The Science of Flipping - The Secret That Built a $100 Million Portfolio in 5 Years | Casey Ryan Quinn

Episode Date: June 14, 2024

In this episode, Casey Ryan Quinn, a seasoned real estate investor and licensed accountant, shares his journey of building a $100 million real estate portfolio in just five years without using any of his own capital. He dives deep into the strategies that propelled his success, including mastering the financials of real estate investing, leveraging seller financing, and understanding market dynamics. Casey emphasizes the importance of knowing your numbers and having a robust back office that supports decision-making. His story is not just about the accumulation of properties but also about optimizing investments and structuring deals creatively to maximize returns and minimize risk. The episode is a treasure trove of insights for anyone looking to scale in real estate with a keen eye on financial detail.---Connect with Casey!Instagram - @caseyryanquinn---Thank you to our sponsors for this episode: Bateman Collective - Digital Marketing That Drives Motivated Seller Deals. https://www.batemancollective.com/ Fund and Grow - https://www.fundandgrow.com/ ---The #1 training and coaching system to launch, grow, and scale your investing business! 𝐋𝐞𝐚𝐫𝐧𝐌𝐨𝐫𝐞: http://www.thescienceofflipping.com Turn cold real estate leads into engaged motivated sellers on auto-pilot using the power of A.I! 𝐋𝐞𝐚𝐫𝐧𝐌𝐨𝐫𝐞: https://www.rocketly.ai/ Have a question? Ask me anything at https://www.askjustin.ai/  𝐀𝐛𝐨𝐮𝐭𝐉𝐮𝐬𝐭𝐢𝐧: After graduating from UCLA in 2003 with an English degree, Justin went directly into business for himself. He has never had a W-2 job. In 2005 he got into real estate by co-founding a brokerage in the Northern California area. Quickly he realized that being a realtor was not for him. In 2007 he got into real estate investing full time. 16 years later, Justin has flipped well over 2600 properties, accumulated millions in rental properties, and is an active investor to this day. His success in real estate led him to start The Science Of Flipping podcast and education company, where he has coached and mentored over one thousand aspiring and active investors.  He is a nationally recognized speaker and is on a mission to educate as many people as possible on becoming a successful dynamic real estate investor.  𝑾𝒉𝒂𝒕𝒕𝒉𝒆𝑷𝒓𝒐𝒔𝑯𝒂𝒗𝒆𝑻𝒐𝑺𝒂𝒚𝑨𝒃𝒐𝒖𝒕𝑱𝒖𝒔𝒕𝒊𝒏:  “Justin is one of the best trainers in this space. He really gives everything to his tribe.” – Brent Daniels (TTP)  “Justin’s ability to connect with people and help them understand what he is teaching, is unparallelled” – Kent Clothier (REWW)  “We have been in the trenches flipping homes in Phoenix for over a decade, he is one of the best to do it.” – Sean Terry (Flip2Freedom)  Subscribe To Justin Colby: http://youtube.com/justincolbyView All My Videos: https://www.youtube.com/c/JustinColby

All right, Science Flipping podcast listeners, as always, this episode is brought to you by Rocketly.ai. If you're looking for a seller lead generating system that has automation in AI bot and has sellers coming to you, then Rocketly.ai is your choice. Make sure you head over to the website, fill out an application and schedule a demo now to see the power of rocketly.ai what is up science floating family i am back with an incredible guest a close friend of mine this man has over a thousand doors he's been doing this

for over a decade he's an expert real estate investor but he's also a licensed accountant he knows his damn numbers casey ryan quinn is in. What's up, my guy? I had to make sure. I wanted to throw that Ryan in here to make sure, you know, who you are. So our guy Ken always makes fun of it now from when I run on stage at boardroom. Casey Ryan Quinn. Casey. I mean, that's why you're going to do it. So first of all, go follow this man.

I talked to him a lot about, you know, buying more and more property. So if you are buying any level, whether you're flipping, whether you're buying and holding, you need to know your numbers and we're going to dive into it. But first, where does your real estate portfolio stand right now? Yeah, man, we're up over a hundred million. And it's funny, you said I've been doing this over a decade. Yes, I've definitely been doing finance and accounting over a decade, but tomorrow marks five years since I started investing in real estate. So in five years, we've been able to build over $100 million portfolio.

