BiggerPockets Real Estate Podcast - 913: 150+ Deals in 3 Years and Why You DON’T Want to Be a Landlord w/Don'nell Greer

Starting point is 00:00:00 Hey, everyone. Welcome to the Bigger Pockets Podcast. I'm your host today at Dave Meyer, and I'm joined by my friend Henry Washington. Henry, how are you? I'm doing fantastic, Dave. Love, love being here with you. Man, I'm excited to be here, too. I'm just excited that you're my co-host today. I'm excited that everyone is here listening to this podcast. I mean, you could listen to like 10 million different podcasts, but I am glad that whether you're new or you've listened to 900 episodes of the Bigger Pockets podcast, that you're still here with us today learning about real estate and how to be a successful investor. Henry, what do we have in store for all of our friends and listeners today? So today, day, we have an investor story. And we share investor stories weekly here to get you inspired and to take action and provide a glimpse into what are real investors doing. What kinds of deals are they doing? And what's happening right now in the market.

Starting point is 00:00:55 So this week we're bringing on Donnell Greer, who's done over 150. deals. You'll hear about how he started investing in the Dallas Fort Worth market, how he scaled his business there, and why he chose to exit that market. Donah has such a cool story. It's just one of those stories of scaling really quickly. And I think he's going to bear it all for us. He's going to tell us the good parts about it, the challenging parts about it, how you get through some of those difficult times as an investor. He's also going to share with us how he did something that I think is super cool, which is finding the right strategy that matches your personality and your personal circumstances and figuring out really what's right for him, how he used my private money to

Starting point is 00:01:38 scale. So there's so much good stuff in here that I think everyone listening is going to gain some value from. So let's bring in Donnell. So Donnell, you bought five houses in 2018 in the Dallas Fort Worth area. Can you tell us a little bit about your strategy with those deals at the time and why you chose to invest in Dallas of all places? Well, first and foremost, that was just the area that I currently reside in. And then secondly, I've been an agent. I was an agent four years prior to that. I had a little analysis paralysis going in. And I mean, that's why I probably took so long for me to get from 2015-2014 to then is because just the reading everything and and making sure all my boxes were checked. Utilize bigger pockets to understand and learn the

Starting point is 00:02:30 bird strategy is how I was able to go to buy those five houses as quickly in that first year and then from their scale to start doing more fix and flips. You're saying things that I think resonate with almost every investor looking to get started, right? Especially if they're in a market like a Dallas Fort Worth where it's like, I am just over-analyzing everything. I don't know when I'm ready. And so what were some of the things that finally made you feel like, yes, now is the time. Now I'm ready to do this.

Starting point is 00:03:01 Like what kind of eased that process for you? I don't think I actually ever got there. I just saw a house and I was like, this is the one I'm going to do. Just for, yeah, I'm going out there. So how, Dinell, did you learn to even analyze deals in the first place? Because I feel like that's what some people. just stop. They're like, I'm so overwhelmed. There's so many different things that I could possibly buy and then they never actually start running the numbers or learning how to analyze deals.

Starting point is 00:03:30 So what sort of, how did you gain that experience that you mentioned? I contribute a lot of that to just being an agent and running comps for, because I worked with an investor and he finally kind of gave me, but didn't give me his playbook. And essentially, I understood how he was analyzing deals. and how he looked at comps. And I basically copied and paste what his strategy was and how he viewed some of these things. And I just basically did the same thing. And then it helped that I had access to MLS to where I didn't have to go buy like PropStream

Starting point is 00:04:06 or these other real estate softwares out there that do give or offer comps as a service. So your experience as an agent allowed you to practice running numbers, I'm sure, because you were probably running numbers that your clients wanted you to run on top of the fact that you had access to the MLS. And so you had probably the best set of data you could in order to run numbers. And so you found this property and you were like, I'm just going for it. So how did you do it? Did you have any partners?

