The 4 Numbers Every Real Estate Investor Must Know Before Buying a Property

Odis James (00:00)
Yeah, so the 4 Data Points Academy was actually birthed out of necessity. I would get invited to speak at these different real estate conferences and I’d hear all the horror stories that people at the conferences would explain to me about, “Hey, I got ripped off here,” or “This went bad and that went bad.” So I said, “Okay, well, how can I give something to somebody that they can actually use that’s not a real estate investor? And how can I simplify it to where a seven-year-old can understand it?” So I thought, “Okay, well, what are the only things that I care about when I’m looking at a real estate deal before I rule it out? What does it cost, or what am I willing to pay?” Data point number one. “What does it cost to fix up?” Data point number two. “What’s it gonna be worth when I’m done?” Data point number three. “How much income can it generate?” Data point number four.

Cody Crabb (02:13)
Welcome back to the Real Estate Pros Podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’ve got Odis James with me. Odis is the founder of 4 Data Points Academy and brings more than twenty-five years of experience as a real estate investor. We’re gonna dive into the simple framework he uses to help investors avoid bad deals and make smarter decisions in any market— is the— that’s the— that’s what he says anyway. So let’s go— let’s find out what— let’s find out his philosophy. Odis, thanks so much for hopping on today.

Odis James (02:41)
Yeah, and I love— I love that intro, too, because when you hear twenty-five years in the business, the assumption is I’ve been doing everything right for twenty-five years, so I should be good at it.

Cody Crabb (02:49)
Yeah. Yeah. Frankly, I would— I don’t know if I would trust someone that had done everything right, because that implies to me that like, they maybe haven’t learned a whole lot or haven’t learned— but maybe as much as they should, because those mistakes are really where you— where you learn a lot, isn’t it?

Odis James (03:04)
Yeah, man. Absolutely. I’ve had bankruptcy. I’ve had all of the things that could happen. But that’s where the growth is. So, you know, I would just think…

Cody Crabb (03:12)
Well, again, yeah, thanks so much for— I’m excited to talk about those twenty-five years and see a little bit about what— what we can teach our audience here. So, 4 Data Points Academy is the name. I’m curious, what— what is— what is that referring to, and what are the four data points?

Odis James (03:30)
Yeah, so the 4 Data Points Academy was actually birthed out of necessity. I would get invited to speak at these different real estate conferences and I’d hear all the horror stories that people at the conferences would explain to me about, “Hey, I got ripped off here,” or “This went bad and that went bad.” So I said, “Okay, well, how can I give something to somebody that they can actually use that’s not a real estate investor? And how can I simplify it to where a seven-year-old can understand it?” So I thought, “Okay, well, what are the only things that I care about when I’m looking at a real estate deal before I rule it out? What does it cost, or what am I willing to pay?” Data point number one. “What does it cost to fix up?” Data point number two. “What’s it gonna be worth when I’m done?” Data point number three. “How much income can it generate?” Data point number four. So I created this guide teaching which questions to ask, how to find the answers, and then how to interpret the answers to make a buying decision. And I was just giving that out for free. I just didn’t know that people cared that much about real estate investing, because it’s— I’ve been— I grew up in the— it’s just a Tuesday to me, so I’m not as excited about it. But you know, with COVID and all the— the things that have happened, now it’s like the sexy thing, right? So I created this guide to give to people just so they could protect themselves in my absence. And then the feedback… you know, I made it so they could download the guide, and I just looked in there one day and six thousand people downloaded it, and I wasn’t really marketing it at all. So I said, “Okay, well, there’s clearly a demand. Now I feel a responsible.” I know, right? Yeah. So you know, I— I said, “Okay, there’s clearly a demand. Now I have to frame all the s— supporting information in a way that’s easily received.” Came up with a curriculum, opened it up to a few people, and then it just spread— it was like wildfire. And you know, there were some things that I didn’t like about the real estate investing education industry. First of all, they charge you $25,000 to $35,000 annually for what we offer for six, one time. And people don’t learn— like, you’re not going to be a seasoned real estate investor by taking a course. You’ll be better, you’ll be smarter. But if you’re like me, if— if I’m on week eight of the— the class or course, I’ve already forgot you taught me on week one, two, and three, right? So I didn’t want to— I wanted to create something where that didn’t matter because in the real world there’s so much support. We could refer back to what we learned in class, but we didn’t have to depend on what we learned in class to be able to move forward. So I wanted to do all those things. People told me it was impossible. They said I’d be bankrupt in six months, and now we’re on year six— on year six.

