Real Estate Nerds 18: Best Deals

Doing Your Homework for the Best Deals

Josh Bauerle

CPA, Consultant, and Author

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Welcome back to The Real Estate Nerds Podcast! On today’s Best Deals episode, our host, real estate attorney Scott Smith welcomes Josh Bauerle. Josh isn’t just an investor–he’s also a CPA. As we soon found out, his background in number-crunching truly served him when he made his first and best deal. Listen to the full show to hear the play-by-play of how a collection of Midwestern properties (and a series of carefully planned meetings and negotiations) launched Josh into the real estate world on the right foot.

Josh Bauerle’s Best Deal: A Midwestern Success Story

Josh joins Scott to tell him a bit about his life before and in the beginning of the real estate career. Then, the two get right into the circumstances that led up to his best deal.

[1:30] Josh is both an investor and a CPA. His CPA background informs his real estate investing, particularly regarding how he structures deals. Today he has 15 properties, though he started with only two.

[2:00] Scott asks for the “10,000 feet” view of Josh’s best deal. He began looking at a triplex in the rural Midwest, where properties are cheap. He eyeballed a $40,000 triplex, but was presented with 20 properties, but settled on 13 owner-financed properties. He ended up being able to take them all. Between receiving 90% of the financing from the seller and a loan for the remaining 10%, he acquired these properties with none of his own money down.

[3:00] Scott asks how Josh managed to find the seller that made this deal possible. Josh knew the seller personally from his small hometown. The seller even knew his parents. Josh was able to leverage this relationship and negotiate until he was pleased with the deal structure.

[4:30] Josh’s familiarity with the area helped him make this deal: “This was in my hometown. I could look at the street and know if it was a good area or bad area.”

[5:00] While his prior relationship with the seller served Josh, it also made him more hesitant to “lowball” him. The seller wanted $460,000. Since he made a counter-offer of $330,000.

[5:49] Josh’s experience as a CPA helped him manage this negotiation: “I came in with this giant binder. I had every single property I wanted laid out. I went onto BiggerPockets, ran the numbers, and looked at the numbers on comparable properties in the area.” Being so well prepared allowed Josh to justify his counter-offer without offending the seller.

[6:40]  Between Josh’s thorough due diligence and smart negotiations, he ended up paying only $341,000 for all thirteen properties.

[7:20] Convincing the owner to finance the properties was Josh’s next step. He also showed up fully prepared with his credit report, income, and all the information to respond to the seller’s potential objections. He was even able to point out how the financing would save the seller money on capital gains taxes. This strategy was successful: “I think the key was I just went in and every objection he had, I had an answer for it. So there was really nothing left for him to say.”

Sealing the Deal

Josh surely found a great opportunity with these properties. So Scott wanted to know how he finalized the deal and ensured his success with the seller.

[9:00] Scott asks whether Josh had anyone coaching him through these sophisticated negotiations. He did not. Josh relied on his experience as a CPA and his experience as partial owner of family properties to make the deal.

[10:09] Josh points out that new investors are often too quick to accept unfavorable terms, and cautions against this: “You have to be willing to walk away if it’s a bad deal.” Scott asks what dealbreakers Josh knew going in, and he shares what he wasn’t willing to budge on and what his “walk-away number” was.

[11:00] Josh was very mindful of his due diligence throughout the buying process. He was well aware that his properties, which averaged $39,000 each in value, weren’t going to be perfect, but conducted thorough inspections to avoid missing major defects. The seller also had anxieties about what to do in the event he needed to foreclose on Josh. These were relieved by involving an attorney who drew up a contract that satisfied both parties.

[12:51] Josh highlights a truth that this negotiation experience taught him: “I think with any deal you have to be flexible on either the terms or the price.”

[13:45] Scott has found that in his experience, wealthier people are less fixated on price and more interested in good terms. He gives a couple of examples from his own investing life.

[15:30] Scott asks Josh about the transition from closing to managing the properties. Josh explains that in this part of the country, owning property means managing it yourself. He had the good fortune of lucking into good tenants, and most of the properties were already occupied. His terms included that the seller get properties “rent-ready,” though the two were far apart on what that phrase actually means. For instance, he had to pay to fix a water line immediately on one property. Nevertheless, Josh’s transition into management was smooth.

The Takeaways: Build Trust and Do Your Homework

Josh and Scott wrap up the show with the major takeaways listeners can learn from Josh’s success story. The human pieces that made this investment work were Josh’s ability to listen, research his properties exhaustively, and build the necessary trust to get the deal he wanted.

[17:10] The two investors discuss the importance of trust in these transactions. Josh offers advice on going with your gut: “Something in you is going to to tell you that either you can trust someone or you can’t…You’ve got to trust your instincts.”

[18:41] Scott highlights how more points of contact and meetings with a person gives you a sense of who they really are. This doesn’t apply just to his business, but is a general principle he also uses when hiring for his own firm, Royal Legal Solutions:  “We don’t hire anyone without having at least three contacts with them…People will tell you what’s wrong with them. And everyone has something wrong with them, so once we know what it is, it’s like ‘Cool. Welcome to the family!’”

[20:00] While Scott’s major lesson learned is getting to know a person well and develop trust, for Josh, the major lesson is the value of doing your homework. If he hadn’t been thoroughly prepared and investigated every aspect of the deal–down to the cost of property taxes–he would not have been nearly as successful. He believes this also gained him credibility: “Successful people want to know that you did your homework.”

[23:00] Scott makes one final observation about Josh’s Best Deal: “This is a story about really listening to people and giving them what they what they want, down to an emotional level.

Connect with Josh Bauerle

Connect with Josh Bauerle via his website,

Listener Resources

Thank you for joining us on today’s episode of the Real Estate Nerds Podcast.

For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook.

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Hosted by Scott Smith, Lead Attorney and Founder of Royal Legal Solutions. Schedule your personal consultation now. If you have questions about our content or suggestions for future episodes or guests, reach our podcast team at [email protected].