Starting point is 00:04:36 Like what that process looked like? Bigger Pockets was my partner. Nice. We like to hear that. No, it was I was like, all right, I got the house on the contract. now what? And I at the time was trying to figure out between hard money and utilizing private money in which I was able to utilize private money to where I did a little audible. And instead of utilizing the private money to just buy that one house, I utilized

Starting point is 00:05:07 the private money. It was about $100,000 and bought the other five houses essentially is what I did. And so, yeah, that's basically I utilized. Yeah, my first deal is actually from MLS. So I utilized MLF to buy the deal. Once I got the deal, I started, yeah, I was literally all over bigger pockets forums like, what do I, what do I do next? I'm trying to find contractors. I'm like, oh, shoot, I forgot I got to get insurance.

Starting point is 00:05:35 So all of this stuff is like happening. And mind you, like, again, like, in my head, I had all of that information. And it's like different if you're not putting it to practice. And so, yeah, like once I'm in it, now I forgot everything from the previous years of what I read or watched or whatever. So, yeah, once I got in the game or, yeah, once I got my jersey a little sweaty and dirty is when, yeah, like, I just, I had to swim is what essentially happened. So, no, I know you were, you were sort of joking about Bigger Pockets being your partner, but I think a lot of people who listen to the show necessarily know. how they can use the Bigger Pockets website and the sort of broader Bigger Pockets community to help them with their first deal? So do you have any advice for people about tricks or things

Starting point is 00:06:27 that you did to leverage the power of the Bigger Pockets community? Bigger Pockets insurance contacts. Like it literally was the playbook. And I did have a few other investors that I asked them like what were the resources that they were using. But again, I'm like, Bigger pockets. Bigger pockets basically, I learned the birth strategy through bigger pockets. I think I was connected with a few hard money lenders through bigger pockets. So that was, it was almost like my real estate Bible at the time was this is, this is the source that I'm going to for all this information until I get to these first few deals and then like figure out, okay, what are some other sources or like other resources I can use?

Starting point is 00:07:12 You know, I think that's helpful because a lot of people feel like sometimes with bigger pockets, They need to like dive directly into the forums and know exactly where to go look for things. And you can literally just do exactly what you did. Bigger pockets, house under contract. And it will pull up all the articles and you can read through like hundreds of articles of people who are in the same position of you. So I think that's great information for people to see. I want to backtrack a little bit on this deal. So you were on the MLS.

Starting point is 00:07:42 You found this deal. How did you find this deal? Was it listed for a certain amount of days? Like what made this deal stand out to you? For this particular deal, it was in the market that I was looking in because the rental rates were pretty high. And the values of houses were just low. And the demand in this particular area is Cleburne, Texas, was just booming at the time. And so I saw the listing on MLS.

Starting point is 00:08:08 It popped up and it was at like 100K or something like that. and I saw in like as y'all know like how the agent's position or or make the verbiage on a listing description like needs work or TLC stuff like that or slightly dated or wouldn't need and I'm like this was calling my name because I was again not trying to get in over my head and I didn't want anything over like $150,000 to start with and so I started I called the agent and I started asking questions, seeing what offers that they had, and seeing if the seller was interested and, well, if the price was flexible, we negotiated it down to $80,000 on top of, since I was an agent, I got 3% commission. So I just basically rebated it back to, or put that towards a sales

Starting point is 00:09:01 price. So there's, there's so much gold in what you just said, because a lot of really analysis kind of went into finding this deal that I don't want people to miss out on. So if I, if I heard you correctly, what you said was you knew the area of town that you liked because typically the price points on those homes are lower, but the rents are fairly high. And so that's the kind of analysis I think investors need to be doing when they're trying to pick where they want to invest in. So you already knew if I can find a house in this price part of town for under $150,000, I think I'll be good because the rents are high and I feel like the price points are good in that area. So then you're looking on the MLS, you see a house pop up in that area, and then you're looking

Starting point is 00:09:45 at the keywords of that listing. And the keywords are indicating to you that this house probably has some level of distress. And if that house has a level of distress, what you're really saying is that the seller may be motivated to sell that property at even more of a discount. And so in order for you to figure out if that was true, you read the keywords, saw the distress, and then you reached up to the agent and had a conversation to say, hey, what's really going on? And you said, you said, I want to know what's the seller's pain point.

