Do you ever listen to this podcast or others and feel like the host or guest is throwing around all these technical terms and jargon and really wish they would just slow down and explain things in a step-by-step process that's easily understandable?
I understand that everyone who listens to this show is in a very different place in their investing journey, and I recognize that sometimes we can get a little bit overly technical or complex in certain episodes.
So I've decided that I'm going to deliver a live masterclass specifically for beginners who want a simplified step-by-step process for buying their first really high cash-flowing short-term rental investment.
There isn't gonna be a bunch of complicated terminology and formulas to sort through, just a down-to-earth process breaking down, you know, if I were gonna start over today, if I was gonna buy my first rental property today, here are the basic steps that I would use to do things like identify the perfect place to invest, what types of properties to target, the basics of running your numbers, and how to set up a simple system to manage your property and ensure it continues to be a great income producer for you
years to come.This is a brand new masterclass that, as I said, is going to be live, so if this sounds appealing to you, you can join me for this free session.It's gonna be on October 17th at 3 p.m.
Central Time, and you can reserve a free spot at airbnbwithkirby.com.So again, that's airbnbwith, my first name, Kirby, K-I-R-B-Y, .com.So airbnbwithkirby.com.Now back to the show.Tommy, welcome to Living Off Rentals.
Thanks for having me, man.I really appreciate it.
Yeah, I'm really excited to hear about your amazing story today.You went from a home inspector to an incredibly successful home investor with over 85 doors and are consistently doing 15 to 20 deals a month.
really relatively short period of time compared to what a lot of people take.So, you know, I'm excited to hear about this.Tom's in the Columbus market, Columbus, Ohio market, and he's been featured in Business Insider twice.
So I just want to jump right in.You know, I'm really curious what made you take the leap from home inspector to home investor?
Yeah, it's a it's a funny story, and it's not how many people think it was actually a bad story. I became a home inspector.I'm one of five kids.My dad has always been a home inspector.
We also did a little bit of property preservation from about 2007 to 2015.I grew up in the business.I'm the oldest boy, so I was always his guinea pig, his muscle.I'd go help and mow lawns and do all that stuff.
I graduated college in 2017 and started doing home inspections and started to learn.I really didn't know much about that side.
I grew up really in the property preservation side because it doesn't take not that much smarts to clean a house out and board it up and things like that.
But just learn that stuff from the ground up and then started doing draw inspections for investors.
So somebody who is getting a hard money loan would have an inspector come out, we would look at the property, we do an initial, and then we come out in phases, I was seeing their scopes, I was seeing how much they were making.
And I was like, you know what, this looks pretty cool.And it brought me back to a conversation I had with my uncle right before I graduated college.My mom's brother, he lives in Chicago.And he goes, Tom, do you want to invest in real estate with me?
But he wanted me to move to Chicago.And I said, no, I'm going to go work with my dad.It's always been my plan.And really didn't think anything of it.
So then once I started to see that, I was like, oh, let's go back to this conversation of maybe there is something there.And I still knew nothing about it.
And he put me on to bigger pockets, rich dad, poor dad, all of those things, talking about assets.And because a home inspection business is very, I call it hamster wheelie.
You wake up every day, you go to work, you punch in the clock, you can make good money. But if you don't do it the next day, you're not making that money.So I fell in love with the idea of just passive residual income.
Now, I always throw these in here because sometimes it can't be passive, sometimes it can be, but worthwhile nonetheless.
Yeah.Yeah.And so, um, I guess a lot of people probably have thought about real estate investing, but don't actually take the leap.
How did you do that first one and actually move forward with, especially being right out of college and probably not having a huge amount of savings.
Yeah, I didn't have much money, really at all.I was living in my parents' basement.I was helping my dad build his business.About six months after that, I had a conversation with my uncle.I said, hey, do you want to invest in real estate?
We started off wanting to flip.So my story and what we still do to this day is I wholesale, I have a flipping company, and I hold rentals.I vertically integrate.I also manage them in-house.So I came to my uncle.He goes, okay, find a deal.
I'll finance it.You manage it.And let's split it 50-50. It's like, great.So I was meeting contractors during these draw inspections and one of those contractors like, Hey, I know this property is coming to auction.
