Epic Real Estate Investing - Mastermind Monday - Paul Baird, Mike Webb, Bill Kenny | 508

Episode Date: October 29, 2018

Meet Paul Baird, Mike Webb, and Bill Kenny, 3 of this country's most prolific and successful real estate investors! Find out how their current real estate businesses look, the impact that competition has on Paul's, Mike's and Bill's businesses, and why you should mingle with investors.   Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Epic Field Report. So, Rob, hey, it's good to talk to you. I saw it in follow-through Friday inside of our Epic Pro Academy members area on an amazing deal you did. Congrats. Thank you. Yeah, so I'll just read it for everyone. So bring them on up to speed. Close on our third rental in St. Paul, Minnesota.

Purchased price of 146,000. That'd be 146,000. Leveraged, delayed refinance, collected four months of rent with. no mortgage due, 12-month lease signed with increase, appraised value at $2.30. The total cost to acquire this property is only $1,600. So that's amazing. Let's kind of go through each part of that. How did you find this deal?

Really, I have to thank the Epic Pro Academy family. Another acquaintance here in Minneapolis presented the deal to me, and we really worked closely to do our due diligence and see what we could work out with ultimately purchasing the property. So hats off to the academy members. Cool. So it was a referral inside the family then from inside. Exactly.

Exactly. Very good. I love to hear that and especially when it has a really nice ending. Exactly. So you purchase price is 146 and then you leveraged delayed refinance. Can you explain what that is? Yeah. So I think most people are familiar with a traditional cash out refinance.

A delayed refinance is a little bit different and there's definitely some perks to that. The immediate perk is that you can actually refinance that. money literally the day after closing on the property. So you just have to close on the property. The thing or you need to ask that we to lay refinance those purchase the property in cash. When you purchase the property in cash, what you can actually do then is when you refinance, you're actually leveraging out a 75% loan to value. So the difference there, not loan to purchase price, but loan to value. So if you're buying a property at a significantly discounted price, as the case in this scenario, you can quickly see how that.

that's advantageous for you as a buyer. Got it. So you purchased it for 146, but you're ever able to refy it at a price of 230. That's correct. Got it. And so that's where the acquisition cost of $600 came to place. So that's fantastic. So if cash flows, I presume?

It does. You know, it's like, you know, a few hundred bucks a month. But I did, I've had, there was a long term tenant in place, was able to get her to renew her lease. So she just signed an additional 12-month lease. And we were able to put in about $100 upon not only that equity that we got in the refinance, but also what we're getting from a cashful basis month, month. Got it.

I had a little breakup in the internet right there. It said you were able to put in $100 or something. Yeah, we were able to get $100 rent increase in this in 12-month lease. Yep. Got it. Perfect. So, you know, a few hundred bucks a month, but only a $600 acquisition, that's a pretty awesome ROI.

Have you calculated it? Actually, I have not, but I know it's a good one. So I don't try to say I'm a math genius by any means, but even I know that that worked out pretty good on our end. Yeah, like three, four months, you're whole and complete and you've got no money in the deal. Correct, correct. Yeah, and that was a nice thing. So we were out able to capture essentially a full month's rent and put almost all of that in our pocket for a few months before actually having to start paying the principal and interest on the new one. them. That's fantastic. So what was the biggest lesson learned in this transaction?

Well, I was really intimidated at the whole idea of this delayed refinance, but I think the biggest lesson was is, you know, you just put a little time and energy into it, educate yourself. I really, really leverage yourself and other members of the epic family to give myself the confidence and knowledge to do this. And so by doing that, I just took the step forward. And, you know, looking back on it now, yeah, there was a little bit of the epic family to give myself. bit of a learning curve, but is so worth it and would do it again and would encourage anybody else considering it to reach out to myself. I'd be happy to help them or do the homework on their end, but it's totally worth it. That's great. So thanks for sharing. How are you going to

celebrate? We're going to celebrate by trying to find additional properties to do this. So we know we can continue to keep doing this. And I don't know if we can match as well as we did on our first time around, but we're going to definitely shoot for the stars and do it again. And see if we can get that $1,600 out of pocket to $0 out of pocket and just rinse and repeat. Right. I'll go from $1,600 to $0. I like it. All right.

