Solve a Need: The Real Estate Investing Formula Behind Higher Rents and Better Returns

Ted Garber (00:00)
At a point where I also look at appreciation as well. So not only the last couple deals that I’ve done, the last three deals were, you know, net positive cash flow, but there was significant appreciation at closing, you know, to the tune of 25 to 40 % because I find properties that have been on the market.

⁓ Look for ones that have bad photography, like the realtors in the mirror. You can see their picture. The angles are bad. looks like they have a camera from the 1990s. Those are great because they’re under-marketed and typically ⁓ the realtor and the sellers aren’t as savvy. So you can negotiate and that’s what I’ve looked for.

Michelle Kesil (02:14)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Ted Garber, who is a real estate investor in the central Florida area. So excited to have you here today, Ted.

Ted Garber (02:33)
Thank you. Thanks for hosting me.

Michelle Kesil (02:36)
course. So let’s dive in. First off, for those not familiar with you and your work yet, can you share what your main focus is?

Ted Garber (02:45)
Yeah, so I got into real estate investing about six years ago, right before COVID. I’m an entrepreneur my whole life. Basically, I started my early career working for people, but I went off on my own about 20 years ago. Although it was fulfilling financially, personally, and everything, I’ve always been interested in real estate. I bought my first home for myself at the age of 21, and it’s something I’ve always been passionate about. So I got into real estate basically by

you know, commercial house hacking as people know. Typically people buy a home and then they either buy a duplex and they rent the other half out which pays for their mortgage or they live in a house and they use that decreased interest rate and eventually rent it out. So I did the same thing for my commercial for my main business. So I found a commercial property that had many offices in it.

It was underutilized. It was empty for a couple years and I did the math and I figured I could have my business rent the office, which was equivalent to what I was renting an office for that would pay the mortgage and everybody else would be great. would all be profit. So I started doing that early 2020 and I ended up really enjoying it and it ended up being something that I really enjoy, fulfilling that need in the marketplace.

for people. So I’ve accelerated my real estate portfolio and focus on that since, both residential and commercial properties.

Michelle Kesil (04:17)
Awesome. And did you learn about real estate investing in any way, or it was all like trial and error?

Ted Garber (04:26)
So trial and error, but I also use YouTube a lot to listen and learn from people that have done it before. In particular, Chandler David Smith, he’s younger than me, but he has hundreds of doors and units. He actually put out a tool called the CDS for Chandler David Smith, CDS rental calculator, which I use for my deal due diligence. So I have a whole ⁓ host of tools that I use to help me analyze deals.

But that one in particular has really helped. So he did a great job at commoditizing real estate investing and then tons of others on YouTube and blogs and everything. ⁓ Sort of focused on time to ROI, cash on cash return. So my portfolio is focused on that. How soon can that initial investment return the money back to you? So I sort of look at it, Michelle, like I’m buying a business. So this business sheds

net revenue each year and I’m buying into it ⁓ and how long will it take for me to pay myself back based off of that initial investment. ⁓ Excluding all of the other intangibles that do help. ⁓ Depreciation helps with taxes, like I said I’m a business owner, so that helps. Appreciation, you can factor that in as well. And then diversification, I was looking to diversify. So being an entrepreneur, I don’t have a pension.

I have 401k but I don’t work for the government, I don’t have, I for a big company where I have a pension. So sort of creating my own which purposefully would meet my needs in the future. So I kind of look at everything that way and I learned a lot through YouTube primarily.

Michelle Kesil (07:02)
Yeah, amazing. And what are some of the main keys that you feel made the biggest difference in allowing your business to be able to grow and run successfully?

Ted Garber (07:15)
Yeah, so fulfilling a need. So what I always tell people when they ask me, you know, if they want to get into real estate, don’t buy the property that maybe you want to live in. I focus on middle market properties, nice, safe, clean, modern places for people to live and work. So a lot of people look at buying that house on the river or that beach house or that condo outside of Disney World or things like that, where it’s more of a lifestyle decision. I’m looking to fulfill a need.

Okay, so ⁓ in my market, in particular in the space coast, it was underserved. We were actually the first fractional office space and coworking space beachside in the area that I live in. There weren’t other ones within 10 miles or even 20 miles or so. So I sort of created that need ⁓ or fulfilled that need and created value there. So we do fractional offices, so they’re ⁓ furnished.

They have internet, they have power, businesses can just move in. And I find a lot of value there. My latest purchase was last month and it was a freestanding building. And I did the same thing. ⁓ As soon as I got the clear to close, I started marketing the business as a fully furnished, just move your business in. And I was able to attract a tenant within days. So the building was listed for rent at $1,900 a month.

⁓ for two years it sat unused. I was able to get $2,900 a month furnished. So significantly above market rates because we ⁓ offered a commoditized product. It’s furnished, we updated it, it’s clean, and ⁓ I like providing that value. So for small businesses or even big businesses, we rent to like Verizon and some other billion dollar companies, their tenants can just move in ⁓ and they have an office.

