bonus. Don’t expect it. So I was just looking at it as this cash flow isn’t really doing much for me. Let me just flip and wholesale and make a bigger check right away, which that’s what I was doing ever since that first deal through 17, 2018, 19. And that’s what I continue to do after I quit my day job.

Brett McCollum (15:08.108)
Okay. Wow. Incredible, man. Yeah. mean, and we talked about pretty like kind of introducing the show of like pivoting and that sort of thing. You know, and now so 21, we and it’s a hot market into 2022 even, you know, and then we started getting I don’t know when are you is it mostly out of Houston? Where do you do all a lot of your deals at?

Adriel Hsu (15:23.768)
Right.

Adriel Hsu (15:30.402)
Yeah, mainly in Houston. Now I do kind of all over Texas. I do quite a few deals in Dallas and Houston and San Antonio. Not really much in Austin, maybe a handful. But right now I’m all over Texas. But at the time was mainly Houston and then the Beaumont Port Arthur area, which is where I started.

Brett McCollum (15:47.072)
Yeah, very cool. And the reason I ask is I don’t know what the market was doing like in the last little bit, you know, you know, but when things start shifting rates going higher, you know, here in Florida, where I live, insurance goes, you know, way up, you know, all that stuff, it really starts to impact margins and hold times and you you name it, right. And so when did you start pivoting and start adjusting some of the stuff for? Yeah.

Adriel Hsu (15:53.976)
Right.

Adriel Hsu (16:02.786)
Yes.

Adriel Hsu (16:15.822)
Right. So like I said, my first pivot was right after that first deal into wholesaling and flipping. And then at that time, I always went against the multifamily and I got my first apartment complex in 2018, a 14 unit. And then 2020 acquired two more, but right when the rates were going up in 2022, it’s kind of when everything went dry in the commercial space as the sellers were still expecting 2021 prices, but nothing was in line.

Brett McCollum (16:20.083)
Uh-huh.

Adriel Hsu (16:44.812)
And as you mentioned, the insurance and taxes going up that came into play later for me, at least the, my multifamily properties got huge increases last year and this year, which is really killing all the cashflow to be honest. But, you know, luckily I have them for more tax benefits, the depreciation and the bonus depreciation it took on them helps offset my active income and the wholesaling and flipping side. But yeah, that’s kind of the pivot was in 2022. I noticed.

It really dried up because the sellers were still, you know, stuck in their praise values in 21 and early 22. And the whole time, you know, I’ve always approached commercial the same way I approach single family where I want to get an off market. It doesn’t have to be off market, but a deal. And at the time when everyone was doing these syndications of multifamily, essentially they’re still just buying it on market. get, you know, I get pocket deals from the brokers, but you’re still really paying market price or more.

But everyone was doing well because the market was going up, right? The cap rate compressions. So I was always still, I guess, more conservative. said, no, I still need it, you know, at a discount. And that’s how I got those smaller multifamilies because those owners are less sophisticated than let’s say when you’re buying those hundred plus units. So I was still able to get them below market value. And that’s kind of what’s helped me right now. Still have these properties is because I got them at such a low basis that

my, you know, I can still afford to weather the storm of the high interest rates. Well, you know, I’m locked in on my loan rates, but the high insurance and taxes, because as I know, I’m sure you’ve seen a lot of syndicators have either gotten foreclosed or had capital calls the last two years. So yeah, so that’s my philosophy is always no matter what I was doing, commercial, single family, new construction, get it at a discount because you make your money on the buy.

Brett McCollum (18:27.83)
So many.

Brett McCollum (18:40.255)
Exactly. Yeah. And that’s been some of the difficult thing is a lot of us even buying at a discount and underwriting it. And then it still didn’t like because that’s something that I had happened, actually, right? was 2020, 2022. We bought a property. was a three duplexes, one parcel in our historic district. Right. Great property. And I kid you not, I drove it a prey like we did a soft appraisal like, hey, here’s our blueprints, this and the other. Let’s go meet. Like if we did the

Adriel Hsu (18:52.129)
wow.

Adriel Hsu (19:01.24)
Yeah.

Brett McCollum (19:09.132)
If we refind on this thing today, and it was done like this, what would you guys do? We brought three different people out there. We had a million dollar spread on it in 2022. And I was like, this is the best. We just did. Home run, right? This is the one. This is the big one. Long story short, the project took a really long time. Way longer than we expected.

Adriel Hsu (19:23.639)
Seven figure home run deal. Right.