Rob, so keep doing what you're doing. Stay in touch. Let me know if you need anything, okay? All right. Thanks, Matt. This is Terrio Media. Yo. Yeah, yeah, we got the cash flow.

You didn't know home for us. We got the cash flow. Welcome to the epic real estate investing show. Got a great show for you. I continue to just scroll through my database and find amazing individuals, accomplish real estate investors, and I brought together three of this country's most prolific and successful real estate investors for a mastermind session. And so welcome back to another episode of Mastermind Monday.

So let's get started by introducing everybody. Go ahead and Mike and Bill introduce yourself. What market are you in? And then tell me a little bit about your current real estate business. My name is Mike Webb and this is my partner, Bill Kennedy. We work in the Berkeley County West Virginia Market, which is in the West Virginia, Maryland, Pennsylvania Corridor. We primarily focus on cash flow properties, building our rental portfolio, and also focus on wholesaling in some rehabs. Got it. Super.

My name is Bill Kenny, like Mike said. We've been partnered for a number of years now. I am a licensed agent, so we try to monetize every lead. we take down deals and we fix a flip. Mostly we're buying and rehabbing and renting and, you know, I'll list a lot of stuff. So. Fantastic. Yep.

I'm glad you guys can make it. Paul, what market are you and Paul? And tell me a little about your current real estate business. Yeah. So my name is Paul Baird. I currently live in Salt Lake City, Utah. And our primary business here is to buy and sell. We've had about 14 flips that we're currently doing right now.

and then we have a rental portfolio about 60 properties that we own that we own and manage. And then we do business in San Diego County as well and been in the business for about the last 10 years. Got it. So you're working some San Diego County from Salt Lake? Correct. So I'm originally from San Diego and moved to Salt Lake City about 15 years ago. And I still have family that's in San Diego. And it's just a good way to get back to get to the beach there. Super. That's a good. You know, write it off too. Exactly. Super.

So, Mike, Bill, what's your best source of off-market deals at the moment? Well, we're primarily getting most of our leads from direct mail. We do get, I'd say that's the largest part of it. We've been doing it for a while now, so we're getting some stuff from referrals, from, you know, just Facebook posts, kind of stuff like that. You know, we've, what else would you say? Beyond that, you know, that's kind of our breadbuck. A little bit of Internet, but primarily our largest off-market sources, direct mail still.

Direct mail. We've done some MLS deals, too. You know, it gets tougher and tougher in this market, but, you know, we mix a couple of those in there, too. How is your direct mail look different today than it did say 12 months ago, or does it? Our response rate is probably in half. So, for the most part, about a 1% response rate. The actual mail piece is, you know, same mail piece probably 75% of the investors in this country use. But actual mail piece is pretty similar, but our response rate is definitely down.

We are doing a lot more direct mail than we had in the past. In the beginning, we really got started on bandit signs. And we got to the point where that's almost ineffective in our market. I mean, there's more investors. You know, there's so much education and, you know, everybody's doing it. That's the easiest way to get into it. So we've kind of, you know, that's where we started, and we've kind of just gotten away from that at this point.

And, you know, maybe the market takes the term. We'll get back into that. Yeah. Got it. Yeah, it's funny how the, uh, something like a bandit sign, it's like everybody's bread and butter in one market. And it's like, oh, gosh, that doesn't work at all anymore in another market. As far as your direct mail list, is that the same or is that changed?

