The Rohny Award is given at our live I Survived Real Estate events to a real estate educator or mentor that has impacted the real estate investment market and many careers along the way. To receive this award not only means that you are a great mentor, but it also means that you are of the greatest integrity possible.
Ward Hanigan or Uncle Ward as he is known to many in the real estate world, is a full-time foreclosure specialist and trainer in San Diego County. He brings you over 37 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.
Episode Notes:
Narrator This is The Norris Group’s real estate investor radio show the award-winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever -changing real estate market hosted by author, investor and hard money lender, Bruce Norris.
Joey Romero Welcome back again. Hope you enjoy part two of our interview with Uncle Ward, Ward Hanigan. Here’s Bruce.
Bruce Norris The award that we created, the Rohny award.
Ward Hanigan Right.
Bruce Norris You have that because of your reputation in a business that, you know, most people look at trustee sales and go oh, yeah, that’s a that’s a whole different level of nastiness or something. But you know, go know, the man that teaches that’s really rock solid. So anyway, that’s, uh, it’s pretty cool. No, you got to speak for the first time for Kurt is that the first time you were in front of an audience?
Ward Hanigan I ended up but what happened was Greg Metcalf decided, when I told them to quit the title company. He said he, one needed to do something I said during the foreclosure notice serves, it’s, you know, how to search a title to, to foreclosures or any property. And so why don’t you go in business and do that. And the company that you got county records research, put them out of business, I didn’t know Kurt at the time. And because they didn’t sell their service in San Diego market at that time. So, I said, you know, what you, what you need to do is you got to build a business that you then can sell for a profit. And that gives you the cash that your dad doesn’t have. His dad would not sell those two fantastic deals he bought.
Bruce Norris Oh.
Ward Hanigan Okay. And so this is an I even went up there, up there to talk with Greg’s mom called me up and asked me if I would come up and talk to her husband, that’s Greg’s father convinced them with that, to sell or borrow against these properties, because he owned them free and clear. And I call them up and try to explain that the comparator would be and he just was dirt. You know, he just no way. And so anyway, so I said, Well, we’re gonna do the next best thing, Greg, why don’t you just start a company. And that would be a foreclosure notice, sir, company. That’d be fantastic. No more training on your part, you know exactly how to do it, et cetera, et cetera. So, he and I conspired, for that first year, we would talk every day or every other day about different things he could do. And so if the, if there were mistakes made, and it was in the public record, that didn’t, Kurt would not because he was relying on Title Company info, which is not as perfect is going down to the recorders. But Greg would know, as I said, Greg, why don’t you go to the sale and a lot of people show up for the wrong reason for foreclosure. Just say, ‘Hey, anybody who’s a subscriber for county records research, please come over here. I’ve got information they don’t have concerning this deal that you all think is great,’ because it’s more liens against it, that what county records research found.
Bruce Norris Okay.
Ward Hanigan Let me prove it to you. And wow, he got subscribers and so he started proselytizing for, for subscribers by going down to the sales, which is something that Kurt didn’t do, Kurt relied on newspaper advertising.
Bruce Norris Okay. Right.
Ward Hanigan And so, because, and then I, I started this thing called Help Saturday. So, every, every five weeks, I would go up to Orange County every four weeks. And as I said, ‘Why don’t you find me, Greg, I placed the week and speak to your subscribers because he’d had who’s working out of his home and stuff like that. So, my wife’s a bowler as you know, and so I knew there were meeting rooms in bowling alleys and bowling alleys have big parking lots and they don’t charge for parking. And all that stuff was fantastic as Orange County the hotels charge for parking and, and you can have the bowling alley. That community room was virtually unused most the time, especially quite a narrow town. But you got to have an meeting on Saturday, and that you’re going to have 100 people show up that means you can have the restaurants going to be overpacked. You know they’re gonna be making all kinds of money even if these people aren’t bowlers. You know, it’s a turned out to be fantastic. We started out doing it for four hours of 10 to 2 on a Saturday. Pretty soon I was doing it from 8 to like 4 up there because so many people popped up, Kurt loved it. I mean, not Kurt, but Greg loved it because you couldn’t get in to come in hear Ward Hannigan talk about foreclosures, unless you’re a paid up subscriber. So, you get all those subscribers paid up, you know.
Bruce Norris Very nice.
