How to Turn One California House Into Three Rental Income Streams

Sean Saed (00:00)

So this law is just asked to accommodate more ⁓ homeowners, I mean rentals. And it wasn’t possible. So let’s say you buy a 10,000 square feet lot of single family homeowner, you divide that, you put an ADU in the back, and then you divide the house into two and then becomes two units. Now you renting each of them and you probably are collecting twenty five hundred, twenty five hundred, seventy five hundred dollar cash.

Joseph Crooms (01:59)

Hey everyone, welcome to Investor Fuel Real Estate Pros Podcast. ⁓ I am your host, Joseph Crooms, and it is a pleasure to be here. ⁓ joined by someone chatting with.

hey Sean, say hello to everyone.

Sean Saed (02:17)

Hello there, hello everybody.

Joseph Crooms (02:19)

Peace.

I think our listeners are going to take away something away from how you’re approaching ⁓ your real estate, but you are multifaceted in business. So ⁓ we’ll get into it. So let’s dive into it. So first of all, for people who are not familiar with you in the world, give us the short version. What’s your main focus these days? What markets you’re operating in, Sean.

Sean Saed (02:45)

Good question. I am here in Los Angeles, Southern California. It’s one of the biggest markets and is the most expensive market to trade or buy or sell real estate in the country. The prices are very high. We are looking at a market that has reached very high levels. minimum and median home prices are something like a million or something. It just depends which area you go. But in terms of the market, it’s one of the

best markets too because the climate and the place to live. And the pricing is what I’m watching here. And now because the interest rates are higher, we’re looking at a little stagnation here. That’s what is happening here in the business. So a lot of people are pivoting from this, they’re changing tactics, they’re doing other things and getting into other deals.

Some of them are now instead of buying properties multi-units, they are taking the laws have changed here. So now you could in California take a single family home, divide into a triplex, three units, one the main house, one ADU, and partition the house. So three prong cash flow. This is the hardest thing right now.

Joseph Crooms (04:01)

So Sean, you have a unique ⁓ resume. You you’re an investor as and a lender. Talk to me how you juggle that ⁓ now with the market the way it is. What do you how how do you how do you see your C saw? Which one is up, which one is down, or are they balanced on how you’re approaching it?

Sean Saed (04:20)

Well, I’m not doing as much of the lending part of it right now. I mean, ⁓ I being a lender and also a broker here, mortgage broker, I’m licensed and MLS. So I’m not doing all of that as much. I’m a little bit taking the easy. The market is not that good right now in terms of ⁓ acquiring property, though what happens here in a slower market, the deals become much easier. So I’m pleased with

I opened my mailbox and I have about five or six deals today that I can choose. It never used to happen. I used to chase the wholesalers and other people and sources. So it’s a low-hanging fruit. You can buy a lot of it, but can you sustain it?

Joseph Crooms (05:48)

I understand that. What would you need to know and speak as if you’re talking to lay people, what do you need to know? Can you sustain it? What does that mean to you?

Sean Saed (05:58)

It means when you buy real estate, it needs to be fed. It needs to be, it needs to give you a return or money. So the payment, your cash flow has to be made. So if you can make the payments, fine if you have a lot of cash flow. Or your property breaks even or it provides positive cash flow.

Joseph Crooms (06:18)

No.

Sean Saed (06:18)

That’s sustainability. If I if I word it very quickly, you know.

Joseph Crooms (06:21)

I’m

No, no, thank you. so when you say you’re cautious, when what are some of the things that you look at prior ⁓ you see a piece of property, you’re interested in it, but now you have this this cautious sign up in front of your face. Tell me how do you move?

Sean Saed (06:39)

Well, the reason is because the higher interest rates and the markets slow down. So that is why you need to be careful. You could buy a lot of properties at this time if you have the cash. some big investors are buying it, banks are buying it. ⁓ Black Stone is buying a lot of homes. You could buy some of it. But then again, how you’re gonna be able to keep it for the if this turn continues higher or doesn’t go away. It’s slowing down the market. The one of the culprits is the

a geopolitical situation and that has kept the interest rates higher and inflation. So if that ha keeps on happening, you’re gonna have to be very careful. I’m not buying anything really, really good deal if it comes around. I may get into it. I haven’t bought anything in the past three months. The reason is that unless it’s a triple digit flip or a good buy and hold, I can do that.

Joseph Crooms (07:33)

Let’s talk about flipping homes for a moment. So you have that to fall back on. So how is the flip market now? And what do you look for?

Sean Saed (07:36)

Yes, go ahead.

Flip market is also slow. The wholesalers are there, plenty of them right now. You can go there, you can get a whole deal right now, very easily. I at least I have no problem because but I have contacts in the LA market, wholesalers and people where my name has already been out there. And so I make these contacts, I get it. That’s what I could you could do. Right now, it’s a little bit cautionary if you want to buy into it.

I wouldn’t touch anything unless it’s very high is well is bought correctly. Let’s say you buy 70% minus your ⁓ renovation cost, minus your closing cost, other things, and then your offer should be around 50 cents, 60 cents on a dollar. You do not want to buy a property at 80 cents a dollar, 75 cents a dollar at this point.