Uh, we just try and cycle it up. So it's pretty much the same. We're trying to kind of stack some of those pain points or motivation factors a little bit better so that we're not just blanketing such a large high equity absentee owner list and stack it with some motivation in there. So we're trying to get a little more nimble, a little more specific with those mail lists instead of just dumping more volume on it. Got it. Yeah, it seems to be very much the trend right now. Paul, what's your best source of off-market deals?

So here in Salt Lake City, it's been online. About, I would say, 80% of the deals we close are on Google, paper click, or searches. And then, you know, we do some auctions, have some relationships. We do pre-foreclosures. You know, as they say, everything works some of the time. Or what's the same? Everything works some of the time.

Nothing works all the time. But I would say our bread and butter there is, has been online and then just kind of a few other a few other ways. But I would say in San Diego 100%, well, I couldn't say that. It's online and then we've got some relationships with some agents down there that we get off market deals as well. Got it. Fantastic.

Paul, what trend are you seeing in your business right now that might have you a little concerned and how is it changing the way you're operating? Yeah. So right now, I mean, the market continues to obviously go up. In Salt, I mean, we see that here in Salt Lake. We see that in San Diego. I guess the biggest concern is just how much longer can it continue to climb the way that it is. And so we would say, or I would say, I mean, the majority of our business and we've talked about this is, you know, is the first time home buyer. We don't do a lot of high end big rehab. So I would say, you know,

we're in and out in 90 days when it comes to buying and selling a property. And so we just figure the faster that we can get in and out, that's going to mitigate our risk. You know, and so that's really where, you know, the faster we can turn the properties, the faster or the less risk we expose ourselves to. Right. So you say you're leaning a little bit more in this, you know, we're coming to the end of, likely an end of a cycle. Nobody knows for sure, but it feels like it.

It historically would certainly suggest so that kind of leaning more towards the fast nickel than the slow dime? Yeah, I mean, so of the 22 properties that we purchased, you know, this year, uh, we've flipped all of them and that we've kept, I shouldn't, we flipped, we flipped, uh, well, we've kept four of them as far as reticles and then the other ones we've, um, we're flipping or half flipped. And so as kind of, they just kind of come along.

Got it makes sense to hold, we hold and the other ones we flip. Super. Got it. So, Mike, Bill, what trend are you seeing in your business that might have you a little bit concerned right now and has it changing the way you're operating? I would say that just like I mentioned earlier, the amount of people coming in to real estate investing and you see new lines up all the time. And we both own a lot of properties and we get a lot of direct mail than we ever did before. That's, you know, that's a big thing. you know, the more savvy you are, the better you can talk to sellers so you have those advantages. But also, I feel that the market is starting to turn a little bit.

And that can be a good thing, you know, not so much a concern. You know, we're almost kind of looking forward to that when, you know, prices drop or, you know, less people are able to, you know, pay those mortgages. You know, we're ready for that. You know, we've got several private investors and we've got lines of credit that we're ready to go. So that's kind of something that's on the horizon that, you know, we're ready for, we think. Got it. Got it. Same thing you hear about everywhere is you don't know how much longer it can go.

And just when you think it's gone all the way, it seems to go just two or three percent more, right? I don't know how much longer the current rents that are in our market can support the purchase prices that some of these rental units are selling at. So for us, we just kind of see it as an opportunity to just stay disciplined with our rental property criteria and stick to it. So, and then whenever the music stops, hopefully we can pick up a couple seats. Yeah, two very different markets you guys are in. And, you know, it's already, the nation is very much showing some signs in some areas of slowing or maybe even stopped, right? and in some areas are still showing robust appreciation. And yeah, good.

I'm just always curious. So you get a good, I don't know, consensus from across the country of what's happening and because of real estate being so local, it's a little bit different everywhere. So thank you for sharing that. What, you guys, what system or technology have you implemented in the last 12 months that's had the biggest impact on your business? Bill and Michael, start with you. as far as system, I would say it's something as simple as we just hired our first assistant, right?

