How Vincent Fleischman Buys Undervalued Real Estate, Forces Equity & Refinances for Long-Term Wealth

Vincent Fleischman (00:00)

It really makes no sense to flip, because then you’re paying twenty percent on that money, which is brutal, because you got into it usually with—sometimes a lot of the stuff I got into with zero down because I had hard money, but I was so far under hard money, guys don’t care. They’re giving me sixty percent on a deal and they’re like, “How did you get this deal?” And I was like, “Well, come on up.” So if you get into it right, flipping’s not the best way to pull out the money, still own the property.

Issa Hanna (01:57)

Welcome back to another episode of the Real Estate Pros Podcast. I’m your host, Issa Hanna, and today I have Vincent Fleischman with me to share his knowledge. Vincent, welcome to the show.

Vincent Fleischman (02:04)

Thank you.

Issa Hanna (02:05)

I’m super excited to have you. You’ve been a realtor in the game, so you’ve been in the industry for a while. You’ve put your license on hold and you’ve gotten into the investing space now. So I kinda wanna ask you what Vincent’s day-to-days look like, and what’s your focus on nowadays?

Vincent Fleischman (02:20)

Yeah, I’ve been investing since COVID, and it’s just this last two years. I love real estate. However, I have way too many properties that need to be rehabbed and put together, and now I just want to do that. So that’s my highest and best use, I feel like. My—my day is—I’ve already started my day. Sometimes I start at two, sometimes I start at four, but I’ve already talked to my staff and they’re—

they got a game plan for the job, and—

so I typically—and then I have a night staff, because they’re working jobs. So they’ve already have a game plan for tonight as well. So I pretty much have mapped out a twelve—13-hour day or something like that.

Issa Hanna (02:58)

I love that. I love that. See, guys—guys at home, just cause we’re into the real estate game, just because we’re investors, we’re not sitting idle. He has a twelve, 13-hour day, but his twelve, 13 hours is gonna go a lot farther working for himself and—and managing his—his team than working that nine-to-five or—or whatever. So real estate is a great, great road to take in life. Vincent can definitely attest to that, me as well.

Vincent, I wanted to kind of get your origin story, though. So we talked earlier, you said you were a realtor for twenty-five years. You—and—and I said in the intro you’re no longer doing that right now, you’ve got it on hold for a little bit. But how did a young Vincent decide, “You know what, real estate’s where I want to go”?

Vincent Fleischman (03:40)

I’m much older than you, but I was in retail management for twenty years, like Toys “R” Us and Best Buys and computer stores, and it was all commission. And then at some point, I think it was after—it was during Toys “R” Us, I said, “No, no, no, no, I can’t do this.” We hire—we hire a hundred people and like the day before Christmas, it was nuts. So I said, “Okay, we gotta do something else.” And I tried real estate, didn’t know a thing,

and just started out cold. And I did open houses and cold calls and stuff like that. And I found out, once you were starting to make money, it’s okay. You just starve for a while for sure. And then it was in a smaller town in Washington, and Washington has—and—and was a strong market. So, but I’ve restarted my real estate career three times in different cities, and all—I did it all the same. But I came from a construction family where my—

my uncle, my grandfather, and my dad were—I watched them build houses and stuff like that. I went on the jobs, but I didn’t actually do anything. When I started, I had an affinity for rebuilding things and remodeling, not for building from the ground up—I don’t know how to do that—but for remodeling, and I wouldn’t—didn’t have any fear. So when I got up here,

I brought the tools, bought used at garage sales, and just—just dove right in. And so that was seven years ago. I think I’ve acquired twenty-six thousand square feet in seven years.

Issa Hanna (05:47)

I love that, man. And—and yeah, people that have a construction background, even just being around it your whole life, seeing the things done, you realize material doesn’t cost that much, it’s the labor. And if you know how to do it, or you find some good guys that—that’ll cut you a deal on the labor, man, you’re saving so much money compared to hiring these—these guys. And also you—you learn the real estate, but you learn like what they say, like the bones, the guts of the house. You’ll learn how a house works,

the components of it. So it’s definitely a great, great way to learn, man. As somebody whose father was in construction growing up, and I—and I hated doing it growing up, so I was the same way. I was a little bit like, “Hey man, keep it away. I’ll watch it be done.”