If you get the property, can I do the work?So we ended up buying this 4,000 square foot, six bed, five bath.Um, I call it a mini mansion in a, a class downtown area of Columbus, a hundred years old.
I mean, I'm telling you everything now, but to plaster a hundred years old tons.I mean, and then we had to go high end. Long story short on that, we took double the amount of time, doubled our budget, overestimated our ARV.
And at the end of the day, we walked away with about $100,000 lost on that.So now at the time, I didn't have any money, but I told my uncle over time, we'd figure it out.But huge learning lessons on those.
And it really changed my entire perspective on business life and how easy and how hard it's going to be to really get in the game if you don't have the right guidance.
Yeah, yeah, I have a few of those stories myself.I mean, most people, I think, losing $100,000 on their first deal, they're like, I'm out, I'm gonna go back and just grind it out and try to pay off this $100,000.I mean, where'd you go from there?
Obviously, like you mentioned, I think having those lessons learned, people underestimate that.They're like, well, I lost $100,000.Yeah, but you gained some massive perspective that has made you a lot more successful going forward.
So what'd you do from there?
Yeah, so at that time, a lot of things were happening.I was still learning about investing every day.I was driving around and being a home inspector, 12-14 hour days, learning.Bigger Pockets was always on my radio.
So I kept learning and kept figuring it out.And wholesaling kept coming up.So wholesale, wholesale, wholesale, you don't have much money.So I moved back in with my parents. started to actually take action wholesaling.
So handwritten letters, sent out some postcards, and I ended up getting I spent my last $800 on a set of postcards.It was probably about 1000 postcards and got three phone calls from it.One of them I ended up putting in contract for $54,000.
Then I tried to go sell it.At the time, there was a Columbus meetup called Columbus Dealmaker Session where you could go and you could present deals and people would be in the crowd and they would go and buy them.I had pamphlets.I had everything.
I had my inspection.I had it all laid out.I thought it was a great deal. And nobody wanted it.I was like, well, I just spent all my money.I don't have my back against the wall.I have nothing now.
Let's do what everybody says on this podcast is like, figure it out.So I called everybody in my phone, and one of my mom's friends ended up financing that deal for me.So she put up the 54,000 plus another 15,000 in rehab, I did most of the work.
I flipped that house.I sold it for 130.About four months later, we made 50 grand.I cut her a 90 grand check back.It was so crazy because I'm assuming a lot of your listeners and you yourself obviously are an investor.
The way that she lent me private money was insane.It was literally a handwritten check to my name from her personal account to my personal account.No notes, no mortgages, nothing.Just a pure handshake deal.
And she made a great, great profit on the investment.And that to me was like, Oh my god, this is real.I was just doing it wrong from the beginning, I gotta I gotta go after these base hit, or the smaller houses that are easier to handle.
And that's kind of how I built my business model.
got it yeah a couple of key points i think in there you know people always i think over complicate private money you know and they don't understand like it's a huge spectrum like people say private money and one thing typically comes to somebody's mind based on what they've heard about private money but
I have so many of those relationship type lending deals where it's somebody, obviously you've earned that, like she trusted you for some reason and she figured you'd pay her back and so that's why she was willing to do that.
And a lot of those are out there.It's just like a relative or a friend or somebody that isn't a trained real estate investor and it's more of a relationship based loan.
And so those are great to have, and after you gave her 90,000 back, I'm guessing she probably was like, let's do this again, right?
She never loaned again to this day.She never loaned again?Her life changed.Her and her husband moved down to Florida.Oh, okay.But yeah, like you said, family friend, and I tell people that as they're trying to raise capital.
It's like, the first deal is going to be based off of you.You could be the worst investor.It's going to be somebody that likes, knows, and trusts you. your ethics, your morals and your background.So that she just saw me grow up.
She saw that I was my mom would always tell her how she was a realtor for 30 years, too.So she knew real estate and she knew that it was a good deal, too.So she she was like, OK, go ahead.Go figure it out.
Yeah, that's awesome.That's awesome. Cool.Yeah.I've several of those.And usually the first question they ask is how quickly can you do it again for me?Cause I, you know, I love that rate of return and let's keep it, let's keep it rolling.
So from there, then now you've had some success.What did you see?Did you primarily then focus on more flips or more wholesales or how, what was the growth path from there?
