We are going through a serious real estate crisis right now. There are rising interest rates and unpredictable market trends due to the pandemic. Thankfully, we’ve been through this in the past, and we just need to build grit at a challenging time like this. Navigate today’s market much easier by finding your real estate expertise and focusing on that.
Join Julie Houston and Gem Rinehart as they talk to the President of Integrity First Home Buyers, Eric Brewer. IFH comprises over 40 staff members and does nearly 350 deals per year. Learn more about his wholesaling and innovation business, as well as what happened to turnkeys. Furthermore, find out how Eric is balancing all of his real estate ventures, especially today when interest rates are at an all-time high.
We have our wonderful guest, Eric Brewer. How are you doing?
I’m doing good. Thanks for having me.
You’re new to our show. What we like to do with anybody who is new is introduce yourself to our audience, who you are, and what you’re doing.
My name is Eric Brewer. I’m a father of five, soon to be six.
Thank you. I’m happily married to my wife, Sonia. I was born and raised in Pennsylvania. That’s where I reside. I spent some time in the military, where I traveled for a little bit and returned home after being in the military. I spent a little bit of time in the car business and mortgage business before I got into real estate. I’ve been in real estate since 2016. Our operation is based out of Pennsylvania. We operate here and in Central Ohio markets. We do predominantly wholesale and turnkey. We have a portfolio of about 60 rentals. We do about 100-plus novations a year. I have about 50 employees. We buy and sell 300-ish properties a year.
To backtrack a little bit, you were from the car industry. What ended you up in real estate at all?
I love telling the story. When I got out of the military, my MOS in the military was 68 Lima, which was an avionics communications repair. I didn’t do a good job picking that MOS because when I got out, there was no civilian application for working on Chinook radios. I came back. I hung out for a little bit. I ended up in the car business because I applied for an ad in the newspaper. It said, “Lot porter.” I read the little fine print that says you drive cars around all day. I was like, “This seems like a pretty cool job.” It so happened that the dealership was a Mercedes and Toyota dealership, so I was like, “That would be cool to be able to drive this car.”
I went in and went to the job interview. I remember it like it was yesterday. The manager’s name was Mark Smalley. He came out. He was the service manager. There was a busy waiting area there for everybody that had their car in for service. He walks out, and he’s looking around. I had a double-breasted pinstripe suit on because all I had was my military uniform and some play clothes I wore to go out to the bars and hang out. It was the suit that I wore to the senior prom. He goes, “Eric?” I said, “Yes, sir,” and I stood up real quick. I was still fresh out of the military. He goes, “You wore a double-breasted suit to this interview?” I said, “Yes, sir.” He goes, “You’re hired.” That was it. He hired me on the spot.
It was a cool job. It was fun. I spent cool hours. I started at 7:00 AM, which is early for most people, but after doing PT and being in the military, it didn’t bother me. I got off at 3:00 in the afternoon. There were other jobs that opened up there, so I washed cars at night. I went from working from 7:00 AM to 3:00 PM or 7:00 AM to 4:00 PM, and then I would work in the detail department from about 4:00 PM or 5:00 PM to 10:00 PM and make overtime and a bunch of extra money. I was working 12 to 13-hour days.
I eventually caught the eye of the owner of the dealership back then. His name was Albert Diehl. He must have gone to someone in service. He goes, “Who’s this guy here? I see him from 10:00 PM to 7:00 AM, and I see him at 9:30 PM. What’s this guy’s deal?” The service manager, Mark Smalley, who hired me, goes, “He is a hardworking man. He is a young kid from the military.” He goes, “We need a new service manager. Do you ever think about interviewing him?”
They brought me in to interview me for a service manager job, which is like when you go in to take your card for service, this is the person that says, “Here’s what we suggest you have done maintenance-wise on your car. We checked your brakes. Your brakes are low. It’s going to cost $300 to fix that.” Now that I know what I know, it is a sales position. At the time, they call it service manager, but it’s really sales.
I took the job. I made pretty good money. It was $45,000 a year back in 1996. It was more than I made in the military. I got pretty good at it. I was out selling to other people. I was making $50,000 or almost $60,000 a year. The other service managers hate working weekends. I had no life and no kids, so I worked every weekend and made extra money.