Brett McCollum (19:37.504)
historical district stuff, had some permitting issues, took longer. So it went well over, severely over budget, way over time. It’s still short-term debt. our note was due. so we had penalties and all the fees and all of the things we got. So before we know it, we were supposed to be into it for about 950K all in with everything. That’s bringing back everybody the whole nine. We ended up into it for closer to 1.3 after it all said and done.

Adriel Hsu (19:40.419)
Makes sense.

Adriel Hsu (19:51.054)
Gotcha. Right?

Adriel Hsu (20:04.449)
Okay.

Brett McCollum (20:05.772)
because of time, budget, everything else, know, rehab costing. And we still project it, we were projecting back then to sell it at low end 2.1, high end 2.5. We sold it at 1.3 before closing costs and everything. It was actually 1.2, 1.275 is what it sold for. So, but after you pay commissions, closing costs and everything else, we sold it at a loss. And, but we underwrote it.

Adriel Hsu (20:07.181)
Right.

Adriel Hsu (20:22.159)
wow.

Adriel Hsu (20:31.842)
Wow.

Brett McCollum (20:34.892)
in 2022 and said, hey, the rates are here, but we don’t think they’re going to stay here. They’re probably not going to go above. I think we underwrote it was at the time rates were like three and a half. we’re like, it’ll probably go five point five to five point eight. And when that property was eight percent, it at the time what was coming back. then, no, no. Yeah, three different buildings. Yeah, it was just.

Adriel Hsu (20:49.198)
Right.

Adriel Hsu (20:56.866)
Wow. And was this a new construction or just a full gut renovation kind of thing? Gotcha.

Brett McCollum (21:04.452)
Man, was a, but like things like that, you know, were happening all over the place and not just for you and I, but like for these, like the syndicators that are like, they bought them on 2021 pricing and going, Hey, know that it’s gonna, we’re looking at a five year horizon or three or whatever they’re doing. And they underwrote it like, yeah, it’s at three and half now, but we don’t think it would go above five. And then it goes to eight. And then, insurance is here. Now we think it’ll go here, but it’s not gonna go here. You know, taxes, we were at this kid, do not.

Adriel Hsu (21:14.638)
Bridgette, yeah.

Adriel Hsu (21:29.709)
Right.

Brett McCollum (21:33.356)
They’re $14,000 a year here for those three. When we went to go sell it, one of the reasons what forced us to sell too was taxes were $40,000. So you added all these, it’s like, dude, we finished it, got all the tenants placed, we sold it as a turnkey. And we’re thinking, we’ll get all these tenants in and we’ll still be able to burrow out and cashflow, we’ll be okay. And we couldn’t make the numbers work anymore.

Adriel Hsu (21:42.935)
my gosh, wow.

Adriel Hsu (21:51.48)
Okay.

Brett McCollum (22:02.668)
It’s that’s been a lot. So for anybody who’s listening, that’s not to say you’re not going to miss it. But at the same time, there’s a lot of wisdom. What you were saying, it was like you still buy the discount because it could have been worse for us. Had we. And it was bad. could have been worse.

Adriel Hsu (22:14.702)
Exactly. You could have taken a 500k spread and you’d be actually negative 500k now. Yeah.

Brett McCollum (22:22.656)
Yeah. So, mean, yeah, good on you for that, man. So you mentioned now we talked pre-show you’re like kind of today it’s more wholesale innovation and like new construction. So what does that look like?

Adriel Hsu (22:34.604)
Yeah. So, you know, when those rates are going up, I had to full gut renovations as well that, know, when the market turned on us, you know, luckily they weren’t big losses. You’re pretty small, you know, the single family flips and they’re still close to downtown Houston. So I say I probably lost maybe 15 K on each one. And one of them, like you said, was being way too long of a timeframe and then way too big of a scope of a rehab. And that’s when I pivoted, Hey,

Brett McCollum (22:53.868)
Mm-hmm.

Adriel Hsu (23:03.958)
let’s just de-risk the lowest amount of risk. And that was wholesaling. And that’s also when Novation was starting to get pretty popular. And that’s when I said, man, Novation and wholesaling, let’s just do those two things. And then it got to the point where in the market got so competitive, where really Novation was the only way to make money. Cause I could offer more to the seller since it was lower risk for me. I mean, even lower risk than really.

Um, a wholesale and also getting buyers that are paying retail on the market. And I guess for if it’s a viewer that’s watching, it’s not aware of innovation. That’s basically just like wholesaling it. You get it under contract with the seller, but you’re listing it on the MLS on the market as your exit strategy versus assigning it to a cash buyer. So you’re going to get a lot of retail, uh, buyers paying retail price. So therefore we can offer the seller more. And I think that’s the only reason I’ve been able to stay afloat these past few years is.