Yeah, so wholesaling really started to take off from there.I started wholesaling more, and then I ended up finding my business partner.
But in that beginning phase, I took that 25 grand I made, and I basically just followed the entire bigger pockets blueprint.They're like, okay, if you're young, you don't have a wife, kids, family, whatever, go house hack.
So I used that money, did an FHA loan on a duplex, I lived in my living room, rented out all three of my bedrooms, rented the other side out, with cash flow of $400 or $500 a month on my primary.
That allowed me to save money to then pump into my wholesaling and marketing engine that I was starting to build.Then I met my business partner right around that same time.
I probably stumbled my way through four or five more deals, and he was in the same spot.I was doing a home inspection for a hard money company.It all kind of goes like this together at the end. he was buying something through a hard money company.
I was the inspector, the person that was selling the house who actually refereed officiated my wedding now six years, seven years later, he was 20 minutes late hungover.So we got time to hang out talk.
And then six months later, we were we were doing wholesale deals together.And then now, five years later, we're business partners, and we've done hundreds and hundreds of deals together.
Wow, that's awesome.Yeah, it's amazing how those relationships form.So I'm curious about the partnership then, because I've heard lots of different stories of, you know, positive stories of partnerships and negative stories of partnerships.
What was the reason you felt like you wanted to take on a partner?How did you structure it?And then is there anything that you've learned that you would recommend to somebody else who's who's looking to partner as well?
It's a great question.So number one, the reason I was looking for a partner is because during this whole time, I was still working full time as a home inspector.
I was still helping build my dad's business going out trying to get new business because it was it was just him.And in order for me to make my money is I had to go drive business.
So I had to go learn and he never marketed he knew it was all just kind of word of mouth. I was like, that's not a very good marketing strategy.You got to have some consistency here.So I was sponsoring events.I was going to networking events.
I was boots on the ground.I was in Facebook groups, just adding value to people.So I was growing that business.I hired an inspector.So I was working 12, 14 hours or so a day.I mean, busy long days.
So I knew that if I want to do wholesaling, which is heavy time intensive as well.I had to have somebody that could could do the front end, which is going to be the marketing, the phone calls, things like that.
And I was doing it on the side as well, but just not as as consistent as it needed to be.And I actually stumbled my way through to I wouldn't even call them partnerships.I used to throw them an air quotes as people that were just like helping.
And then my my business partner now Andy, it just ended up being he was in the perfect scenario.So the reason why it came together so well is For the last three years, I was being a home inspector.I had a great network.
I was just meeting people every day.I was meeting contractors, people, buyers.He was in car sales.He actually owned car lots from the time he was 19 to 23.Then he was a finance manager at a car dealership for another seven.
He knew the insides and outs of sales.He knew that he could pick up the phone and call somebody and get told to F off all day, every day was not a problem for him.And I was scared of doing that, because that was not my my background.
But I knew that if I got a deal, I could sell it.So he's like, Okay, I'll get the deals.And this is when text message marketing was like brand new, I had the CRM.And I showed him it.And I was like, he was like, dude, there's so many leads in here.
Like I can guarantee I get something from this.Sure enough, we had a we had a contract two weeks later.And then we just kind of went from there. and never went into each other's sides at all.
Now the lines are a little bit blurred because we do have four or five businesses all in one, but we don't really go into the main parts of each other's businesses.
Okay.So you don't own an LLC together.You each own your own LLCs.
We do now.So in the beginning, we would, uh, it was, I call them our dating phase.When we were doing wholesale deals, we would split the assignment fee 50 50, both go.And then we put the marketing on a credit card.We'd split that.
And then as time has gone on, we've everything's now in a couple of LLCs that we split.So we flip everything together. We hold, I have a couple of my own assets, he has a couple of his own, but 90% of our portfolio is together.
We have an education company together, and our management company is together as well.
Nice, nice.Yeah, I think that's smart, though, in the beginning.Seth Godin says, I can't work with someone until I work with someone.Yeah.
And what he means by that is, you know, he's talking about hiring, like, he's not gonna ever hire someone until they actually, like, do a project for him and he can actually see how they work, and I think that applies so well to partnerships as well.
People will meet someone at a RIA and it's their first meeting and they're like, let's form an LLC and be 50-50 partners.It's like meeting someone on the bus and saying, let's get married.