Cody Crabb (06:43)
That’s great. Yeah, and I think— so first— first of all, my son just turned eight, and the way you explained that, I will say he would understand that. Like, he— he’s smart, but he’s— he was seven until yet— like the other day. So, you— well done, because that’s— you’ve nailed it. That’s— that’s exactly— I— and I think really that sometimes it does need to be that simple because w— we tend to overcomplicate a lot of decisions that we make, whether it’s real estate or other things. But the— when you really boil it down to the very basics, that’s really what it is. So I think— I think that’s— that’s awesome. So I’m gonna ask you the obvious question that everyone’s thinking is: how on earth can you charge that— like, this amount of money for a fr— like, a tiny fraction really of what a lot of these other people are doing? Like, it— it— is it just like, that’s the business model and— and I’m just gonna get more people? Like, I— I’d be curious to hear what your— what your thoughts are. Why aren’t more people doing this?

Odis James (07:38)
Because it’s expensive and it sucks as a business model if the goal is to drive— is revenue.

Cody Crabb (07:46)
Well, yeah, sure, yeah.

Odis James (07:47)
And I— and I’m a business consultant, so I get it, but I didn’t start it to generate revenue. I started it to create a thousand real estate investors that were educated. And the first conversation we had internally— and this is a— a public story— but our first conversation was, “How little can I charge without negatively impacting my quality of life?” That’s cool. Because my first million dollars wasn’t in real estate; it was in general entrepreneurship. So I was supplementing the program if we wanted to, you know, bring in systems and more automations and new technology. I would use my own real estate investing so I wouldn’t have to pass on those costs to my students. Now there’s different levels of support, right? The six thousand dollars, we’re meeting four times a week for as long as we exist, right, in the evenings. And you can come back as many times as you want. Our curriculum just resets after eight weeks. We add a little, maybe we’ll take a little out. But the goal is to create a community so you don’t just join— like, you join and we’ll grow with you based on where you are. So you start as a beginner, then you’re intermediate. Well, as an intermediate, you’re gonna be doing different things than you were as a beginner— different types of investing, hopefully. So we have a— right, so we have a whole curriculum for that. And then when you’re an expert, I have students that now they’re— they’re over 30 doors and they’re buying and selling businesses now. Well, that’s cool. Now we’ll mentor you through that, right? Because they’re gonna buy from me all the time. They signed up for our real estate investing mentorship, they’ll sign up for our international business retreats, they’ll sign now. We’re creating a community and we can do business together. Now, some of— some people that came on as students are now vendors that I use for different projects. So the goal was to create a community that was so large that we could be self-sustaining. We never have to go to a bank to borrow anything. We could purchase within the group, we can manage within the group, we can lend within the group, we can incorporate different business models within the group. So my long-term goal is to have this community that we don’t have to go outside of for anything. And I think when people know, like, and trust you, and six thousand dollars is not a small amount of money, right? Like, I get it for what you get, but most people don’t understand the value of what they get when they’re getting ready write that check. To us, we’re kinda— we know, right? So it gives the average person an opportunity to come in, get familiar with it, and then if they want more support, we have options for that. If they want me to actually hold their hand through actual projects, they have options for that. So how can we do that? I don’t know, man. God just keeps sending people my way. I think as long as you continue doing business with full transparency, professionalism, and some integrity, I think even in this world of, “You know, I want it right now, I want it fast, I wanna be a millionaire tomorrow,” I think that that stuff stands.

Cody Crabb (11:03)
Yeah. Yeah, I mean, honestly, like, I— I really believe that. Like, if you— if you’re really making decisions to help people and, you know, it’s— you kind of can’t help but be successful in a lot of ways, because things— things point toward that if you’re— I think if you’re— if you’re doing good. So, I mean, you’ve been in business for— I mean, more than twenty-five years. I mean, that’s a lot of market cycles. You’ve seen, you know, the— the rates drop in twenty twenty, you’ve seen the— the two thousand eight crash. I mean, I’d be curious to hear, you know, what is— what’s something that you see investors doing today that they’re maybe getting wrong with your experience?