To your point, we're right approaching 1,000, not quite there. We've definitely sold a bunch. We've done a bunch of flips and things, but we would have been at over 1,000 doors if we'd ever sold anything. But we'll be there soon enough. We've got another 40-unit deal we're closing this week. We buy three properties. We're buying a property every three days at this point, a single-family home in our local market. So it grows quickly at this point. So are you more focused on single-family or multi?

I would say both. I mean, we're making some moves here to get into the multifamily space. It's been tough over the last year. We did in February buy our largest deal to date, which was a 98 unit deal. Really cool deal. I got 95% seller financing by structuring it absolutely wildly. We took over the existing LLC as the GP, restructured the whole thing. 50 Gs in legal on that one. It's the sun money out of pocket. Yeah. I mean, listen, we bought it for 7.5 million. Right now, today, it's worth a little over 9 million, significantly under market rents as it sits as well. So the really weird caveat to it all is there's a stipulation of the gentleman that

owns the property that is now an LP on the deal, that structured the entire deal, manages it on behalf of his mom. And so they're essentially not selling it, if you will, when we were able to create this arrangement, uh, until mom unfortunately decides to no longer be with follow Jesus and God to, to another world. So do you, so when a deal like that has to get that creative, do you get in the trenches and structure the deal yourself? Oh, that was a hundred percent me. I love deal structuring, especially on the multi. The single family stuff, you know, I typically don't get involved with the structuring. I manage over top.

We borrow most of those. Based, right? Yeah. And I have a team. I mean, the financing stuff, I'm definitely still involved with. I have all our banking relationships. You know, I review all of the underwriting before it goes to the bank. So I still do that.

I mean, that's probably an hour every three weeks. It's not a lot every three weeks. It's not a lot anymore because we have such a routine. But the multifamily stuff, I'm still very actively involved. That specific deal, I was involved from day one, early on negotiations. I handled the entire negotiations. I handled deal structuring. I even managed a legal one at all because it was so complicated. But the 40 unit deal, for instance, I wasn't as involved. I don't handle the basic underwriting I review at all. I don't handle the due diligence anymore. I don't even handle the attorneys. My COO handles that. So we'll buy a 40-unit deal

where I probably spent five to 10 hours total on it. So yeah, we've been able to really build a good infrastructure, right? Because again, it's all about me finding my time to manage my team because we have such good numbers. We have such good bookkeeping that we understand our business and don't necessarily have to be trial by fire, if you will. So you're ahead of me in terms of where I want to get. And there's so many, as I'm growing and like, we're going to buy another apartment here, I think close the end of this month. So that's like three apartments in this year alone. Great.

It's not. We're ahead of most. to structure it. And why I say that is because Grant Cardone last month or last week or whatever just funded the largest all-cash apartment in the state of Florida for $150 million. Wow. I'm pretty sure I understand

his structure. He goes in and gets a fund. He raises it through the fund, buys it all cash. Yeah. Which right now is a really good idea. We're actually,

in the middle of conversations, a couple partners and I, where we're going to go after big multi, and we're doing it that way as well, where we're going to close all cash through investor capital that we raise and then quickly turn it to refinance it on bank maybe a year or two years later. So that's what I was going to go. So his model, he takes a pretty large acquisition fee, correct? I don't know as Cardone does. Yeah. He's actually got sued for it before. Cardone did. But he got out gardone does yeah he's actually got sued for it

before cardone did but he got i mean he's doing it the right way as long as he discloses it all and talks about it all as long as his marketing's on point yeah right and that types of deal sizes and the way they structure that with the with the sec as long as you're following all the rules if we could charge whatever you want i actually was had a deal another guy that i was in on a deal with he did another deal where he took a 25% acquisition fee. And he didn't tell me about the deal, obviously, because he knew I would not be happy with that. Because I understand real estate. But the numbers pencil.