Vincent Fleischman (06:28)

Yeah, the idea of just jumping into something, you don’t really know if you’re gonna like it. I bought a house that was really done and started an Airbnb, and I love being a host, and so that is like a landlord, a short-term landlord. So I find out that’s what I love to do. And if you find a passion, then the construction side was just a natural fit to that, because I know I’m making so much money

on doing it. And then like you’re saying, you have to negotiate the trades and find somebody that maybe doesn’t have his own electrical company. But my electricians cost me $25 to $30 an hour, and you can’t buy that for less than $100 an hour usually. So you—you have to really duck and weave. I know developers who use contracting crews, they’re at $60, $65, $70 an hour. But on the back end, I’m making way more than him. When it—when my deal comes done,

I have a minimum of a hundred thousand equity, pure equity, whereas he doesn’t, he has like thirty or forty grand. So when he does a DSCR loan, it makes it tough for him. So he’s really coming out of the DSCR loan without any cash, whereas I’m usually pulling a hundred and forty, one hundred fifty, a hundred and twenty out on the DSCR loan.

Issa Hanna (07:33)

One hundred percent. No, that’s one thousand. You gotta negotiate the trades, you gotta watch every dollar that comes in, every dollar that comes out. Yeah, if you can figure out a way to—to cut twenty, thirty percent off, all that money’s in your—in your pocket, yeah. And then I asked you earlier, I said, “If you had to say what strength that you bring into the real estate game that’s made you so successful in the short time investing,” you told me

that one of your strengths is buying undervalued properties, identifying them and identifying the value-add. So can you give our young viewers maybe one strategy, one trick, or—or one type of house to go after that’s undervalued?

Vincent Fleischman (08:12)

Well, because I chose to invest in a small town, and the small town has a lot of opportunities, but the one thing about a small town is like everything’s the same comp. Like, we comp to three different towns, the entire town, so it’s still different than let’s say a bigger town. I’ve worked in Seattle, in a large five-million-person town, whereas you only comp against three or four different subdivisions around there, and everybody knows how much it is.

So it’s really hard to buy something. So in those particular areas, I said to myself, “I’m buying in the worst of the worst areas, because I believe they’re undervalued, and eventually it’s going to regenerate and it’s going to be worth a whole lot more. The upside is going to be worth a whole lot more, unless I buy into, let’s say, an area that’s already come up.” So when I come into these towns, I’m just—my ear to the ground, I talk to everybody at the gas station, at the grocery store,

and everybody knows there’s a good deal on a house. There’s no question about that. But in the larger towns, it’s really a lot more difficult, because if you’re in a nicer area, they’re not gonna know about the worst area. But in a small town, everybody knows everything’s at. So I—I was fortunate about that. And then the second thing is that in the small town, a lot of people don’t want to work on this—these older houses. So I mean, probably in the town I’m in of 4,000, I probably have a hundred houses I could go after.

And then the smaller towns around it, which I own in all three areas, there’s probably another 40 in each one of those towns. So there’s a couple hundred houses here that are targets, that I don’t have time for. So anyways, the art of the deal is the most important thing. Not one house has been the right time to buy. Every house I’ve bought is the wrong time to buy, whether I didn’t have the money or I didn’t want it, but I just put it on my plate.

I have four houses… No, I have seventeen thousand square feet in front of me that needs remodeling, and that’s what I like. I like to always have a big pipeline. And my pipeline’s getting bigger. I have a forty-thousand-square-foot building I’m—I just put an offer on two motels. It works better if I have a huge pipeline. And yeah, I’m spending more money in carrying costs, there’s no question about that. However,

when I buy, I’m buying sometimes 10 times under value. So if it’s a 25,000—this latest one was a $25,000 house, ARV (after repair value) is $170, and I put $30 into it. So my DSCR takeout loan is gonna be $140. So you have to buy it right is the main thing. You can’t buy retail. I mean, don’t matter, you can’t just buy the house on the block.

Like, worst house in the best area is not going to give you enough profit. And besides, your mortgage isn’t really going to cover the rent anyways. So my mortgages after the DSCR loans, all my mortgages are covered, and I have eight of them, so they all cover. So it—is really just buying the—the—the right house at the right deal. And even if it’s a bad time, you—you just gotta figure out a way to make it happen.

