House Hacking & Creative Deals in Los Angeles Real Estate

Rick Albert (00:00)
We negotiated, we’re actually down $98,500, almost a hundred grand off.

So we can do those negotiations, but there’s other workarounds, right?

Michelle Kesil (01:42)
Hey everyone, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’ve been looking forward to chatting with, Rick Albert, who’s been making serious moves in the real estate and house hacking space. So Rick, I’m glad to have you here with us today. I think our listeners are really going to take something away from how you’re approaching house hacking and the LA market. So let’s dive into

of that.

Rick Albert (02:12)
Thank you for having me, I appreciate it.

Michelle Kesil (02:14)
Of course. So first off, for people who may not be familiar with you and your world, can you give us the short version of what your main focus is these days?

Rick Albert (02:25)
Sure,

so full-time realtor, real estate broker, associate, helping clients buy and sell. But I’m also a two-time house hacker here in Los Angeles, so I buy properties, fix them up, by the room while living there, or I rent out another unit. And then that’s been able to kind of help me scale and invest at a state. So I do a little bit of everything, but it’s all with the focus of real estate.

Michelle Kesil (02:46)
Cool, I love that. Yeah, how did you get into this industry?

Rick Albert (02:50)
Yeah, so it was the December before I graduated college. I didn’t know what I wanted to do with my life. And so a buddy of mine said, hey, come down to LA, meet my dad. He’s really big in real estate.

So I met with them and I just got hooked. And so my first job down here, it 2010, so Heart of the Recession, was actually working for him on the development side. So we were buying foreclosures at the courthouse steps. As project manager, we kind of negotiated cash for keys, all that. That whole world is how I kind of got into it. And then just kind of scaled from there.

Michelle Kesil (03:23)
Cool. Can you explain a little bit more of the house hacking because maybe people aren’t so familiar with that term?

Rick Albert (03:30)
Yeah, so for a lot of people who want to get into real estate investing, but they don’t have the big down payments, the interest rates, the points, there’s all it’s very expensive to actually invest in real estate from a lending perspective. So the workaround is house hacking. That’s where you buy a property as your primary residence and you do live there while renting out another bedroom, while maybe you buy a duplex and you rent out the second unit and that offsets kind of your expenses. I know the goal is typically to live for free a little

challenging but you still get all the other benefits and then typically after enough times past you would move out keep it as a rental and then house hack again you just that’s one way to build a portfolio but you don’t have to put the 20 to 30 percent down interest rates are better because everything’s based on you actually living there

Michelle Kesil (04:17)
Okay, that is cool. Yeah, is though does that something that you like support your clients with getting into?

Rick Albert (04:25)
Yeah, it’s kind of the majority of my clients who are investors, because I do work with traditional investors as well, but the majority of them start this way. So it allows them to just get their foot in the door, right? Because if they do FHA, do three and a half percent down, I have clients where they live there long enough to where they can then pull out a line of credit. But again, the rates are better because you live there.

So then we pull out a of credit and go buy the next one. That’s what I did. But it’s a way to get started. And a lot of my clients, I’ve been fortunate to kind of see them grow and help them buy two, three, four properties.

Michelle Kesil (05:48)
Wow, that’s exciting. what has been like the key to keeping this business running smoothly?

Rick Albert (05:49)
Yeah.

You know, a lot of it has to do, cause in LA we do have Los Angeles rent control, right? Or if you’re in California, you have statewide rent control and it does pose a lot of problems. Like I’m not going to sugar coat it. Um, but if you can navigate and willing to navigate it, you can actually make a lot of money because the rent control, the short of it actually keeps inventory low for a variety of reasons, but that’s a whole nother podcast episode.

So to answer your question a lot of it comes from the vetting process how you find the tenants As well as your leases and then I always recommend like an addendum to your lease with all the rules in place Here’s the quiet hours. Here’s you know, the parking situation Just lay everything out because if let’s say you’re buying a four-bedroom house and you’re renting out by the room It’s almost the same as renting a four-plex and in either case you’re building a community

of people who don’t know each other. So set ground rules so they know how to play well.