Starting point is 00:10:15 Because if I can solve for that pain point, I can probably get a deal done. And I don't want people to miss this because, A, this is gold. But B, you don't have to be an agent to do exactly what you just did. You can find a market where you feel like the price point and the rents are going to mesh for you. And then you can set up a search. You don't have to set it up on the MLS. You can set it up on Realtor.com. or if you're not an agent, have an agent set up that search for you.

Starting point is 00:10:43 Say, I want homes in this particular part of town under $150,000. And then in the keywords, please indicate or look for these keywords in the in the in the comment section. And then as those things pop up, you'll just get an email with those listings. And then you can have your agent reach out to those sellers and do exactly what Donnell was just talking about. Like this is real estate investing deal hunting 101. And I think you did a really great job identifying your deals. Okay, so we've been talking about how Donnell got started and how he's looking at deals. But the question is sort of how is he funding them?

Starting point is 00:11:22 What would he do differently in his next partnership? And does he even like being a landlord? We get into all of that right after the break. I have an uncomfortable question for you. If your rent collection dropped to 80% next month? How long would your cash flow hold up? What about 70% for the next three months? Would your cash reserves cover it? I talk all the time about scenario planning. Smart investors don't just model the upside. They also pressure test the downside. This is even more important in a down market.

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Starting point is 00:13:58 Bam Capital structures its multifamily investments around. those fundamentals, pairing tax efficiency with disciplined operators and a long-term approach. This isn't about chasing hype or guessing market timing. It's about building durable, tax-aware wealth over time. Learn more at biggerpockets.com slash bam. Hey, everyone, welcome back. Henry and I are here with investor Don Al Greer. Let's jump back into our conversation. So you got your deal, you got the deal under contract at 80 grand, and you're like, oh, crap, now I need money. And so you said you raised some private money. And so what did that look like?

Starting point is 00:14:33 Was it somebody you knew? Did you go cold calling people and say, give me money? Like, where'd the money piece come in? It came from a family member. And again, it was through some form on bigger pockets about raising capital. And basically the commentary or what their direction was or what they recommend it was, comparing it to, well, if you've got it in your Bank of America Chase account, you're only making about what two, three percent on that in a savings account. And it's like,

Starting point is 00:15:05 I could promise you 10 percent interest on your money, which is far greater than obviously what you're getting now. And that's how I positioned it. And they kind of already knew that I was in real estate. It was from a family member and basically just saying, hey, here's what you're currently getting. Here's what I can give you. Boom. Man, I feel like you ran the real estate investor play to a T. I tell people all the time, if you need money for a deal, there's probably enough money for your deal in your phone if you are willing to call people and have the right conversation. I tell people like when I call people and I'm looking for money, I say, look, I am going to borrow this money anyway. And if I'm going to borrow it, that means somebody's going to

Starting point is 00:15:49 make the interest. And I would much rather pay somebody I know, like, and trust this money, rather than some stranger who knows nothing about me or cares about me at all. And so it's an opportunity for you. And you ran the play. You got the money. You were able to buy the deal. And so then you wanted to exit this deal, I'm sure. And so what was the exit strategy for this deal? Was it a rental? Was it a burr? Was it a flip? Yeah. So it was a burr. So we basically did a cash out refibed, paid back the private money. And then rents and repeat is essentially what happened. And from there, After doing that, I realized very, very quickly that I did not like being a landlord. Why not?