Eventually, I caught the attention of the sales manager. He said, “This guy does a pretty good job back there. He always seems to be busy. Customers talk fondly of him.” He invited me to come and join the sales team. I was like, “I don’t want to do sales. I don’t know about all that stuff.” One day, I was like, “Screw it. You only live once. Let’s try it out.” I started on June 17th of that month. In fourteen days, I was salesman of the month. I sold more cars than anybody else and started on the seventeenth. I had no idea what I was doing. I had zero clue.
I talked to everybody that moved. If you were on the lot and made a sound, I would sprint to get to you. I didn’t know any different. I talked to everybody. It turns out it worked. I would talk to everybody and be nice. I didn’t know much about cars. I’m not very mechanically inclined. I would open it up and show it to them. They get excited, and I bring them inside and go, “What do you think? Do you want to buy it?” They’d go, “My payment’s affordable. I’ll do it.” I go, “Let me go get somebody that can get that for you.”
I sold a bunch of cars. Over time, I got better at it. I ended up closing my own deals. I was salesman of the month for so long. It might have been every month that I worked there. I then got promoted to Sales Manager, then General Sales Manager. I would be the guy that went and opened up new car lots as the dealership expanded. I was on a short list of people that would do it. I got a little bit burned out. I was about to have my first child. I said, “There’s no way I can be a good dad and a good car salesman.”
When was your first child born?
Camden, my son who turned nineteen, would’ve been October 19th, 2003. It was either right before he was born or right after. I knew I was working ridiculous hours. It was 6 days a week for 12 hours. I was working 75 to 80 hours a week. I knew there was no way I could be a good dad. I was burned out. Do you remember Y2K when everybody freaked out about the year 2000? Something happened. It was 9/11. The economy got rocky, and car sales slowed down a lot. It was a rough time in the car business, and I was done. I was like, “I can’t do this anymore.” I took some time off and did some soul-searching.
I talked to my dad, who I trust an awful lot, with life advice. He said, “What do you like to do?” I was like, “Car sales.” He goes, “It’s not cars. What is it?” I was like, “I’m good at sales.” He goes, “You can sell other stuff.” I was like, “Probably.” He goes, “Where do you get paid the most for what you sell?” I was like, “I don’t know.” It turns out it was houses. When you sell a $400,000 house, you make $12,000. I sell a $50,000 car, and I make $100. I said, “I should be in real estate.”
What gave me an advantage in my car sales experience was my knowledge of finance. It was the thing that our dealership did exceptionally well. We sold 300 to 500 cars a month. It’s a lot. We were good at helping people that had less-than-perfect credit. We were helping people that maybe had not a big down payment. We were helping people that maybe had a car to trade in that they owed more on it than it was worth, which is called negative equity. All of that became a finance challenge. You’d have to deal with fifteen different banks to find one that would take somebody with less than perfect credit and no money down and finance it for six years to get their payment down. Talk about finding a needle in a haystack. That’s another version of that.
I said, “If I’m going to get into real estate, I should start in finance.” I interviewed at a couple of different mortgage companies. Two of them made me an offer, and I accepted one at Comfort Home Mortgage back in ’04. I got some training. I was a cold-calling refi guy. I had a fair amount of success. I was closing 10 to 12 loans a month.
I was making more than I made in the car business. I did that for about 4 to 6 months and got a random phone call from the owner of the car dealership where I worked at. He said, “I’m selling the dealership. I’m 38 years old. I have a lot of money, and I’m bored. I heard a radio commercial about flipping houses. It’s a good idea. I’d like to see if you’d be interested in opening a real estate company with me.” I went and had lunch with him a few days later.
I would’ve walked through hell for that guy. He was my mentor in the car business. He taught me everything I knew. It didn’t matter if it was real estate, rocket ships, or cruise ships. I was going to do whatever he told me to do. Sure enough, we started a real estate business. We started making offers on houses. Here I am, many years later.
What about real estate did you fall in love with the most?
Nothing. As I’ve gotten older, what I cherish is the ability to build meaningful relationships with people and be able to see some type of measurable impact in both myself as a result of that relationship in them. It so happens real estate creates a bunch of those opportunities for me to do that. The actual transactional side of real estate drives me bananas, from appraisers to emotional buyers to lenders. It has provided an exceptional living for me. I’ve met some phenomenal friends.
Real Estate Crisis: Before 2008, nobody was using FHA financing because they didn’t have to. People could use non-conforming loans or 80/20 loans. This is part of what fueled the crash.