And the same thing with residential. I have single family, have condos, have townhouses. But some of my single family, we do rentals for insurance companies that have displaced customers. So they’ve been through an event, let’s say a fire or a mold or a hurricane or something, and they need a place to live. So we provide them with temporary housing, again, at far significantly above market rates.

but in clean, safe, nice neighborhoods.

Michelle Kesil (09:47)
Yeah, that’s awesome that you’re able to add that value.

Ted Garber (09:50)
Yes, definitely. solving a problem or fulfilling a need is my recommendation when looking at things. So, you know, I do a lot of purposeful movement in my life. ⁓ You know, I want to be as healthy, you know, physically, mentally, financially as possible. So coming into it saying, I’ve always wanted to get into real estate is great. Most people talk to me and they say, I’ve always wanted to get into real estate. You know, okay, great. Well, what’s the reason? What is your, you know, your reason behind it?

I’d like to make more money. Okay, that’s great. Why would you like to make more money? And a lot of it has to do with they’re unhappy with their either financial position or they’re stuck in a job that they dislike. So you can use real estate as a tool for diversification. You’re not going to hit a home run the first one ⁓ and it compounds over time. So I recommend ⁓ purposefully looking at it and deciding what you’d like and then figuring out how to get it.

And I use different tools in order to do that with my real estate. I’m able to manage it ⁓ Remotely, I travel a lot so I’m all over the world and I’m able to utilize my Electronic tools and vendors in the market that I serve to to kind of manage everything for me. I do the customer communication But again, you have tools that do that. So I wanted to educate Your you know listeners and viewers based off of my experience because I learned through it

But some of the tools that I use for pre-deal due diligence would be that CDS rental calculator. It’s on ⁓ Android and Apple on the App Store, CDS rental calculator. And there you can calculate the deal and try to figure out what ROI you’re getting. ⁓ And they do a great job with that. I have rent collection tools that I utilize. So for my residential ⁓ clients, I use AVAIL. It’s now owned by Realtor. But it’s great because you can go ahead and

and market your property there and it feeds into Zillow and Realtor and Hotpads and things like that. And then you can go ahead and screen tenants through there just like you can do with other tools like Zillow where you see their background and their credit score and everything and try to make the best decisions possible utilizing that data. And then you can actually manage them and collect payments through a veil as well.

Michelle Kesil (12:48)
Awesome.

Ted Garber (12:49)
So

I like that. ⁓ For my commercial tenants, I use Wave accounting. I use it for my main business as well. It’s electronic. You set up recurring invoicing. So it’s kind of like Ronco, set it and forget it. I don’t know if you’re, it might be too young to remember that. was, you know, an old commercial, but basically you set these things up and you can spend a lot less time because they manage themselves and ⁓ you get.

electronic notifications that you’ve been paid or that the tenant hasn’t paid yet and how long they haven’t paid in and you can manage it that way and both of those tools are great for that. Avail has a dashboard that the tenants can actually communicate through as well, kind of like a help desk, so you can manage all the communications and everything through there if you’d like. I don’t as much, but as I scale it, it’s more beneficial to have tools like

Michelle Kesil (13:47)
Yeah, absolutely. That’s awesome that you have those tools that support you. And what would you say have been some of the biggest obstacles or hurdles that you’ve overcome as an investor?

Ted Garber (13:52)
Yes.

Sure. So the market that I’m in, like I mentioned, it was underserved. ⁓ People finally figured out it’s a great place to live. ⁓ I live by the beach. I say it’s kind of like Maui meets Mayberry. A lot of surfers, everybody knows each other. It’s very safe, but it caught on over COVID. So very difficult to get an ROI now because it is a very hot market. And I invest in central Florida as well. So obviously Disney World.

you all that in the state that I’m in has a lot of ⁓ you know natural resources obviously the weather’s great I’m sitting here looking at the beach out my you know window and palm trees and everything and you know so it’s always going to attract people so that increases the ⁓ know property prices and it’s harder as an investor to to get a return that way so I’m always creatively looking at ways to ⁓ to do that and you know running deal due diligence and things like that interest rates as well as an obstacle so

When I got into real estate six years ago, I knew immediately it was something that I liked and I knew it cheap money out there. The rates were very low. So I tried to do as many deals as I could and I’m all self-funded. don’t do syndications or take any other money or investors or anything. So it’s all organic. So ⁓ also difficult to do that. A lot of people do syndications and I have friends that do syndications and they have hundreds of units and they do very well.

But for me, I’m an owner operator in my business and that’s sort of who I am and I get a personal fulfillment out of it as well. I’m getting ⁓ satisfaction out of people enjoying the places that they rent or lease from me. So I wanted to do more of that myself too. So ⁓ the obstacles are there geopolitically as well with inflation and interest rates. I’m just navigating that, it’s also an opportunity. So I’ve used…

the rates in the down market to ⁓ sort of negotiate a little bit better over the last two years as well.

Michelle Kesil (16:43)
Yeah, absolutely. And how do you find the deals and the leads for the investment properties that you’re looking for?

Ted Garber (16:55)
Yeah, so I source them mostly on the main website, Zillow, Realtor, Loopnet for commercial, Crexie. ⁓ I found some deals on Craigslist and BuyOwner.com. ⁓ I don’t do that many deals. My portfolio is 17 properties total. ⁓ So I’m not like a high volume. So I’m not out doing postcards or cold calling or anything, but those are areas when I do want to scale.

