Why Paying Over Asking Can Still Make Sense for Long-Term Real Estate Investors

Dean Pinhas (00:00)
Yeah, it’s a great question. I think the number one thing that I’ve mentioned from the beginning of the show is just find some way to start, right? Don’t sit on the sidelines. And some people, you could probably ask that question five different times and you’ll have someone say, You should wholesale or you should partner with somebody or you should

put a down payment and get roommates, right? and there’s so many different approaches to real estate. But you just gotta do something, right?

Scott Bursey (01:58)
Welcome back to the Real Estate Pros Podcast powered by Investor Fuel. I’m your host, Scott Bursey. Glad you’re with us. And today we have the pleasure of sitting down with a Real Estate Pro in the Los Angeles market, Dean Pinhas. Dean has built an incredible track record scaling residential and commercial deals while navigating shifting market cycles with absolute

Precision. Listeners, you can expect to learn today on operational leverage, deal structuring, and finding the winning edge in today’s climate. Dean, welcome to the show.

Dean Pinhas (02:33)
Thank you for having me.

Scott Bursey (02:34)
It’s awesome having you here, Dean. And to help our listeners get up to speed, please give us the ninety second highlight reel of how your career ignited and where you’re pouring your fuel now.

Dean Pinhas (02:45)
Great. so I have quite the interesting, I think, or maybe coincidental, introduction into real estate. my parents introduced to me from a young age the option to invest in real estate. And my parents had a couple rental homes when I was growing up, aside from their nine to five jobs. and then coincidentally I met my wife, and my wife’s parents and her whole family is integrated into the construction industry as well.

My mother in law works for a home builder, my father in law works for a cabinet maker, my sister in law works for another home remodeling company. and funny enough, my uncles, I have two uncles that work in home improvement in Los Angeles, and construction and real estate has been a big part of my life, as far as I can remember.

Scott Bursey (03:23)
That’s inspiring to hear how the pieces have come together for you. Thank you for giving us the inside look, Dean. what really caught my attention about you was the way that you’ve been able to systematically compete and be proactive in your local market while staying completely nimble on deal flow. Taking that a step further, curious to know what’s working best for your acquisition.

Team right now.

Dean Pinhas (03:50)
Yeah. So I think many people in real estate in general, you have the folks that take action very quickly and you have the people that wait on the sidelines because they think that there aren’t any good deals out there and you have to find things off market. And I think I’ve taken a very practical approach, my team and I, in seeing that I think the long-term value in real estate is the long-term value in real estate. And so we don’t necessarily look at

What is the best deal? How do we find something off market? Making sure that we pay only what something is exactly worth. and I’m really happy and proud of my team that we find a property that we like that we think has either good bones, is in a good part of town, any of the other criteria just make it a solid investment. And even if we have to offer over asking for it, we want to lock that property down, hold it for the long run. we’ll take a look later at.

refinancing, increasing cash flow, all of those other components of the deal. But most importantly, get that property because five, ten years from now, you’re gonna look back and go, I could have had that for 300K. I could have had that for 500, whatever it is. And you go, man, I was so stupid for not getting it when I could have.

Scott Bursey (04:53)
You’re definitely playing the long game, Dean. Is there a specific strategy that you’ll be doubling down on this quarter?

Dean Pinhas (05:00)
from a strategy perspective, I’ve focused primarily on investing in single family homes in good neighborhoods in the suburbs of Kansas, in the Overland Park, Prairie Village, Leewood area. if people are familiar with the Kansas market, they’ll know those cities. and really just looking at holding properties that are in good parts of town, where we can get strong tenants, we’re not gonna have to worry about

damage and turning over and things like that. but recently we’ve been looking at maybe even the possibility of doing some more custom builds and spec homes and maybe trying to build an equity into a property given my background in construction.

Scott Bursey (05:34)
And wondering what is the biggest operational challenge in your business today that you’re facing?

Dean Pinhas (05:40)
I think the biggest operational challenge is just the how far away we are, right? The vicinity to the actual properties. So we live in Los Angeles, all of the properties are in Kansas. we’re very fortunate to have an amazing Property Management Team, which is comprised of my family, my in-laws, they’re super generous with their time. my mother-in-law and father-in-law, they anything we need for checking out, if there’s a leak in a property or sitting in for a showing.

Whatever it is, they’re fantastic with that. And I’m so grateful. But the biggest challenge is not being able to have eyes and boots on the ground ourselves.

Scott Bursey (06:12)
Appreciate you sharing that. Help us understand, Dean, if you will, where are you seeing the best opportunity currently in the market, not only in Los Angeles but also in Kansas?