Ward Hanigan People brag about, ‘Oh, this guy knows what he’s talking about.’ And so they put down and they’d have to sell, they would have to sign up in order to get in if they weren’t a subscriber.
Bruce Norris So, you guys, let me just make sure I understand those were not the investors that were putting up money for for him. They were potential competitors for him.
Ward Hanigan Right. Yes. Yeah. And so yeah, that didn’t faze us. We knew that foreclosure notice services sign you up on purpose. He signed you up in those days, that robot now to two months because they knew that you would you would peter out. First two weeks. Okay. And so they wanted to have you at least two months. And it was a non refundable type thing. And so yeah, that’s what was going on in there. So, most of the people just could not keep up with the foot getting into foreclosures is a full time activity. And I didn’t realize that until I had to focus on it 100%. Yeah.
Bruce Norris You’ve trained, you’ve trained a lot of very successful people. And you have, you’ve had an event, you had an event for years where they got together once a year. So, tell me about those events.
Ward Hanigan Yeah, those events were kinda like yours. We had grads, if they took any class that I taught the first I said, if you take any foreclosure class, then do the one hell am I arbitrary saying, You know, who cares if they took trust class, or if they took a foreclosure class from me or whatever kind of class? Come on, you’re part of the family. And so, we finally standardized it was on the last, last Saturday of February, every single year. So, did you put it on your calendar, and we Eric and I chose February because it proved to be the one month of the year that had the least amount of outside activity going on. Nobody’s taking vacations in February. And there’s no high school graduations. And there’s no this sadder than the other thing, so yeah.
Bruce Norris How many? How many people came usually a year?
Ward Hanigan 120, between 120, maybe 140 people.
Bruce Norris That’s very cool.
Ward Hanigan That was great. I know. And I just loved it. Because then what we did at the reunion is I would focus on, like a couple of levels deep on some aspects of the foreclosure business. And then it was up to set the last thing before we disbanded on that, that they are union would say, ‘Okay, let’s have some ideas of what you want our speakers to be. So’ I ended up having two speakers instead of just Ward Hanigan, you know, it was board and then in the morning, we would have somebody like Mike Cantu or somebody like that, or an attorney, or an auctioneer, actual auctioneer, give a talk about the business, the foreclosure business from the auctioneers point of view. And, or doing selling property to get the highest price. And we’d have people come and talk about what do you call it? Where they used to furnish it and you’ve decorated? The, the houses you’re selling?
Bruce Norris Staging? Yeah.
Ward Hanigan What?
Bruce Norris Staging, you’re just gonna stage the house?
Ward Hanigan Staging. Yes, I’m sorry, staging. And so we had people that did that as a full time business, staging, and how much to stage and on and on, and you only had to do one bedroom at all of them, you know, stuff like that. And so, yeah, so we had, I had an outside speaker, and then myself in the afternoon, which we talked about some deeper aspects of foreclosure, and some war stories and blah, blah, blah.
Bruce Norris How’s uh, let’s talk about your your dingbat rental program is that, it’s, I think, that’s still active in your portfolio, that…
Ward Hanigan You know, because I always like to have these things, when I suggest something, I never suggest anything to anybody, unless I’ve actually done it myself.
Bruce Norris Absolutely.
Ward Hanigan Okay. And because I, you know, I can recover from the mistake Whoa, whoa, whoa, I didn’t think about this or look at that. Oh, man. So, anyways, yeah, we the…
Bruce Norris When did you, when did you land on the dingbat rental is being the best inventory to have?
Ward Hanigan It was slow because it had happened by, you know, just from curiosity. I was trading somebody wanted me to do an exchange, a guy that own property in Orange County had four or five houses. And I had like four or five houses or something like that. So, we was thinking of exchanging. And I said, ‘Sure,’ but he wanted me to take some stupid property he had in San Diego, also, which was a tiny little house National City, a one bedroom, one bath house, and I didn’t want it. You know, you got guys like Schaub? What’s his name?
Bruce Norris Yeah. John Schaub.