Starting point is 00:16:33 Tennis started calling and I'm like, oh, man, I got to, now I got to find, I got to find that contractor and then send them back to do X, Y, Z. Now we're getting into disputes about bedbugs and all these things that you don't think about, read about really. Once you get the deal, it's like on to the next one. but not like the intricacies of like actually owning that real estate now. And so that's actually when I decided I wanted to transition from doing the burs to fix and flips. Well, Danelle, I really like that because I think it's really important for investors to find strategies and tactics that match their personalities. Like some people, me, I would never flip a house. It's just not for me.

Starting point is 00:17:16 And I have a tolerance for tenant relations that apparently you don't. But I was curious if you, like, do you think it's your personality? Like, it's just not for you? Or did you have, like, just a bad luck first experience with being a landlord? It was, I think it's a personality thing because from the jump, I remember going to a house that I own, that I had the direction of the rehab. I'm talking to a prospective tenant. And instead of saying, yeah, we can, when they ask the question, is this, is the owner negotiable? on price. Well, me being the owner and talking to the prospective tenant, like right there,

Starting point is 00:17:56 I'm like, ah, yeah, well, let me talk with him and see what he says. And like, little did the president know that I'm the owner. But again, like, my personality is obviously non-confrontational. So I'm like, oh, I don't really like. And again, so when we got into tenants asking for repairs that technically they should be responsible for, I'm basically folding and, and, and doing it just because I don't want anybody be mad at me. So what I hear you saying is I won't build for this. Yeah, man, I want to be your tenant done. I'm going to come to your to your property and just ask for a rent reduction. And yeah, like that's the that's the part where you got to have either the spouse or a partner or somebody that has that like type A personality that that they're like no,

Starting point is 00:18:45 like kick rocks. Like this is, this is what it is. Take it to leave it. And me, I'm like, well, like maybe I can work it out. But yeah, it's just, yeah, again, it was a personality thing for me. Well, we're just joking around, but I do, I do really think that is super important and honestly impressive. You just need to know what you like and what you don't like. Otherwise, you're going to burn out. Like you, and I respect the fact that you looked at this, tried it, said, you know what?

Starting point is 00:19:13 There are other ways in real estate that I can make money. So what did you do next? Did you sell those properties and then go into sort of the transactional flipping side? of things or how do you unwind that situation? So I actually still hold on to them to this day. The next step for me was I was talking with a money. But you hired a property manager? I actually didn't because of all of those tenants, well, I take it back. Four of the tenants were perfect. Three were felons. And what I've realized or come across like mistakenly was as a felon, they don't have a lot of other chances.

Starting point is 00:19:55 And so they don't want to screw it up. Yeah. So they're like, I started texting him like, hey, everything okay? Like I hadn't heard for you. I hadn't heard from you. The rent comes and it's never late. But at the same time, I'm like this other tenant is calling and like they're talking about a light bulb went out, but you don't tell me anything.

Starting point is 00:20:15 And he's like, oh, no, it's all good. And again, we had a heart to heart conversation. He's like, man, I just appreciate you giving me the opportunity. because I don't have any other place to go if you kick me out of here. And so he's like, I could handle all the repairs or anything that is deficient in the house because, again, I don't want you to be upset to where you got to raise the rent or something like that or of that nature. I know, you said something that I think it's hugely important that a lot of people don't frequently talk about. And you said that you have, it's three tenants that are felons.

Starting point is 00:20:51 that have a felony conviction on their record. And they are great tenants. And so this is something that I think is hugely important because we as landlords have the opportunity to provide housing to people who really, really need it. And as landlords, I think we're often taught that if somebody has a felony conviction, that that's a red flag, you should avoid them at all costs. Right. And that's just not the stance that I've taken with my portfolio.

Starting point is 00:21:23 Now, I'm not saying you want to go out and rent to anybody that has a felony conviction. It's not just about that they've made a mistake. It's about what is that mistake? When was that mistake? And then you make a call because you could be providing somebody an opportunity for housing who doesn't get much opportunity for it. I have a tenant who is a felon. he spent 14 years in prison for a nonviolent drug charge.

