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Show Summary
In this episode of the Real Estate Pros podcast, host Micah Johnson interviews Roger Hauf, a seasoned real estate investor with over 40 years of experience. Roger shares his journey from active single-family investing to a focus on passive investments, discussing the lessons learned from market crises, the importance of networking, and strategies for identifying profitable markets. He emphasizes the significance of understanding demographics, being aware of landlord-friendly states, and the value of building relationships in the real estate industry.
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Roger D Hauf (00:00)
Well, because we weren’t going to lose our house or any of the rental. We worked so hard to get where we were at. And the nice thing about it is there was a lot of people that were losing their homes, but they were good people. So they still had all those crazy loans that if anybody’s done any research, all the crazy, you know, 1 % interest rate loans and stuff back in the day, negative amortization.people got upside down in their payments. Well, they would go buy a house and have a thousand dollar payment. And then six months later, they’d have a $2,000 a month payment because rates would go up and there was no caps on these besides payment cap adjustments, but still it destroyed them. So their incomes didn’t double, but their house payments doubled. Prior to 2008, anybody that could fog a mirror could get a loan. Our tenants were the people that couldn’t fog a mirror.
That’s how bad they were. So, so we, was terrible collecting, but we chugged through it. But once people started losing their houses and still didn’t have a place to live, all these people still had good paying jobs. They just couldn’t afford these absorbent payments. So they became our tenants. So our tenant base improved after 2008. So we had better tenants, less to do there. And then we just did whatever it took to make ends meet to bridge the gap, to keep everything going.
Micah Johnson (02:49)
Hey everyone, welcome to the Real Estate Pros podcast. I’m your host, Micah Johnson. And today I am joined by Roger Hauf who’s been making serious moves in the single family residential space for over 40 years now. Roger, it’s great to have you on,Roger D Hauf (03:03)
Hey, good to be on. Thanks, Micah.Micah Johnson (03:04)
Absolutely. I think our listeners are really going to take something away from how you’ve approached your real estate career in general, the ways that you’ve adjusted as market changes have happened since you’ve been doing this. So let’s dive in on that. For people who may not know you yet, what’s your main focus right now and what markets are you operating in?Roger D Hauf (03:22)
Well, right now the main focus is my wife and I are kind of on the latter end of our career. I just turned 65 yesterday and so we’re kind of the senior citizens and we don’t feel like it. So we’re starting to liquidate some of our single family residences have been for the last about a year to year and a half. But currently we’re in several markets.We’re in Arizona, Colorado, Texas, Oklahoma, Michigan, and South Carolina until recently. We just sold our South Carolina property that we had, ⁓ and we’re looking at hopefully selling the Michigan one. So we’re in six states. We’re trying to get down to four and eventually whittle those down a little bit as well.
Micah Johnson (04:05)
And what are you trying to shift to? What’s the move for once you liquidate those properties?Roger D Hauf (04:10)
Well, our biggest thing right now is more passive investing versus active single family investing. I right now, even though we have for a long time, for a number of years, I self-manage them. And my wife said that I needed to get them turned over to a property manager or she’s going to divorce me. So I decided I would do that. And especially we were bouncing between several states.And so it was always this case where, we’re in Texas, but something’s broken in Colorado, or we’re in Colorado, something’s broken Texas. So we got property managers for all those, which is awesome. That helps alleviate me talking to 60 individual tenants, but you’re still managing five or six property managers in five or six states. ⁓ getting the tenants and toilets off of our lap, I guess, for lack of better term, is what we’re trying to do.
So we’re moving into more passive investments where we’re the investor more of the bank than the property manager, multi-family, storage units, ⁓ raw land, things of that nature.
Micah Johnson (05:13)
Gotcha.moving those projects. makes sense. Makes sense. let’s, let’s, sir, let’s move back a little bit. When did you get into real estate? What led you to this industry to begin with?