Joseph Crooms (08:30)

Let me ask you this question then Sean. What’s been keeping your machine running smoothly at this time? And it can be multiple things, but share with what you have honed in on. What’s keeping your machine running?

Sean Saed (08:43)

Well, I have some old properties and these properties produce cash flow. For example, the home that you look here, here I rented. Part of it is rented. It has an EDU in the back, it is had a room in the back, and there is partitioned in it. So we rented and the cash flow is what is giving us. But this is a lot of planning beforehand. So

The law has changed, as I said, you can buy a single family home with a larger lot and then subdivide and divide it into three units.

So this law is just asked to accommodate more ⁓ homeowners, I mean rentals. And it wasn’t possible. So let’s say you buy a 10,000 square feet lot of single family homeowner, you divide that, you put an ADU in the back, and then you divide the house into two and then becomes two units. Now you renting each of them and you probably are collecting twenty five hundred, twenty five hundred, seventy five hundred dollar cash.

Joseph Crooms (09:43)

And how many of these properties do you presently have?

Sean Saed (09:45)

Well, I have three of them now and I’m working on the fourth.

Joseph Crooms (09:49)

And so that’s what’s keeping your machine running at this time.

Sean Saed (09:52)

It

is for me, I ⁓ supplement these things with other things that I do. I do also trading stock market and ⁓ investing into the market. I have breeds which pay us ⁓ dividend stocks and I continue with those. But there are other things a lot of people do not trade, they do not go involved into it.

Joseph Crooms (10:13)

I understand.

Sean Saed (10:49)

If you are not doing in the stock market and you’re not familiar with the REITs, R-E-I-T-S REITs. So then you have to really rely on the real estate part of it as cash flow. But cash flow-wise, you can buy a single family home, divide into three, and then have a massive cash flow. There is a person by the name of Melina Boswell. She is giving seminars on it. If somebody wants to join, fine. I mean, I’m not trying to plug her, I don’t know her.

But I have been to their seminar. That’s how I learned that technique. And your viewers can learn this technique. In Southern California, I mean in California, the state of California.

Joseph Crooms (11:27)

Thanks for sharing that. So other than that, ⁓ now I know every operator I know has a moment when things got real just like this time you’re talking about. Maybe a deal that went sideways or time that they had to pivot. Do you mind sharing ⁓ one of those moments that come to your mind, even if it’s one presently?

Sean Saed (11:47)

In the past, you be

Joseph Crooms (11:48)

past, present, whatever one that comes up your mind.

Sean Saed (11:51)

In the past, I have made a lot of mistakes. I’m not perfect. My record is not stellar. It’s very sketchy, I would say. I mean I mean there are some deals that I have made money, but some deals I have lost.

So I bought a property in West Adams area, which is the older area, where White Earp, the guy the gangster, the White Earp famed man used to live there. I bought a house in the older area. And I thought I could r renovate and put it out. But what happened here is the COVID came and a gangster got into Airbnb and

Joseph Crooms (12:32)

Yep, no don’t die down, you’re doing keep to

Sean Saed (12:34)

We could not get him out through the courts, and we had to get a special order, ⁓ restraining order against him, and then we got him out. And in meanwhile, he burned the house, property. I had insurance on it, and the payments I could not make at that time. And I didn’t I cannot fix the property because the lender was asking their loan to be repaid.

I was not behind in payments, but they were ⁓ we couldn’t make the payments for five or six months. Eventually it foreclosed and I lost two hundred and fifty thousand. But there was a huge police case and everything in there. And even the LAPD had ⁓ you know, Michel Moore, who was the ⁓ chief of police, got involved in it. And I had such a opportunity to meet him. I went to ⁓ religious meeting.

And he was giving a speech there. And he said, anybody who has any problems can contact my department. I just went up to Michel Moore and I said, This is my problem. And he gave me my his card and ⁓ he assigned me a precinct seventy-seven head and they took out that gangster completely. They worked with me, they got me out there, and we were able to remove him. Longest story short.

But this resulted into a loss of a property eventually. Sure. I’m not very proud of it. But it’s a learning lesson. I there was nothing we could do because the courts were shut down.

Joseph Crooms (14:08)

And Sean, you know, the this this is the whole purpose of the podcast. Besides getting you out there, ⁓ and you can utilize these podcasts, it’s letting people know the real deal of being involved, what it really happens in real estate. So thank you for sharing that. How important is as has been ⁓ it been in building sound relationships? How important is that in your real estate business?

Sean Saed (14:32)

I think you anybody who is trying to get involved in real estate or is in real estate, you should not isolate yourself. You need to go out and meet other people. And one of the best ways to do that is go to meetups. There are plenty of your meetups in your community.

And there is a website, meetup dot com. You can use that. I use that. And you would get invites once you’re there. ⁓ I go there and I take my business card, not any more business card, now my cell phone. And my target usually is I make six contacts in one evening. I eat some tacos, food, and everything, but then I work and I make six contacts. And that’s the goal I have usually.