Yeah, I think that's super smart that you dated for a while made sure that you complimented each other really well, which I think is the key.And then you have grown from there.
Yeah.And another question you'd ask is like how to maintain it?Or I think that was a question over time is you have to see what it's like when it's good.But more importantly, you have to see what it's like when it's bad.
So when money starts to get a little bit funny and things start to go a little hairy, you got to see how they claw out of it, you know?So we had a scenario and I think it was 2021 into 22 when rates were low.
So we started wholesaling, we were wholesaling everything.We were taking down some flips and then finally we're like, okay, let's, let's start holding some rentals together. And then we flipped it to like, let's buy a ton of rentals.
And so we stopped.So we instead of direct, we were still in direct seller getting these contracts, but instead of monetizing them as a wholesale deal, we raise private money, and then we do the burn method on the back end of those deals.
So money got super, super tight, we're keeping money in deals, and we weren't really tracking it that well. And we knew we were making money, but we just didn't know where it was at until we looked, we kind of reverse engineered it.
And we're like, Oh, my God, we have no cash.We have all these asked us to speak for it.But this is a problem.I remember we sat outside our office, we're like, what in the world are we going to do?And we both look at each other.
It's like, we got to figure it out.So we both kind of just like fist bumped.We're like, let's let's go harder.We just got to claw our way out. So those are the scenarios, I mean, that you are going to get in with a business partner.
Some people, they fight or flight and they just, they run, they put their heads down, they go away, but not what we did.
That's awesome.Yeah, I can totally relate to that.I've been in those situations before. you know, there's always a shortage of something, you know, whether it's deals or money or, you know, time or whatever.
And you got to figure out how to how to solve that problem.And that's great that you guys were able to work through that of all the different strategies.
Well, actually, first, I want to, I want to understand how you source deals, you mentioned postcards initially, then you mentioned text messages, what's the main strategy that you found to be most effective and that you're using today?
Yeah, so we're doing mostly cold calling now.Okay, texting, it's gone up and down.So for if this was two years ago, I'd say our main form is texting.But since the laws and regulations have been coming out lately, I think it's kind of lightening up.
But I would say 95% of our deal flow is coming from cold calling.So we have six overseas cold callers that are basically plowing through lists, and then they're dropping warm leads into our CRM.
We have two acquisitions team members on our team that are just talking to sellers all day.So that's our direct to seller side.
And then we also hired what we call our JV manager, JV department, to where he's doing what I was doing before, which is relationships, wholesalers and realtors. and going out there and just being that guy for them.
And going out there and just trying to follow up and kind of do the same thing you would do a seller, but the same thing with a wholesaler.And that's pretty much a free marketing strategy.
So anybody that doesn't want to wholesale, that's a great, great method to get really, really good deals.
Yeah.So what does that bring in for the direct-to-seller side of the business?With six cold callers, what type of volume are they calling on a daily basis?And then how many deals does that turn into typically?
Yeah, so we're doing I forget exactly what how many calls they're making.But I think they claim they do like 10,000 dials a day or week.
I mean, they're plowing through phone calls on like a quadruple line dialer, even like I think you have a 10 line dialer too.But they're just plowing through calls going through a script trying to get to the next person.
And right now, we're 40 leads from those callers we know is one contract.And we're about a 75% close rate on those contracts.So every month, we're doing 13 to 15 contracts.And we're closing usually about 10 of those.
Some get killed just for seller's line, because we're doing a lot of virtual stuff, too.It's in our market, but we're locking up stuff on the phone most of the time.I mean, that's a whole other conversation.We'll talk about that.
Yeah, that's our main strategy on the wholesaling side.
Okay, and are all those wholesale, Ben, or do you decide which ones you're gonna hold on to?
At this point, yes, our first option on is wholesale, because we're trying to just separate all of the entities, because we have a full-time Dispo, Dispositions team member, which if he doesn't sell the deals, he doesn't make any money, so it's much easier now that we have, because I was that seat for years,
And if I want to go keep it as a rental, it's like, oh, okay, we just pay our acquisitions guy, their commission, and nobody's hurting.
But now that we have that seat, it's forcing us to wholesale, which is why we started the JV department is like, okay, we still want to we're flipping 15 house at a time.So we need to feed that engine as well.