Roger D Hauf (06:16)
Well, I originally started out, graduated from college in 1983 and bought my first five plex about six months out of college. And subsequently ended up buying that property. And then my brother was very interested in what I was doing. So he partnered with me and then we bought two duplexes and a triplex. And then finally ended up buying a house for myself. But ironically, that house that I bought for myselfI rented the upstairs and I lived in the basement just to keep my costs down. So I had 13 doors and I was probably 23 years old at the time. ⁓ And a lot of people on this probably are too young to remember, but then the SNL crisis hit in the mid 80s and I was working for a savings loan out of college. ⁓ And so ended up subsequently losing everything.
Micah Johnson (06:54)
Whoa!Roger D Hauf (07:11)
and I ended up moving to Denver, Colorado and starting all over in 1986.Micah Johnson (07:15)
What was that like? You’re 20, what, 23 at that point? 26 at that point? In that range?Roger D Hauf (07:20)
About25 when I moved to Colorado. Yeah, I had gone from, I’m going to be this real estate empire here at 20, 23, 22. And then by 25, 26, I was back to square one living in a townhouse in Aurora, Colorado, working a commission job with no income.
Micah Johnson (07:38)
Man. So how long were you out of real estate as it were before you got back in and started buying again?Roger D Hauf (07:45)
Well, we had bought our townhouse on a non-qualified assumption back then, but then that’s all we had. And then it was about four years, started ⁓ establishing myself in the Denver metro area, and we bought a single family house in like 1990. And then, sad to say, I went through a divorce situation then, and ended up starting all over again in about 1993.Micah Johnson (08:11)
Man, okay. So was the third time the charm then?Roger D Hauf (08:14)
Yes, it was second wife, but third time starting over. So then I found my current wife, you know, and then we ended up ⁓ buying a house in 97 because we were a blended family. And so I had two girls and she had a girl and so we needed a little bigger house. So we rented out the little ranch house that I ⁓ was living in and bought a two story bigger house.Micah Johnson (08:18)
Hahaha!Roger D Hauf (08:41)
And I still have both of those houses to this day. And so then in 97, we bought that house and then we bought another three, I think in 98, another about four in 99. And then we ended up building in 2000, we ended up buying a lot and building our dream house. But then 2008 happened and we all know what happened back then, or at least I think a lot of people.Micah Johnson (09:05)
So was that all right there in the Colorado area, right where you were living?Roger D Hauf (09:09)
Yeah,that was also in Colorado. Yeah. So we had, we had eight houses at the time when we built our big dream house. And then we, then we bought another seven houses, eight houses after that. Had about 15, 16 houses and our big house. And then the 2008 recession came.
Micah Johnson (09:28)
Why did that one fair off for you? So you had the 1986 recession there and it had one turnout. And so what’d you learn from there that you were able to navigate the next one with?Roger D Hauf (09:38)
Well, yeah, so that’s a good point because the main thing was is in the first one, I was young and stupid and didn’t have any money. Second time I was just older and maybe not as stupid, I still, we decided that we got to get rid of the big house. The kids were all going to college and gone. And it’s like the wife and I and the dog. And so we said, let’s sell this big house. I mean, I had a…I had a $4,000 a month house payment back then. And so it was a big nut to crack. We sold the big house, downsized and got a little house. And I told her, I said straight up, I go, can work at McDonald’s and still make the house payment. And I almost did that. I actually drove for Domino’s for a couple of winters just to make ends meet. Cause I was still commissioning loan officer doing deals and it was a tough market. So.
We saved every rental property. did not lose a property. Our smaller house, we still have to this day, that’s our house and when we’re in Colorado and and we weathered the storm and got through it.