Sometimes I don’t make six contacts, but sometimes I make twelve contacts and some good contacts have come up. So you could don’t isolate yourself.

Joseph Crooms (16:01)

You know, Sean, I’ve heard that a lot about ⁓ getting out there, but what I haven’t heard, thank you for sharing that unique perspective of setting a goal so you’re being attentional in every aspect of your business. Wow, that is huge. that’s the kind of p stuff people don’t talk about enough. And honestly, it what separates the folks who are just dabble to the ones who stay in the game a long time. So let me ask you what are you most

Sean Saed (16:26)

Yeah, right.

Joseph Crooms (16:28)

focus on solving or scaling now. What’s your next real goal?

Sean Saed (16:32)

⁓ little bit patience now, waiting, and the rates have to come down a little bit, then I would start buying properties. some people are getting into commercials and all that, but I don’t advise because commercial has been beaten down so badly lately that it is it is in a terrible situation. So I don’t recommend going into commercials, but they are those those are also low-hanging fruits right now.

In my opinion. Commercial you can buy a storefront or office building, small office building.

Things like that. There are a lot of foreclosures in there. So my strength was this that I started my career in Oakland, city of Oakland, Northern California. And I the first thing I did is I started going to the foreclosure sales, trustee sales. I read all those books and all that, and I went there and I was outgunned because I had only $20,000. And these people were coming 40 years ago with hundred thousand cash, two hundred thousand cash.

Joseph Crooms (17:14)

Okay.

Sean Saed (17:31)

And I could not compete. So I had to rely on another method, which is the pre-foreclosures before it goes to the trustee sales. That is one of the best ways to get involved as a as a tool to acquire properties. You should work and try to get all the pre foreclosure lists which are available in LA or some other market as well, nationwide, and then work with those pre-foreclosures.

Joseph Crooms (17:57)

Mm-hmm.

Sean Saed (17:57)

It requires a lot less cash. So with the twenty thousand dollars that I had, I was able to buy a house that I lived in it initially. And the minute I got into my own house, I bought another property, free for closure. So this is how my career started. That was 40 years ago.

Joseph Crooms (18:13)

So when it comes to building relationships and growing your network

I wanna pinpoint this question. What type of people to help you identify pre ⁓ foreclosure and commercial real estate, what type of people have you built relationships with that you can share with?

Sean Saed (18:30)

Well mostly you will see other investments.

And then you wanna see service providers, contractors, ⁓ people who are providing solar or contracting or lenders. So you get all a mix of it. But if you network with other investors, you get partnerships as well. And you’re not alone, trucking, you know, just riding on the pony alone in a desert, you have other people with you. ⁓

I made some very good contacts here and these people kind of helped me, you know.

During the foreclosure that I’ve went through, several ⁓ investors came and they tried to help me.

Joseph Crooms (19:10)

So when it comes to building r relationships and growing, that’s what’s made the biggest difference for you. Am I correct?

Sean Saed (19:17)

Relationships

are very important, yes. But your own hard work is also. They will not give you nobody will do anything for you. They will not give you deals, but you have to do it yourself. Initially. Initially you have to really be in the trenches.

Joseph Crooms (19:31)

Okay.so yeah, you can’t fake that. Relationships are everything in this space. All right, before we wrap up, if someone wanted to reach out, connect with you or maybe collaborate or learn more about what you’re doing, what’s the best way to reach out to you, Sean? And repeat it twice for our audience.

Sean Saed (19:49)

Well, you could reach me out on my email or my Instagram, my name is Sean, but my handle is @DanTanner4 on Instagram. I’m all based there all the time. I’m also on TikTok, ⁓ Instagram. ⁓ TikTok is @DanTanner54549 and ⁓ also on YouTube and as well as other ⁓ social media acts.

⁓ YouTube, I have a channel which is more my stock market channel that I post. It’s called Index Options Trading. And it’s free. I don’t charge any services. I just give out information. People can benefit what I know. And trading is also a thing because real estate has never been for me a steady source of income. It changes and it goes up and down. So we’re right now in that kind of a position where it is slow.

But if you have the patience, you write this out and you come out much stronger. So they can contact me anywhere on those social media. I have a book coming out, by the way, which will be available. It’s known as No Simple Highway. Life has not been a simple highway.

Joseph Crooms (20:57)

Wow, thank you, Sean. Perfect. Well listen, I appreciate your time, your story, your experience, your the which has helped develop your philosophy. Even that little pointer about, you know, do everything with purpose and an objective at the end. Thank you for sharing that nugget ⁓ on when you go out to how to hand out your cards, have a numerical metric to it. I think that was key.

We need more people in this space who are doing a ⁓ doing it the right way. Thanks again for being here, Sean. And for those of you turning in, if you got value from this making, make sure you subscribe. We got more ⁓ conversation between operators like Sean, who are building their building real business. We’ll see you on the next episode. Sean, tell everyone, I’ll see you next time.

Sean Saed (21:49)

Thank you very much. An honor to be here. I really enjoyed talking to you. And some very, very good questions. I hope it does help somebody else which listens to us.