Data Driven Real Estate Podcast #34 – Senior Housing, Ding-Bat Rentals, and Accessory Dwelling Units with Ward Hanigan DDRE#34

Ward Hanigan is a full-time foreclosure specialist and real estate investor based in San Diego County. He brings over 40 years of real estate experience, with a degree in Economics and a Doctorate in Law. He has worked in California’s foreclosure market exclusively since 1982, and as a consequence he has extensive experience finding cash, researching title, handling evictions, rehabbing, reselling, consulting, and is a “one-on-one” trainer and mentor to some of the most successful foreclosure practitioners in the Western United States. At 80 years old, Ward is still chasing deals and loves what he calls Ding-Bat Rentals. He’s a perfect example of backing into a unique niche that no one else wants, and finds unique ways to attract tenants with an average lease-up of 25 years! He’s also recently discovered accessory dwelling units and he’s got new ideas you won't want to miss.

Get your questions answered on the upcoming show by posting your questions in our community.

Connect, subscribe and like on: YouTube, iTunes, Pandora, Spotify, Stitcher, Google Podcast, Amazon Music, iHeart Radio

‍

Show Topics

00:00​ The Data Driven Real Estate Podcast Welcomes Ward Hanigan, Founder of Foreclosureforum.com

‍00:04​ From A&W Franchisee to stocks to foreclosure investing, Ward shares his unusual journey into real estate investing

‍14:37​ Why Ward got into foreclosure investing

‍18:25​ Ding-Bat rentals and senior housing

‍23:44​ What is a wrap-around deed of trust or all-inclusive deed of trust?

‍26:44​ Why one-bedroom homes for seniors work best

‍30:07​ Properties selling cheap because nobody wants them

‍35:16​ Using other peoples' land to build ADUs for rentals

‍36:15​ Building accessory dwelling units for seniors

‍42:56​ Unique ways of connecting with section 8 seniors for future housing vacancies

Show Transcript

Aaron Norris  0:04  

Welcome back to the Data Driven Real Estate podcast, the podcast for real estate professionals dedicated to driving business using data. I'm Aaron Norris along with Sean O'Toole with PropertyRadar and this is Episode 34, featuring Ward Hanigan. Ward has one of the most interesting real estate backgrounds I've ever heard. He started as an orphan eventually got into becoming an A&W franchisee holder in Mexico, then to stocks, commercial real estate, law, and then into dingbat rentals, you're gonna be very interested to hear his journey into real estate and later on the show, how he finally focused on a very specific niche that nobody else seems to want. And he's got marketing lists that nobody else has, because of the way that he approaches his dingbat rentals. And now Accessory Dwelling Units, you won't want to miss the show. Well, Ward, I really appreciate you joining us today. And my first question is, what keeps you excited about investing in real estate?

Ward Hanigan  0:53  

All the girls. Yes, yes.

Sean O'Toole  0:59  

You're in a different real estate business than I am.

Ward Hanigan  1:04  

No, it's just, it's just a quest. You know, you find out something that you like that. And you've mastered it, once you've mastered it, it comes from a pain in the butt to a passion. And if you live long enough, I prophesize. That's what's going to happen to people. And so right now, it's just a passion. And I keep score, you know, with proving over and over again to myself, that what I'm doing is valuable, because I'm getting a lot of money. As long as I can teach somebody teaching element is, is very important to me. And I've never been that sort of thing.

Sean O'Toole  1:44  

When I first came across you almost 20 years ago in 2002, when I was first starting in the foreclosure biz.

Ward Hanigan  1:51  

Right.

Sean O'Toole  1:51  

And I never took one of your classes because I had a very experienced mentor that had done hundreds and hundreds of foreclosures. But you know, I always wanted to come to him with smart questions. So, I spent a lot of time on your site ForeclosureForum.com, to at least try to find the answer first. You know, I think that's, anybody who wants a mentor out there. Like, try to find the answer on your own. First, you'll ingratiate yourself a lot more. And but yeah, your site, I think was 2002 was around and was had a lot of good information.

Ward Hanigan  2:24  

Yeah, we endeavor to use it primarily for the betterment of the people that came. And so, I absolutely insisted, we're not going to have any ads, I could care less if we made buku money with ads and all that crap, and selling people's emails, and I'm not interested in it okay, because I make enough money, my, my, you know, major foreclosure activity. And also, I love the freedom. If I'm not dead, I'm not going to step on somebody's toes, you know, because they're an advertiser. And, and I think they, what they're advertising is overpriced, or some other damn thing.

Aaron Norris  3:02  

Now, your background is an economist and law. Did you practice either of those professionally?

Ward Hanigan  3:08  

No.

Aaron Norris  3:11  

Why is that? That's a lot of schooling.

Ward Hanigan  3:13  

It was because of money. And yeah, I was fascinated when I was in junior college, and also in when I went to the University in cultural anthropology. I just loved it. I'm much more interested and in society and stuff like that. So, but I got into, I was recruited on campus by IBM. And so, I became, I was more interested in sales rather than technical end of it. So, I went into office equipment sales instead of computers. But I liked the, I liked the stuff you go out and meet people and talk to them and, and convince them to make things better for themselves by buying your service or either that or buying your products. They didn't have a business major. So, the next best thing was economics.

Aaron Norris  4:12  

So then, how did you fall into real estate?

Ward Hanigan  4:13  

I fell into real estate because IBM I loved it. The first year was all very new. Uh, second year, in fact, I did too well, I in one year, sort of unheard of. But when normally you don't get to the IBM 100% Club, to sales, for sales, where you take a fantastic trip anywhere in the United States and sometimes foreign countries as a reward for being top in your division, your district as far as sales are concerned. And uh...