Ward Hanigan Yeah. So, it’s saying you need a three bedroom, two bath, you know, two car garage, backyard, blah, blah, blah, in a nice neighborhood, all that stuff. And so, you know, that’s made sense to me. So, why would a hell I want a tiny little one bedroom, one bath house at six years old, that has been ignored and neglected for most of that time, and has no yard, no garage, blah, blah, blah, you know? And so find these guys said, it’s either you take this stupid house, or I’ll find somebody else who will call you okay. So, I took that in on a trade. And I turned it over to Eric. And I swear, I just totally forgot about it for about easy, about two years. And I asked one day, I said, Eric, what the hell did they ever do with it? No, it was this tiny little house and this old lady in it. And Where the hell was it done and nasty city I think, blah, blah, blah. What are we doing with it? How much should we get? Well, we still had a dad. And I said, Wow, he was having a lot of vacancies on that tiny piece of shit is enough back the lady that was in it is still there? Uh huh. And I drove down to look at it. And I got my curiosity. And I’m like, how the hell does that happen? Because I had experienced one time owning an apartment house, two storey apartment house. And they were all one bedroom, one bath apartments. And I had 100% turnover. No matter what I did, a thorough I qualify people had 100% turnover because it was just a transient abode, you know, people coming into town and not knowing the town well, and so not wanting to buy and so they know, the better neighborhoods, you know, the streets and traffic patterns and all that kind of stuff. And so, I had about 100% turnover. And it almost all one bedroom, one bath apartments that I, that I had, and I used to manage a lot of apartments for people, because that was another objection, the way I would get over. So, listen, if I manage it for you, okay, for you then buy this property to go. Yeah, we’re great.
Bruce Norris Okay.
Ward Hanigan So, then I would manage. And so I had a lot of management, 10 years of management experience, and…
Bruce Norris The one bedroom house rented differently, and more recently…
Ward Hanigan Absolutely…
Bruce Norris …forever.
Ward Hanigan Well, you have to be unique in two things. Number one is it’s got to be a one bedroom, not a two bedroom, or anything else, can’t be a studio. So, it’s a one bedroom, one bath. And it’s got to be a senior retiree who’s on Section Eight.
Bruce Norris Right.
Ward Hanigan Those two critical things. And so, you got people all the time that will say, Oh, what’s a Duplex, is is better or have two one bedrooms for one on each end and all that kind of stuff? No. And if you don’t want multi member families because they grow up and split up and every time there’s a split up or adjoining you, there’s a difference in your bedroom requirements. And so now they’re really they’re moving. So, I’ve finally discovered that’s got to be a one bedroom, one bath, dedicated, single family house cannot be two stories. It’s got to be in a residential neighborhood can’t be out in the boonies. And just on and on and on. I don’t know if you know, I built one.
Bruce Norris I did…
Ward Hanigan Oh, turned out to be bad. Yeah.
Bruce Norris Now you also have an interest in hearing garages these days.
Ward Hanigan What?
Bruce Norris Garages? Are you…
Ward Hanigan Yeah, but yeah, I rent garages and they love a property. I’ll pay more for property if the garage faces an alley, or faces the street so people don’t have to walk through to get access to this storage. And I mean, that night got that information out of our built to self storage facility in Mesa, Arizona. We had that for 12 years, operating that. And I finally saw that 2020. And so we started out with about 3 million and I had one, and got a loan from the Bank of Arizona or some damn thing in Arizona. And so we bought the land, built our own 776 units. We’re going to operate it for four or five years, and then sell it exchange into something bigger, and stuff like that. And the market at the time, just, was not apropos to doing that we were in three years or four years, whatever. So, finally, Eric, was one of my investors. And, are you still with me?
Bruce Norris Wow. Yeah, I’m here. I’m listening to you.
Ward Hanigan I don’t see you anymore for some reason.
Bruce Norris Oh, I didn’t
Ward Hanigan Can you hear me?
Bruce Norris I can hear you fine.
Ward Hanigan Oh, you came back.
Bruce Norris Yeah.
Ward Hanigan I lost the view that came back.
Bruce Norris Okay.
Ward Hanigan So, anyways, we had ah, what was it? What was I at?
Bruce Norris The big project that you have 700 houses?
Ward Hanigan Oh, 776 storage units. Yeah. So, we bought a land, and I bought the land. It wasn’t zoned for storage. But it was on two commercial streets, the intersection of two commercial streets, then Mason, I thought it won’t be difficult to get that just to be sure. I made sure that I bought it cheap enough that if I couldn’t get the zoning, I could turn around and ship it for a profit.
