Why Cheap Properties Cost Real Estate Investors More | Jamie Dietz on Smarter Investing

Jamie Dietz (00:00)
I say don’t buy cheap properties. That’s the number one thing I tell young investors. Is, you know, I know you start off you don’t have a ton of capital. And what people do is they’ll search up their, you know, their Zillow or wherever they’re looking for properties, and they want to find the cheapest property they can find on the market. And—and I just think that’s the wrong approach, because I’ve done it. I bought really cheap or funky properties. And that looks great on paper when you start, but it

almost always cost you more throughout the process. Capital expenditures, tenant turnovers, lots of vacancies—usually that comes in a challenging neighborhood.

Scott Bursey (02:06)
Welcome back to the Real Estate Pros Podcast, powered by Investor Fuel. I’m your host, Scott Bursey. And today we’re thrilled to be joined by Jamie Dietz of Next Door Capital. Jamie brings over 25 years of experience to the table with deep roots in brokerage, development, investing, and private lending. He spent 15 years navigating corporate America while building his own rental portfolio before making the jump into full-time investing. Listeners, expect

to learn exactly how Jamie manages his portfolio and helps investors fuel their growth through private lending today. Jamie, welcome to the show.

Jamie Dietz (02:43)
Great. Thank you, Scott. Glad to be here.

Scott Bursey (02:45)
It’s awesome having you here, and to help our listeners get up to speed, please give us the ninety second highlight reel of how your career ignited and where you’re pouring your fuel now.

Jamie Dietz (02:54)
Sure. I started in real estate brokerage on the commercial side, selling, you know, small apartment buildings, commercial strip centers, and that sort of thing. That was a great way to learn the business, but wasn’t really a perfect fit for me. So I moved into corporate real estate, doing large company portfolios and expansions and so forth. But realized that the only way to get ahead in life was to actually own the real estate. So started buying small,

single-family, multifamily properties. And then my last venture currently right now is the private lending. So we’re really doubling down on the growth of our private lending company based here in Pittsburgh.

Scott Bursey (03:32)
That’s a powerful journey. Thank you for sharing that with our listeners. And Jamie, what really caught my attention about you was the way you’ve been able to bridge the gap between institutional corporate structure and the agility needed to provide private lending to portfolio management groups, building on that.

How has your fifteen years in corporate America shaped the systems you use to manage your portfolio today?

Jamie Dietz (04:01)
Hm. Yeah, good question. So I—you know, corporate America did teach me a lot about structure and formality and creating great systems. Cause in a big organization, you can’t just wing it, right? You’ve got to create a—a network, a series of processes. And that’s really what I’m trying to apply in my smaller business now on the lending side.

Scott Bursey (04:20)
What is the one corporate habit you find most valuable for private investors?

Jamie Dietz (04:26)
Hmm, you know, in corporate America, if you can’t document it, it didn’t happen. And so we try to do that same thing on the lending side. Like I make decisions because they feel good on a gut basis, but if I can’t back it up with data, we don’t move forward.

Scott Bursey (04:43)
I love that. And we’d love to hear your thoughts on the biggest weaknesses or challenge you face during your transition from corporate to full-time investing.

Jamie Dietz (04:52)
Yeah, it’s a tough transition, right? So like I liked everybody I worked with. It was a good organization. There was nothing, I’m gonna say, wrong with my job. In fact, most people would be pretty envious of it. But I just feel like maxed out my growth and I was looking for something to give me that—I’m gonna call that—that high, you know, when are you chasing the deal or you’re chasing a new business? I had missed that in the corporate world. So that’s literally what I was trying to make that transition—that’s what I was looking for.

Scott Bursey (05:20)
Was the hardest part the capital or the mindset shift?

Jamie Dietz (06:12)
Yeah, mindset, definitely. You know, you get that paycheck every two weeks, it’s pretty nice and you kind of get complacent, if you will, because it’s, you know, was totally enough to live on. But I—just switching over to totally running off your own what you, you know, eat what you kill type thing, it—it’s—it’s definitely a mindset shift. But it’s been financially very rewarding, even way—more rewarding than the corporate job.

Scott Bursey (06:40)
Jamie, where do you see the biggest opportunity in the private lending space for the next twelve months?

Jamie Dietz (06:46)
Well, it’s funny, like, you know, the big players in the market, the national players, they’re going into a, I’m gonna say almost a AI model where there’s very little personal interaction. It’s, you know, all done behind a corporate veil somewhere. And while they can offer pretty good rates, I kind of go the opposite direction. I’m gonna be more your—your local boots on the ground, local advisor on a deal-by-deal basis. So I’m kind of going the opposite way of the big companies.

And that’s how I differentiate myself.

Scott Bursey (07:16)
Interested in how you view the current threats or risks in the lending market right now.

Jamie Dietz (07:23)
Well, I think the biggest risk is really the leverage that’s being offered out there. While it’s great as a borrower to come into a deal and put very little capital down, it’s—it’s just very risky. And it’s—it’s risky for the lender, obviously, if you’re doing these high leverage deals, but it’s also really risky for the borrower. It really limits your exit plan.