You know what I mean? And the investors are happy and they're willing to invest still and take whatever you want if it pencils. So how do you guys structure your, when you go for multifamily commercial? Yeah, so obviously the 98 unit, we didn't raise any capital because I got 95% of the capital from the seller, but we've done four syndications in total on four multifamily deals. And all four of those I've structured identically, super simple. What we do is 75, 25%. So we take the 25% equity. We bring no cash to the table at all. 75% is the cash to the table. And we do 8% preferred returns paid quarterly. And that's all in an entity. Basically,

you're not going and creating a fund. You're going and creating an entity, getting the operating agreement that shows their ownership in that entity. Yeah. I mean, it's similar to a fund. It's a syndication. And so it's a- But you can use that word a couple of different ways,? Like you can create a syndication of a property. Like right now, this third one, we're going to syndicate it, but all the investors are going to own the LLC. Yeah. Right?

Yeah, same concept. Yeah, instead of going and getting the actual fund and spending the $15,000 to $25,000 to go get the, you know. Yeah, I mean, really, it's just a different way to look at how you're spending money on legal. Right. If you've got a bunch of partners coming in on a JV, right, a joint venture or operating agreement, you're still going to need an attorney to make sure those stocks are good.

You're still going to have to answer attorneys on the other side, right? So it's just a different way to fund it and a different way in how you have to report to the SEC, right? There's reg A's, there's reg D's. There's all kinds of different ways to do it. This is just an entity. And I find at the price point, this is like 1-1, right? So at that price point, it's not worth all of it. No, it's not.

And that's why I said, listen, instead of going through this route where we can get the whole fund and the reggae or whatever, let's just go have you guys be GPs, true ownership, et cetera. Yeah. It depends on the deal size, right? I'm closing next month. I'm less than a month away now on a 40-unit deal. We're acquiring that for 2.4 million. And instead of doing a syndication, instead of raising a bunch of money on that

specific deal, I needed 700,000 to come in for our equity on the deal. I gave that to a partner. They're bringing all 700, just one person for that deal. They're part of the LLC. So the deal that we structured to make it easy, I him 50 yep so we're splitting a deal 50 50 on equity side and then their money's actually coming as debt yep what an eight percent uh eight percent it's not really a prep it's interest right because they're going to be higher up on the balance sheet because they're debt yeah so they're 700 it's just going to be dead at eight percent interest for five years so that's the same thing i just have four players you have one player yeah and that's it i mean i mean as debt at in as debt at 10 i want to get your 8 guy but they're coming in at 10 part of it is i just i just over perform right well 10 is tough but in this market it must be really undervalued deal

because you're probably going to add we're at value yeah because 10 right now on a stabilized asset is really tough to pay off we're buying it at 300 grand, putting 750 into it. Yeah. So we're basically buying a shelf. Yeah. So we're building out. Yeah. Yeah. Um, and so, which for someone who has some limited apartment, I like it. Meaning I have a blank canvas. I don't have to go get tenants out. I don't have to wait. Do you have up the top of your head? I bet you don't know this answer, but this is me right into the numbers. The 750, how much equity values I can add to the property? About a million. About a million. So you're going to put 750 in and create 1.75 in value to the property. So you can afford 10%. Now make sure you can pay it out. So you're

going to have to defer the payments or raise enough cash that the cash itself can pay back during the renovation period. I'm sure it's going to- Well, it's all back-ended, right? So they get their money when the money comes back out from the refi. So because we'll be into this call of 1-1, it'll have some sort of valuation of, I mean, who knows, but we're guessing somewhere between 1-6 to 1-8, all of the money is going to be coming out of the thing, right? So you can afford- Yeah. 10% is nice. Really good, actually, for that.

Because the numbers work, right? And they're not counting. So their IRR, they're counting on timing for you to perform, right? Maybe it's a year or two years. But if you push that thing, right, and you're going to do it all right away, I'd imagine IRR comes down because they're not seeing cash on a monthly basis, on a quarterly basis. My deal is 40 units.

It's fully occupied. We're going to turn them all, but it's already cash flowing, right? So the 8%, we can afford to pay that out, but we can't afford to pay much more. As a real estate investor, one of the most challenging hurdles you'll face is figuring out how to fund your first project and then how to keep the money rolling in for all the projects that follow while holding on to as much of your profits as you can. This is a challenge that today's sponsor, Funding Grow, knows all too well. They've built a strategy that has helped tens of thousands of real estate investors access 0% interest business credit for their first, their third, their tenth, even their hundredth deal.