That's something we probably needed to do a year ago, but it's nothing glamorous. It's no podium or call rail or anything like that. But it's something that simple has been just monumental for us to kind of offload some of those administrative things that, A, we don't like doing. B, we're not very good at. And it's allowed us to open up our time to go look at deals, talk to sellers, talk to, lenders, things that really matter. So maybe you have something else, but as far as I'm concerned, that's probably been the most impactful thing we've implemented to our business.

I mean, really, we've stuck with the tried and true stuff, you know, podium, you know, kind of the basic podium system that works for us. A lot of just a lot of follow up. We could get a lead. We just follow up, follow up, follow up. I did hire an assistant who was kind of slash my realtor assistant slash our investor needs. and she was really good with our social media presence. And once again, you know, building systems.

And we just brought in another one that's another lady who's going to work specifically for our investor business. So, yeah, it's just, you know, because we were kind of loosely together for a long time. You know, pretty much a handshake agreement, very honest with each other. It's worked out really well. We've been doing it for four years. But in the last six months, we've really kind of gotten together. We put an LLC together, put a business plan together, and we really started to go after it. You know, our goal is to hit 25 units.

Sorry to get a little bit off topic here, but, you know, that's, we've kind of changed directions, and that's where these new systems and things have developed from. Yeah, I mean, certainly hiring help and taking some of that mundane stuff off your plate. They're going to allow you to spend more superior time towards those 25 units. So that's good. No, it's not off topic at all. So thanks. Paul, what's the, what system or technology have you implemented?

in the last 12 months that's had the biggest impact on your business. Yeah, I'm going to go ahead and echo what Mike and Bill said about 14 months ago. We hired a property manager to take over the 100% of the property management part of our business, which has agreed our time up a lot and giving us the opportunity to go go find more deals. Super. Yeah, help is helpful. Right? Paul, what's the biggest mistake you've made this year? And what did you learn from it?

Oh, man, where do I start? You know, I've always, it's interesting, I would say here in Salt Lake City, one of the biggest things is we rehab, we really don't wholesale at all. We do everything, kind of keep it in-house. And I've known, based on the experience that we have, most deals that we close, they happen within a 10-day period. From the time that we see the property, the time that we close on the property, that's how fast we tend to buy these from sellers. I think one of the biggest mistakes that I've made is that when I get a phone call

that I am on that person's doorstep as fast as possible. And I can remember within the last two or three months. For whatever reason, I waited like three or four hours until I could actually be out at that property. And the next thing I knew, I showed up to the house and somebody else was already in the door. And so for us, I mean, we hear it in sales or whatever it is. You got to strike while the iron's hot. And, you know, when there's, they're motivated sellers for a reason. And we have a solution for motivated sellers. And so we just got to be there. when they call. And so we really try and take it upon ourselves to be there as soon as possible when we receive a phone call or lead or whatever it is.

Yeah, particularly, I guess that's especially, I mean, it's always the case. I mean, speed is definitely a competitive advantage for any investor. But I can imagine when most of your deals are coming from PPC, that's even more so because they're looking for you and they need help right now. No, absolutely. And there's obviously competition when it comes to pay-per-click and know that you've spent money, you know, when they picked up the phone to reach you, so you want to be able to kind of maximize that as much as possible. Mm-hmm. To flip it on you, Paul, what's the biggest win this year?

And what did you learn from it? So I think the biggest win is just us kind of scaling our flip business in terms of hiring a project manager that instead of, you know, when we first started this business, we were probably visiting a flip three, four, five times a week, right? because you want to see what progress has been made. But, you know, in the last year, we've hired a project manager and we visit properties once a week.

We get an update. We go visit the properties. But that's pretty much, and we make whatever decisions need to be made. But other than that, we've empowered somebody else to kind of make those decisions based on the systems that we have in place in terms of the finished product. And that's been a huge win for us. Awesome. Congratulations on that.

