From Realtor to 31 Doors: Detroit Cash Flow, CapEx/Vacancy Buffers, and Investor Mindset w/ Joe Hammel

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Show Summary

In this episode of the Real Estate Pros podcast, host Erika speaks with Joe Hammel, an investor and realtor from Michigan. Joe shares his journey into real estate, the challenges he faced during his first year, and the strategies he employs to identify profitable investment opportunities. He discusses the importance of networking, learning from mistakes, and maintaining a resilient mindset in the competitive real estate market. Joe also highlights the unique approach of his team at Fire Realty and their commitment to educating clients and fostering long-term relationships.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Joe Hammel’s Website
    • Joe Hammel’s Email: [email protected]
    • Joe Hammel’s Phone No: (248) 422-1685

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Joe Hammel (00:00)
  Yeah, so a little bit of context. I personally, my wife and I, own 24 properties here in Metro Detroit and it’s 31 doors and we’re cash flowing. It’s about $115,000 a year and that’s after budgeting out 15 % for vacancy maintenance at CapEx. So between that and then as a realtor, we’ve sold, my team has sold near 2,000 houses at this point in the last five, six years. So we have a lot of data on

  what works and what doesn’t work between the clients and our personal portfolio. And so what we’ve identified as the profile of property that’s the highest probability to succeed with, we call them bread and butter deals. And it’s what I’m buying, it’s what we see a lot of clients buy. And they’re 80 to $130,000 houses. They rent for $1,100 to $1,500.

  Erika (02:24)
  Hey everyone, welcome to the Real Estate Pros podcast. I’m your host Erika and today I’m excited to be chatting with Joe Hammel He’s shaken things up with his company Fire Realty Team and he’s also investor himself. Joe, I’m glad to have you on the show today.

  Joe Hammel (02:40)
  Thanks Erika, I’m excited to be here.

  Erika (02:42)
  think our listeners are gonna have a lot to learn through your unique story. you know, let’s jump on in there, Joe. Can you share with our audience who may not be familiar with your world, how you got started in real estate, how you ended up in Michigan and what you’re working on today?

  Joe Hammel (03:01)
  Sure, yeah, and I’ll try to be as concise as possible. I currently live and invest in Metro Detroit. I grew up in Ohio, and so my story really began right out of high school. I went to college full-time and started working full-time. So I was going to college during the day, working either afternoons or midnights. And then it was a commuter college, so I was living at home and

  college wasn’t that expensive. So I was actually coming out of that net positive from what I was making it work financially wise. And so then when I graduated college, I’d always wanted to land. So I bought, it was like 20 acres of land for $100,000. That’s what I had saved up for. And then shortly after that, I bought a house. And again, it was only a $112,000 house. used FHA loan for a down payment. So it wasn’t a lot of money there. And then,

  living there for a little bit. was working in a factory manufacturing and if anybody has done that, they realize that’s tough and probably not something you want to do your entire life. So I started searching for something else in that search is when I found real estate, specifically real estate investing. I was like, that’s it. I was like, that’s what I’ve got to figure out. So it was, I didn’t know how I was going to get there, whether it was just part time, buy a house, house hack, but I was going to do it. And so then my

  My now wife, at the time girlfriend, she was in Michigan. And so I was like, well, I’m trying to figure my life out. You’ve got your life figured out. She’s a partner at a financial services firm. So was like, I’ll follow you up there and figure my end out. And so I sold those two properties and I actually did well on them. I made over $20,000 on each of them. I’d fixed up the house. And so again, further cementing, oh my gosh, you make so much money in real estate one way the other.

  And so when I moved to Michigan, I had those funds to kind of begin my investor journey. I’d bought a house and the plan was I was gonna live in it. My wife and I would then buy a house together and that would be the first rental.

  Erika (05:50)
  Yeah, Joe, that’s really awesome. And I know to fast forward today, you have quite a lot going on with ⁓ the doors that you have and the team that you have. So that leads me to ask you, what would you say was, thus far has been like the most challenging stage of growth because you’re just keep adding on more plates there as you grow.

  Joe Hammel (06:14)
  Yeah, the most challenging was by far my first year as a realtor. That was a very brutal year, know, because people don’t line up at your door asking you to buy or sell a house. And that’s what everyone realizes when they become a realtor. ⁓ So it was it was just figuring that out. I knew I wanted to invest. I was going through my savings when I wasn’t selling houses at the beginning.

  But then, but then I, because I did have the investor knowledge from all the studying that I was doing, I pretty quickly established a niche with investors. And so that’s when I started getting momentum from that is when things kind of turned around for me.

  Erika (06:54)
  Yeah, do you, you know, do you find more advantage and more opportunities by having your feet in both doors there? Have you know, being a realtor and being an investor?