Odis James (11:43)
Yeah, I would say I’ve seen more than that. I remember when interest rates went up to twenty percent, just over twenty percent in nineteen eighty-one, right? I was five, right? I was five and I was going to meetings with my dad. I remember those conversations. And the dot-com bubble burst out here in the Bay Area in ninety-nine, of course, then the real estate debacle and COVID and all those other things. I think that, you know, before I say what other investors are doing wrong… real estate investing, you can do everything right and still have a bad outcome. I did a project in 2022, the numbers were perfect. It was a multifamily, it was commercial. Between 2022 and 2024, interest rates rose 11 times. And when the cost of money rises that much in mid-project, you’re not gonna be able to exit because the project no longer generates enough income to service the debt. So there’s things that— that are just gonna happen. Outside of that, I think that investors need to really diversify into the type of investing they’re doing. I’ll invest in single-family homes, then maybe I’ll invest in debt, and then maybe I’ll invest in someone’s business, and then maybe I’ll invest in tax deeds, and then maybe I’ll— so it depends on, you know, what the market is saying, because I’m from the San Francisco Bay Area— it’s always been the most expensive market. San Jose, California is the most expensive place to live on the planet at this moment. So we got to get creative and we got to be able to jump markets and do all these other things, because all these strategies aren’t going to be working here. All right. Yeah. So I think, you know, with investors, they really need to diversify the type of investing they’re doing and let the math determine how they move forward as an investor, and not just be married to one particular thing because that’s them— that’s what they do.

Cody Crabb (13:20)
One thing that stood— that caught my attention is that in kind of your— your messaging and things, “in any market” was kind of there, like anywhere. And I would be very curious because I— I mean, I’m picturing contrasting your— you— your market that you just talked about versus some relatives I have in Missouri. And the— and like, I— I— those seem like so— like, not even the same universe almost. Really? That’s funny. But— but— but that’s— that’s my question. I— I think, you know, how is it that— I mean, obviously you’re like, “Do the math and if it works then do it,” but like, what is it— I mean, what’s different about how you would talk to somebody in— in these—

Odis James (13:51)
Yeah. I invest in Missouri. Yeah, Saint Joseph to be exact.

Cody Crabb (14:13)
—crazy different markets that couldn’t be more different?

Odis James (14:15)
Yeah, so let’s say so the BRRRR method, right? That’s a very popular strategy. You buy it, you rehab it, you put a tenant in there, you refinance it, you repeat the process, right? Rent it out— buy, rehab, rent, refinance, repeat, BRRRR method. Well, that’s not gonna work in a market like the Bay Area because when you do that last refinance, the cash-out refinance, even with the highest rents in the country, the properties are so expensive it doesn’t generate enough income to service that debt. So the four data points tells me it’s not gonna generate enough income to service the debt, so I can’t do the BRRRR method out here. So what does that mean? I can only do flips out here. So if I can only do flips out here, that means I need some capital to start the project. Now, a seasoned investment can get around that by paying for it out of your exit strategy. That means there’s four components to that. Component one: assess it with the four data points. Component two: get your name on the deed before you have to pay for it. So you have to incorporate a seller financing component, even though temporary. Component number three: make it worth more than you bought it for. Component number four: exit. Buy it or refinance it, whichever you do, pay the seller out of those proceeds plus a little something on top for working with you creatively. So once you understand the different strategies, then you know where you can apply it into what market. Now, if we go back over to St. Joseph or Missouri— let’s just say Missouri because I have some other investments there— the price points are really, really low. So the cost to get in doesn’t require a lot of creative stuff. I bought a property in St. Joseph for $49,000. I told the seller to sell it to me for $69,000, I’ll give them all cash, but give me a $20,000 credit for the rehab. So I only still gave them $49,000. But the sale— it sold on record for $69,000. I put another $40,000 into it, so I’m all in, let’s call it $90,000 in change. It was worth $123,000. I got all my money that I put in back. I have a ninety-five thousand dollar mortgage, cost me about seven fifty a month, and I rent that duplex out for almost twenty-one hundred a month. So I— I didn’t— I had to have the capital to do that. Now, I could have borrowed that also. It’s such a low price point. The only challenge that I have, because a lot of these asset-based lenders have minimum loan amount thresholds… so it— it— it allows me to get creative easier because I can say, “All right, this is a forty-nine thousand dollar property. I could probably go in there and get them to seller finance this whole thing. I’ll give them five grand up front and then go ahead and borrow the money to rehab it, then do the cash-out refinance.” So it’s— I have a lot more flexibility out there. Whereas if I’m going to do that— something creative out here, if I don’t have an— a relationship with the seller, I’m still gonna have to come in with a significant amount of capital. So it’s really, you— you let the four data points tell you what you can and can’t do and then see what applies to whatever market that you’re looking at.