Scott Bursey (07:44)
If you could give us the play-by-play on your strategy for the next—the long-term strategy, the three to five year plan for Next Door Capital.

Jamie Dietz (07:53)
Yeah, well, we’re raising more capital all the time. We—so we fund a lot of our deals ourselves, but we also have some co-lending partners that we bring in. So that pool of funds is—is always growing. And what we’re doing is we do a lot of fix-and-flip type loans here in Pittsburgh. And you know, they’re smaller loans because it’s an inexpensive market. But we’re increasing that to add in some commercial properties, doing some larger deals. And then we’ve been dipping our toes into the Ohio market, which is

very close to us. And there’s a lot of opportunities that I like over there in the, I’m going to call it Eastern Ohio market as well.

Scott Bursey (08:29)
Jamie, if you could tell us more about your strongest attribute when it comes to helping other real estate investors scale their businesses.

Jamie Dietz (08:37)
Well, I get a lot of younger guys, you know. I’m—I’m not over the hill yet, but I definitely have some more experience than some of the borrowers that come to the table. And, you know, they’re all so energetic like I was when I got started and so excited about every deal. And—and I feel like one of my primary roles is to kind of moderate things a little bit. Like, all right, I like what your plan is, but have you looked at these two or three risk factors that I think you’ve missed? So I end up becoming kind of a

a mentor or a guide on some of the deals and making sure that they are looking at every angle.

Scott Bursey (09:10)
Incredible distinction. And let me ask you this. What does your professional network look like right now?

Jamie Dietz (09:17)
Well, networking is how I bring in business, right? It’s—it’s what we do. So we have a pretty good social media online presence. We have a outsourced social media company that runs a lot of our media. But I’m out there in the field all the time. I’m meeting with brokers and borrowers and investors. We do meetups every other week. And we’re actually sponsoring some upcoming meetup groups as well. So, you know, you gotta be in the market

in—in my opinion. That’s how you get to know the feel, the pulse and—and—and meet new people.

Scott Bursey (09:47)
That’s a solid foundation. And Jamie, if somebody’s listening and they’re thinking to themselves, hey, this is somebody that I really would like to do business with, what would you like them to know first about Next Door Capital?

Jamie Dietz (10:00)
Well, you know, on the borrower side is—is it’s just we’re gonna be your local market expert and not just a source of funds. So I have a lot of regular, I’m gonna call professional flippers or investors and they’re buying, you know, five, six, ten deals a year. And, you know, they’ll call me up before they even make an offer, like, “Hey Jamie, this is the deal I’m looking at. Here’s kind of the ballpark numbers. What do you think?” And we’ll just brainstorm through the deal on ten, fifteen minutes on the phone. So

that’s the partnership that I’m looking for. It’s not just somebody to call for money, but we’re—we’re gonna grow something together.

Scott Bursey (10:33)
What is the one piece of advice you’d give to a newer investor looking to secure their first major private capital deal?

Jamie Dietz (10:42)
Yeah, don’t do what I did basically.

So I say don’t buy cheap properties. That’s the number one thing I tell young investors. Is, you know, I know you start off you don’t have a ton of capital. And what people do is they’ll search up their, you know, their Zillow or wherever they’re looking for properties, and they want to find the cheapest property they can find on the market. And—and I just think that’s the wrong approach, because I’ve done it. I bought really cheap or funky properties. And that looks great on paper when you start, but it

almost always cost you more throughout the process. Capital expenditures, tenant turnovers, lots of vacancies—usually that comes in a challenging neighborhood.

So I find that instead of buying cheap properties, you know, partner with somebody that’s got more capital or do seller financing, you know, get creative with your financing, not with the quality of your property.

Scott Bursey (11:34)
That’s some solid advice right there. And Jamie, you’ve given us a lot of really good insight today. Is there any additional final thoughts that you could leave with our listeners?

Jamie Dietz (11:46)
Yeah, the other—the other part of the piece, and I just do this from experience. So like when I started, I thought I had to do everything. And that’s how I was gonna save money, right? I’m gonna make money because I’m gonna find the deal, find the financing. I literally was, you know, putting in kitchens, laying tile floor. I did everything. And I thought that’s how you made money. But what that did is just took my focus away from finding good deals. In fact, it probably actually encouraged me to buy

bad deals, because I thought I could save money by doing my own work. I say focus on what you do best and then outsource and build a team around everything else.

Scott Bursey (12:21)
Powerful advice right there as well. Thank you for that, Jamie. And for those of our listeners that want to keep this conversation moving, stay in your lane or collaborate with you on future deals, what’s the best way for them to reach you?

Jamie Dietz (13:15)
You can reach me on email, which is [email protected]. That’s my direct email. You can also call us. We’re at 412-337-0884.

Scott Bursey (13:29)
Jamie, thank you so much for joining us today on the Real Estate Pros podcast.

Jamie Dietz (13:33)
Thank you so much, Scott.

Scott Bursey (13:34)
And to our listeners, we appreciate you. If you receive value from today’s episode, please subscribe. We’ll be fueling your tanks with the lineup of elite guests, just like Jamie Dietz, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.