Sean O'Toole  4:47  

And you've nailed it.

Ward Hanigan  4:49  

And I did it in spades. And it was funny because it, embarrassed. There's only two guys out of Riverside district that went to the 100% Club and, and I went, and I just pissed all the other salesmen off. I won the 100% Club. And when I came when we started the next year, they they increase the quota, I could care less fine. You want me to climb another mountain? That's okay with me I get it that didn't bother me for what really bothered me and I hadn't thought about before, was it cut my territory. And that's the way I felt. I felt like this is my territory, I had this very, very strong ownership feeling about my territory. And I'm the one that fertilized it. And I'm the one that organized, I'm the one that you know, got people just primed to buy with the next budget just on and on, and I just could not get over it. I just could not get over it. And so, finally in discussed it, I find I just quit, shocked everybody. And the manager really wanted to find out why I quit because he didn't want to be criticized that I think by supervisors, here's his hot shot, and he quits. And so, what the hell did you do to them. And so, anyways, I left IBM for that reason. And I, in him, it was a A&W Root Beer stand. And in a summer, Hemet is hotter than hell. And so, I would go in there on the day, the day that I usually went to him it whatever it was a Wednesday or Thursday or something, and drink a, an A&W Root Beer. And when I think about it now, I could have one right now. But anyhow. There's only one person in there besides me and as the guy that owns the joint. And so, I said, 'Wow, how'd you get this place?' And I'm making small talk, you know, and, and this is cool. And he had the district manager for A&W Root Beer right there where there's his register, he says, 'Here is this guy's card. He's the area manager. And if you want to talk about a franchise', and wow, I thought I think of his card. And that night I saw I looked at the card. I thought A&W. I know enough people, you know, it was raised some money, and buy an A&W franchise, and I wanted to put it into one because I noticed that when I went down to marry a Mexican girl, and she has a zillion relatives in Mexico, and now that she's up United States they want to come up at Christmas time. They want to come up on New Year's Day like, I they like come up on Valentine's Day or something. I'm always going down to the airport in Tijuana to pick up some friends or relatives. And, and while I'm waiting for the plane to come, I'm still standing around and waiting downtown, Revolución, and there's a ruler's drugstore there and they got a lunch counter. And no matter when you go in the lunch counter, is jammed with tourists. And as a lion going out the front door. They would buy Woolworths hamburgers and stuff like that, because it just didn't know about how they could trust eating Mexican food. And I go wow, I can take advantage of that. The A&W thing clicked in my mind. I thought wow, A&W everybody knows A&W, that's how I started and I bought the A&W Root Beer franchise for Baja California Norte, and so what I did is I raised $90,000 with some, some people that knew me.

Sean O'Toole  8:39  

What year was this, Ward?

Ward Hanigan  8:42  

That was a 65-ish.

Sean O'Toole  8:44  

So, there's a lot of money it's not $90,000 today.

Ward Hanigan  8:47  

No. Yeah. And I didn't have any money to put in. So, I said I work for nothing for free, no salary. I just get my portion of the of the profit. I thought it would be profit a lot faster. You know, I put a I was completely wrong as to who my customer was absolutely 180 degrees upside down on that one. I thought it was going to be American toursist going down Revolución to the racetrack. And so, I spent all this money and we actually built on leased land which is crazy. The world's largest A&W Root Beer stand at the time. See, I got out of A&W and, and that's a story in itself as you can imagine. And then so, I stayed in San Diego, I fell in love with San Diego. I had an economics background. So, I decided to become, go to Shearson, Hammill & Co. in La Jolla and try being a stockbroker. And again, I took off like crazy even though I had an empty book of, what we call book of customers. But I quickly found out that it's really a shady business. And so, I saw there was a, an ad to paper. Countrywide, Countrywide funding. So, Countrywide was a brand new outfit in 1969, in Los Angeles, and a year after that, they decided to open up an office in San Diego, the first expansion. And so, Mozilo interviewed me. Okay.

Sean O'Toole  10:24  

Personally? Wow.

Ward Hanigan  10:26  

Yeah. And gave me the job. There's two people hired in San Diego. Again...

Sean O'Toole  10:32  

How big, how big was Countrywide? I mean, this is, where it's just for the viewers, we're talking about Countrywide financial, which was kind of the epicenter of the foreclosure crisis. Mozilo was, you know...

Ward Hanigan  10:42  

Mozilo was it was a conniver, right?

Sean O'Toole  10:46  

Yeah. It was one of the biggest names in the whole foreclosure thing. And we're talking a huge company that was still sold to Bank of America. And how big were they when you interviewed?