And if we're not buying our direct seller stuff, we'd have to come from somewhere else.Now we are picking some of the best deals are ones that we think we should get more on.But majority of them are being wholesale.
Okay.You mentioned doing this all virtually, even though you're focused on the Columbus market, I guess, what's the impetus behind that and how do you, how do you do it virtually?
Yeah, so I would say our deals are done 7525 virtual to in person, just because I mean, time is your your best asset that you have.
And I mean, if you're really good, it's all about a sales process, you know, so if you're really good on the phones, you ask the right questions, you really should be able to get somebody a pretty good offer on the phone.
And it's not that we're never going to the house, it's just the first touch to that seller sometimes will be our inspector. We'll lock it up over the phone and say, hey, Ms.
Susie, if what you're telling me to be true and all these motivations are something that we can help with, we can give you, let's call it 100 grand.
If the house is different than what you're saying, after our inspector comes through, we're going to evaluate, we're going to underwrite, and we're going to maybe come back on this price if it's not what you say.I hope you're telling me the truth.
Then we send our inspector in.They give us 150, 200 pictures of the house in a one-page report. We then look at it, we run a deal analyzer, and we say, Okay, what do we want to dispo this out?What do we think Tony will buy it for?
And where are we at on it price wise?And if they don't match up, we then renegotiate or kill the deal or pop it out and see what we get.And go from there.Yeah.And then we'll meet people in person.There's always those stubborn sellers.
So that's part of our sales process to Hey, we can get this done over the phone right now.Or I can come meet you and shake your hand today if you want.
Yeah.Do you typically ask for a price from them that they want to sell it for?Try to.
I remember back when I was first getting started, you know, I, I didn't understand this concept and, and so you'd spend all day, you know, getting a lead and then going out, meeting, I'm doing all this analysis just to call them back up and say, Hey, here's my offer.
And then they're like, that's not even close to what I wanted, you know?And so I think it's so smart to reverse engineer that and just,
you know, work with the people that are most negotiable are in the situation, you know, people think, well, you're giving these lowball offers, it's that you're finding people who have a problem in a situation that they cannot solve by selling the house on the MLS, you know, like, I can't tell you how many hoarder houses we bought and how many
You know, one lady called me who was locked out by the health department because her house was so nasty.I mean, like dead animals and stuff inside.Like those are the types of people.They're not listed on the MLS.
That's part of our sales process, too.Sorry to cut you off there, but no, no, no sales process is we literally tell them that say, hey, if you're looking for the highest and best price for your house listed on the listed on the market,
And if they're like, okay, I'll go listen on the market, then you know, you're not talking to somebody motivated.But you just gave them that option.
If they still continue to talk to you, there's something that you have to use to peel back the onion a little bit and figure out what's really going on in that situation.
Why are they talking to somebody that they already told you they're not gonna be the highest offer?
Yeah.95% of people should sell on the MLS, but that 5%, that's the people that it can be a great win-win for.So your team then, it sounds like you have quite a few team members.What is the breakdown of that?
You already mentioned the cold callers, the acquisitions team members, the JV team member, the Dispo guy.Who else do you have on the team?
Yes, I don't really count the the cold calling people as our team members.Those are just kind of outsource subcontractors, I would say, okay, but we do have virtual assistants outside of that.So we have two data managers.
So we're really tight with our data on our wholesale side.We're not really a spray and pray type wholesale company.We use a lot of our, you know, REI sift, I'm assuming we use a lot of REI sift, a lot of things like that to try and save money.
And we also have a lead manager on that side.So three VAs, on the acquisition side, one on the dispo side, and then we have a full-time in-house transaction coordinator.
So our wholesaling company has three, four people on staff, and then four virtually in the Philippines.And then our flipping company, we have two project managers, I have a full-time content guy.So for social media, I always miss people.
A full-time property management team member, a VA on that side too, and then a full-time maintenance guy.And then we also have the JV acquisitions team member as well.I think that's it.
Okay.And how did you decide when it made sense financially to hire these different individuals?
You know, it all started to tell us on the acquisition side.So with the end in mind, what do we want our business to look like?We want autonomy.We want lifestyle freedom.
And we also want to build a business that we don't have to be stuck in every single day.And I learned a lot of this from my business partner, Andy.I don't talk about him a whole lot.