Cody Crabb (17:50)
Yeah. Well, that’s— that’s a great way of looking at it. And I feel like that also is really helpful for the— the emotional side. You know, someone falling in love with a— an idea or a— a deal or something, and this really can kinda throw some— a bucket of water on your face and just be like, “Actually, that’s a really bad idea.” Well, and that’s a question I’d have for you. So like, looking back over all these things that you’ve seen, is there’s a lesson that you learned or a mistake that you made— or opportunity, we’ll call them opportunities, that sounds nicer— that completely changed the way you invest or how you see investing?

Odis James (18:24)
Yeah. Man, mistake. You said this is only a twenty minute podcast, huh?

Cody Crabb (18:30)
I know. Well, with— when you get— when you get going that many years, I feel like there’s probably the— a handful of decisions that ’cause like you said, you can do everything right and it just— and just falls apart for reasons that you can’t control.

Odis James (18:41)
Yeah, I would say taking— taking people at their word for— for certain things early on. There’s always that one particular detail, right? For example, we just did a foreclosure bailout. All right, somebody was getting foreclosed on. I put a group together, we came in, we f— finished off the rehab, put the property on the market. Property didn’t sell for as much, so we lowered it a bit. And their lender— their lender calls me and says, “Hey, the loan matured.” Their loan, their original loan. See, we didn’t buy it from them, we just came in with funds, got caught up, and then we were going— we had it structured to where we were going to get paid out of the exit. And the lender says, “Well, we’ve already give— given them six extensions and we’re not gonna give any more.” I didn’t know that they already had six extensions. That wasn’t shared with me. And who’d have thought to ask, right?

Cody Crabb (19:24)
Yeah. Right, yeah. That’s it. It’s a question you don’t really know to ask until you’ve already seen the outcome.

Odis James (19:34)
Yeah, because we looked for payoff information and what it took to get current. We let the lender know what we were going to do. Everybody was on board. But it was just one of those little details that’s gonna c— that we’re doing that now. That’s— and I’ve been doing this a long time. This happened today or yesterday, so it’s like, well, th— there’s— there’s— I should have known to ask for that, right? I always take full responsibility. I should ask, “Hey, have you gotten six extensions already?” Because it didn’t show up in any of the documentation. So things like that. You know, a l— and all money isn’t good money. That was a— that was a n— that’s another lesson. Sometimes, you know, you gotta do the right thing to, you know, preserve your name and reputation, even when it means losing some money. We had a project where everybody was on board, all the stakeholders were involved. We were gonna build some residential units above some office units. And I had a hunch. I happened to— during the walkthrough, the contractor was on board, we already had the estimates, everybody was ready to go. I happened to be walking through and I see one of the columns, support columns, and I’m thinking, “Okay, that’s four by four inches, and we’re gonna build a second floor.” That’s not enough to— let me bring in a contract or— my architect and a structural engineer. And they confirmed, they said, “This first floor was not designed to have another floor built on top of it.” So our hundred and thirty thousand dollar rehab project just turned into a six hundred thousand dollar rehab project. And it was a domino effect and, you know, I had an obligation because I had other people investing with me. If this goes bad and somebody gets hurt, then we’re— we’re all gonna be liable for that, right? But ultimately, it made the project tank because with the interest rates going up, now we have an additional five hundred thousand or just below added onto the budget. The cost of money is increasing, seems like every day. We can’t gener— we can’t create enough units to service the debt. And it was one thing after another. And that’s probably, you know, that was a tough— that was a tough lesson for me because it’s like, you know, the part of you wants to, “Hey, the contractor said it was good. The liability is gonna be on them, not me. And if they’re gonna do it and there’s some issue,” you know, but just d— do the right thing, man.

Cody Crabb (21:38)
With that one in particular, I’d be curious, do you think you’d— if you’d have caught it or like, w— if you caught it because of— because of when you caught it, did that— did that allow things to be a little better? ‘Cause like my question is like, at least you noticed this. Yeah. At least— at least it came up. But like, and obviously if you’d have noticed before you bought, things would have been different. So like, did at least the amount that you did notice it save you?