Ward Hanigan  10:56  

Oh, it was just one dickie office, you know, I mean, he would use other companies forms and copy of them, and just put Countrywide's name on it. And that was the form that we would use, you know, to, to interview people for mortgages and stuff like that. I remember one time it had a question on it. And it says something like, 'Are you interested in, I'm going to shorter, like mortgage term insurance?' you know, this what it was really about. But anyhow, and nobody knew anything about it. My office, and I called up LA, and nobody knew anything about it up in LA, when did this Countrywide form and you don't know what it is, you know. So, they give me a clue about it originally was somebody else's form. Anyways, they gave a spiff if you checked, yes. And because there was a premium that was charged, you know, as they added it to every monthly payment, or mortgage term insurance, we did the interview with husband and wife in their home while I was qualifying, take the application for a loan and I'd say okay, Tom, when you die, not if, but when you die. Do you want June here to be saddled with the continuing payments on his mortgage? Or would you like to have the house fully paid off at the time you die? And he can say he couldn't say in front of his wife. Now, they're struggling with a mortgage. And so, it was 100%? Yes, yes. Yes. And so, it got to Angelo's attention. That the CA who in San Diego, Ward Hannigan is, as was used up all the S&H Green Stamps. And so, he calls me up. The Saturday was our sales meeting, down here, was is up in LA. And he wanted me to come up Saturday and it tells the salesforce up and says what was my approach by getting people to agree to pay a little extra and, and I tried to tell Angelo over the phone. I said look, it's, it doesn't coming out of my territory on Saturday to go up there. It doesn't it isn't that. It's so simple. Let me tell you how I do it right over the phone. And so, I mean, you could do it. It's just, it's not that I'm, he was into it. He said, 'Hey, I told you I want you up here. I want you at our sales meeting. It starts at 09:30 on Saturday, and he end his conversation bam! So, I went up there and I purposely I walked in said either the guys that had about six or eight or 10 salespeople or something like that, 'Mr. Jones, all right, when you die, do you want Neely over here to be saddled with the mortgage, having to deal with mortgage payments when now you're gone and had incomes gone? Or just for the price of, and IBM taught me to sell the difference, and so I suggested for the price of a pack of cigarettes, all right, once a week, okay, she could do, would be completely paid off if something tragic happened to you, pal. Okay, that's it. See you guys later. That was anyways so...

Sean O'Toole  14:09  

Ward you have led such a full life. And let's pull forward to Ding-Bat rental and, and also what you're doing today because you know, you are after all these years you're still after it, still making it happen, still closing deals. I understand you got some stuff going with ADUs. And let's, let's pull forward to today and give folks some.

Ward Hanigan  14:35  

Okay.

Sean O'Toole  14:35  

Some stuff they can use in the market right now.

Ward Hanigan  14:37  

You know, here's one man song and maybe they can sing it too. I'm convinced that we now have progressed medically in both devices and medicines and stuff like that. treatments that the average person if they don't play the no-no games, you know, no booze, no drugs. No, I don't alcohol, all this nonsense, and you're not a real Daredevil, you probably can have the expectancy of living approximately to 100. And so, the problem is that you're going to be replaced, I guarantee it, you're going to be replaced at about 50 to 60 years of age, no matter how good you're at, or what you're doing. And so now, the problem is that since you didn't think it was important enough to create something while you had an active income, so, that it would give you a passive income in the second half of your life, the second half of your life is gonna be a long period of time, that's going to be 40 to 50 years. And so, you got to start taking something that you make out of the first half of your life, all right, and given an opportunity to come to fruition at the beginning of your second half, so, that it's going to carry you through. And so, that turned out to, for me, that turned out to invest in something that I don't have to babysit, invest in something that I don't have to keep staying. So, it doesn't require my active presence. And so, that's why I say it's a passive income type thing that occurred to me when I was 40, 45. I was making so much money in foreclosures that I didn't think that I need, didn't need to, to, to do anything else. But that because I never made 40, 50, 60, $80,000 in a crack and I just 'whoo!' you know.

Sean O'Toole  16:35  

What year was that we were going so crazy with foreclosures?

Ward Hanigan  16:39  

I got started in foreclosures in '82. Okay, I work for Countrywide for about two or three years. Then I decided, you know, I can sell rings around these guys, mostly guys are selling real estate. And those days were retired, the guys really didn't intend to really understand anything about mortgages and mortgage rates. And let's say they sold or they, they, they sold the house. And now they got to find a lender trying to pass the lousy the salespeople so that they would steer the buyer to this mortgage rep or that mortgage rep or something else. And I remember Weyerhaeuser was, had such crappy rates, because Countrywide was trying to very quickly get market share. They're the new boy on the block, and they want to elbow their way into the trough. And so, they have really low, low, much lower interest rates. So, I remember one day just couldn't believe it. This guy TOs his mortgage to like Weyerhaeuser. I knew Weyerhaeuser's fees and everything else. and they just stuck compared to Countrywide, I said, 'why did you do that to your clients?' And he picks up a pack of Wrigley's gum. And all that he's got, a thing that, that they gave him. That's what he got for steering the goddamn deal to, I couldn't believe it. It just oh, you did not only screw your, the, the listing that you got your, your owner, all right for a pack of gum. I walked out of the damn office and said, Hey, I can do this standing on one leg.

Sean O'Toole  18:25  

Yeah, the mortgage sides are much harder and a lot of ways on all that stuff you have to do. So, you have this great combo. You got sales from IBM, right? You got entrepreneurship from a A&W. Now, you've got, you know, good real estate knowledge from Countrywide and doing a bunch of mortgages. So, you put all that together, you're in the real estate business, you're doing a lot of foreclosures. Jump to dingbats.

Ward Hanigan  18:48  

Okay, so let's jump to being dingbats. So, what are the things you do when you start acquiring property when you're selling it is you might do a 1031 exchange. And so, I did a couple of those. And one time, this guy he wanted us to take from his side, not only his apartment house, but this stinking little one bedroom, one bath, old piece of junk, you know, and he dug his heels and he said, 'No, I don't want this and I, but I and I got it and I sell, I'll agree to your trade with your property and my apartment house and stuff like that. But you got to take this thing too. Basically, I took that as part of my share of the deal. So, I took this trade and then about a year later, two years later, I completely forgot about it. And I TO'd it to Eric I said 'Hey do something with this, you know, sell it to something.' And I don't know why but about a year, or it's two years later I asked and said Eric, what do we, did we ever sell that one bedroom, one bath piece of crap that we had to take? And he said no, no, no, we didn't sell Dad. We still have it. And I go 'What? We still got it?' Yeah, we can't sell it. Nobody wants to buy it's too old. and blah, blah, blah. Who's gonna brag about buying a one bedroom? A 60 year old one bedroom, one bath house? I said 'damn, still got it?' Yeah. So, 'well, how many times you have to rent it out to somebody?' 'No 'cause the lady that lived there when we bought it is still there.' I'm gonna go 'Wow, that was not my experience'. When I'm selling when I was in the, I got into the apartment business, by the way. Okay, as an agent, so became an agent. And when I left the...

