How To Maximize Your Rental Property Returns | Justin Winn’s Strategy

Justin Winn (00:00)

So the last time we went to PCS, we were wrapping up renovations in one of the houses

we went from ⁓ renting that property for about $600 a

to

renting it for $1,500 a month because the renovations made the house more modern, made it more appealing.

Erika (01:55)

Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika, and today I’m thrilled to be joined by Justin Winn, who’s been carving out a strong presence in the real estate space and investing. Justin, it’s so great to have you on the show.

Justin Winn (02:10)

Thanks for having me Erika.

Erika (02:13)

So let’s jump on in, Justin. For those who aren’t familiar with what you do, give us the rundown. How did you get started in investing in real estate?

Justin Winn (02:23)

So my first property I bought in 2004, I was a young enlisted individual in the army at Fort Campbell, Kentucky, used my VA loan, lived in it for several years, and then turned it into a rental when I moved in the army. We call that PCSing or permanent change of station. And then I eventually got re-stationed at Fort Campbell, Kentucky, bought another home using my VA loan.

And then both of those became rental properties. I’ve since sold those properties and I’ve purchased some others. So I have four properties in Northeast Oklahoma. I have two in El Paso, Texas, a combination of lease to own and then long-term ⁓ rental properties.

Erika (03:17)

That’s exciting. Was there a

moment for you that you realized this was what you wanted to do?

Justin Winn (03:25)

I think really just part of my own financial education journey, I kind of realized that real estate was something that could give me better returns than the stock market. I know there’s a little bit more hands on, but I wasn’t afraid to do some of that hands on work, build the teams that was necessary in each of those cities where I’m investing. And then it’s ⁓ also partly to do with my wife. She’s

got an interior design background and likes to make homes look really pretty and she does a great job of that. And so one kind of feeds the other.

Erika (04:02)

Yeah, yeah, I can see that. Are there certain types of properties that you’re sticking with?

Justin Winn (04:09)

So I primarily have single family at the moment. ⁓ We are looking in a few years to kind of break into ⁓ more commercial space. Don’t know yet if that’s gonna be strip malls or if that’s gonna be ⁓ larger apartment complexes, but commercial is probably where we wanna go in the future.

Erika (04:32)

Yeah. And when it comes to the deals that you’ve already done or just kind of your process in general, how do you decide which properties to go with?

Justin Winn (04:46)

So I guess it kind of depends on the time. So the first property when we started buying more rental properties was really out of necessity. So my sister needed a place to live and she was having a hard time finding a place to rent.

And I thought, well, that seems really odd. What’s the rental market like in this town? I was like, well, my goodness, it’s hot. Like you can’t get something. If you can’t get into something, you’re going to be there for a while.

So I decided to buy something, do a lease to own. And then that kind of drew my attention to, I started going into Zillow regularly and I came across another couple of houses that said, these homes are for sale, but they’re part of ⁓ a portfolio and the individuals who own them are trying to retire. So if you want to buy all three of them, ⁓ we’ll give you a discount. And so I reached out and said, I’m interested in buying all three. I wasn’t really sure.

⁓ how I was going to do the loan and then talk to a local lender. He was like, I have the perfect thing for you. It’s called a DSCR loan. was really, it was the perfect loan for me. So we ended up buying those and those were just kind of targets of opportunity. The other two properties that we have in El Paso, because I’m military, ⁓ I bought one ⁓

to live in using a conventional loan. then 18 months, 24 months later, somewhere in there, we used my VA loan to purchase the second one. We did some light renovations and just lived in both of those properties while I was stationed at Fort Bliss the last time.

Erika (07:21)

Our listeners that are new, think it would be helpful if you explained more about that DSCR loan. How did it give you an edge in that situation?