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this is the space I want to just keep pushing into. Heck yeah. I like the blank canvas. I know they're just hard. Like we've just lucked out to be able to find three apartments that we've been able to have the opportunity to build out, But they're in those type of neighborhoods also. I'm not buying necessarily in B&A neighborhoods. And it's because the numbers make so much more sense. So I'm also going to do something I've never done before and go section eight. I'm going to section eight all three separate apartments. I love that, man. We'll have to talk offline. I can give you a lot of- Oof, let's go. Yeah, I got a lot of-

It doesn't have to be offline. Let's teach the people. Yeah, I've got a lot of section eight in my portfolio. The crazy thing right now in my town, if you put $10,000 into a renovation project at a home, Section 8 gives you another $1,000 a month for the full first year that you put a Section 8 tenant in there. And right now, Section 8 is paying above-market rent. So we've got a unit, for instance, that might rent for $1099, right? Fully renovated unit that we add over $10,000 into it. Well, Section 8 right now might be paying $1499. But if you put $10,000 into it, they'll actually pay $2499 a month for a full year. So you're getting $12,000 back on a $10,000 renovation back in the rent year.

So it's free renovation, plus you're getting above-market rents from section eight all of this man right now casey ryan quinn on instagram the reason is just because you know affordable housing is it's such a premium it's really hard to find right now and so the government has to do something so that they don't have people living all over town right especially depending on where you're at this is in pittsburgh right right so i can only imagine the bigger cities if you get to a bigger city it's even better i'm buying in birmingham for what i think most people are going to see here in the next four years people can't afford to live outside areas that are priced the way birmingham's priced right this was i mean this is exactly why we bought i mean i'm from pittsburgh so but kind of got lucky. I always want, I massively believe investing in your hometown. I get it when you live in Miami, you can't.

Not, not as easy. Right? It's a lot more difficult, but it makes it way easier for us. But we also knew coming into this thing, we are the, we, Pittsburgh was the cheapest market in the country from a cost of living perspective. And so we knew we could only go up compared to the rest of the world, right? The rest of the country. So we've got lucky from that standpoint too. Just this last year, we're actually the highest, the fastest growing home prices in the country, right? It was all over everything else.

Yeah. Pittsburgh. 22% year over year, I believe it was. Now, we're not taking massive advantage of that. That's insane. When we get to a point where we're ready to recap all of our recap properties. But it's a long game. I mean, I think that's the other thing. I think you and I also realize I'm not doing this to go essentially get rich now. Yes, I make a lot of money and whatever,

but it's more about the long game when you can go back in five years and say, hey, this thing's not worth 2.8, not 1.7, right? You know, it's incredible, right? And, you know, I know we want to get into a little bit of talking numbers here later on the podcast. But the really cool thing is if you could figure out how to live your life and do things where you make money outside of the actual investment in real estate. So instead of flipping it, right, if you can have a coaching program or you could do something where you're making enough money that your lifestyle is okay. And you can keep more of the real estate. Yeah. I mean, and it's a numbers game, right? And really understanding how to look at a balance sheet and how to understand the wealth that you're creating. Yeah.

And how easy it is to borrow, right? And to build your wealth by looking at the numbers. Because the reality is, let me just want to run through an example right now. A single family home and why I preach keep it. So I'll give you an example, right? And I'll keep the numbers simple. Let's say we buy a home for 150 grand and we're planning to flip it. And so we're going to add a hundred grand to it. So we have a 250,000, we're all in for $250,000 and we can sell it for 400 grand. Okay. Right. So that's a really

nice profit on that. We can sell for 400 grand. Okay. Right. But let's just say, right, we're going to sell a 400 grand. We're going to pay selling costs in Pittsburgh. It's 5% transfer taxes. So we're going to pay two and a half percent of that. And then we've got realtor fees, unless we're our own realtor, which I would love for all realtors. And we obviously, I own a brokerage as well, but let's just say you don't, right. And you're going to pay five or 6%. So let's just say five, you pay half of that, right? I'm sorry, no, you don't. You pay all of it. So you paid a full 5% realtor fee.