Aaron Norris  20:36  

Countrywide, yeah.

Ward Hanigan  20:37  

Yeah. Countrywide. And so, I worked for 10 years then buying and selling apartment houses as an agent. And so, I had gone to law school. But I, nobody wanted to hire me because I went to a no name school. So, I wasn't going to go into practice myself, because I knew that I didn't really know I only knew half of law. And that is the book part. I didn't have the experience of knowing that way around a court how to frame an argument in front of a jury, you know, all that kind of stuff.

Sean O'Toole  21:11  

More of doing apartments and practicing law?

Ward Hanigan  21:13  

Oh, yeah. So, I said I'd do it someday, when I, you know, get older, selling real estate, lots of times, you have to be creative in financing to put the deal together. And so, I learned from a guy in Phoenix showed me how to do wrap-around deeds of trust. I didn't even know what the hell he's talking about, and they are all inclusive. And so, I mastered that. And then I found that it doesn't pay to be the only person in your whole area, that knows because no one else wants to, we're gonna deal with you, 'cause they don't understand it. And so, how can they tell their seller, let's cooperate with this, and we carry back and all inclusive deed of trust, and blah, blah, blah. So, I had to start a class under the, the ages of the title company. So, I was told, convinced the title company that, hey, let me teach this class, in your boardroom on weekends. And I have an attorney buddy, I met in my law school, he was a, he was a real estate attorney. But he got his license in the Navy, he would come to me and breaks in the Senate and asked me what was the crux of this case that we're talking about? What was the element? That's in it. And so, after a while, we came pals. And so, I tell them, I said, Hey, I need to, I need to, to convince the title company. Let me teach a class. It's actually I want to tell them, you're teaching a class, I'll show you what, what you need, and what equipment you need and stuff like that. Taught...puts class on it says it was the attorneys class. And that's how I started with my, I found out that it takes two to tango, you just cannot be the only genius in town, you got to be able to do business with people and you got to if they're not there, you got to train somebody so that you can you know, dance. I considered...

Sean O'Toole  23:10  

That started your career in real estate education, then because you've had a long career now doing that and teaching people the business. That was the first one.

Ward Hanigan  23:18  

Yeah, probably right. And I started fast started buying commissions of promoters, salespeople that, you know, we're living on a dime. And, and so we would be splitting commissions, because we tell somebody, 'Hey, let's do a wrap-around deed of trust. So, we don't have to pay off that mortgage'. And we're going to do it in such a way that will never be discovered that you're getting around to doing on sale clause, I had to explain all that kind of stuff.

Sean O'Toole  23:44  

I'd like to explain for our viewers really quickly, a wrap-around deed of trust. So, if I as the owner, I have a good mortgage at a good rate. You want to buy the house from me, right. But maybe you can't qualify or you can't get as good a rate, what we do is we put a wrap around my existing mortgage that says you're going to make payments, basically, to me, and I'm going to make payments on that mortgage, and you get to now live in the house. So, you're going to become the new owner. You're going to give me a mortgage, but I'm going to keep my mortgage and so it wraps around. And that's that's the all inclusive, it includes the underlying mortgage or wrap-around mortgage.

Ward Hanigan  24:24  

And then you get sophisticated and you make sure it's collected by a neutral third party and no collection service. Here in San Diego. It's called Toro, something Toro Note Collections. So, it wouldn't come undone. Because sometimes the guy that you sold to originally he now turns around and sells it somebody else and he doesn't explain it quite good enough and starts to come apart. Anyways, one of these my, my inclusive mortgages it was sold the property department house was sold more than once or twice after I sold it. And so, all of a sudden now they guy that the original owner who he wrapped his mortgage, he calls me up and says 'Ward, he said, you convinced me to carry back this all inclusive deed of trust. And now there's no payments on it. What the hell am I supposed to do?' And I said, 'Well, you start a foreclosure'. And he said, 'Well, how do I do that?' We started getting into the details, you know, that motivated me. I'm going law school at the time, that motivated me to go to law library, and got every book written on for closures. In California, foreclosures, not interested in other states, California foreclosures, I started buying wrap-around mortgages because nobody wanted to buy a wrap-around. Alright, people in town like to buy a mortgage for some income, and it's an add on and they want an ordinary mortgage Ain't nothing new. And so I knew that I could drive a better bargain by willing to buy if I'm the only willing buyer. All right, I don't have to be as much as if everybody knew what that was. And so I have mortgages coming out my ears. But I didn't like about mortgages, and I still don't to this day, is that that the person in control is the payer, because if the interest is, is up here, and he can find a new loan down here, all right, then he's logically going to want to refi. And so, I get paid off earlier than expected. I found out later, there's a lot of wisdom in not trying to get the greatest part of a deal, you got to have leave something in for the other side, or they have no incentive to stay in the deal. And that took learning.

Sean O'Toole  26:43  

On that apartment deal. You ended up with the ding bat, right. There's the one bedroom, one bath, tenant had stayed in there for a while.

Ward Hanigan  26:52  

Right.

Sean O'Toole  26:53  

And which was a surprise to you. Because in apartments, you saw a lot of turnover, you see no surprises person stayed in.