Justin Winn (07:31)

Yeah, so the debt service coverage ratio loan helps if you’re trying to buy either a portfolio of homes or a commercial

So that could be your five unit or higher properties. And so the bank will start to look at what is the income produced by those assets more than they are looking at.

your income and your credit score. They’re looking at how those assets will be able to pay for themselves. And so my down payment actually ended up not even being a full 20 % of the agreed upon purchase price. It ended up being based on where did the bank want the loan to value ratio to be. And so that may change based on the state, may change based on the bank, but that’s how that one particularly worked out for me. And then

It was still amortized over 30 years. So I still have a really low monthly payment.

Erika (08:36)

That’s great. As I’m sure you know, every investor has a story. Maybe a deal went completely sideways or a moment where you had the pivot fast. Can you share one of those moments that you had along the way?

Justin Winn (08:50)

Absolutely.

So the last time we went to PCS, we were wrapping up renovations in one of the houses that we were living in. And we’d put probably about $15,000 into new windows and some other beautification for that home. And one of my tenants in Oklahoma just stopped paying and were like, crap, this isn’t good. ⁓

turned out they had moved away and they had left a bunch of garbage. There was an issue with the HVAC that they hadn’t told us about. So we had mold and we ended up having to do about a $90,000 renovation that we weren’t expecting. But that said, we went from ⁓ renting that property for about $600 a month when we inherited the tenants to

renting it for $1,500 a month because the renovations made the house more modern, made it more appealing.

And there’s just also some general rent increases for that area.

So all that came together and it worked out okay. But yeah, that $90,000 caught us by surprise, unpleasant surprise.

Erika (10:44)

Yeah, that’s a big unexpected, ⁓ Bill, what was the biggest lesson that you took away from all of that? Did it change anything with how you operate now?

Justin Winn (10:56)

So if I were to buy another portfolio like that, I would make sure that I personally walked every property. In this case, when we bought them, I was in another state doing my army thing. My property management was actually my parents.

We didn’t lock the properties the way we should have because they had tenants in them. I didn’t really want to disturb the tenants. And ⁓ that I would do different.

Erika (11:36)

Justin, I’m sure as you know, relationships in this industry are so important. For our listeners who are trying to break into the industry or level up, what’s been the biggest game changer for you in building those relationships and growing your network?

Justin Winn (11:54)

Yeah. So it’s kind of twofold, right? Where there’s a strength and a weakness. So the strength I’ve had to develop based on the weakness with my military career, I move every couple of years, every two or three years, the army’s looking to move me. However, the opportunity in that is that every time I go somewhere, I have a new chance to connect with another group of folks. So.

Anytime we move, am immediately getting connected to my martial arts community. I coach judo, I train BJJ. ⁓ Depending on where I’m at, if there’s a good triathlon scene, I’ve been known to coach triathlon. So all the different athletic things that I do are great community opportunities for me to connect with people. I also typically will seek out ⁓ investor meetups or other types of real estate related meetups.

and try to get out to at least one or two of those a month. And then my church community, same thing. Those are places where I start to meet contractors. I start to meet other investors, agents. My wife and I are both licensed as agents in California. She’s licensed in Texas. Part of that’s based on where we’ve moved and how often we’ve moved. But just getting connected to those folks and trying to just be helpful.

Erika (13:23)

Yeah, yeah, absolutely. And Justin, for our listeners who are also new and looking to get their first deal, what advice would you give to them?

Justin Winn (13:36)

I’d say make sure you think through your strategy. Like what is the strategy that you ultimately want to execute? And you don’t have to know 100 % of the ins and out of that strategy, but you do need to understand conceptually what those are. Excuse me. And so if you know that you want to be able to do a

buy and hold if you want to do renovations, if you want to do flip. ⁓ Those are different strategies that you can then talk to an agent, some type of an investor friendly agent, and start to look for properties that meet your criteria to purchase. I often hear that referred to as your buy box. And once you’ve identified your buy box and you’ve got the resources necessary,

Whether you’re going to go out and talk to ⁓ an investor who’s going to maybe offer a part of their retirement or just has a big stack of cash, however you’re getting the money to acquire that property. Once you tell that agent, hey, I’m ready to go and they bring you something for your buy box, be ready to execute. It’s really frustrating if you’re working with an agent

and you

or presented something in your buy box and you’re like, ⁓ I can’t do it. And if that’s not you, you’re struggling with like, I just don’t even know where a person comes up with that much money to be able to acquire property. There are some other little things that I think you can do to start changing your identity into becoming a real estate investor. A lot of people immediately gravitate towards wholesaling and that’s a way, go get you a good book on wholesaling.