Issa Hanna (11:03)

One hundred percent. I always say on my show, “If it makes dollars, it makes sense.” So if you do the math, if you do your underwriting the right way, and—and your buyer’s net, as if you cast that buyer’s net and a whole bunch comes out, buy, guys, buy.

Vincent Fleischman (11:17)

It really makes no sense to flip, because then you’re paying twenty percent on that money, which is brutal, because you got into it usually with zero down because I had hard money, but I was so far under hard money, guys don’t care. They’re giving me sixty percent on a deal and they’re like, “How did you get this deal?” And I was like, “Well, come on up.” But so if you get into it right, flipping’s not the best way.

Is—is to pull out the money, still own the property.

Now I’ve had some of these properties for seven years, and the market’s moved considerably, sometimes ten times in seven years. So when I started, I had a bunch of money in tech. I had Microsoft and Tesla and all that. I’ve beat Tesla. I beat Microsoft, too. So all my money’s a lot better because it’s not in the bank, I can’t spend it.

Issa Hanna (12:00)

No, 100%. No, it’s the best way to put money up. It’s the best way to over time these mortgages go down. It’s all equity that you own. It’s legacy building, but it’s still cash flowing every month. So it’s one of the best investments you could get into. And—and everybody has real estate in their portfolio, no matter who they are. So 100% you’re right, Vincent. And—and I kind of wanted to now

look to the future, right? You—you’ve got twenty-six thousand square feet. Yeah. Five years down the line, we talk again, how many properties are you going to be sitting on?

Vincent Fleischman (12:32)

Well, that’s twenty-six thousand of average thousand-square-feet houses, so it’s equivalent to twenty-six houses. But I go in dollars, so my goal originally was houses and I wanted to do it in like three years. I probably didn’t do it for five, but my goals are a lot bigger than that because I’m in an area that’s economically on a huge growth pattern.

And by the way, if anybody—doesn’t matter where you’re at, you just look around and look for where the jobs are at. Yeah, almost every state has a huge growth pattern somewhere. And if you look for that pattern… Mine, I’m looking at building a city of probably a thousand. The—the areas that I’m in, the particular state could probably use another twenty thousand beds, so every town has a lack of beds, even in some of the big towns.

I’ve been looking at a system called PadSplit, which they take a like a three-, four-thousand-square-foot house and then you chop it up into twelve bedrooms. There’s no living room anymore. And you could cash flow any property with bedrooms at eight, nine hundred bucks, a thousand bucks a month. So there’s—I probably won’t do that for a few years because I like being in the rural areas, but that’s my stepping stone into

a lot bigger properties, and probably not even motels because they’re not as profitable. Somebody, usually when they’re selling a motel, they want a lot of money for it per square foot. So it’s gonna be using old buildings that nobody wants anymore and rehabbing them, as long as they’re not in a historical district, and rehabbing them. And then that way, my per-square-foot investment is—it’s really good, and then expanding from there.

My next stop is about ten million equity. I probably gained four million in seven years. So my first goal was just to get a retirement fund. I didn’t—I was fifty-five, I didn’t have any money. It’s like, “What the hell are you doing, man? Might as well get going here.” So I created a whole retirement fund in—in five, six, seven years. So next stop is ten million, after that, a hundred million. You have to have big goals.

Issa Hanna (14:25)

Bringing that—that mentality, that real estate agent mentality, you’re bringing it to the real estate… No, you’re gonna just keep going up, smashing the goals. And one thing I picked up that—that I want to point out and—and compliment, your knowledge as a realtor, the way you’re able to identify these areas, the trends in the neighborhood, all this stuff, is due to definitely doing a lot of deals for clients and your extensive knowledge as a realtor.

‘Cause truly, talking like a—like a seasoned vet in the real estate game right now, you’re identifying that. So I just wanted to highlight that and compliment it.