So you're at 7.5% of your 400 grand that you owe out plus other closing costs. Plus most of the times when you sell a home, right? You're selling to a first time home buyer on a flip. Well, guess what? They're going to come in and beat you down through inspection because it's not going to be perfect. Let's be real here. They're going to nickel and dime. They want a perfect home. So something's wrong with the basement,

whatever, called 2%. So you're looking at roughly 10% that you're going to pay. So $400,000 less $40,000, you're actually going to net like $360,000. Not only that, when you flip a home compared to when you keep a home for rent, there are certain things when you renovate the home that you don't have to do because you're not selling to an end user homeowner you're just renting it like finished basements right or like there's certain things in the home right it depends on your market for us in pittsburgh we have a lot of wet basements right they're unfinishable so you'll

have to go in and you have that way to all make the clean term when something's unfinished just wet or or it's literally damp that's literally when something's unfinished, just wet? Or it's damp that's wet? Yeah, it's literally wet in our town where it's damp, it's moist. Yeah, yeah, yeah. But that plays a tool, right? So a lot of times you'll have to paint over the walls, right? Different things. And so for us, it's like 20 grand usually that we have to put in an additional capital every time we flip.

Because when COVID took off, we flipped probably 30 homes. Yeah, yeah. Right? We were flipping a lot because it was like, oh, my God, we can take advantage and make a ridiculous. Sure. We were making good money on the flip because they were paying way above appraisal value.

Yeah. Right? And justifying that. So we have to do that. So call it another 20 grand. So you're at 10%. So 400,000 less 10% is 40 grand plus another 20 grand is 60 grand. So you're at 10%. So 400,000 less 10% is 40 grand plus another 20 grand is 60 grand. So you're really only going to net probably, right? 340. If you go refinance that home,

because you can get money from a bank and you can get an 80% loan to value on the home and rent it, you're going to get 320 grand. So the difference is only 20 grand, right? But you have a cash-flung asset in building wealth, and you have all of that net equity wealth sitting on your balance sheet, on your personal financial statement, so you can go borrow more. You're worth more money. Yeah, call it bankability, right? Bankability, right? So you do that on repeat, right?

The bank's giving you more money, and all you really had to do was give up 20 grand on that specific day. But this is why it's really important for someone to have income that they don't have to rely on. Like the sole fix and flipper, a lot of times that's hard, right? This is your only income. So you want that extra 20 grand because the next flip might take, you know. Let me take it one step further for everybody listening. We didn't talk taxes. True. So you can sell it and you can net 340, 340 of 250 into it. You make 90 grand. You refinance it. You get 320, right? 80%. The difference is 70 grand that you get. So you could pay taxes on 90 grand or you can get 70 grand tax free. True. Which one do you want? Right. Right? Do the math. Now, are you seeing those numbers in today's financial economy?

It's definitely harder. It's definitely harder for us, like that exact example, you know, where we would have, where when the market was taking off, we were netting a good 30, 40 grand per refi. Yeah. Tax-free. And we were able to scale the business. Right now, our goal is to break even on all of our burrs. All right.

So our goal was to essentially get into it and get out of it with no money. A dead zero break even. Now we have some wins, we have some losses, but we do it at scale. I mentioned at the beginning, we buy property every three days now. Well, that's the key. So I'm on that kind of buying trend is every two to five homes a week, just some weeks are higher and lower but at scale these numbers work a lot of the people aren't at my level your level right so we also have to understand to get there you can have some wins and losses and at scale the wins outrun the losses right yes when losses to you is like you have to leave 10 grand in the deal that's a loss that's a loss it's not really a loss it's not really a loss yes right i always talk about that to a lot of people of, you know, because we evaluate that as a company.

We have 50 employees and we always talk about a loss. The reality is it's not really a loss. Think about any home anybody's ever bought. You have to put money into the home. Right. When I bought my home that I live in currently, right, I put 20% down. That's how much money I put into the house. Now we're saying 10K we have to leave in.