Michelle Kesil (06:50)
Amazing. Okay, cool. yeah, every operator I know, like maybe has a moment where their business felt more real, a deal could have gotten sideways, or you had to think fast and pivot. Would you mind sharing one of those experiences for you? So many.

Rick Albert (07:09)
So many. So

yeah, right? I mean, really it was my first place was a condo that I had fixed up and rented the second bedroom. And that was like, okay, cool. He’s paying the bills, right? He’s helping me pay. It was when I moved down that became a full on rental that I was like, okay, now I’m like, ⁓

felt more like a legitimate investor. Like I have a full rental. And then on top of that, we had built out the accessory dwelling unit in our house. And then my wife and I moved into the ADU, the studio ADU and rented out the main house. I like, I got two doors. I got two tenants. Like that for me was like, almost like, okay, this is something bigger. This is a business. And then we sold the condo, moved into the main house, did 1031 exchanges, got a business partner.

So I think we’re up to like 16 doors now. But it all started because I bought this tiny little fixer condo.

Michelle Kesil (07:59)
Okay, cool. Yeah, that’s fascinating. yeah, how would you say that, what’s the most common obstacle that your clients face that you can help them overcome?

Rick Albert (08:03)
Yeah.

It’s really all about creativity, right? So we see some of these deals and they’re like, the price doesn’t make sense. Okay, well we can offer less. I have a client escrow right now.

We negotiated, we’re actually down $98,500, almost a hundred grand off.

So we can do those negotiations, but there’s other workarounds, right?

It’s like, okay, could the seller buy their interest rate down to make the numbers work? Is it, do we look at properties for the house hackers, for example? Do we buy properties near universities where those tenants might be more inclined to double up on the beds, right? So yeah, maybe you normally can get $1,000 a room. Maybe you get $750 a bed.

Right, now you start making more money. So it’s about creativity in what we’re seeing on the market. And yes, most of my clients do buy on market. We don’t do a lot off market.

Michelle Kesil (09:40)
Cool. And what would you say you’re most focused on solving or scaling next?

Rick Albert (09:47)
so there’s a couple of ways to look at it. So I do have my own podcast, the key to the city of angels, where we do explore all things real estate, but have a focus on LA. So I am working on building that section up, right? Cause we want to be able to educate as many people as possible. I’ve had attorneys, tax people, all sorts. so that’s been amazing on the investment side. Personally, what I’ve been working on is figuring out ways to increase cashflow with what I have.

Right. So, for example, I just recently bought a fourplex at a state. So how do we maximize the value there before I start doing the cash out, things like that. And then, you know, on the real estate side, one of the challenges that we have is we spend a lot of time with our clients. Like a lot of time analyzing properties, literally right before this, I had a meeting with a client over Zoom and I’m going through all the different systems of a house.

Here’s what to look out for, here’s what to do. So we’re really focusing on education for our clients. So that way we basically are growing their wealth together. It’s not just, hey, here’s a list of homes, let’s go buy one. This is a relationship and let’s help each other out.

Michelle Kesil (10:48)
Thank you.

Yeah, absolutely. Can you share some of those educational tools that maybe people are needing but aren’t fully aware of yet?

Rick Albert (11:04)
Yeah, mean, honestly, it’s just opening your eyes. I know that sounds super weird. It’s super basic. But like what we went over, like, for example, today was, hey, when the roof’s shiny, that means the roof’s worn down. Here’s what galvanized piping looks versus copper piping. But it’s actually taking the effort so that when we go to these houses, we can open up underneath the kitchen cabinet, we know what to look for.

Right. We don’t need all these extra tools that come out and a lot of them are very helpful. But that is something. But it’s just like that basic like I’m an investor. Here’s what to look out for as I see these homes before even write an offer. Just that much more informed so we don’t get caught with surprises later on.