If anybody's on here and follows me on social media, you may not even know I have a business partner.And that's by design. He actually went bankrupt when he was 22.So he went bankrupt when he was 22.
He had a business partner in car lots that passed away, signed everything over to him, he was getting sued.He signed a Cognovit note on a bunch of cars, and they came down on him and took it all.
So a lot of those lessons that he learned from that really trickled down into why we do what we do now.So he knew that he'd been on the phones for a long time. And he did it for 10 years.
And he's like, I do not want to talk to sellers all day, every day, I put my time in first person we're going to hire as an acquisitions.
So you got to keep the I mean, any real estate business really leads and acquisitions are going to be the lifeblood of your business.And you can't stop that.
So if you want to get out of it, you got to you got to train somebody, you're gonna take a couple steps back to take a bunch forward to go work on whatever you want to work on.And then everything else just kind of came out of necessity.
Our businesses are a lot of when we both put our heads together, and we go at something hard, things change really fast, it works.
But it's like we call it a leaky bucket, we've got five holes in four hands, when we start plugging one, the other one starts leaking, and we start to do this all the time.And it's kind of a, it's a good thing to have.
And it's also bad, because we change focus to certain things every now and again.
Got it.Yeah, yeah, that makes sense.And so how do you spend your time?Like, what's your main focus now, as a guy who's running these teams?
Yeah, most of my time is bigger picture items.So I'm, I'm raising a lot of capital, I'm raising actually all the capital for our deal.So everything has now kind of almost stems from social media.So social media has grown
really, really big bigger in the past two, three years.And everything kind of stems from there.
So I raised a lot of capital on there, spent a lot of time, it's just crazy going from being a home inspector, where you wake up and you work, you make money to just the way work changes, you know, and I still have a hard time wrapping my head around that, like, I'm going to go for the private money lender, I still feel bad about doing it, because I'm not actually I feel like I'm not actually working.
which is, it's just such a weird mindset and conceptual thing, but anything that moves the business forward, go to masterminds, meet with people, host events, I host networking events in Columbus, make content, stuff like that.
Got it, okay.I was gonna ask you about the list that you're calling to, that you give your cold callers, what type of leads are those and where are you getting them from?
Yeah, everything we get is from PropStream and then Freelist.So $99 PropStream account, and a lot of times we're getting free and clear, high equity bank, like we're just pulling those every single month.
And then what we do is we also pull code violations, evictions, tax delinquents, water shut off lists, all Freelist from your county.And what we do is we pop those into REI SIFs, which will then stack them.So anything that's on those lists,
both of them.So say somebody is on a free and clear list and also a code violation, we're definitely going to target market them because that's a higher likeliness of motivation and can sell at a discount.
Because you can have the most motivation in the world to sell a house.But if you just bought it last year at top dollar, I can't really do anything for you unless I sub to it, which is not really our strategy either.
So I want somebody that can sell it at a discount and be motivated as well.
Yeah, that makes a ton of sense.And then of the different strategies that you do, have you identified one as being the most profitable or are they all similarly profitable?
Wholesaling is definitely the most short-term profitable.It's pretty crazy.We've been wholetailing a lot more too.So taking stuff from wholesale to retail. That's been pretty great as well.
But I mean, long term is going to be the holes on the assets and restructuring debt and pulling out tax free money.That's really the long play on what I want to do.
Yeah.And have you found it harder to find buyers for your wholesale deals with the market kind of shifting?
Yeah, it's been it's been really weird and cyclical, you know, I mean, last, maybe August to September, or a note to like December, it was dead, nobody was buying anything.
And then something happened around like February, and people started to buy again.And it's been a little bit slower recently, which is weird.So I don't know what happens.It kind of comes in waves.And I can't really put a pulse to it.
Yeah, interesting.Yeah, I've heard different things.So I think, yeah, I think you're absolutely right.It just is like little, little cycles.
And from the rental side of things, though, what type of rental properties are you guys targeting that you like to hold?
Most of our stuff is one to fours.So if you've ever been to Columbus, Ohio, a lot of duplexes, a lot of small multis.So a decent portfolio is duplexes, a three unit, and a lot of single families.I mean, it kind of just came from
I mean, most of our target marketing is single family people that have things they want to sell, so not a lot of large multis.But with that being said, I mean, we will buy small multis.We've got a couple eight units, a nine unit.