⁓ would be areas that I could find unconventionally. ⁓ know, people who have properties that they are interested in selling. I’ve gone to property auctions and you know, ⁓ county property auctions and appraiser and everything and tried to get deals that way as well, but it’s just not, I don’t do flips, so for my long-term hold ⁓ portfolio, I don’t think that’s the best for me, but those could be values as well.

Michelle Kesil (17:53)
Awesome. And so what are you most focused on solving or scaling to next?

Ted Garber (17:59)
Yeah, it’s adding to my portfolio. have an end goal with what I’d like from a top line ⁓ revenue standpoint. ⁓ So meeting those goals, I have buy boxes for residential and commercial. Like I mentioned, I like to be in the middle of the market. I don’t like to do the low end. I don’t like to do the high end. So I’m looking at properties where everyday families or businesses can rent from.

So just always looking to see if I can find something within that buy box. A quick tool is the 1 % rule. So if you look at a property that’s $250,000, if you can command 1 % of that per month in rent, $2,500, the deal looks pretty solid. And then you can go and see if you get the math in your favor that way. So I always look at it that way.

At a point where I also look at appreciation as well. So not only the last couple deals that I’ve done, the last three deals were, you know, net positive cash flow, but there was significant appreciation at closing, you know, to the tune of 25 to 40 % because I find properties that have been on the market.

⁓ Look for ones that have bad photography, like the realtors in the mirror. You can see their picture. The angles are bad. looks like they have a camera from the 1990s. Those are great because they’re under-marketed and typically ⁓ the realtor and the sellers aren’t as savvy. So you can negotiate and that’s what I’ve looked for.

Michelle Kesil (19:38)
Awesome. And so what advice would you give to someone that’s earlier on in their investing journey?

Ted Garber (19:47)
Yeah, it’s be purposeful. Okay, so decide what you want first. ⁓ Is it diversification, extra income? Is it, you you want to get into real estate full time? You have an end goal, whatever that is. And think about your buy box beforehand. So kind of plan it out and then find properties that fit within your buy box. ⁓ You know, treat every property like it’s its own business. ⁓

And again, my model is based off of immediate cashflow and a clear ROI. So I don’t know why you would look at it any different, but a lot of people do. You know, I shoot for 10 to 15 % plus throughout my portfolio, average over 20%, even weighted down by the last, you know, a couple of years of deals with higher interest rates. Some of them are 40 % plus. So try to find a need in the marketplace. I also like to find properties that have maybe more

cosmetic remodeling needs. I don’t do any work myself. I can barely change my own light bulbs, but I found teams to be able to do that. I have, you know, I think an eye for design and we do clean modern offices and homes. So something where you can, you know, redo the floors, paint the place, add new appliances, and automatically it looks, you know, like a new or different place. I find that a lot.

you you find a lot of things like older lighting or offices that just carpet haven’t been updated. And I use tools like Upwork to find vendors that do digital mockups for me. And they can do that with virtual staging. ⁓ So I like doing that as well. So I’ll start looking at marketing properties even beforehand. So I’ll go on Upwork and hire somebody for $30 to digitally stage a house.

and they can declutter the house digitally, can change the floors, can change the walls, add in furniture, you know, for not a lot of money, and then you get a real tangible idea of what your property could look like if you’re a visual person like me, and then realize, hey, this could be something, and then if the math works out and that works out, you know, decide to move, try to move forward with the deal.

Michelle Kesil (22:04)
Yeah, amazing that you’re able to utilize all these other tools and resources. That’s so helpful.

Ted Garber (22:11)
Yeah, for sure you got to be creative. I use Upwork as well for legal work. My wife is an attorney by trade, so she has that background, but ⁓ I have used Upwork to find attorneys to help me put together leases or ⁓ other tools to make sure that I’m covered financially as well.

Michelle Kesil (22:33)
Yeah, definitely. Well, before we wrap up here, someone wants to reach out, connect and learn more. Where can people find you and connect with you?

Ted Garber (22:43)
Yeah, so I’m on LinkedIn or I’m on ⁓ Instagram, Ted Garber. ⁓ And, you know, I’ve become an evangelist for all of this. It’s something that I personally get a lot of benefit from in many ways and I’m always happy to talk to people about it and help them. I’ve been featuring in some other articles on, know, AOL and Business Insider. I’ve had people reach out and I’ll take phone calls with anybody or message with them to help them.

I’m a big believer in using real estate and diversified income in your life in any way. If you work for somebody, if you’re an entrepreneur, you’re retired, whatever it is, ⁓ it’s an unbelievable tool to ⁓ fuel whatever life you’re looking to have.

Michelle Kesil (23:27)
Yeah, amazing. Well, I appreciate your time and your story. Thank you for being here.

Ted Garber (23:32)
Yes, thank you for hosting me. Have a good day.

Michelle Kesil (23:35)
Yes, of course. And for those tuning into the show, you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Ted, who are building real businesses, and we’ll see you on our next episode.