Dean Pinhas (07:10)
Yeah, so the biggest opportunity for us is I think somewhat unique because I can leverage my background in construction and my family’s presence in the industry. So while we’ve been holding essentially turnkey properties, I don’t like to take on a project with a rental. I like to just buy something that within 60, 90 days I can have someone in there. But right now we’ve had our interest peaked

with the potential of doing teardowns and spec homes and custom homes, either, with the opportunity for multiple exit strategies. So if interest rates go down and there’s an opportunity to build something and sell it and walk away with a quick gain, great. If not, we can do a larger scale Burr, which many people will be familiar with that strategy, and build it and own it and then just rent it out, refinance, pull some cash out, and continue on to the next deal. So I’m really excited for that opportunity.

to potentially start building some homes in Kansas. that’s what we’re looking at.

Scott Bursey (08:03)
And it got me thinking, what market shift are you most concerned about right now?

Dean Pinhas (08:08)
we’ve got some crazy interest rates, which I think we’ve kind of grown accustomed to over the last couple of years. at the beginning of COVID, everyone was enamored with these two and a half, three percent, three and a half percent rates. and now everyone is a little bit in shock from the six and a half, seven and a half. And many people who are sitting on the sidelines don’t realize that even with a seven percent interest rate today, for investors it’s not seven, right? For investors, that’s maybe more like seven and a half, seven and a quarter.

Because it’s not your primary residence and you’ve got debt to income ratios and all different kinds of things that dictate your interest rates may even be higher than what you’re hearing in the news. so in order to mitigate against those interest rates, we’re looking at the possibility of, raising rents, seeing how the market demand is shifting between buying and renting.

Scott Bursey (08:51)
Thanks for bringing that up. Risk management is what really separates the pros from the amateurs.

Dean Pinhas (08:57)
Yeah, absolutely. And I think we have done a very good job with trying to be aggressive, but not be too conservative. and in fact, one of the things that we did beginning of this year is refinance all of our properties from 15 year notes to 30 years. And it was because of that risk mitigation approach. My wife and I, we were pretty

Dedicated to the strategy of trying to aggressively pay down properties and own them outright as quickly as possible. And so we’d bought everything on 15-year notes. And we quickly realized that we went into it knowing that we would be subsidizing the properties, that the rents would not cover the mortgages. But once you get to a fifth house or a sixth house or a seventh house and that debt service becomes greater and greater, Now we have to shift our strategies.

Let’s refinance everything to 30 years, pull out some equity, or use the equity to pay down the notes and have a lower payment, have better cash flow, use the cash flow to pay for repairs, additional properties, whatever it might be. so it’s very important to have a strategy, but also to be nimble and make sure that you can flow with the market.

Scott Bursey (10:01)
Would love to know what is your primary growth target over the next 12 months?

Dean Pinhas (10:06)
Yeah, it’s a great question. I think it’s a constant fight in my head between do I create more security for myself and to pay down properties or maybe take some cash on hand and pay off whichever house has the highest interest rate or the lowest balance, or to be aggressive and say, Listen, we’re young. Now’s the time. Let’s use the extra cash on hand or cash flow to buy more properties and continue to expand.

so I think where we’re at now is my approach over the next twelve months is to try and get at least one or two more doors. And whether that’s a combination of a teardown and new build or just a turnkey property, I think it’ll just depend on what comes across my desk and what looks like a better deal. but my sights are more so on growth than on being conservative.

Scott Bursey (10:51)
And you touched on the tug and pole. What strategy are you planning to implement to make that target achievable over the long haul?

Dean Pinhas (10:59)
Yeah, so I think one of the things that we’ve been very deliberate with is to stick to our strategy. And I just mentioned how I’m wavering a little bit on the approach, right? and so I don’t want to give conflicting advice or to contradict myself, but I do think it’s important to stick to a strategy one way or the other. So one thing that I’m not looking to do is I don’t want to get into multifamily. I’m not really particularly interested in duplexes or triplexes.

there’s a lot of, a lot of news about Section 8 investing. And there are these big players that are selling courses and things like that. So you go, okay, how hard can it be to get some Section 8 houses? but I think right now the thing I’m most interested in is sticking to my play of single family homes, whether that’s turnkey or new builds, but staying within the single family home business. and the other thing that we’re super passionate about is our online presence, which is to teach homeowners how to own a home.

And that’s a passion project of my wife and I. if you follow us on social media, you’ll see a lot more related to educating homeowners on the systems of their home and how to maintain their home and how to not be taken advantage of by contractors and it’s very common nowadays for our generation to not be so familiar with, how do you fix an HVAC or how do you maintain your dryer correctly so it continues to dry effectively, those little things that make home ownership a little bit tricky.

And we want to instill some confidence there. And then we have our investing in the single family homes that we’re really passionate about as well.