The thing that attracted me to real estate was my mentor told me that’s what we should be doing. Time flies. That was many years ago. I was busy doing deals. I was busy trying to go from 70 deals a year to 100 deals a year, from 100 to 200 deals a year, and from 200 to 400 deals a year. I’m scratching, clawing, fighting, and trying to remain profitable in this crazy real estate market we’re in now. People talk about interest rates, and that’s creating some headwinds for us.
Before this, we had to deal with a crazy real estate market with 100 offers on every property. Before that, it was COVID. We’ve had three years of very unusual circumstances that had a very negative impact on the conventional way of doing real estate, whether you’re a buy-and-hold investor, fix and flipper, wholesaler land developer, or apartment syndicator. Everything since 2020 has gotten, in its own different way, harder.
You have to get more creative.
Post-COVID, the easiest thing in the world to do was sell a house. If you had a deal, you could add it on Craigslist and have 37 offers. What people didn’t talk about is what got hard was buying a house. It got hard to get a deal because there were 1,000 more people fighting over a deal in 2020 than there were in 2018 or 2019. As soon as that started to cool off, the government raised interest rates. We’re now dealing with that. We’re actively knee-deep in a recession, whether the government wants to admit that or not. We’ve had massive rip-offs.
I agree with you 100%.
It’s hard out there. I’m in a couple of different mastermind groups that are comprised of about 400 different real estate investors. I don’t know the last time someone told me, “I am killing it right now.” Everybody’s on edge. They’re a little stressed out. It’s taken longer to sell a house. The cost of construction went up. The cost of borrowing money went up.
What are you doing at this time? What are you specializing in? What are you most focused on?
I pray a lot. That’s my strategy.
I made myself invest. I started investing several years ago, but in the last couple of years, I’ve been doing the owner-finance model. I do live in Texas. I’m in a non-judicial state, so it’s very easy. More than 80% or 85% of our buyers are from Mexico because I live in Texas. They don’t like to use the bank. They like to use cash. When I owner-finance it, most of these people meet me and give me a cash down payment.
This 2022, what I did when the economy was dropping, the interest rates were going up, and everything was out of control is I picked up a few rentals that I was able to get under the value of the home to have locally. I’ve been able to rent them. People are looking for rentals left and right out here. The cost of my rentals is affordable compared to them having a house. If they owner-finance one of our properties, we’re able to get them in and get them a note that they can manage.
I’ve lived through the 2008 housing crash. One of the things that come up often in these conversations for me is novations. You and I talked about that a little bit before we got started on our call. In 2008, I was selling a bunch of fix and flips. It was probably 75 to 100 that we were doing in 2008. We had a pretty significant business.
I remember for the 2 to 10 days following some of the announcements of these major corporations going out of business. I was getting phone calls from buyers, agents, and lenders going, “I’m sorry. Our deal is dead.” I’m like, “What do you mean? Do you have an appraisal issue?” He’s like, “No. The bank’s out of business.” I’m like, “What?” He’s like, “They sent out a mass email that every loan in the process is declined. The office is shut down. They laid off 65 employees.”
Prior to 2008, nobody that was offering to buy my flips was using FHA financing. You didn’t have to. You could get nonconforming loans for people with bad credit. You could get 80/20 loans. Part of what fueled the crash in 2008 was all these irresponsible loan programs that they had. There was some appraisal fraud. There was a lot of stuff that went wrong back then.
About Eric Brewer
Since 2006, as a real estate investor, Eric Brewer has done over 3000 residential real estate deals in Pennsylvania and Maryland. His experience covers purchase, renovation, direct to seller marketing, novations, turnkey rentals, property management and wholesale. Currently owner of Integrity First Home buyers, that does nearly 350 deals per year, and is comprised of 40+ staff members, including a COO and full executive leadership team. Eric believes in dedication to family and community. He and his team actively help provide annual donations and sponsorships for children, student athletes, local churches and those in need. His commitment to service started in 1994 when joining the United States Army in the Avionics Division. After serving, Eric got his start in business in the auto industry, working his way up from lot attendant to General Sales manager in a few short years. His greatest joy is his wife Sonia, daughters; Mya, Lily, Olivia, and Sophia ages 1- 7 years and their son, Camden. Camden is currently attending the prestigious Blue Ridge Academy where he has proven himself to be a leader, in the classroom and on the basketball court as well as football field. As an entrepreneur, Eric continues to grow his brand and share his knowledge and experience through motivational and educational speaking engagements.