Bruce Norris Okay.
Ward Hanigan So, it turned out we got the zoning and…
Bruce Norris Are you converting, are you converting garages in San Diego? Somehow?
Ward Hanigan For ADUs?
Bruce Norris Yeah.
Ward Hanigan Yeah, I would. What my idea is, and I’m probably will do it. In just a neighborhood down here. You notice all the crappy areas have crappy neigh, crappy neighborhood names.
Bruce Norris Okay. Yes.
Ward Hanigan This, I call it C neighborhood stands for crappy.
Bruce Norris Okay.
Ward Hanigan And so the, it’s called the Shelton. Shelton, how would you like quitting shelter. But anyways, 8 years ago, 1940 was when I was born, they zoned, the way property used to be sold, right was not in projects, housing projects came up with Levittown after World War Two.
Bruce Norris Okay.
Ward Hanigan So, 47, 48, something like that back and I think it was New Jersey. So, before that the way properties were built was some guy would go out and aggregate the land, get an engineer to divide it up into parcels, to set asides for streets and alleys, and, you know, sidewalks and all that stuff, and see what the yield is. And then they would have, you know, a weekend, open house, perpetual open house there and guys, salesmen that inhabiting a, you know, a onsite motorhome office, selling the lots. And so, that’s what they did down here. With that property, the property wasn’t that great back then. And so in order to encourage the success of people coming out and buying, they sold oversized lots, it was like a shoe box shape. And so but long enough or deep enough to where they build a house, that face the street, and then in the back, you build another house, sometime you can afford it, that face the alley.
Bruce Norris Okay.
Ward Hanigan And so right now, if you drive out in that area, down the alleys, you’ll see that it’s pretty well then fleshed out, but there’s enough houses or properties that nobody ever did bother building in the back end.
Bruce Norris Okay.
Ward Hanigan I bought a foreclosure two bedroom, one bath house about, I don’t know 18 years ago or something down there, and never did anything about improving it beyond the original two bedroom, one bath house, that’s there. And finally I decided to put a unit in the back. I didn’t have to pay for the land because I already owned the property. So, cost me 150,000 out of pocket to build a one bedroom one bath ADU. And it turned out so great. And Eric and I collaborated on putting touches in it that would make it much easier for a senior to live in it. So, no steps, every doorway, at least 36 inches or wider. A, you don’t get to the bathroom by going through the occupants bedroom, you know, it’s got an entrance from the main area not going through that I still can’t stand that configuration of going through a bedroom to get to the bathroom, and it cetera, et cetera, all the little touches that I liked, and sharp corners are made radius. And, and there’s two, there’s a, there’s an entry and an exit, you know, in case there’s a fire here, you can get out there instead of trying to climb through a window, all that kind of crap. And so that lady then moved in, she’s a little bit ditzy. And so, even though she’s in her 50s, she, she’s not employable, but she can handle her own affairs and live alone. And I’m and I’m very successful. So it should be there for according my statistics, at least, at least a minimum, about 30 to 35 years, as 30, 35 years uninterrupted, rental cascade coming. Okay.
Bruce Norris The hell of a business model.
Ward Hanigan And I have 28 of those styles. And they will never, they have the same mindset the owner has, the owner does not want anybody that move out. Because every time you ever move out, you got all the costs of vacancy. You got to put new carpet you got a page gives you this, that and the other thing, we don’t, we strip it of everything. If we buy it, rather than building it, we strip it of anything that’s going to be unnecessary. So, we don’t, they don’t provide a dishwasher or one per, one bedroom. A one man, a one member family doesn’t eat enough to have a dishwasher.
Bruce Norris Okay.
Ward Hanigan Don’t need a garbage disposal. They buy their own refrigerator. What else? The compact with what microwave, they get their own microwave, all that we take out all carpet. Okay, so we have no carpet. So, now we have very, very little maintenance calls zero just about once in a great while in the desert is where I have some of my units. The air conditioner might need some repair or something like that. But, you know, that’s about the only problem we get. We’re not replacing even water heaters. We do inline water heating, instead of putting in a new water heater. Because I want, I want to be able to have properties by far this property is Sacramento. I tried buying three units three on one in Anchorage, Alaska, if it didn’t go through, because, you know, we couldn’t get to agreement on money or otherwise, I could care less if it’s in Anchorage, Alaska.