My office building I own, we're buying a 32 unit office building right now.So I understand that side.I actually really, really like commercial banking, financing, that type of stuff.I'm kind of a math nerd, but not as much my main strategy.
I see.Okay.And are these primarily turnkey properties?Are you doing the burr method?
Or what does that look like?I'm doing the burr method on everything.If I can't have some sort of if I can't buy it super discounted, and then put my own my own construction into it, I probably not going to do the deal.
Oh, okay.What's the metrics that you use to determine that it is a good deal?
I mean, I'm just looking at ARV, I'll take the ARV times 75% minus my rehab and money costs, and then boil it down to purchase price.And then on so that hopefully I can get all of my money out.But to me, that's a pipe dream.
If you I hate anybody that will say online that they have their whole portfolio, they've never had $1 in.I'm just like, yeah. That's just that's, that's ridiculous, right?So I'm not afraid to keep cash in.
So when I do keep cash in, what's my cash on cash?Am I what's my return?I'm actually making my money.Because when I told you that we almost went bankrupt, like in 2022, we had no cash.
We weren't looking at that, you know, we were so focused on just keeping assets deals were cash flowing.But it's like, well, if you keep 60 grand in on a deal that the ARV 300, I mean, you might as well just go buy a term key asset at that point.
So really looking at where your money's at and don't fall in love with owning rentals so much that you get yourself broke.
Well, the equation you just talked about, that's I think really good from an equity standpoint.Is there a cash flow equation that you're like, it needs to produce X amount of cash flow?
Not necessarily like it depends on like where it where it is.So I like to see after expenses $200 $300 a door.
But if it's an A class asset that I can put my portfolio and maybe break even at an 8% interest rate, I'm probably going to do that deal if it's in the path of progress.
And it's an area that I like because I really like those anchor anchor properties in my portfolio.So I can pay down good debt I can they can appreciate and then have my C ish assets maybe make up for the cash flow on the back end. Okay, got it.
And what's your main source of capital at this point?Private money.Okay.So what does that look like?You use private money to purchase the property for the flips and the burrs, and then you refinance it into a long term for the rentals?
Yeah.So that's the reason why well, flipping one, I don't love it, by the way, like flipping is to me means to an end, it's, it's hard. You're juggling a lot of people.But if you do it right, it can be really good.
So we figured it out, at least for now, until maybe contractors quit on us.But to me, you have to have a flipping engine to be able to do the burr method at scale.
So if you want to build a portfolio and build it faster, you have to be flipping houses because you have to have that engine always going and then you start popping them out on the back end.
So for example, I'm buying a house Friday, we just put in contract actually yesterday.
115 grand purchase price, ARVs 240, we'll put 50 into it, and at the end, I can sell it, make 50 grand, 40 grand, or I can refinance, keep 10 grand in that deal, and keep it as a long-term rental.
That's my whole business model right there is I wanna have multiple exits.If I can't sell the house, I wanna be able to keep it and not lose my shirt.
Got it, okay.So a private lender then would be okay with leaving a portion of their capital in the deal then?
No, they get paid out.So they'll get paid out with my own cash.So the title will clear it, I'll pay them, and then we're doing a lot of DSCR lending on the back end.So the DSCR lenders will take over and I'll just leave cash in that deal.
Got it, okay.And what DSCR lenders do you recommend?
Right now we're using Certain Lending.They also go by Vontive.Vontive, Certain Lending, I don't know really which one they like to go by, but they're kind of like a Kiavi type hard money, DSCR type lender.They're a tech company.They're really good.
So their rates have been great.And then RCN out of Texas is pretty decent. Who else?And then we try to go through like small brokers in our town that we can have a good relationship with.
And we know maybe what appraisers that they have in their circle and things like that, you know?
Yeah, no, that makes sense.And what's your goals for the future?Like, I'm curious, like, you know, you've, you've had a lot of success, like, where do you guys see yourself going?
Yeah, so we started an education platform, so I want to continue to grow that.I want to help people.We mostly teach people wholesale and flip.We don't really teach people the burr method yet.We're going to introduce that.
So grow that and help people out.My mom quit her job.She was a teacher for 30 years.She quit her job three years ago now to basically design my flips and sell them on the market.So just continue to change the people's lives around me.