Starting point is 00:21:52 And when he came to us to look at our place, he said, guys, I've spent several thousand dollars on application fees in order to look at places just to have them turn around and tell me no, not based on anything other than the fact that I've been to prison. And so he just wanted a shot. And so we pulled his record. We looked up everything. We saw it was a nonviolent conviction. He served his time. We met the guy in person. He seemed like a really great person.

Starting point is 00:22:29 And he was remorseful for what he did. And he said, I just need an opportunity. And so we gave him an opportunity. And this guy has by far been the best tenant I've ever had. He mows the grass for the whole place. There's an elderly woman next door. he mows her grass, he takes care of her. Like, this guy just needed a shot.

Starting point is 00:22:49 And we were able to give him that. And so I love that that's something that you do because I want other people who are landlords to consider this. Like, do your due diligence and make sure that that person fits, obviously. I've had a convicted felon who wanted to live in a multifamily, but his crime was a little more violent. And so we couldn't allow him to live in that multifamily because there's other families. families that live there. So you have to do your due diligence, but there are people who've made mistakes who just need an opportunity. And we as people who provide housing can can provide that opportunity. And I just love hearing somebody who didn't just see a felony conviction and turn

Starting point is 00:23:29 somebody away. So thank you for doing that. As I transitioned from holding these and not hiring a property manager like I probably should have. But I was talking with a buddy mine to to see how we can scale it up because again, I was doing a cash out refi from these birds, but at the same time, I was putting it into another property versus like not necessarily going into my bank account. So my net worth was growing, but not my, like, not my active income was growing. And so talk with a buddy of mine and we were trying to figure out how to scale it up. And so he put me in touch with a guy he had. So it is scrap metal business here in Dallas. And he was sitting on about 30 or 40 million dollars.

Starting point is 00:24:20 And he was, he's been ready and looking to get in the real estate. So we, we met him over coffee one day. I think it was maybe 30 minutes. And I think he showed up like 15 minutes late. And so he, he heard all he needed to hear. We had the, the documents just kind of showing like what, what I've done, like the ROI. He could potentially. make and that day he basically let me $160,000 and it was like, what's the catch? And, uh, no, like, I'm like, are you going to follow me? You're like, what's, what's happening here? Like, don't ask any questions. Just go. Yeah, no, I'm like, in my head, I'm like, is, is he going kill me after like, I'm, this can't be true. Because again, like, I'm like, that's a hundred and $60,000. Like, not a, like, if I lend you $200, like, next week, two weeks from here,

Starting point is 00:25:14 I'm probably like, hey, like, where's that $200? And like, the beautiful part about that was he, half the time I was trying to track him down to like give him updates. Because I'm like, man, he's reached a level of money that I know nothing about. Uh, so anyway, we, we've utilized that $160,000, uh, to, to flip the first deal. he was all on board from there. When it was all set and done, I think he was all in $750,000, which again, I think we went like three months of sending him a text trying to call him.

Starting point is 00:25:54 My man's ghost. Like, didn't hear anything from him. And I'm like, that's crazy that you've got all this money sitting in account with basically a stranger you met over coffee. And so again, like, I used to hear and read like people raise money and it was just like nobody's going to give you a hundred thousand dollars like this that's that's crazy to think about but again like as i i've been on this real estate journey and just started asking but also utilizing my experience to back like the reasons why you should

Starting point is 00:26:27 you should lend money to me i feel like you you did all the things right right you went to this person who you were going to say i would like a piece of this umpteen nils millions of dollars that you just had, but you didn't just say, sir, give me money. I heard you say, you went to him and you had kind of like a portfolio or some documentation showing your success history. And I think that that's huge. I teach people to do that all the time. Every deal you do, just make it a slide in a PowerPoint and keep that PowerPoint running, just a picture of the property before and after what you paid for, what you put into it, what you did to exit it. Like, that'll go a long way to showing these people who have this money, who want to make more than, you know,