Always feels good. Bill, Mike, biggest win you've made this year, and what was the biggest lesson from it? Biggest win this year has easily been the market or the meetup group that we've started in our county. We've kind of structured that, kind of like a RIA, not so much, a meetup,

and we've had pretty solid attendance. We've been reaching out to some of our past contacts and some people in our referral network have come and spoke and provide a lot of value. Our goal there is to provide a lot of value at no cost. Let's just make friendships. Let's lean on each other when we need each other. And a lot of stuff has come to us from that. And that's been a huge win.

It's been really rewarding for both of us. So your meetup group is a group of other investors, right? Yeah. We just call it the Berkeley County real estate investors. And we meet the last Thursday of every month in our city there, which is Martin Spurn in Berkeley County. And I guess we've been doing that for about six months. We've just kept it kind of basic. We're not big on the production of it, right?

It kind of started by a bunch of guys wanting to talk about real estate. So we got people with never done a deal to people that have over 100 units and everything in between. So it's worked out great for us. In fact, after our last meeting, last month, we picked up a deal right afterwards, like from the meetup. So it's great. So that's probably our biggest win so far this year. Got it. It's interesting.

What you guys said, and I don't know if you guys have recognized it is that one of your biggest concerns is a lot of the competition that's coming in, but then you hold a meetup group with a bunch of your competition. Have you found it more beneficial or more, you know, counterproductive? Definitely more beneficial. Absolutely, right? I agree. I agree 100%. I think I've gotten more benefit from networking with other real estate investors than I've ever lost from the competition. Yeah, huge. It's just crazy. It just goes back to the power of like a, you know, handshake and maybe grabbing a beard talking about stuff, right? You know, a CPA or I need a this or, you know, everybody's just bouncing stuff off each other. We've got other wholesalers in the meetup, right? And they're selling property. Sometimes properties we've looked at that just didn't make. make sense for us or we didn't get. And, you know, it's just kind of a place to pass deals around. And there's about, you know, four, five, six big players in our area. And we know them all. You know, we're good with all of them. You know, it's really good. And, you know, several of them come

to our meetup and, hey, you want to buy this? Hey, I got this one. I got a buyer for that. You know, it's great, you know, teamwork. It's awesome. I'm glad we got there because that is a concern for a lot of people and probably a lot of people that are listening to this right now that are thinking there might be too much competition or there's not enough to go around and and uh i just think such the opposite i mean the the common answer is like i live in a world of abundance and there's always enough but i'm also looking at it as investors you know every investor is a buyer at one time and every investor is a seller at another time and and you can't have enough of those in your databases your your business will benefit from it do you see the same thing paul do you have the same type of relationship with investors

Yeah, it's interesting that you bring that up because I would say if there's a weakness that I have, it's like I'm not very good at networking. I'm not very good at going to the next Ria meeting and going and talking to other investors. I will say that in the last two months, I've tried to make that a little bit more of a priority. And I have gone to other or gone to networking, networking events. So, no, there's absolutely value in talking to other. investors. I was just talking to one on Monday that does a lot of higher-end stuff. And absolutely, there's a lot of benefit from talking to other investors. Sometimes I just get so focused on me finding the next deal or whatever it is. But I know that I can take advantage of talking to other

investors and seeing what they have out there. Absolutely. Paul, what's the best book you've read in the last 12 months? And what did you find most valuable about it? The last book I read was just on my desk and I gave it to our property manager yesterday. But let me look here. I write a journal entry. Okay, perfect. So the last book I read was a book called Relentless. And it was, it's written by the trainer of Michael Jordan, Brian. And, you know, it was just kind of a real in your face. If you want to go out and be successful, you've got to just go put the work in. And I really found that, you know, it wasn't necessarily real estate related, per se, but there's a lot of things that you can apply to the real estate business in terms of, you know,