  Joe Hammel (07:05)
  It’s a good question. You have to answer that with yes. Being in the world, living in the world of only real estate has its advantages. It’s a tough, it’s a thing that like when people ask me, I like can’t in good faith recommend it because the fail rate as an investor, as a realtor is so high. It’s a 95 % fail rate. And so I don’t wanna say I got lucky, but I got fortunate that I identified a niche and was able to make it work. However,

  If you’re not able to make it work, end up just going backwards. You end up blowing through your savings. You waste a year or two before you go back and get a regular job or a different job. And that’s where it’s a difficult risk reward situation.

  Erika (07:46)
  Got it. Well, with where you’re at today, I’m sure you’re awesome at source and deals. So can you share with our listeners, you know, what kind of opportunities you see in Michigan and, you know, what you’re looking for there when you’re making a decision or helping someone out.

  Joe Hammel (08:05)
  Yeah, so a little bit of context. I personally, my wife and I, own 24 properties here in Metro Detroit and it’s 31 doors and we’re cash flowing. It’s about $115,000 a year and that’s after budgeting out 15 % for vacancy maintenance at CapEx. So between that and then as a realtor, we’ve sold, my team has sold near 2,000 houses at this point in the last five, six years. So we have a lot of data on

  what works and what doesn’t work between the clients and our personal portfolio. And so what we’ve identified as the profile of property that’s the highest probability to succeed with, we call them bread and butter deals. And it’s what I’m buying, it’s what we see a lot of clients buy. And they’re 80 to $130,000 houses. They rent for $1,100 to $1,500.

  They’re gonna be

  5 to 12 % cash on cash ROI after budgeting out for vacancy maintenance capex plus all your fixed expenses. are, the cash flow, $50 to $300 a door, kind of depending on if you’re self-managing or how much sweat equity you bought. And they’re in solid locations. Those are, everyone thinks of Detroit as a $10,000 house in the middle of Detroit. And the reality is we’re buying $100,000 houses and…

  Detroit is one city and then there’s 59 other cities in the metro, Pulitzer area, and we do a lot of investing in those cities as well.

  Erika (09:36)
  Yeah, Joe, are there any pockets in there, you know, in those metro cities that you’ve been really excited about lately?

  Joe Hammel (10:16)
  Yeah, there is. mean, you can probably nail it down to, we’re actually only really in like 10 of those cities. And one of the most straightforward location, you still have to know your streets in your neighborhoods, but the ring cities, the cities that closely border Detroit, they’re gonna have a really nice balance of that lower price, good price to rent ratios, and then still be in a solid location.

  Erika (10:43)
  Yeah, yeah, absolutely. And Joe, I’m sure, you know, with your experience, you’ve had a moment where, you know, a deal’s gone sideways or you had to pivot, pivot fast. Can you share one of those on your journey and what you learned from it?

  Joe Hammel (10:59)
  Yeah, that’s a good question. I sometimes I struggle with almost being too optimistic because those little blips, like really, to me they’re just so much part of investing, right? You’re gonna have an eviction. You’re gonna have a rehab go over budget. And so I mentally was so prepared for those that I can’t, it’s hard to think of anything that really derailed me. I can think of one, I was trying to do a perfect burr and when you think about trying to do perfect burrs,

  most of the time does not work. You have to accept a non-perfect burr. And I had a rehab that I thought was gonna be $30,000, $35,000, and it crept up to $50,000, $55,000, almost $60,000. And so that’s a big deal. That’s almost two rehabs instead of one. And that was one of my earlier ones where I was doing a lot of learning on trying to figure out what items to repair and what not to and what costs were gonna be. And so that was probably financially the

  biggest mistake I made was way over budget rehab.

  Erika (11:58)
  Yeah, when, ⁓ you know, and from that, how did you, you know, adjust or pivot from that situation there?

  Joe Hammel (12:07)
  Well, there was a bigger gap between buying that house and my next house than I wanted to be because we had to recoup those funds. But overall, it just didn’t matter. just, it still had a good ARV. I refinanced it. I pulled out, I still pulled out a chunk of money simply by the nature of following the burr process. And it was good enough. It’s not one of my best properties today because of that, but I like it. It’s really pretty. It’s gorgeous inside.

  Erika (12:33)
  Yeah, I’m glad you found a way to make it work. if you were starting off today, looking more at like an overview, if you were to get started in real estate today, what would you do differently or what kind of advice would you give?

  Joe Hammel (12:52)
  Because I started out having good success, so I can’t say I would change anything. I would have loved to my first house have been a duplex house hack, especially because I was investing in the area I lived in. I think the house hacking is by far the best first strategy. It’s just so incredible. And I look at so many duplexes today that I could have had then. ⁓ And so I would have loved to do that. My first single family home is an incredible investment though, so I can’t complain about it.