Micah Johnson (10:43)
That’s powerful. That’s a powerful story because it’s applying what you’ve learned and then to go through it again and to make it out this time. What I love to hear is that it wasn’t easy. It’s not like the second time was sunshine and rainbows. What was that mindset that it took to go deliver dominoes? Like what was going on in your head then that said, I’ll even do this.Roger D Hauf (11:37)
Well, because we weren’t going to lose our house or any of the rental. We worked so hard to get where we were at. And the nice thing about it is there was a lot of people that were losing their homes, but they were good people. So they still had all those crazy loans that if anybody’s done any research, all the crazy, you know, 1 % interest rate loans and stuff back in the day, negative amortization.people got upside down in their payments. Well, they would go buy a house and have a thousand dollar payment. And then six months later, they’d have a $2,000 a month payment because rates would go up and there was no caps on these besides payment cap adjustments, but still it destroyed them. So their incomes didn’t double, but their house payments doubled. Prior to 2008, anybody that could fog a mirror could get a loan. Our tenants were the people that couldn’t fog a mirror.
That’s how bad they were. So, so we, was terrible collecting, but we chugged through it. But once people started losing their houses and still didn’t have a place to live, all these people still had good paying jobs. They just couldn’t afford these absorbent payments. So they became our tenants. So our tenant base improved after 2008. So we had better tenants, less to do there. And then we just did whatever it took to make ends meet to bridge the gap, to keep everything going.
And so then,
by about 2000 and was probably about 2010. My daughter’s down in Texas at the Texas Christian TCU. And we found out that housing was cheap in Texas, unlike Colorado.
Micah Johnson (13:10)
And what did that open your mind to? So how’s this getting more expensive in Colorado? Y’all are here here in one backyard and now a whole new world opens up to you. What was that like to make that transition down there?Roger D Hauf (13:22)
Well, we dida lot of thinking and basically the housing prices were two to 300 % higher in Colorado than in Dallas, Fort Worth. And I was floored because I had never done any research out of my own backyard. And so our daughter’s down there going to college and she gets out of school and she goes, dad, what should I do? And I said, you buy a house. You don’t want to be a renter. And at that time, Obama was offering the tax credit for first time home buyers.
I think it was like $8,000 or something. I said, you can go buy a house and they’re gonna pay you all your money back for down payment and everything when you file your taxes. said, you’re gonna own this thing, nothing out of your pocket. And she goes, that can’t be right. I said, no, trust me on this one, it’ll work. And rates, I said, are super low. They’re like six, 7%. We got spoiled here recently, you know.
But at the time I go, this is great because my mortgage back when I got out of college was 12%. I’m thinking 6%. This is awesome. So she buys a little three bedroom, two bath, two car garage house for $68,000 in 2010. And I go, I go, what? I said, are there more of these or is this some kind of anomaly? And she goes, oh no, we looked at a bunch of them. And I go, get the realtor to call me. said, we’re going by.
Micah Johnson (14:20)
YeahRoger D Hauf (14:40)
buying houses. And so we ended up purchasing 13 homes there in about a two year period, ⁓ ranging from $32,000 up to about $68,000. And it was just crazy. And Sarah rented out these little houses and she was going to help us manage those because she was going to just finish school there and was working for Lockheed Martin.And all these houses were probably within three miles of where Lockheed was at. So go, hey, this is great. We little portfolio and she owned half of these properties with us because we couldn’t get mortgages anymore because we had too many properties. And so she would get the financing and we would give her the down payment to put the deals together and we partnered with them 50-50 on them. And so she ended up with a nice little portfolio and we ended up with another dozen houses.