Scott Bursey (12:18)
Thank you for that, Dean. Not only are you an investor, but you’re a builder.

what ability from building has parlayed into your investment career?

Dean Pinhas (13:10)
having knowledge of construction inherently I think makes you a more knowledgeable investor because I can see pictures of a home and it’s easy to see issues potentially in foundation, in framing, to recognize is this an issue with an HVAC that might be related to maintenance or does it need to be replaced?

Does the roof look old? Does it look bad? does this type of electrical panel is it riskier? Will it be harder to insure? All of those things. also I think gives me some insight into how easy it would be to make something turnkey if needed, right? Being able to put together the right contractors, subs, vendors, whatever it might be in the right order to be most effective with timeline, with pricing, to know if I’m being taken advantage of or not.

all of those things, they align really well with investing.

Scott Bursey (13:58)
You’ve spoken a little bit right there on your networking. And over the years, what has made the biggest impact for you when it comes to relationships and networking?

Dean Pinhas (14:09)
Yeah, I think the biggest benefit to networking that I’ve seen is connections with people that you may not realize you need to know for investing. So for example, I’ve got an amazing relationship with my lender at Fairway Mortgage, a guy named Matt Devine in Kansas. And when I realized, hey, I want to mitigate my risk and I want to put all my properties in LLCs, I knew to go to Matt, and Matt knew immediately to give me the correct real estate lawyer.

That would help me set up all these LLCs. Right. So for me, it’s less about the who can I meet that can be an investor, who can I meet that’ll bring me a good deal. It’s less those things that I think are where people immediately go to networking is how can I benefit from somebody? And it’s more so, well, I’m still benefiting from their knowledge, but from an indirect path, right? it’s how can I leverage their acquaintances and the people they know to protect myself, to set myself up for success, to do all those other things that I just mentioned.

Scott Bursey (15:02)
Appreciate you taking us down that path. Dean, taking a closer look. If you had to rebuild your real estate business from scratch with let’s say only fifty thousand dollars, what steps would you take to start the process?

Dean Pinhas (15:16)
Yeah, it’s a great question. I think the number one thing that I’ve mentioned from the beginning of the show is just find some way to start, right? Don’t sit on the sidelines. And some people, you could probably ask that question five different times and you’ll have someone say, You should wholesale or you should partner with somebody or you should

put a down payment and get roommates, right? and there’s so many different approaches to real estate. But you just gotta do something, right? And so if it were me and it was the 50,000, if I was single, I would probably do that. I’d probably buy a home, get roommates, have them help me pay down the mortgage. Me today, and I’m not really interested in going down that path. I’m married, I’ve got two kids, I might say buy a property in a market like

Kansas City, right? In Kansas City, you can buy homes north of the river for 80K, 90K, and with $50,000, you can put down a hefty down payment. You can do some small renovations. And before you know it, you could have a two bed, one bath property that you’re renting out, right? So the beauty with real estate is depending on your strategy and your approach, it’s a very small barrier for entry, is the reality, right? So you just have to take action.

Scott Bursey (16:20)
That is excellent insight right there. Be productive. And Dean, you have given us a tremendous amount of insight here today. But is there any additional golden nugget or two that you like to leave with our listeners?

Dean Pinhas (16:35)
I found two things to be important, which you and I spoke about off camera one, establish a strategy and stick to it. the most successful people in all industries you’ll find they do one thing really well.

there’s obviously diversification, which is important in the bigger picture. But in business, when you can narrow your sights onto a strategy, a product, whatever it might be, you’re gonna have, I think, a better chance for success. And then specifically with real estate, I would say screen your tenants. I think those are the two nuggets that I would leave people with. Tenant screening is probably the most important thing besides buying the property, is making sure you have the right person in there.

Scott Bursey (17:10)
Appreciate that, Dean. And for those of our listeners that want to keep this conversation moving, stay in your lane, or perhaps collaborate with you on future deals, what is the best way for them to plug into your pipeline and reach you directly?

Dean Pinhas (17:24)
Yeah, so the best way is on all social media platforms. I believe my handle is at Home Build Dean, which is a pun on home building. and so at Home Build Dean on Instagram in particular, homebuilddean.com, we’ve got a great website there where you can see both my remodeling work and you can also see a lot of our content related to home ownership and how to be a good homeowner and view home ownership as a small business and how important it is to invest in your home and to treat it as such.

Scott Bursey (17:50)
Dean thank you so much for joining us today on the Real Estate Pros podcast.

Dean Pinhas (17:54)
My pleasure. Thanks for having me.

Scott Bursey (17:55)
Absolutely. This has been a pleasure. And to our listeners, we appreciate you. If you received value from today’s episode, please subscribe. We’ll be filling your tanks with a lineup of Elite Guest, just like Dean, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.