I personally am a big fan of doing like tax lien investing. ⁓ If you’re getting started again, you can get a good book on that. You can usually get into a decent tax lien ⁓ for very little money and you’re usually gonna make a decent interest rate return if you don’t end up actually acquiring the property. Most of the time people don’t actually acquire the property through tax liens. just make.

a decent return. So those are little things to help a person change their identity to be able to say, I am a real estate investor. And from there, you just start leaning into wherever you think you can solve problems with your time or your money.

Erika (16:58)

Yeah, yeah, that’s some really good advice, Justin. Let’s talk more about your plans for the future. You talked about wanting to get into commercial real estate. What kind of properties do you think you’ll be going for? What does that look like for you?

Justin Winn (17:15)

Yeah, so we continue or we plan to continue the residential side. ⁓ And so a little bit of the strategy for what we’re going to do on that side before I lead, lean into what our plans are for the commercial, because one affects the other. ⁓ So with our properties in Oklahoma, they’re a little bit. ⁓

lower cost properties because it’s such a small town. So as we pay off those properties, the intent is to then get another DSCR loan, go buy a multifamily and bring that into the DSCR loan with this property. So we’ll essentially repurpose that property and grow. So for each one of the current single family properties we have, we’ll pair that with a multifamily.

in a bigger city and that’s part of our growth strategy on the residential side. That also will help give us more access to a business line of credit and that’s kind of the transition. part of our acquisition strategy for our future commercial spaces will be one, stacking a bunch of cash over the next few years, ⁓ taking my retirement. ⁓

So in the military, we have access to a thrift savings plan and somewhere around the time I retire, we’ll take that retirement account and roll it into a self-directed IRA. And then we have our business lines of credit for the rental properties that we currently have. And so over the next few years between stacking cash, lines of credit and self-directed IRA, we’ll be in a position where I think we’ll be able to take down

either a ⁓ medium to large apartment complex, depending on where it’s at in the country, or a strip mall. Both of those, I think, you know, have good reason to do it or not do it, and we’ll have to assess that when we get there.

Erika (19:20)

Yeah, yeah, that’s really exciting. What’s the biggest challenge that you anticipate in part of that process and how do you plan to tackle it?

Justin Winn (19:31)

⁓ I know at least one of the six properties we have is going to need another complete renovation in the next five years. So just preparing for, which is part of why part of our plan is to just stack cash so that if and when that next 40, $50,000 home renovation comes our way, we’re prepared for it we don’t have to take on debt for it when.

that one comes around. ⁓ But also just making sure that I check in with my wife regularly and that we’re on the same page as far as what we are still driving towards and why we’re choosing to stack cash and not go on lavish vacations four or five times a year.

Erika (20:24)

Justin, before we wrap up, if someone listening wants to connect with you, maybe collaborate, or just follow what you’re doing, what’s the best way for them to reach you?

Justin Winn (20:34)

I’m probably most active on Instagram. My main ⁓ user Instagram handle is jwin, W-I-N-N, underscore coach life.

Erika (20:49)

Justin, this has been awesome. I love how you’re strategically growing your business and thank you so much for sharing your insights today and thank you for your service.

Justin Winn (21:00)

I appreciate you having me, Erika. Thank you.

Erika (21:03)

everyone tuning in. If you got value from this episode, make sure that you’re subscribed to the Real Estate Pro Show. We’ve got more conversations coming up with people like Justin who are building impressive real estate empires. We’ll see you on the next episode.