Starting point is 00:27:07 1% in the bank. I'm sure you showed him your success history. It was like, yeah, man, let's do this thing. So if you're prepared and you speak from a place of confidence and you can talk about, hey, this is what we do. This is what we look for. This is how we monetize it. And this is the history that I've done. I think you've got a lot of opportunity to raise private money. And so I feel like, man, you ran that play to perfection. So you raise this private money. Are you using it? We're using it just for flips at that point? Yeah. So it was, it was, it was only flips. He told me to, we use an analogy of real light, yellow light, green light, and I had the green light. He was like, just go buy as much as real estate as you can, in which then that's

Starting point is 00:27:51 what I did. So we started pretty slow again. I'm like, is this, is this real life? Like, was that a flu? It's almost like that, kind of like an imposter syndrome in the sense of like, am I good enough? Is this real? Like, was that beginner's luck? And so like I kind of had a little self-doubt in myself in a sense of, like, if we lose on the house, like, what happens then? Like, is he going to pull all this money out? So, like, I'm, like, over-analyzing deals just to make sure, like, this is the one. Because, again, like, I don't want to lose this opportunity that I've been given and that I've basically been reading about this whole time that I genuinely didn't believe I actually be done. But, Donnell, I feel like it's that attitude that makes people want to invest with you, right?

Starting point is 00:28:36 It's like as someone who invest in private deals, I don't want someone who's like coming in there super confident over, you know, overaggressive saying that they're going to do everything super well. You want to invest in the people who are going to take the responsibility of managing someone else's money extremely seriously and are going to treat it with the respect that you were talking about. Obviously, you don't want you having imposter syndrome. You know what you're doing. But I think that mentality of being so careful of a steward to someone else's money is really what a lot of passive investors are looking for. Yeah, no, that is, I think I go to every deal with that mindset of if it comes down to it, like, what would that look like if I lost?

Starting point is 00:29:22 What would that look like? What would all these steps look like? And so a lot of that goes into my underwriting in a sense of just making sure X, Y, Z are checked. And then now do we have multiple extra strategies? which when the interest rates took a spike in the wrong direction, that's obviously when things kind of went haywire. So tell us a little bit more about that, Donnell. You know, what happened to your business when interest rates started to go up and what did you do about it? It was rough coming from it's like I went from being extremely like tedious about everything, making sure like I'm being

Starting point is 00:29:57 careful in deals to like it it almost was like I started putting on that that that that that cloak of Superman and was like I can't lose like I'm I'm crushing it now like I am I him like it's like yes it's almost like an invincibility until like the interest rates hit and then we were I think we're sitting on 17 houses and because our strategy our strategy at the time was we were selling into a few hedge funds. We were selling as is. We were just listed on the market. And people were just buying them up. So a lot of those houses that were sitting were not touched and they needed a ton of work. And so once that hit, now we found out that buyers are way more picky. Now there's a lot more competition that we're having to take a whole step back to

Starting point is 00:30:54 assess all of this situation, like this whole situation. to now make a plan. And at the time we had lost our, before we had crews and then as we were just like blowing through inventory, because everything was selling. And obviously it was, in my opinion, was just a momentum market, at least here in DOW. Everything, I felt like time just stopped once the interest rates rose. And again, like you kind of could hear the chatter from like we were utilizing hard money

Starting point is 00:31:25 at the time from our hard money lenders kind of pulling back too. And so, yeah, that affected our business, even to the point to where our partnership was dissolved based on just differences. And I think a lot of it had to do with too many cooks in the kitchen to where somebody wanted to do this, somebody want to do this, and the other person wanted to do that. And it just kind of made things difficult to where everybody could work together. All right, everyone, we've got to take one more short break. But when we come back, we'll hear about how Donnell is evaluating markets today. Stick around. People love to call real estate passive income, which is interesting because most of the