Ward Hanigan  27:00  

You get a lot of turnover, because I had actually, I really had experience with one bedrooms, I had a guy convinced the guy to buy a six-unit apartment building, and he were all one bedroom, one bath. It's like a friggin motel. Because, you know, people are just coming and landing and finding, getting their whereabouts at the town and, and this and that. And, as with anyone make any commitment until they found the best place to buy a house, and they understood the town and where the values were, you know, all that kind of stuff. So, they stayed here. And they would leave. And so, I had 100% turnover, and I was a great manager. So, my bias was I don't want one bedroom, one bath. I mean, you couldn't find a guy that was more polarized and saying, one bedroom, one bath, stick it . In spite of that, I so curious, because my experience with the apartment houses, they didn't just leave their lousy tennis and I hear this little lady, she's doing nothing terrible to the property, she keeps it clean and neat. She pays promptly on time. She's very sweet. And on and on. And I can add the difference between this and this. And it just got me very curious. And so, I found out that she's on this thing called Section 8, and found that she's really not paying us to read Section 8 is paying us directly to our checking account, she pays a tiny part 10 to 20% of the rent out of her own pocket. And the government, the federal government through Section 8 pays their difference. And wow. And so, it's very hard to find landlords that agree to Section 8 situation. And so she just absolutely was petrified that I was going to sell the property, and she'd have to move, or I was so she never wanted to do anything lawn noise-wise. Taking care of the property just on and on and on. And wow. So, I started...

Sean O'Toole  29:13  

Super reliable tenants gonna stay there forever. Completely different situation

Ward Hanigan  29:17  

Now. Yeah, I didn't realize it's gonna be forever. I tried. You know, in fact, actually, I said, Oh, well, if that works, maybe I do a duplex and so duplex didn't work. I couldn't figure out why for a while. Now, I don't. And anything else that has to be must absolutely have to be a single standalone, one bedroom, one bath, one story house, okay, otherwise, you're going to jeopardize the amount of time they stay. Right now, they're staying 24 to 26 years...

Sean O'Toole  29:51  

That's how long tenants are staying tenants of your properties?

Ward Hanigan  29:55  

And so can you imagine a cash flow coming in at you know 180, 200, 240 months without interruption, not one interruption. All right...

Sean O'Toole  30:07  

These properties are the, are selling cheap because nobody wants them.

Ward Hanigan  30:10  

Nobody wants them, but I love it. I love what nobody wants. Man! and you're talking to the right guy, and I just had this big smirk on my face, you know, all the time. And right now as a consequence, I have 20 I have an almost all of them have been there 20, 25 years. And but the ding bat, the brand new and the ADU they built on the back of the house. They're already own boys. She had Jim the why because she's young, she's 51 years old, okay, is an odd quirk or missing cog or something that doesn't allow her to hold a regular job. But other than that, she can live a large takes care of her property, she could cook she eats she does as she drives car, blah, blah, blah. So, anyways, she pays me $1383 a month, okay? For the that's the payment standard. That Section 8 goes to on a one bedroom, if it's a two bedrooms it's more, if it's three bedroom and they go up to six bedrooms. So, it says zero bedroom, if it's a loft or a studio there you go from zero to about six months times five. And but I'm, now, very, if I got a deal, I would, I would, I would, I would 'Oh, okay, sure I buy two bedroom, and there I'll buy a two-bedroom house. And so, they only stayed about half the time. And so, most people would give their eyeballs for somebody that would stay, you know, 15 years. Wow, Jesus, I could add 30 or 25, please, sell it. And so, I got around to purging my collection and selling out every, anything that did not match the profile. I mean, I even have duplexes with one bedroom in the front and one bedroom in the back. Absolutely. It doesn't work. That's good. They said about turnover by once every 12 years have a common, what's the real problem is a common wall. Okay, people spelled especially elderly treasure more than anybody. All right, peace and quiet. And so, if you have a common wall with a neighbor, ah, as far as they're concerned, it's driving them nuts, or they might have an angel. All right, but then that angel moves out, and all of a sudden, now comes a turd. As as the guy on the other side that Whoa, oh, man, you know, and then she wants to move. So, I get two vacancies. He's moving because he's an idiot. And she moves because she is all riled up that the guy is his, he has the audacity to he'd be playing his TV after nine o'clock at night. You know`, stuff like that. And house also, sound travels though them like, you know, a tissue box.

Sean O'Toole  30:11  

So, you've got all these one bedrooms, and some of them have enough land, I guess, to add ADUs. So, now you're adding one bedroom ADUs. And that's not upsetting the applecart because it's no common wall.

Ward Hanigan  32:14  

And most of the time, I wish that was it. But most of the time, they're not on over a large enough lot to allow a building another ADU. Okay. It just happened to be that particular neighborhood called Shelltown and San Diego that was designed from the get-go 1940. I was born in 1940. So, 80 years ago, then zoned so that you put a house in the front facing the street and a house in the back facing an alleyway.

Sean O'Toole  33:03  

Wow.

Ward Hanigan  33:03  

And so, now that 80 years, it's style. Little by little, it's been completely built out. Okay. And so, but there's enough leftover that if I live long enough, what I'm going to do is go through those neighborhoods, here's my new plan is to, is to go to a guy who never took advantage of building anything on the back end of the property. And I say 'Listen, I want to do a deal, which is not going to cost you a penny out of your pocket. Not now. Not ever. Okay, I'm going to build a house that you're going to see because I have the availability to show it to you and the inside the tenant is happy to get 25 to 50 bucks for me to open it up and let us walk inside that you're going to admit that it's a really very, very, very nice ADU'. Okay, it's only 492 square feet. I had a specially designed by an architect who took my son's ideas and my ideas, put them together and we got the ideal, the most fantastic ideal unit for a citizen, or it's got 36 inch wide doors everywhere. It's got not one stair, and the whole place is super insulated. So, they're not wasting their energy. You know, it gets overheated or too cold and all this kind of stuff. I mean I even put in or some huge tenant to plug in your electric car. So, I got that electric outlet to handle that charge and electric cars. So, 90% of my tenants don't have enough money to have a car. Yeah. And...