Michelle Kesil (11:44)
Yeah, absolutely. The simple things are sometimes the most potent.

Rick Albert (11:49)
Well, I think the hope is, you know, we lock up a property, we do inspections, and then we do another round of renegotiations, which we do, we’ve been very successful at, but the markets kind of like change. I don’t know what you’re seeing, but it’s like, yeah, we’re slowly becoming more of a balanced market between buyers and sellers, but sellers, a lot of them are still holding firm. So it’s like, okay, maybe we just need to do more negotiations on the front end.

rather than spend thousands of dollars, tons of man hours, once an escrow, just for the deal to fall apart.

Michelle Kesil (12:21)
Yeah, that makes sense. And yeah, as far as your podcast, like what is your goal? What kind of conversations are you having?

Rick Albert (12:26)
Yeah. ⁓

You know, the focus is more of like an educational standpoint. So it is geared towards people who generally live in the Southern California area. But a lot of the guests we’ve had, like I mentioned, like, was like an attorney. We went over some of the latest tenant laws. Hey, here’s what’s going on. Or I have friends that are also realtors, but in different markets. So we bring them on and we actually talk about what’s going on in the news.

So it’s a lot of more of an educational standpoint from a real estate investing. What are we seeing in the market for buyers and sellers? Because as we know, like the headlines are nationwide, but every market’s different. What’s happening in Austin, Texas is very different. That’s what’s happening here in LA. And so that’s what we want to do. The goal is to educate and to get as many ⁓ listeners as possible and hopefully they benefit from it.

Michelle Kesil (13:10)
Yeah.

Yeah. Can you share maybe a powerful story that you’ve interviewed on your show?

Rick Albert (14:06)
Recently I interviewed, his name is Casey Cohan and he’s all about wealth strategy from a tax perspective but we actually talked about charities and I thought that was super interesting where the ultra wealthy are building out these charities and that’s how they’re spending their money so the money’s tax free. So it’s not really directed to real estate necessarily but it’s showing how people

mindset and how they work the system.

And then the other part was really, and I’ve been actually having this conversation about three or four times on the podcast. It’s all about family values. So we know that statistically something like 70 % of the wealth drops after the third generation. That’s why we buy rental properties, right? We won’t be able to pass those onto our kids, but we noticed that a lot of that money ends up getting spent, properties get sold. So what we’ve been noticing is more household conversations.

As the kids get older, you have them participate. Have them on the calls with the property managers. Have them walk the property with you during escrow. Right? Have them be part of what’s going on. So as they get older, they also learn to appreciate it. They understand the business. So when they take over, because we’re all going to expire at some point, that we’re not, you know, we’re leaving them with more than just, hey, here’s money. Here’s actual tools.

Michelle Kesil (15:22)
you

Yeah, that’s a very valuable perspective. Awesome. So what would you say like that next big goal for yourself is?

Rick Albert (15:36)
Good question. So the next big goal on the real estate side, on the investing side for me is to basically set up systems to where I’m buying one property a year, at least. And I typically like the three to four unit properties. I’ve noticed the triplexes and the fourplexes do the best. So I am working on systems.

to generate, basically become self-sufficient and buy at least one a year. So that’s kind like my big goal personally. And then on the real estate side, like realtor side, it’s just helping more more clients with the goal of doing, you know, probably five to 10 million more in sales each year.

Michelle Kesil (16:14)
Amazing. Yeah, those are some big goals.

Rick Albert (16:18)
Yeah.

Michelle Kesil (16:18)
Awesome. So I know a lot of people that listen to this show are either earlier in their journey or potentially looking to level up. And I think they benefit from hearing this when it comes to building relationships and growing your network. What do you feel has made the biggest difference for you?

Rick Albert (16:39)
in terms of building relationships or in general? No.

Michelle Kesil (16:42)
Yeah, building your relationships

and growing your network.