Odis James (22:00)
Absolutely a little bit? Absolutely. Because it wasn’t that— because we were— we were fine adding more units. Because in the beginning, those additional units were going to be enough to service the debt. But as we’re going, interest rates went up again, right? Interest rates went up again and again, and again, and again, and again. And we need to do a cash-out refinance to stabilize this property. Well, yeah, when interest rates are three and a half percent, everything is great. When interest rates go up to seven, eight percent, now no matter what we build, it’s not gonna generate enough income to service the debt ’cause we can only build so many. Yeah. And so, you know, yeah, it— it— it kinda took some of the blame, I guess, if— if you know, it took some of the blame off of me, right? It’s, “Yeah, I can’t control interest rates.” Yeah, right. But at the same time, it just doesn’t feel good, man. It ca— that was the only project that ever made me lose sleep.

Cody Crabb (22:48)
Yeah. And I think, you know, this is— this is a question that I’d have for you because something that I see people ask a lot in the early days is like, you obviously the risk versus the reward, right? And risk— that’s what investing is, is risk— is risky because it’s— you that’s— you there’s a return involved. But you know, how do you manage risk and and balance that with the fear of maybe what could go wrong in— if something does go wrong?

Odis James (23:18)
Yeah, I mean there’s certain things like interest rates going up that much. That— that hasn’t happened since— that frequently in such a short amount of time, that hasn’t happened in like forty years, right? So I mean, that’s not something you’re like protecting against all the time.

Cody Crabb (23:31)
Yeah. Yeah.

Odis James (23:34)
Yeah. But what— so the 4 data points helps with that, right? So that’s gonna mitigate some risk. So you know that when we interpret those four data points, I know if data point number one, “What does it cost, or what am I willing to pay?” is too close to data point number three, “What’s it gonna be worth when I’m done?” I already know if those are too close together, I can’t add enough value to get all my money back, right? So being able to interpret those questions is gonna be a key factor in mitigating some risk. When it gets into multifamily commercial, I have an operational background. So, you know, everybody wants to invest in apartment buildings. It’s easy to acquire, but can you make it profitable? And that was my corporate job for a couple of decades in the multifamily commercial industry. So that reduces risk, also. But there is no way to mitigate 100% of the risk because there’s too many things beyond your control. But you can stack the odds in your favor, be conservative, don’t be too optimistic with respect to what this property is gonna sell for, know how to value the different asset classes so you know what to watch out for. Multifamily commercial is valued different than one to four units. So I think over time and with experience… and I didn’t have a mentor. My dad was a real estate professional, but he wasn’t an investor. He was a real estate broker. So a lot of these things I kinda had to, you know, figure out on— on my own. So yeah, and there’s— y— and no one knows it all, right? I’m— I— I’m fortunate because I consult also at five hundred dollars an hour. So I’m constantly having to solve problems. So my growth relative to the average real estate investor is increasing exponentially because of all of the— I have to practice my craft every single day. And I think the more you do it and the more you’re willing to venture out— just that tunnel vision, “I only do flips, I only do flips, I only do flips”— then I think you’re— you’re— you’re gonna get some more experience. It’s gonna help you in the long run.

Cody Crabb (25:18)
Yeah. Well, I mean, I think this has been— th— that’s a great place to land this. I— I— that’s hearing that kind of tied with a bow like that, it just like, it fe— it makes me feel like I can do anything. And I’m sure our listeners feel the same way. So for people that want to learn more about what you do, want to learn more about the 4 data points and— and just kind of what you do in general, how can people get in touch with you and learn more?

Odis James (25:43)
They can go to 4datapoints.com— the number 4, D-A-T-A-P-O-I-N-T-S.com. All of our stuff is on there. We have entrepreneurship, real estate investing, personal development, and leadership led by my brother Dr. Alfred Smith. We also have land trust doc prep services— we were trained by attorneys on that. So whatever they are looking for… an international business retreat for entrepreneurs— it’s in Medellín, Colombia, by the way, we do it twice a year. Yeah. So all that stuff is on our website, and I’d be happy to answer any questions they have through that medium.

Cody Crabb (26:07)
Cool. Yeah, well thank you so much for that offer and thank you, listeners, for joining us as well. I hope you got something out of today’s episode. If you like this, make sure you stay subscribed so you don’t miss another conversation like this one. Odis, it’s been a pleasure. Thank you so much for giving us some of your time today.

Odis James (26:26)
Thank you, man. I like talking about this stuff. So yeah, that’d be talking about…

Cody Crabb (26:30)
Yeah, that’s— that— it seems to be a thread in the industry. You kinda start— you— you turn on the switch and it just doesn’t really turn off unless you make it. So let— we’ll just turn that off now before— while we still got a chance. Thanks— thanks again, Odis. Have a good one.

Odis James (26:42)
Take it easy.