Sean O'Toole  35:14  

We're running out of time.

Ward Hanigan  35:16  

Oh.

Sean O'Toole  35:16  

So, you've got this amazing ADU. And you're partnering now with folks that own these special lots in Shelltown and putting the ADU in the back and...

Ward Hanigan  35:30  

I use all my own money, because I got tons of it. So, I'm using money, and I build everything, so not a penny out of the pocket. And then for the next 25 years, I manage it. Okay, if anything goes wrong, I pay for it. Never a penny out of his pocket, but I get all the rent for it. Okay.

Sean O'Toole  35:48  

What if they decide they want to sell what happens, then?

Ward Hanigan  35:52  

I've made all my money back, plus another several $100,000. And I can better...

Sean O'Toole  35:59  

Keep going. Unfortunately, I have a hard stop right now. So, I'm going to go and say goodbye Ward. Awesome to have you on and learn so much from you over the years. And thank you for all that you've given to so many in the real estate business. And I'll let you guys continue.

Aaron Norris  36:15  

I want to back up for a second and explain how brilliant it is what you just did. So, it's a list that nobody else is going to have. So, you were talking about a very specific neighborhood where it was designed with an alley, where it's almost like you can come in and build this ADU and put a wall down the center of the lot. And for all intents and purposes, it's two separate units, completely two detached separate units, right?

Ward Hanigan  36:36  

Right. And one piece of ground.

Aaron Norris  36:38  

And the design wise, that's perfect. And you already know the ADU's that work. Is there a garage on these? Or is it just...

Ward Hanigan  36:45  

You know, most of the, most Section 8 don't have enough money to afford a car. And so, it's not a negative if you have no parking. All right, you're gonna be walking everywhere. The breeze, I had some space on the back, all right, to put a driveway. And I elongated it so that you can have tandem park. So, you put two spaces, and you approach of course from the alley. And, but and it just a fluke, this gal that I put in, she needed to off street parking places because her daughter who's ready to leave probably is already gone on because she's she only had another year in school. And she's going to move to somewhere in LA. But she got extra money from the state because she had a daughter. Okay, that says they're gonna pay more for dependent. And, but so most of time if I can do it while I'm building the house. Yeah, why not put the parking driveway? I didn't, I don't have there's nothing over there. It's just a it's just a driveway in the back. And so, then I noticed well, okay, so here's a, there's an alleyway and an alley. The difference between an alleyway and an alley is an alley is wider. And an alley allows some parking in the back and has lighting. Okay, this is an alleyway. So, it's not wide enough to allow parking. And it has no lighting of thinking about yourself as a 60 to 65 year old gal is she going to want to walk at night, coming home. I mean, after she's goes to the supermarket that's three blocks away and carry groceries in a dark alley. And there's no lights and on. So, I said no, that's going to maybe agitate or bother her enough to where she might want to move faster than 25 years. So , what I did was I, I, I put a sidewalk on the inside of my property line going from my unit all the way up the property line on the east side to the sidewalk in the front and putting a down there and put the mailbox there. Okay. And then I in this in this gate that I built halfway through the gate that split the lot. I put a gate, excuse me a fence. And so, that and that's operated to where the people in the front can't come in her yard and she can't go in their yard. She because the fence is kind of like a quarter. And it gives some security and privacy to both people. So, yeah, that's how it worked.

Aaron Norris  39:45  

So, she can decide whether to park in the front or the back then as well.

Ward Hanigan  39:48  

Yeah, but the problems's the front, the street is when you have, you have a single lot but you have two houses on almost every single lot. You've doubled the population and neighborhood and now there's almost always two families or more living in each house. And so, the little parking is premium thing. In fact, they got a thing going on in my mind that if she ever moves, I get a gal that doesn't have a car, I'm thinking, I'll tell you what, sweetheart, why don't I rent out the parking space to someone in the neighborhood, right now split the rent with your 50/50.

Aaron Norris  40:26  

There you go. There you go. Now, when you're approaching people that you don't own the property, what happens if they decide to sell?

Ward Hanigan  40:35  

I put on a property, she can't lease the land, because if you lease more than three years, and I want to go 25 years, then the assessor considers it the equivalent of a sale and wants to reassess the property. So, I know he's not going to want to do something, which causes a reassessment of his property, increasing his taxes, and he not getting some money for that.

Aaron Norris  40:58  

Okay.

Ward Hanigan  40:58  

So, I figured out, okay, there are forgiveness loans out there, for cities for whatever reason, they might get cops to move into tough neighborhoods, and this and that, they'll provide a junior note, and which is usually the down payment. And if he stays there, 10 years or five years, or whatever the time period is, they'll forgive the note, you won't have to pay it. So, it's a, it's not an installment note, it's a straight note, no payments until the end. And so, that induces that, that a doctor or that whatever, to stay in that neighborhood, and, and normalize the neighborhood, right. With cops, stuff like that. So I've got that I've got a forgiveness note. So, if he, if for some reason, whatever, who cares, they want to sell the property in a snap, and they want to pay off my loan, but my loan is going to be for the exact amount that it costs me to build it.

Aaron Norris  41:58  

Okay.

Ward Hanigan  41:59  

And then it's going to have an interest rate, that's going to be modest. Okay. And but it's not going to be doing payable. Uh, if I am allowed to stay there in place for 25 years, I'm collecting the rent.

Aaron Norris  42:15  

That is very interesting. Now, I, you and I briefly talked about this, there's two different ways to approach this stick build wall, for the stick build structure of the 452, 492 square feet, there might be a reassessment by the county, a little bit of property taxes, so, the owner might have to pay property tax unless it's a structure like a tiny home, so.