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Starting point is 00:34:34 Sorry. Yeah. So this was in 2022, I assume, just based on the timeline. Yeah. And so at that point, who were your partners that you were working with? And I'm just curious because partnerships are such a challenging part of real estate and a great opportunity too. but like who are your partners and were some of the cracks that sort of evolved in 2022 apparent to

Starting point is 00:34:59 you before interest rates went up or was it sort of the stress of this new paradigm shift that started to cause some issues with your partnerships? Yeah, it was it was after that. And now again, it was arguments about who was doing what. And I think the partnerships are extremely important and needed. in real estate if you want to get to a certain level. Now, if you just want to be like two, three deals a month, yeah, you probably could do it on your own.

Starting point is 00:35:29 But being as ambitious as I was, we were probably around 20 to 30 a month at the time, deals per month. And so, yeah, once that stuff started cracking and buyers weren't buying like they were, is that's where yeah just differences were just spotlighted I feel like and again just going back to your question I think it just you have to have clearly defined responsibilities in a partnership because ours was pretty loose it was like oh I know this guy we're cool like I like what he does and then we had another capital partner come in from Massachusetts to where he saw what we were doing and he wanted to be a part of it as well. And so again, like we just kind of came in and everybody was doing their own thing and nothing was really

Starting point is 00:36:28 defined until like there had to be, it's almost like to come to Jesus meeting of all right, like what exactly are we doing here to like get through this inventory so we can continue to move on. And it just, it was just too many differences at the time to where we could and reconcile what was going on. Okay, so it sounds like you, to backtrack, it sounds like you found your private money partner, you went out there, you started doing deals. And then somewhere along that path, you decided I can do more volume. And I could do more volume if I had partners.

Starting point is 00:37:04 So it sounds like maybe you found another investor in the area that you partnered with. Yep. So it was a friend of my, so initially it was me and a friend. And then we partnered with the guy that sold his scrap metal business. We went with that partnership for about 18 months. And then from there, we met another guy who was, I guess, even further along. And he was ready to put literally millions into real estate. And that's when we actually, we were buying houses in cash and we transitioned to leverage.

Starting point is 00:37:40 It's like, well, why don't y'all just buy 15, 20 houses? And obviously, ultimately, we got to like 2530 a month doing this. this way. And so yeah, that's how we transitioned from buying all cash to now we're leveraged through hard money lenders. Okay, got it. So you were buying cash and then refining them, putting them on leverage. Yeah, well, we were buying cash and just flipping, we were just flipping from at that point. And then we were still flipping, but we just, we utilized leverage. And then with that leverage, we found that. So the market shifted when you started to use leverage. No, no, no. Thankfully, no. We did a huge run, thankfully. But unfortunately, we were left with,

Starting point is 00:38:28 yeah, it was about 17 houses that had leverage. So now you've got these hard money lender payments coming every month. On top of now, we have the enlist contractors to get some of these these houses rehab to get them on the market, uh, to get them sold and off the book. So, um, yeah, it was, uh, yeah, again, that was eye opening because at the time I was, I was, I mainly was doing the acquisitions, the, the managing projects and dispositions. Because our business was built off of relationships. So we didn't, we didn't spend any money on marketing. Um, so yeah, like, that's where it was like, all right, guys, I'm, I'm trying to figure out like whose role is what.