Micah Johnson (15:32)
Yeah. So how many that, so you’re in Colorado at that point and you’re in Dallas Fort Worth. How big was your portfolio at that point?Roger D Hauf (15:39)
We were at that time, I think up to about close to 30 houses.Micah Johnson (15:46)
close to 30. And did you have a target number in mind or you were just finding the deals as they came along?Roger D Hauf (16:32)
Just finding the deals as we came along. kind of wanted our, my goal was to get critical mass wherever we were at, where it would make sense. Cause I saw the writing on the wall that it would make sense to get a property manager because with her there, it was nice. And my ⁓ son-in-law at the time they weren’t married, her fiance, we figured they could handle those. could handle these, but I said, if we go anywhere else or get any bigger, we’re not going to, and we were all working full time, you know, cause my wife and I were working and my daughter and her.fiancee are working, but we could handle them on a part-time basis, okay, because we were in that neck of the woods. Then she gets into a leadership program, ends up getting transferred to Florida for a little bit, then back to Texas for a little bit, and then to Colorado for a little bit, and then back to Texas, and then they said, and this was over a two-year period, I think it was, two, three-year period, and then they said, where do you want to go? And she goes, I want to go back to Colorado.
So boom, we lose our property manager there. So then I go, hmm, we need to relook at this. And we ended up getting a property manager there. And then in the interim, ⁓ because I had been going down to San Antonio, side issue, I’ve been in the martial arts for 45 years, and ⁓ my instructor lived in San Antonio. And so we were going down there for clinics and things like that.
I go, if Fort Worth is this cheap, I wonder if San Antonio is the same. And it was. So we went down there and found houses like that in the Fort Worth area, in San Antonio, same thing. So we’re buying houses there, know, 40, 50, $60,000. think we paid up to $80,000. The market was already starting to move up, but we were kind of in that range.
But the problem we ran into there, side story was is that we bought a lot of these on hard money. As everybody knows what that is, we’re paying 12, 14 % rates to get these properties that needed work. We go in there and rehab them and get a tenant in there. And we had bought three of them. And so this is probably 2013, 2013. And the…
thought was, then we’ll just go refinance them and then take that money. One, we’ll lower our payments, improve our cash flow, and then go buy some more. Well, we go to the bank and we know we couldn’t get any Fannie Mae financing, Freddie Mac financing anymore because we had too many mortgages. And we couldn’t use our daughter because she now had 10 loans underneath her name, so we couldn’t use her. But we go, hey, well, somebody said, just go to your local bank and they’ll give you some money because they want to lend money out.
So we said, hey, we got three houses. They’re not huge deals. What if I put them all together and then you can get a big loan, maybe give us a couple hundred thousand dollar loan on $300,000 worth of houses. It’s a nice 70 % loan to value. And they go, we’d love to. Where do you live? And I said, we live in Colorado. And they go, ⁓ sorry, we can’t lend you any money. And the wife and I go, what do mean you can’t list any money? I said, isn’t that discriminatory? mean.
We got good credit, we got a track record, and they go, no, no, it’s just we’re a local bank. We just only lend to local people in our community. And I said, ⁓ okay. So then what we did is we found another house that was in the same neighborhood as these ones we bought, and we bought it and moved into it. And that was our first year coming to ⁓ Texas to be Winter Texans.
get out of the snow of Colorado. And so we buy this house and we go back to the bank and said, hey, we’ve got these three houses and they go, where do you live? And we said, oh, we live at 9866 Haunton Creek. Awesome, great, boom, down’s approved. And so we just had to live in the area. That worked out great. We took those three houses, got the rates down from
Micah Johnson (20:23)
Bingo! Unlocked it.Roger D Hauf (20:33)
12, 14 % to around 6 % at the time and pulled a bunch of cash out and went and bought three more. And we went back to the bank six months later, did the same thing. Went and bought three more. Well then the bank said, we’re getting too many loans. So then we found another bank, just another little local bank, know, with a few branches. Did the same thing. And within, I think it was probably by 2015.I think about 2015, maybe 2016, we had 18 houses in San Antonio.
Micah Johnson (21:07)
And so you’re starting to spread out now and then your portfolio is growing. What, for someone that’s experiencing, you know, my, maybe my backyard’s running out of deals. Maybe I do need to try to look at these other places. What would you recommend to them as someone who has expanded themselves out? Cause you said what you’re now in Arizona, Michigan, just got out of South Carolina. You got Colorado, you got Texas. What is it that you go look for in these markets toto find more better deals that’ll pencil.