Vincent Fleischman (14:58)

When

I was—I was a realtor, I loved doing comps. So I like to pinpoint the price that that house should be bought at or be sold at. I wasn’t that great of a listing agent, but I loved doing buyers. But I could pinpoint exactly what I think that house should be appraised for. When I was a listing agent, I always oversold them, so if it could—it came in at one—190, I sold it for 210 and had to lower the price, which, yeah, I mean, that’s doing your job. But doing the comps is a favorite thing of mine, so…

But now you could do this on Realtor.com, Zillow, you could comp all your properties. You should know before you buy something exactly what that house is worth after you fix it up and what you should buy—be buying it at. And it ain’t retail, so yeah.

Issa Hanna (15:39)

One hundred percent. One hundred percent. As somebody who’s done over two hundred and fifty first-time home buyers, man, you—you get to be an expert at—at comping things out and knowing how much areas are worth.

Vincent Fleischman (15:51)

It’s vital.

Issa Hanna (15:52)

Yeah, definitely, man. And it’s a—definitely a huge tool to have when you are investing.

Vincent Fleischman (15:56)

Oh yeah, you have to have that.

Issa Hanna (15:57)

I can definitely relate. And now I want to pick your brain a little bit for our younger guys, our—our new agents, our new LOs, our new investors. Our—our—our business thrives on being able to establish relationships, whether that’s contractor relationships, other professionals that you use, all that kind of stuff. But the new generation, they’re not so “get out there and hey, how are you, and shake your hand.” They want to do everything from behind the screen,

and—and some of them are struggling to establish that first relationship, or just to get the ball rolling. So if you had to give a piece of advice on—on what to do, how to establish their first relationship in their network and business, what would you tell them?

Vincent Fleischman (17:16)

Well, where I’m at, I’m 200 miles away from a five-million-person city, and I can bring in contractors, and I have brought in. However, contractors are fat cats. I mean, they’ve learned that they can be all over the place. And what I call it is they’re bidding based on address and based on age, so if you see a little old lady in a rich area, that price is gonna be completely different than me standing over by a broken-down house, that. And the women get taken advantage of.

And you just have to—you have to get 10, 12, 15 bids. I mean, all this stuff is known. AI can tell you exactly what sheetrock costs and all that stuff. I see it online. A lot of times I’m like, “You should just look—ask Claude or ChatGPT what the room should cost,” because it’ll tell you electricity, plumbing, sheetrock, painting—it’ll tell you all that. And then you start at the bottom and you say, “This is my price.” I had a buddy,

he got a price in a bathroom from fifty grand down to eight grand, and that was just like two months ago. He’s like, “What’s going on?” I says, “Well, yeah, he’s doing the right thing, though.” He’s—he has to get bids until he satisfies his—whatever his budget is, and it wasn’t fifty grand.

Issa Hanna (18:22)

No, 100%. And who has fifty grand to spend on a bathroom? But like I said, if it’s—it makes sense, yeah, somebody does. And that’s why they—they start high. Wow.

Vincent Fleischman (18:32)

Senior,

he’s all gray, they think he’s Mr. Patty Cake, and they take advantage of that. So there’s their thing is sliding scales. So I have—in the small town, it’s difficult, because I live in a town that has a high economic activity. The average wage is 120, so the guys that aren’t working in that particular segment, you—you wonder why they’re not. And so I’ve been through a lot of them. I’ve been through 30 people, maybe more. People…

I met a guy yesterday, “Because I worked on that house for you.” I was like, “I don’t even remember you.” So now I’m probably hiring everybody at twenty-five bucks an hour and I’m overpaying them for sure. But sometimes you overpay and then you learn the lesson, and then they’re not working for you the next day. So you—you are your general contractor. So if you’re looking for a contractor that’s gonna look out for you, it doesn’t exist, I don’t think.

So you need to be hands-on.

Issa Hanna (19:21)

Definitely. And even if you find one, he’ll do a few projects for you, the price will go up on you. So you’ve got to be your own project manager, definitely, and that’s how you keep the cost down. Man, golden, golden knowledge that you brought to the show today. I’m all out of time for today, Vincent, but I want to thank you so much for coming on the show. It was such a great, yeah, knowledgeable conversation, man. Thank you so much.

Vincent Fleischman (19:45)

All right, good.

Issa Hanna (19:46)

And then to the viewers at home, if you enjoyed my conversation with Vincent and want to see more like it, make sure to hit like and subscribe. I talk to people every day that can bring us different knowledge on every aspect of the real estate industry. Until next time, the Real Estate Pros are out.