Starting point is 00:39:16 And again, like, I love partnerships. I'm in, I'm still in other partnerships, but just going back to making sure you just have clearly defined roles and responsibilities versus like trying to wing it like I'm usually used to. So it sounds like if I'm hearing correctly, you were doing a lot of hotels. It sounds like you were buying them so cheap that you were able to not have to do much rehab, stick them on the market, and you were making a profit. interest rates started to shift and buyers could be a little more picky. And so now you're like,

Starting point is 00:39:46 okay, we need a plan. And that plan was to go ahead and bring in the contractors, renovate everything to where the point that it needs to be renovated to flip those properties and get them off the books. Yep. And you were able to then unload the properties by doing the full rehabs and flipping those. How'd that go? Did you make money on all of them? Were you losing some money? What did that look like? We lost money on the majority of those. But the one thing I do, I guess I love that we were able to accomplish was our investors, if we had any investors, because we were trying to raise other, like outside capital, because we were still looking into doing like land development and some other deals. We didn't allow them to lose any money. and we stayed true to our promise.

Starting point is 00:40:35 So whatever their principal was, they were paid back plus the interest that we promise. That is why you are a person people are going to want to continue to do business with. I tell this to students all the time. If you're going to borrow money, private money, you have got to make sure your investors get made whole, whether you lose money or not. That is first and foremost. Because if you ever want to be able to borrow money again, you've got to make sure your investors are made. whole. And not everybody does that, Donnell. Like, not everybody will bite that bullet. There's a lot of people who start making calls and asking for more money to try to keep the ship afloat and borrowing from Peter to pay

Starting point is 00:41:13 Paul. And sometimes you just have to bite the bullet and you make sure your investors are made whole. And to hear someone say, look, we started to scale. We got into some trouble. We pivoted. That pivot meant we lost money, but my investors did not lose money. Like, that's the kind of operator that people want to work with. And I hope people listening to this, like, understand. It's not just about borrowing money to scale. It's about borrowing money to scale and staying true to your word no matter what happens with that deal. Yeah. I mean, through all of that is then we shifted to different markets because obviously now you're, I think Dallas, Dallas, the Dallas market was tough because now you're battling high interest rates and you're battling high taxes on top of like these inflated

Starting point is 00:42:02 sales prices. So finding, trying to buy deals and trying to sell deals was, it was, it was tough to call. And so we shifted, shifted to the St. Louis market, Raleigh, Durham, North Carolina, and even started looking into Nashville, Tennessee. And St. Louis market, that was just a unique place just because it's like, taxes are like two grand a year. And I'm like, that's, that's two grand a month in Texas. Like, um, on top of like, you can buy a livable house for $75,000. Like, if you try to buy a house for $75,000 in DFW, it's, yeah, you're definitely in, in the hood, like, O'Cliff or, or stop six for one of those places. So, um, which again, like, even the rental, the rental rates in St. Louis was like, I'm like, is this really, like,

Starting point is 00:42:55 somebody, is somebody playing with my emotions right now? That's awesome. So Donnell, you obviously went through some setbacks, and I'm sorry to hear that. That's never fun. But how would you say you got through that and bounced back to kickstart your business? Yeah. It was more so just utilizing the masterminds that we were a part of. Because it was like a part of that was, man, we're taking a beating. Like nobody knows what's happening in the market? Like what are other people, what are other investors? experiencing. It was just eye opening to see, we're not the only ones that we've experienced this. There's like, there are tons of others out there that are experiencing the same thing. And now they're just basically sitting on the sidelines and waiting to see what the market does or like us, just expanding the different markets to see if we can still real estate invest at scale as we once we're doing, obviously just in a different market. Well, thanks so much for joining us today, Donnell. We really appreciate you.

Starting point is 00:43:58 being here. I appreciate y'all. Thank you, sir. I appreciate you. If anyone wants to connect with Donnell or know where to find more about him, just check out our show notes or the show description below. For Bigger Pockets, my name's Dave Meyer. He is Mr. Henry Washington, and we'll see you for an episode real soon. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday.

Starting point is 00:44:47 the host and executive producer of the show Dave Meyer. The show is produced by Ian K. Copywriting is by Calicoe Content. And editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pockets LLC disclaims all live. for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.

BiggerPockets Real Estate Podcast - 913: 150+ Deals in 3 Years and Why You DON’T Want to Be a Landlord w/Don'nell Greer

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