What that looks like.I don't know.I don't know any vanity metrics.I know people are like, I want to have 1000 units only this.To me, that doesn't really matter.I mean, maybe we'll get there.Maybe we won't.
But if it allows me to retire my dad next or my mom and my brothers are now investing, like I said, one of five kids, they're all now mostly investing in real estate.So if I can be that, that catalyst for that, that's really kind of my goals.
Yeah.Yeah.I think most people start with, you know, I got to pay the bills and that's, you know, the goal.And then it turns into like, okay, how can I create fulfillment in my life?
Cause it's, if it just stays with just a monetary goal, you know, I think it's not a super fulfilling place to live, but if you can change people's lives along the way, that's super fulfilling that I've found.So that's awesome that you're doing that.
Tell me about the education platform.So you mentioned that you teach people how to flip and wholesale. Yep.What all is entailed in that?
Yeah.So it all stemmed from social media.So that's most of my videos.So if anybody here has watched my videos, it's called the real side of real estate.So I talk about losing money.I talk about houses.
I just all avoid in, in most of the online people's content of like, okay, you guys are buying all these houses, you're renovating them.Nobody's talking about losses. Nobody's talking about the house itself.
It's like, we're investing in real estate, right?And you've never took a loss.I was like, this is so wild.So just decided to kind of add those in together.And then it stemmed into people just be like, Hey, can you teach me?Can you teach me?
So now, we have a platform to where we do four live calls a week.So we wholesaling training, we have sales training, we have fix and flip training, and then we have community led training.
So somebody who's crushing it in the community, they'll, they'll tell their story and what they've went through.I think that's really important. And then we have a messaging platform to where people can ask questions all day every day.
So a lot of my time is spent in there helping people hop on one on one calls with people and go through their systems or processes, their marketing, whatever it may be, and just kind of roll with the punches there.
Awesome, awesome.So who's the ideal person that you work with?
You know, I like beginners, beginners are great.But anybody that's done a deal before they understand, like, it all goes back to like knowing how hard everything is.
So if you've done a deal before, and if you've gone through the kicking in the in the shorts all the time of like, how hard it is to get your first one,
So you understand the process, you understand what it takes, and now you just want to get it to consistency.So, okay, I need systems, I need processes, I need a roadmap.
That's our perfect, ideal person to where we can get you to two to five deals a month very, very easily with the right guidance.
Nice.That's awesome.Yeah, and that's powerful.I mean, two to five deals a month changes a lot of people's lives and their financial picture.Amazing.Well, if people want more information on that, what's the best place to go to?
Yeah, the website is real side community.com.Okay.And then if you want to chat with me, aside from that, because I'm not coming on to these podcasts to pitch anything.That's not my my intention.I just want to help out answer questions as I can.
Tommy has zero five on Instagram.Like I said, I spent a lot of my time helping people.I mean, with no intentions of anything in return.So if you have any questions, just make sure they're detailed and thought out.
Like I don't want to really answer like basic basic questions.I do.But let me actually help you.Like, yeah, I think a question out. and you'll get a really thought out answer on the back end.
Yeah, yeah, I think it pays to do some of your own research first, not the first question that pops in your mind.Like if you can answer it via YouTube, do that and that'll probably spark other more deeper questions.So I think that's great advice.
Cool.Well, thank you very much.This has been super informative.I appreciate all the detailed information because it's you're right.
I think you hear a lot of like general information, like, you know, just cold call and, you know, and you'll get deals.And it's like, well, yeah, but specifically, who do you call?
How many call like, you know, so I appreciate the platforms, the lenders, the specifics.So yeah, cool.Well, thanks again.I appreciate your time.
Yeah, I appreciate your time as well.I'm super excited to connect in the future, maybe rub shoulders at some masterminds or whatever.
If you're in Columbus, would love to, I don't know if you drink beer, but Midwest guy drink, go have a beer and hang out.
Yeah, I usually don't anymore, but I'll make an exception if I'm in Columbus.Sounds great. Hey, thanks again for joining us.
If you enjoyed this episode, make sure you leave a positive review on iTunes and also head over to Facebook and join the Living Off Rentals Facebook group where the conversation will continue.Thanks again.See you next time.
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