That's it per deal. That's a loss. Well, in the Pittsburgh market, what are you looking at in terms of net revenue a month on a single family? Our goal is always 200 to 250 net cashflow per month per product. What happens at the refinance stage? This just happened to us. That's what I'm going to ask. It goes to 76 bucks a month net, but you could go make 40 grand on a flip. It's a tough call. I'd evaluate what you need. I would still say keep it if you can, particularly in any market that you're ever in, because look, appreciation is real. And so if you can afford to keep it, $76 a month in cashflow and that net wealth of which you can continue to borrow on as you grow, because banks like you more, you're more bankable with the right back office in place, of course,

because you have to be able to track and show that well. Yeah. We have a lot of deals that don't pencil at 250 a month. The reality is they don't, I really don't even count on the cashflow. Right. Like we look at that always as bonus, right? Because we have a management company that we're paying. Um, and we want to continue to scale that business independently and separate. And so we're adding a bunch of value in other places for us that we're okay if we lower that cashflow on those deals. So we definitely have lately, we always try to maximize cash out, right? So if the question is, hey, you can cash out and get an extra 10 grand today to get to break even, but your property is not

going to cashflow. I'll still take that all day because we're scaling and growing. So again, at scale, that makes sense. But for the person that has one, two, three, four, five rentals, what happens in that maintenance tenant tears the thing up, maintenance breaks a window and you're essentially net even. Yeah. At scale, you can afford to take that L. But for the person who owns this is why like i have a hard time advising people to go buy a rental or two like learn what we know about raising capital learn what we know about syndicating and all the different ways of syndicating because you don't need your own money and you can actually go buy a rental a month a rental every two months

is better than justin even that even that, I still believe, even if you have to put two, three grand into it every year, you're still getting all of the net equity. You're still getting the appreciation on the property. Most likely in most cities across the country, you still appreciate it. What's the point, right? That's my, so I guess where I'm going is you got to be able to go, I'm going to go by, like, I want people to go by one a quarter one a quarter i love that right because even if you're a w2 employee again there's ways to raise money we're going to go

start traveling the world and speaking together about how you've raised money how i raise money there's ways to raise money that even if you have a w2 you're a licensed accountant even if you're stuck being a true accountant still the big four you don't have to use your own money and you go buy these things without having any of your own cash. I say partner with somebody. Totally. Right? If you have a couple bucks because you have a really good job, partner with someone, make sure you're getting one a quarter. Yeah. Right? Or if you don't and you have the time, find someone that has a really good job that they're willing to partner with you because 50% of four single family homes a year is still great wealth, particularly in our market,

where we know inflation's real. It's always going to be real. It's still a great retirement. Well, we just talked about it. You're doing it on one of your apartments, right? 700 grand's coming in. You're doing a partnership agreement. I'm doing it on one of my apartments. I'm basically syndicating the ownership group, right? So it's going to be an ownership group. I say that because it's relatable in terms of like ownership groups by football teams, baseball teams, ownership groups, right? Yeah. Percentage ownership. People can do that, right? If you're listening or watching this, you could call, go hit up Casey, go hit up me. I mean, there's opportunities out there that like we're always looking for something bigger. Today's episode is brought to you by our

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And reality is we have five or six deals total that we don't have 100% equity. We have over 300 single family homes that my partner and I own 100% of all of the equity in all of those deals, right? By using other people's money. The reason is, is we have a really clean, good back office that we can show exactly what other folks are getting into, how we manage the capital, how the investment's doing, how's the deal's going to do. Even those deals that we talked about that might be short-term losers, if you will, we had to leave a couple bucks in there. No problem, right? We have borrowed debt on the back end that sits there. Guess what? It gets paid off, right? And we're maybe not cash flowing as

well from the deal because we have to pay off that second position debt. But no problem. We still own the equity in the property. And last I checked, it's going up. Rents are going up. Single family homes are really cool because it's not just based on rent because you could always sell it to a homeowner. On the multifamily five plus, you're always generally going to be selling that to an investor. And so it's much more based on what's rent going to do. That's how the value of the property goes up. More based on cap rates, which I don't think we want to get a ton into that.