Roger D Hauf (21:36)
Well, basically, yeah, that’s a good question is we look at the demographics of the area. And one of the big things right now is we’re looking for landlord friendly states. Colorado is not that anymore. Neither is California or New York or ⁓ Washington state. And especially during COVID, everybody saw what you had a lot of.squatters happening, you couldn’t evict people, their laws tightened up. It just got really crazy and they were all against landlords. There was a lot of people that lost their rental properties because they couldn’t make their mortgages because their hands were tied on getting good tenants in, getting the current ones to pay or to get people evicted to get good ones in. But that’s one of the big things. Also is the area growing? Is the area have good schools and good job base?
⁓ We ended up moving to Arizona. We ended up selling 100 % of the Fort Worth portfolio. A couple of the properties we moved up to Colorado Springs and then Colorado Springs started to get too expensive. The rest of those Fort Worth ones ended up being in Arizona in a couple of small towns south of Phoenix, Casa Grande, Eloy, Arizona City, ⁓ and Coolidge. And there was a lithium battery plant being built.
there and they had no housing. They were going to be bringing in thousands of jobs and no place for people to live. Well, our theory to start with, ironically, was we’re going to go in and do what we normally did, find some beat up housing, fix it up and rent it. There was no housing to be had because it was a small community, was never that big. And so new construction was all that was available towards us.
Micah Johnson (23:00)
man.Roger D Hauf (23:23)
I think we ended up buying two resale homes of the 15 we have there, and the other 13 were brand new construction. And we ended up buying them, and every month to two months, the builder kept raising the prices, and we would keep buying them. We’d sell a house in Texas, 1031, and over to Arizona, buy something, and then six months later, we’re buying another one and buying anotherMicah Johnson (23:31)
wow.Roger D Hauf (23:50)
and their values keep going up and up and up. So we ended up building equity from that standpoint. And then we got lucky on the last few we bought. And we started doing this probably, this is like 2020 through about 2022. So in two years, we bought 15 houses there. In the end, the builders were calling us and said, the deal fell through. We had this place under contract, it’s supposed to close.Micah Johnson (24:12)
I bet.Roger D Hauf (24:17)
ironic, a lot of them was like November, December even. And they go, we’re trying to get this off the books by the end of the year. Do you want it? And we go, well, what price? And they would go, blah, blah, blah. And I said, we just bought that exact same model from you six months ago. I’ll give you that price. I’m not gonna give you what the owner-occupant person is gonna pay for it. Fine, they go, we just wanna get it off the books. So we were still getting prices six months earlier that we had been getting because of the fact they wanted to sell them quick.They knew we could close, et cetera, et cetera. So it worked out really good.
Micah Johnson (24:48)
Getnew construction at a discount. Rogers, eat your class, please. That’s killer, man. That’s really killer. So to start wrapping this up here, for listeners who are earlier in their journey or they’re trying to level up, what’s made the biggest difference for you when it comes to building relationships and growing your network?
Roger D Hauf (24:51)
Thankand what was happening with the economy there, he ended up getting a commission on 15 houses. And eventually ended up becoming our property manager of those houses too, because then we turned it all over to him. So we went to Tulsa then the last two years. And so basically we were in, we were 1031ing, we’re selling out of Colorado, we’re trying to move out of there because of some of the property laws there and stuff. So we,
Micah Johnson (25:21)
Yeah!Roger D Hauf (25:35)
we’re looking at ⁓ just in 2024. We started buying in February of 2024 in Tulsa because of some property we sold in Colorado. We got referred to a realtor by another real estate investor of ours. So networking is very important. And he had bought a few houses in Tulsa. He goes, hey, work with Angela. She’s great. She knows what to look for. She’s owned property before. She does fixes and flips. She’s got contractor contacts, except everything that you need.I said, awesome. So we ended up buying a property in February of 2024. And then subsequently, we bought 13 properties in 2024 in Tulsa and 1031s. And we were just cranking. were buying, you know, sometimes two or three a month until we could use up our 1031 money. They would sell another property, buy another lump sum. So we have 15 in Tulsa right now. And she helped us get our tenants in there.