  And then what would I do, what would I focus on? It would be these exact, I would just go pick off $100,000 house, you know, 80 to 120, and just simply repeat that strategy as fast as I had the money to do it. I’d like the little bit of sweat equity because you can, if you need the money faster, you can refinance it and pull out some money if you have a little bit of sweat equity in those types of deals.

  Erika (13:44)
  Yeah, absolutely. Whether it’s the, you know, fire reality or your own investing, have there been any ⁓ relationships or networks that have been really instrumental in the growth of your business?

  Joe Hammel (14:40)
  I definitely do a lot of researching online. can say the, the agent, the agents on my team have been huge and the agents and everyone on the team, ⁓ because we’re all investors. And so we have a mastermind every week. ⁓ And, and those two hours are some of my favorite hours every single week, because we’re all doing the same thing. We’re just talking, investing, talking real estate.

  And we were talking about this, we actually do a client’s mastermind as well. And because we wanted to share how helpful that is. Everyone who wants to get investing has that negative uncle who’s like, real estate investing is a terrible idea, who’s never invested before, or you did want and you did it wrong. And so to have people around you who doing it, who are investing and encouraging you to invest and pushing you to invest, that’s really been helpful.

  Erika (15:35)
  Yeah, yeah, absolutely. And going back to ⁓ Fire Reality to Joe, what would you say sets your team apart from other reality teams?

  Joe Hammel (15:46)
  Our investor knowledge is off the charts. We still try to educate, we still read books, we still go to conferences and very often we’re like, we’re kind of beyond that. And so because we’re investors ourselves, we should arguably call ourselves a coaching program because we do so much education for free just by simply working with a client who’s asking us questions. And so that combined with our core values are…

  really ethically based. Our number one goal is a five-star review. ⁓ We will not know. It’s unacceptable to not do the right thing in all circumstances. that’s based. It’s an ethics-based, but it’s also a business strategy-based. Our best client is a repeat client. And so if a client has success on their first buy, they’re going to buy more with us.

  if that first property fails, they’re gonna be mad at us and we’re never gonna see them again. So strictly from a business perspective, it makes sense to do the right thing and just really, we have a lot of resources, long resource list, a lot of things in place to help someone actually succeed as an investor.

  Erika (17:01)
  That’s really awesome. yeah, that’s like, you know, on the one hand, that’s kind of like the downside is that you’re associated with that if it’s not a good, good pick, but then the upside is them, them coming back to you. Are there, you know, are there any, you know, kind of pitfalls or misconceptions that you see that you’re, when you’re working with investors that, you know, you need to help them out and set them on the right path when they work with you?

  Joe Hammel (17:29)
  Yeah, there’s two big things. One is mindset. ⁓ The successful investors versus unsuccessful investors, the successful are gritty, resilient, and high ownership. They have a vision and a plan. We are a tool and a resource to help them get there. The ones who oftentimes don’t make it are the exact opposite of that. it’s, you guys didn’t help me do this.

  or this is hard, and it is hard, right? It’s the best investment class you can be in, so it’s not as easy as picking a stock and sitting on it. Passive is a pretty loose term when they talk about passive income in real estate, because it’s not super passive, it’s great. And so, and that on top of, you gotta have a little money. I mean, there’s a lot of creative finance strategies out there, but it’s…

  10 times harder and so if you’re coming with a little bit of savings and you can actually get into that first deal, it’s a lot more helpful.

  Erika (18:28)
  Yeah, yeah, that makes a lot of sense. Well, with ⁓ what you’ve built with your team and ⁓ the doors that you have, what would you say is next on the horizon, Joe?

  Joe Hammel (18:38)
  Man, we’re gonna, my wife and I are, we believe strongly that God has a plan and he let us know that that’s not to go sit on a beach and just relax. So we’re gonna keep growing. We keep growing the real estate team, keep buying investments and just try to make the world a better place.

  Erika (18:59)
  Yeah, yeah, that’s awesome. Well, Joe, it’s been a great having you on the show. Before we wrap up, if someone wants to reach out, connect, learn more about what you’re doing, what’s the best way for them to reach you?

  Joe Hammel (19:13)
  Easiest is just you can Google Fire realty team or firerealtyteam.com and that’ll have my email and phone number and get in touch with us that way.

  Erika (19:23)
  Well, Joe I appreciate your time story perspective. We need more people in this space who are doing things the right way in bringing value to the industry.

  And for our listeners today, if you enjoyed this episode, make sure that you’re subscribed to the Real Estate Pros podcast. We’ve got more conversations coming up with experts like Joe, who are out there building fantastic real estate businesses. We’ll see you on the next episode.