Bruce Norris That’s funny.
Ward Hanigan Alright, so sometimes when you want more grist for the fire upon we have an asinine idea of going out in neighborhoods and putting more and more ADUs up without buying the land.
Bruce Norris Let’s, let’s talk about it right now.
Ward Hanigan Okay, so I traveled up and I enjoy putting up this ADU or, or my Ding Bat so much that I was driving up and down the alley, the park on a driveway that I made accessible from the alley while the construction was going on in this house. And then I started walking down the alleys and start noting that hey, even though 80 years had passed, and you’d think that just about every parcel would have two houses, one on the front, one on the back end, there were enough of them that didn’t go ahead and put one on the back end. So, I wanted to be great, I got a pile of cash. You know, it’s gathering dust balls or something. And so why don’t I put down and somehow someway convinced this property owner not to sell me his property, but let me build without a penny out of his pocket, an ADU unit on the back end, just like I built by the way, I got to demonstrate it. Right. I have a model
Bruce Norris Right.
Ward Hanigan Got to deal with a gal that rents for me that with less than 24 hour notice she’ll let me bring someone by and show them the inside and I give her $50 spiff because she likes getting the extra 50. Now, I got an actual real world model of what I want to put on the back end of this guy’s property and without asking for penny. What I want is I said, I want to make sure because I’m going to put 150,000 bucks that I don’t want to cut short. So, I need to get the rent off of that unit to pay me back would cost me to put it up plus my profit. So, I want a 25 year forgiveness loan. Okay, I’m doing like municipalities do and they want cops to move in, you know, sketchy neighborhoods or school teachers and this and that is a the down payment that they stay there 10 years, they forgive the down payment loan, while I’m doing that same sort of thing. But if you let me put this unit up out of my own pocket, and let me manage it, and let me make any, and all repairs, and etc, etc, for 25 years, at the end of 25 years, I’m going to give you the reconveyance.
Bruce Norris Wow.
Ward Hanigan It’s yours. And so I was just ready just to begin doing that, I found out that, at least temporarily, I was making so much more money in the stock market. I mean, I took sale proceeds from Arizona to self storage facility that took 3 million of that and put it in the market. And then so I added to some of the tests of stock I was buying and about about 10 stocks. But anyways, in that year made over a million. And I know that’s stupid is that I’m not the brightest guy in the world. And then I had to pay really laugh at this. I, I was going to get around to making sure I could pay my taxes on that. Right. So tax bill comes due in last year 2021, no, this year. Yeah. And so I had to pay, you know, 2.6 million. So and, and I had it in stock. I just didn’t I didn’t want to sell my bitcoin, which went up incredibly. And I didn’t want to sell fast. So, I’m sitting here thinking, shit, where to hell can I get a loan, I got something of value, generates income. Mm hmm. Maybe I can get a loan instead of on my properties, leaving it alone on stock. Because I got what happens with Tesla bought 2000 shares and went through unbelievable. I went through this five for one stock split. So, now I got 10,000. And so I called up Schaub brokers said, hey, you know, don’t you guys make loans on stock, you know, is secured to hell yes. And these crazy thinking me alone, less than 2% and 2.6 million. So, I pay my taxes with that.
Bruce Norris Okay.
Ward Hanigan That’s, so now I’m trying to figure out how to live off of loans instead of income. And so not pay any tax.
Bruce Norris There you go.
Ward Hanigan Interest. And that’s what…
Bruce Norris Alright, my friend, I have enjoyed catching up with you.
Ward Hanigan Alright, so I’m going to protect this thing about and I’ve got it just about done. I’ve got the forgiveness loan, and the promissory the paperwork necessary for me and them to sign. And if you have anybody that wants an idea, you know, yeah, a little niche that they could probably do in Florida or anywhere else where that…
Bruce Norris Got that all right. Yeah, Florida has its share of older people, that’s for sure.
Ward Hanigan Yeah.
Bruce Norris All right Ward. Have yourself a great holiday.
Ward Hanigan Thanks for calling me.
Narrator For more information on hard money, loans and upcoming events with The Norris Group, check out thenorrisgroup.com. For information on passive investing with trust deeds, visit tngtrustdeeds.com.
Aaron Norris The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669. For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.