If you’re still stuck on the old, you know, 70 % of ARV minus repairs, for your offer price, then no sellers really taking your offer at this point. Cause you have people like me doing innovations or just regular, you know, open door that are buying these hedge funds that are paying more. So that was another pivot. I guess you can say is from the traditional flipping and wholesaling numbers. I started offering, you know, higher numbers of a little lower spread, but I was okay with a lower spread because

Brett McCollum (24:24.876)
Absolutely right.

Adriel Hsu (24:32.45)
my risk was lower since I’m owning the property. I’m not even turning on utilities. So that’s kind of what I’ve been doing mainly. I still do some wholesales for certain properties. I’ve wholesale to New Western, which I’m sure you’ve heard of nationwide. I don’t know how they find their buyers, but they always got buyers that pay crazy amounts, right? So I still do some wholesaling, but yeah, Novation as well is really the main one right now. And not just like…

your standard innovation. What I like to do is I still go in and make the property sell for top dollar. So I always do like a deep clean, professional photos, landscaping, and sometimes I’ll do sheetrock work or anything. I know it’ll pop up in a third party inspection report when you go and sell the home because I have a flipping background. have the contractors, so my cost is cheaper. I’ll just, you know, I’ll spend anywhere from three to 10, sometimes 20 K on the property as innovation.

Brett McCollum (25:14.881)
Right.

Adriel Hsu (25:28.204)
which can be risky because I don’t own the home. still under the seller’s name. Of course, worst case I can file a mechanics lien, all that stuff, but really it’s just transparency and being open with the seller saying, hey, we don’t buy at a hundred percent market value. what I see a lot is these sellers don’t want to deal with the home. A lot of times if it’s out of state seller or they’re just busy with their own life, me being able to present like a full service hands off for them.

getting it done, they take that over a traditional realtor even because the realtor’s not gonna do anything. They’re gonna tell you, hey, you need to go find someone to fix the sheetrock, right? So me just kind of doing a hands-off service for the seller has allowed me to win a lot of deals even against realtors wanting to list a property to get them a higher price.

Brett McCollum (26:18.912)
Yeah, love that. Yeah. And the innovation thing, if you’re doing it the right way, right? Like you said, it’s just transparency. A lot of disclosures, guys. So make sure that you … I will be remiss to not at least say, if you’re listening, that’s a great strategy, but make sure you have a good real estate attorney that can protect you with your paperwork. Because there’s a lot of people doing it the wrong way right now because they heard it somewhere, like on a podcast where they watched a YouTube episode or something.

Adriel Hsu (26:27.405)
Yes.

Adriel Hsu (26:40.204)
You

Brett McCollum (26:44.556)
I will plus that and say for sure a million percent innovation is a phenomenal exit strategy right now, but just do it the right way. That’s all.

Adriel Hsu (26:51.95)
Right. And even title companies are not say catching on to innovations, but some of the bigger ones are acquiring extra, like I said, paperwork, extra documentation. know Capital Title, nationwide title company, they started in my Beaumont market, at least requiring extra forms for the seller to sign for any innovation deals. And some title companies are just dropping them altogether. So definitely, you know, have your ducks in a row before jumping into it.

Brett McCollum (27:16.31)
That’s right. Don’t make an offer for innovation and you don’t know how to transact it. Just make sure you do the homework, get the disclosures, get it yourself right so that you can truly help the people out that you’re serving, right? So yeah, I agree a million percent. And then on new construction, you’re still doing some of that.

Adriel Hsu (27:31.47)
Yeah, so, you know, this whole time from when I started in 2016, I was living in the Beaumont, Port Arthur area because that’s where my job was, right? And then I knew I wanted to move back out to Houston or at least, you know, a bigger city because if anyone’s ever heard of Beaumont or Port Arthur, it’s really nothing there. I know Janice Joplin is from Port Arthur and she calls it the armpit of Texas. So, yes, you know, not a great place to be, but.

Brett McCollum (27:53.228)
You

Adriel Hsu (27:57.966)
And the market’s very small, right? So if you want to scale to a certain size, just not that many houses. I mean, the population, think for Beaumont’s about 120,000, 150,000. Well, Houston is, know, millions. So I knew I wanted to move out to Houston and my last two personal residences in the Port Arthur area, I bought fixer uppers, right? And even though I fixed them up nice and older homes still has older home problems. So I figured, okay.

Brett McCollum (28:10.252)
Yeah, we’ll see ya.