Rick Albert (16:46)
You know, it’s interesting, when I meet with lot of aspiring investors, often times they talk about grinding down vendors. I know it sounds weird, but they’re like, yeah, I’m gonna grind down my contractor to get, you know, certain margins and all that. You develop that reputation, no one’s gonna wanna work with you. Like, I’m a big proponent of taking care of my people.

Right? My handyman, I told him, as long as you do good work and good pricing and, you know, speed, I’ll keep using you. And I rarely question his pricing. Yes, if something’s outrageous, we talk about it. But like for a lot of little things, like you got to keep them working because then they’ll come back. Right. When the time comes and you’re like, hey, I have this emergency. I have contacts that will drop what they’re doing to go help me out.

or they’ll drop what they’re doing to go help my clients. And so your relationships is actually probably one of most important things because no one can do this alone. But one of the beauties about real estate is you get a full team and not have a single employee.

So that’s probably some of the best advice, is really take care of your people.

Michelle Kesil (17:46)
Yeah, absolutely. Relationships are everything in this space.

Rick Albert (17:50)
Mm-hmm, very much so. And it’s also a small world. It doesn’t matter what, I mean, pick an industry, fashion, tech, whatever. People talk and you get reputations and the last thing you want is a bad reputation.

Michelle Kesil (18:01)
Absolutely. How did you grow your network? what? How did you like start that process?

Rick Albert (18:08)
Yeah, so when I was working on just the development side, when we were buying like fix and flips from the courthouse steps, I would just ask a lot of questions to like the different inspectors and the contractors. Like there was no stupid question. And a lot of them I think tended to appreciate that, not just because they can show off their knowledge, but it showed that I actually made an effort. So then when we did talk about certain topics, I already knew about it.

Personally, I actually built a lot of my connections through just a variety of networking. When I was in college, I joined a fraternity.

And it’s a nationwide fraternity. So when I moved down here, I’m meeting guys from Texas that moved here from Northern California, Southern California, like all over the country, because especially in LA, it’s such a melting pot. So I’ve had the honor of meeting some amazing people over the years that way. And then, you know, just different forms like bigger pockets, Facebook groups, things like that. I’ve been able to really just expand my knowledge and expand the network.

Michelle Kesil (19:05)
Yeah, I think that’s such good advice and something that people should really be focusing on.

Rick Albert (19:11)
I agree. know, it’s when, you know, the big conversation right now is, is college worth it? Right? Especially with student loans and all that. So I tell a lot of people, it’s like, you go for the networking.

If you’re like go and study, get the good grades, but get involved. I’m not saying you have to join a fraternity or sorority, but like student government or I mean, I know I have friends who went to USC, University of Southern California, and they have networking events on the East Coast. Like it’s, you know, that’s really, I think where some of these early stages, these 19 year olds, when they don’t know what to do, network.

Michelle Kesil (19:49)
Yeah, that’s really good advice. mean, your network is your network, they say. Amazing. All right, so before we wrap up here, if someone wanted to reach out, connect with you, maybe collaborate or just learn more about what you’re up to, what’s the best way for them to reach you?

Rick Albert (19:54)
Right?

Yeah, so if you want to call or shoot me a text, 323-929-7653, or an easier way if you want, also if you didn’t memorize that, I might add on social media like Instagram, my handle is at Rick Bismboy Albert. So Rick B. Albert. And I respond to all my DMs, all that. So that’s another way to get ahold of me.

Michelle Kesil (20:32)
Perfect. Well, listen, I appreciate your time, your story and perspective. We need more people in this space who are out here doing things in this right way. So thank you again for being here.

Rick Albert (20:44)
Of course, thank you so much for the opportunity. I appreciate it.

Michelle Kesil (20:46)
Absolutely. And for those of you that are tuning in, if you got value from this, make sure you’ve subscribed. We got more conversations coming with operators just like Rick, who are out here building real businesses. And we’ll see you in the next episode.