Ward Hanigan  42:38  

Yeah, the tiny homes are too impermanent for me and I think would be too impermanent for my tenant. If you want to get rich in life, and I really believe in, is find out what your customer wants. And then what?

Aaron Norris  42:55  

Deliver it.

Ward Hanigan  42:56  

Yeah, give it to him. Okay. And so, yeah, I didn't know who my customer was. See, because I thought a tenant, was a tenant, was a tenant that I never distinguished between, you know, senior, as a tenant, as someone on Section 8 as a tenant, or you know, that kind of thing. And all of a sudden, I had to sit down and figure out who am I really want as a customer. So, I say, you know, birds of a feather do what flock together. So, where does seniors go where to older people go, oh, senior rec center. Wow. So, you're not going to find any 18 to 49 year old, going to a senior rec center and learning how to play bocce ball or something. So, good idea. And then I learned that they have senior nutrition centers, ah, that is a gym. So, I don't have to advertise anywhere I do once in a while and Section 8 nationwide website's called gosection8.com you go there and drill down to the state you're interested to the county, the city, the blah, blah, blah. And you'll find a bulletin board set aside for that local area for landlords and tenants to announce themselves, okay. And but I would the way I like is with the way I I think I invented and that is these nutrition centers. There's many nutrition centers in a metropolis as our branch libraries is enabled. So San Diego is an example we have a team, a senior nutrition centers, and we have 15 branch libraries in San Diego. Wow. Okay. So, if you ever wonder where that's going to be where it is in your neighborhood, just find out where the branch library is and you find you're probably going to be A Nutrition Center in that little, in that community, that neighborhood. And so, they usually start at 11 o'clock in the morning. And they go to about 1230. Right at noon, they don't give breakfast and most of them don't give suppers. I've heard some of them do. But anyways, most of us just ate lunch, a nice, nutritious lunch. That's kind of like I call it orphanage food because I grew up in an orphanage where you have casseroles and you have, you know, a biscuit. Right? You have overcooked lima beans, like so. Okay. So, but it's real cheap. If you're senior, of course, being government, they can't not let you be a customer. And you might have a guest, but somebody is younger than 62, then they pay double. So, it's like $6, or maybe $7, rather than a three for the senior.

Aaron Norris  46:05  

So, do you go as sponsor? How do you, How are you connecting there?

Ward Hanigan  46:09  

Well, what I do is I go on Lombardi time. So, if this thing starts at 11 o'clock, I'm there at 10:45, 15 minutes early to make sure I'm at the head of the queue, or the line that is starting to start right about on 11. And I want to be at the head of the line, because I'm going to have about 20 or 30, flyers, a picture of my vacancy, and some of the pertinent stuff about it and direction how to get there. And a offered that, hey, if you want us to pick you up and take and show it to you and take you back home fine. Because some of them are so poor, they can't, they don't want to spend money to or Uber or a cab. And so I'm there. So, when someone comes up behind me, it's just very sociable and logical, I would turn around and say, 'Oh, hi, my name is Ward, what's yours?' And you say Aaron, and I go, you look a little bit too prosperous, to be enrolled in Section 8, but I bet you you get a lot of friends and accomplices, not accomplices, but acquaintances, and maybe even relatives that are on Section 8. And not as lucky as you. But what I want to do is give you a flyer and in case some of those people all of a sudden need to find another place to land because of being displaced, because somebody bought the dinky little house. And now they got to find somewhere else to live. And according Section 8 rules, if they don't use their entitlement. After 90 days, in Section 8 feels free to give it to somebody else.

Aaron Norris  47:46  

I did not know that.

Ward Hanigan  47:47  

90 days to find someplace. And so, they're kind of panicky. S,o you can be a great help to them, Aaron. If you have my flyer because it's got my name and number and I got a lot of units in this area, and just give it to them. And I maybe at that time, I might have any vacancy. So, why don't you take one? So he does well, you and I know he probably doesn't say Section 8, but doesn't want to admit it to a stranger. So, I'm saying that like to prospers. Just and then I go, 'Aaron, you want to get ahead of me?' Oh, yeah, sure. So, nobody can get upset because they let you their ahead of time. Yeah. And so, then I and intro myself, I introduce myself down the line. So, by the time the line starts moving, I'm at least halfway through it, handing out my flyer, because they don't want anybody handing anything out there. Okay, so I'm hitting because I'm part of the line. I think it's cool.

Aaron Norris  48:41  

Well, it's a list that nobody else has what a creative way to target a market that is not on TikTok or probably social media all that much. It's, it's just a very unique way to approach the business. I've always loved the dingbat rental. I left, I told Sean before we got on the air that I'm like, I think at one point, his average day was like 17 years. Well, I guess we haven't, I hadn't asked that in a long time. So, to have that long of a stay is insane.

Ward Hanigan  49:08  

Well, people are living a lot longer enough, even the oldest.

Aaron Norris  49:11  

Well, how are they as tenants as far as calling you and needing things?