Brett McCollum (28:25.985)
Right.

Adriel Hsu (28:27.35)
I want to move to Houston, but I’m not going to pay retail value because I’m an investor and I want a new construction home because I’m sick of just small stuff that comes with older homes. So really the only option is I’d have to build my own house at a discount. So I actually was marketing lots in Houston because the marketing is still the same. I’m, you know, wholesaling houses, self storage complexes.

The marketing method is the same as just the data, the list that I’m pulling to target changes. So my criteria shifted to lots. I wouldn’t say shifted. was still, you know, running the business, marketing to single family homes, but I was adding in vacant land in there. And I finally found a piece of land in a zip code that, you know, I knew was up and coming and I was okay. I’m cool of living here. And that’s kind of how it all started. I bought that really in mind to build for myself to live in, but here in Houston,

Brett McCollum (28:56.394)
Right.

Adriel Hsu (29:26.25)
If your viewers aren’t aware, there’s a lot of homes that are just like crammed right next to each other because there’s no zoning laws. It’s very, you know, wild west out here. And the only way the numbers worked was if I bought a piece of land big enough where can fit multiple homes, sell out the other homes and then keep one of them to live in. Because, you know, just the cost of construction and the cost of permits and fees, the economies of scale of building one house doesn’t really make sense to be profitable.

Brett McCollum (29:30.208)
Yeah.

Brett McCollum (29:44.203)
Okay.

Adriel Hsu (29:54.914)
And at the end of the day, even though it’s a personal residence, I want something at a discount, right? To have equity. So I found a piece of land that was a hundred feet wide and by 75 feet deep. So 7,500 square foot lot. And the reason I, you know, mentioned the dimensions is because most lots in Houston are a hundred feet deep. So if he’s told someone at 7,500 square foot lot, they will think, okay, 75 feet wide, a hundred feet deep. And

Brett McCollum (29:55.051)
Right.

Brett McCollum (30:15.788)
Mmm.

Adriel Hsu (30:22.542)
I bring that up because in that case you could only fit three houses. So a rule of thumb is 25 feet of street access is what a lot will need to build, you know, a narrow townhouse style home. But since this lot was flipped the other way, I could fit four houses on the lot compared to a traditional 7,500 square foot lot. So if someone was looking at it just on a price per square foot basis,

Brett McCollum (30:31.084)
Mm-hmm.

Adriel Hsu (30:50.766)
they would see, 7,500 square foot. I can only pay this much. But I was able to see that, hey, I could fit an extra home here so I can actually make the profit work. So long story short, I bought the lot for $100,000 and I could fit four homes. So basically $25,000 per lot. then I ended up, you most of first time doing new construction. So had some bad people, right? The person doing the subdividing of the lot.

wasn’t the best, the surveyor wasn’t the best, ran into a bunch of issues, but eventually, you know, got the four houses built, sold three of them, and now I’m living in the fourth one.

Brett McCollum (31:30.4)
Good for you, Dude. And it’s just, I’m glad you keep saying these different things because like, think you’ve just over your professional career of just pivoting, pivoting, pivoting, pivoting and doing different things and staying and keeping your business relevant and keeping your, you it’s a testament, man, to your success. And I appreciate you sharing your story with us.

Adriel Hsu (31:53.666)
Yeah, definitely. And it’s not to say I’m not going to never do multifamily or commercial again. It’s just not the right time in today’s market. Yeah.

Brett McCollum (32:00.832)
Yeah, that’s, mean exactly. I think there’s wisdom, right? But man, again, thanks for sharing the story with us. This has been a good time. Thanks for hanging out, Yeah, if people wanna get ahold of you, reach out in some way. What’s the best way for that to happen?

Adriel Hsu (32:11.416)
Yeah, no, I appreciate it,

Adriel Hsu (32:16.674)
Yeah, so social media is probably the best way. Instagram, TikTok, Facebook. It’s just my name at Adriel HSU. I’m sure you can leave it in the notes in the podcast. Yeah.

Brett McCollum (32:26.988)
Yeah, mean, we’ll have him to show. Yeah, man. Yeah, guys, seriously, go over there and follow him and long because there’s a lot of wisdom that he’s been unpacking throughout this whole episode. If you follow along and backtrack, right, and just see the difference of like how he’s pivoting like, you know, it’s it’s an incredible story, man. I appreciate that. I really do. Yeah, well, guys, thanks for hanging out with us again today and we will see you guys on the next episode. Take care, everybody.

Adriel Hsu (32:46.018)
No, thank you for having me.