what it takes to be elite in whatever business or industry that you're in. Yeah, agreed. Yeah, with audio books being eight, nine, ten hours these days, relentless was one that actually listened through from beginning to end. I enjoyed it as well. Bill, my best book you read in the last 12 months and what did you find most valuable about it. I would definitely have to say the most impactful book for me in the last

four months has been a book called Extreme Ownership by Jock O'Ellink and Lake Babin. It's a book that's premised on a lot of combat leadership principles that were learned during the war in Iraq and how it relates to basically every facet of your life, whether it's personal or business. So, Bill. Well, the last book that I read, you know, was profit first. I mean, I just found that to be just an amazing system for how to, you know, take profit and let that drive your business forward and how to just, you know, structure, which we haven't had for a long time, which we're building now. And so it just falls right into that category.

But, you know, two quick other books that I always like to mention is what got me started was rich dad, for dad. I'm sure you've heard that a million times. But that's like. It's nice. Yeah. To the Bible. Of this stuff. And, you know, I'm a Keller Williams agent.

So the one thing is something I'm quoting all the time. I mean, that's just always go back to that. So many good principles. Yeah. Great. Great suggestions. Absolutely. So, Paul, what's in the future that has you most excited and why?

Yeah. We're just excited to continue to be able to grow. I think that we really got into this business when we started. And the reason why we got in the business was to be able to flip properties, be able to have the cash available to go put them in rental properties and kind of live a residual lifestyle, right? And so, you know, for me, I love the idea of finding the next deal going out, talking to a seller. But ultimately, the bigger goal is just to be able to continue to build a rental portfolio

and, you know, build the cash flow. Right. That's great. Yeah. It's a good formula. Flip for cash flow for cash flow. and the one feeds the other. And boy, you can get out of this rat race really quickly with that formula.

Bill, Mike, what's in the future that has you most excited and why? Well, we've actually, when we joined forces and went at this hardcore here in the last, you know, six to eight months, we've actually, we actually did it with really no money. We've funded it through our flips and through our wholesales. That's how we've funded it. We've turned that back into our buy and hold, you know, just refinanced these properties. So what's really exciting is that, you know, we pull from each other's strengths. We're building a strong team here.

We're building systems. And, you know, we're on pace to really double our rental holdings, you know, I would say in the next year. So it's, it's been a great partnership. Yeah, that's what gets me excited is knowing that, like, if you just go out there and stay consistent, right, the market might change a little bit. But as long as you just stay to your criteria, it's never really a bad market, right? you might slow down. You might sell more right now versus buy more. But whenever the time comes, we're just going to pick it up and maybe double

triple our portfolio. And he said live for that cash flow. Right. It's awesome. Yeah. Consistency. It's everything. You know, if there was one way to beat the competition, it would be consistency, I think.

You know, everybody could do it. Not everybody will. And that's where the opportunity lies, I think. So great. Mike, Bill, if anyone wanted to get in touch with you, what would be the best way for them to do that? Go to our website, MDWV Homebuyer.com, Maryland, West Virginia Homebuyer. Or we're both on Facebook.

You can reach out to us on Facebook, Instagram, whatever. Just send us a friend request or shoot us an email through our website. It's MDWV? Yep. The abbreviation for Maryland and West Virginia. MDWB Homebuyer. Homebuyer.com, perfect. Paul, someone wanted to get in touch with you.

What would be the best way for them to do that? Yeah, we buy Salt Lake City Houses.com. We're on Facebook and Instagram as well. Super. Everybody, thanks for participating on this episode of Mastermind Monday. Let's do it again soon. Sound good? Sounds good.

Thanks, Matt. Thanks for having us. You bet. You bet. So if you'd like to do deals and you'd like to build wealth, stay tuned here. Seven days a week, we hold nothing back. And if you'd like to go fast, go to R-E-I-A-S dot com. Until next week, God bless to your success.

I'm Matt Terrio. Give him in the dream. Yeah, yeah, we got the gas flow. Yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know, home board, we got the cash flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.