Micah Johnson (26:16)
Wow.Roger D Hauf (26:32)
She helped us find the properties. She helped us find the contractors to rehab them. And then now we’ve got another property manager that’s taken care of all of them because she can’t manage all of them. I was self-managing that group until I got to that critical mass that I was talking about. So then I could go to a property manager and say, hey, I got a portfolio here. What are you going to give me for a rate on management? And we’ve done that in every market.and that’s Colorado, Texas, Arizona, and Oklahoma, it’s like, I’ve got 10 properties, 15 properties, 18 properties, what kind of deal will you cut? Because most people when they go in and they’ve got one house, oh, it’s 10 % and know, month rent and blah, blah, blah. We never paid that on any of ours because we come in there with a little bit of clout and a little bit of volume so we can cut a good deal. You know, we can get the, you know, 7 % or a flat fee to rent or a flat fee to lease.
or whatever. So that’s very important too. Is that one, you get your contacts, two, you get your contractors in place, your realtors and everybody. And then three, I recommend everybody self-manage for a little bit so that you know what to expect so that you’re not told by somebody, well, this is what you need or you should do this or blah, blah, blah. If you’ve never done it before, it’s like the mechanic and when you take your car to and they say you need a new motor when you just need some spark plugs, you know?
Micah Johnson (27:55)
Yeah.Roger D Hauf (27:55)
Same thing. And that way when you turn it over to the manager, when they start telling you stuff, you’re going, it doesn’t sound right. And you can be an educated investor instead of one that’s taking advantage ofMicah Johnson (28:06)
And it sounds like you double dipped a little bit right there. Taking that time to get enough properties to self-manage that where you learn those lessons also gave you the chance to negotiate at the table with them on how much they were gonna charge you to manage that. So you got a double benefit out of the same amount of time.Roger D Hauf (28:07)
I’m sorry.Well, exactly, we saved a lot of money the first year in ⁓ Oklahoma or any of the other markets as well. But yes, then when we turn them over, it’s like, hey, and then you know the market better too, because every market’s different. How do contractors work there? Who are the good people, the bad people? How do you deal with the municipalities and the water districts and whatever? I mean, ironically, they’re all weirdly different. And so you kind of know who to contact and then…
you can talk intelligently to your property manager and go, hey, here’s what to expect. And they tell you something different. go, no, no, no, I dealt with this person or I dealt with that person, know, that kind of a deal. So it’s a good education thing. think the more tools you have in your toolbox there, it makes the whole thing work better, smoother.
Micah Johnson (29:14)
You’ve been putting 40 years worth of tools in your toolbox. That’s what’s impressive through many different kinds of market cycles. Now many different markets in general. So if someone wanted to connect with you and learn more from you and learn more about you in terms of the knowledge that you have to offer, what would be the best way for them to reach out to you?Roger D Hauf (29:33)
Yeah, just to shoot Joanne and I an email, it’s at jr, as in Joanne and Roger, jr for the word for, F-O-R, freedom at gmail.com, jrforfreedom at gmail.com.Micah Johnson (29:48)
Man, well, perfect. Well, listen, I appreciate your time, your story, your perspective. Thanks for hopping on and speaking with us. I think we need more people in the space doing it the right way, like you’re doing it and sharing that knowledge, passing along what you’ve learned. So for those of you tuning in, if you’ve got value from this episode, please make sure you’re subscribed to the podcast. Like this episode. We’ll make sure that Roger’s information is in the description for you. If you want to reach out to him, we’ve got more conversations coming up with operators, just like Roger, who are out there building real businesses.Thanks so much for joining us. We’ll see you on the next episode.
Roger D Hauf (30:19)
Thank you.