Ward Hanigan  49:15  

Never! Never their attitude is that they're effusive. Absolutely effusive. And I need, I use this, by the way, in their gratitude, right? And so, you might ask me, okay, well, let's say using your technique of getting in line at the senior Nutrition Center and holding out flyers, you said, what if three of the people in line or four, you know, call you up and they want to take a look at it and they want an application in the center. Now, my question is, well, how do you decide amongst these three people or four people which one to take? And my answer is the one who is very, very obvious exhibiting gratitude. They'll thank me for giving them an application. They'll thank me for, you know, letting me, tet them see the unit they think in and it never stops. But I found out is when they're paying me every month I have one lady. And I've not just one lady, we have a couple ladies, but just one one. She for 30 some years, right? She sent me a rent in a thank you card every month, every single month. And it she's blessing me in Spanish, you know, that such a wonderful landlord. And, you know, blah, blah, blah. And so, she did, she stayed until she had to move out. People say how long am I going to be staying here? And I said, until you have to go out feet first. You think that would irritate them? Ah, I love hearing that. Really? Yeah. I remember one time. She's this gal. She was so funny. She says really I've been, I've been upset by, or surprised by landlord said tell me that. But it doesn't turn out to be the truth. And I said you got a pin? And she said, Well, yes, I need a pin. I said, so she went and got me a pin. And I said okay, I'm going to prick my finger with this pin. And I'm going to write and blood that and you can stay. No, no, no, no, no, you don't have to do that.

Aaron Norris  51:34  

Well, I just I love when we get a chance to talk about niches on the show and realizing people can bring you know their passion or find a really hyperlocal niche that nobody else wants or owns. I mean, this is definitely very nichey.

Ward Hanigan  51:47  

In my, in my experience Sean, is you don't have to be concerned about blabbing about it to everybody around you end of the day. Nobody, but nobody, but no, he does it. I have a class, and I teach people how to do this. You think that you know, after you paid me $900 you know, you'd go out and you do it. And I give you the manual all the forms. That's say call me anytime you do get stuck. This doesn't end here. You know, it's ends when you die, because I don't talk to dead people. But you know. And so, anyhow, it I have trained probably, I don't know, let's say two dozen people. Not one of them has yet done it. Hmm.

Aaron Norris  52:33  

Why do you think that is?

Ward Hanigan  52:35  

I think what it is, is someday, someday I'm going to do this someday, someday, someday. And they just put it off, put it off and put it off. They're actually a little bit embarrassed that when I see them then, oh, I know you're gonna ask me if I get started yet. But no, I have one gal that didn't bother taking my class. She heard about it because I was giving a talk out in Palm Desert. And we needed to about another 30 minutes to fill the time. And so, besides talking about the trustee, organizer of the club says 'hey, Ward watch, tell him about that crazy thing you got what do you call it doing something rather thing?' That's right. So, I did she was in the audience. her jaw dropped. Wow. So, then she, she had 1,000,001 questions and she was getting so excited and on and on. So, I said hey, you call my number anytime you want, and blah, blah, blah. And that so she never took the class, she attends the class over the phone. You know, it asked me all the questions and blah, blah, blah. And now that's 5 years ago, she's got 10, 10 absolutely amazing. And she was she called me up and her name is Julie, and she says this truly, you know, I don't think I ever thanked you. Because I'm doing my taxes. And I now notice that I am making about $4,000 a month, free and clear. All right off of my rentals. I got mortgage payments and net. But net, net, net. And I did that and I now see that I can retire and have a very, very solid income and you're right, nobody moves. Nobody's creating any aggravations on and on. And you, she, she just did it by of constant calling me and this and that. And I had fun. And you know, showing her. She uses. She buys different size properties, two bedrooms. Okay with her. I prophesized that she's, she's going to have a much higher vacancy rate than I do. And so, it's going to be working out to be probably, she has a vacancy probably every five years. And she's rents to younger people. Her heart goes out to wounded warriors type. And so, I said, well, you're going to find out that even though they're wounded, they got that mindset of a 28 year old. And so, a wanderlust and not being stuck in one spot all their life and you want to go and see the world, we want to do it in a wheelchair, or with, you know, an artificial leg or something. And so, she does have, but her eyes are open, she does have a much higher vacancy than I would tolerate. Okay. And it's a program called VASH. Veterans is V. It's a, it's a combination of VA, and a Section 8. Okay. And so, but she now knows she's forewarned. And first for me, and then, then through experience, that it's not as perfect as what I had.

Aaron Norris  56:06  

Well, 25 years, most people would be very happy with half that turn rate. So we we have run out of time, we've gone way over. And we, we didn't get, we have to have you back another time to talk about title, my brother went to your course I know a lot of people who've gone through your course, I am going to be going through your title course. As soon as we finally get to meet, I want to go through it in person. You were one of the most creative and well-off people in the business. I think they should name ADUs after you actually. So, Ding Bat ADUs, I like it. But you know what, if people want to get ahold of you, what's the best way for them to reach out to you?

Ward Hanigan  56:41  

The best way actually is call our office number at 619-283-5444. Or we still have our website up for the foreclosure game, though. I think it's over. And that is the www.foreclosureforum.com. There is a archive ton of articles I've written. And some of it can be germane today. Some not. I have handy little things like how to roach-proof your property? Absolutely guaranteed Roach proven to one time you don't have to do it again. And stuff like that. And so, yeah, or give us a call. I love phone calls. In fact, I'll do anything to generate more phone calls, because that's what keeps me on my toes and keeps me sharp. It's people asking me these questions. And it forces me to review that subject matter before it's gone stale.

Aaron Norris  57:46  

And if you go to the San Diego Creative Investors Association live, Ward is typically in the back at a table and more than willing to answer question which I've always appreciated. So, Ward, I will make sure to definitely post all that information on the website. And thanks! Thank you for listening to the Data Driven Real Estate Podcast, you can find show notes and links to some of the resources mentioned in the show at datadrivenrealestate.com. Click that join the community, and you'll be forwarded to the PropertyRadar community where you can ask questions about the current show and even see upcoming guests and ask questions there. We'd love to engage with you in the community. So check it out. Please don't forget to like, favorite, subscribe and share on your favorite platform where you're listening to the show. It helps us out a great deal. Thanks for listening, and we'll see you next week.

‍