But that's ultimately based on what's your market doing? What's the market saying? What are interest rates? What is rent? I think people who don't continue to do both are short-sighted. And the reason why I say that, people get so drawn into Grant and his whole apartment thing. I love it. It's not wrong. It's right. But it's an and, not an or. You're echoing it. I'm going to say it in a different way. A single family home, you could do a seller finance

deal where you now no longer need to be the landlord and you can sell it for a premium, get your cashflow each and every month, which elongates the payoff. So your tax situation is even better. And then there's a lot of times where those buyers default and you get to go do that again and again. You're likely really going to only focus on single family homes in that. Same way you can flip it, but you have multiple exits with a single family home. To your point, really everything's based around rents, cap rate, et cetera. You're really looking for an investor, right? So you don't quite have as much wiggle room as you necessarily would with single family. I think it's an and. I'm going to start going into multifamily, too, when we had some track record, we had some experience and we wanted to start branching into multifamily. People said, well, you've got to stop single family home. And I always said, I'm going to do both. Why wouldn't I do both?

Single family home is such a it's much less risky at the end of the day because of your point, there's so many exit strategies, right? Because you can, like, I always just go back to the most basic exit strategy is you get the tenant out, clean it up, and you can sell it to a homeowner, right? Last I checked, everybody needs a place to live. It's not changing. I mean, it's only going to get worse and worse and worse because people are having a lot of fun out there and creating a lot of families, right? And I don't see the builders, at least in the areas I'm in there's still no builder activity the loans are too costly for them um not saying it's not happening at all but i'm not seeing the bigger builders go out and build at scale like we did previously right covid kind of shut it down and they really haven't started since covid again they may be picking and choosing eight homes here and maybe smaller lots, but they're not going and building at least the areas I'm in.

Yeah. I mean, it's a math game, right? So if you just want to talk to data for a second, home building is up 40%. The cost to build a new home, the cost of renovate a home, maintenance, it's all up 40 plus percent since COVID. Real estate home values across the country up 22%. So if you think about it, right, it's going to cost me 40% and I'm only going to get a 22% increase. I'm down 18%. That's right. At scale, numbers don't do math. Like they don't add up. 18%, you're bankrupt. That's right.

At the end of the day. And so they can't. That's right. To your exact point. And so that's ultimately what happened. Now there's a lot of stuff coming on market right now in the big cities because they were already being built. Yeah.

And so there's more coming on, which is like places like Florida down here, you know, rent growth is actually negative because of how much supply has come online recently. And so the reality is, though, it's a cycle because guess what? Now nobody's coming to Florida. Right. Nobody wants to invest in Florida. I was on a call with a bunch of big investors, and pretty much it's a big red X on Florida. Do not touch Florida right now for those reasons. Well, guess what? Now all of a sudden we're going to eventually get back into the demand cycle. That's right. It's going to come. So for me, it's location-based, of course. And that's why

the other thing I always say is know your market. Know the market you're in. Know where you're at. Know what you're investing in. For us, it's really easy. I'm in Pittsburgh. I live there. I know the market really well. And you know that, and I go the other route, right? I'm on the other side of that coin where I say you don't necessarily need to live in the market you're investing in. No. And the reason why I make that argument, I'm sure you can at least agree with this point. None of the big money, the funds, live in the markets. Like they do this all virtually. They have a great backend. They have a great team. Yes, they have all the money to go for all that, but if they can do it, so can the little guys. So can we, right? So I can

go buy in Birmingham, Alabama, Pensacola, Florida, Charlotte, North Carolina, Oklahoma city, all the places I'm buying in. I've never even been to the state of Oklahoma. I've never been to the state of Alabama and have more real estate in those two states than anywhere else in the country. And I'm never amazing in the state. That's amazing. Um, but I'll proud of yourself for that because even, even me, he was there. I'm a, I'm an accountant, extremely conservative, but I do take risks like that scares me. So I'm, that's amazing that you do that for sure. It's a risk tolerance, but it also is based around growth, right? I know where people are going to ultimately end up growing and living, and I bank on big colleges, big sports teams.

I mean, that's really the two things I really look at and say, okay, do we have a big college so there's always going to be some level of economy? Because when was the last time, you know, Oklahoma University, when was a big college like that ever go out of business? Never. They don't. Right. But I wanted to highlight something because I want to transition this into your back end university when was a big college like that ever go out of business never they don't right so so

but i wanted to highlight something because i want to transition this into your back end and dialing in the numbers and understanding what it takes to build a hundred million dollar portfolio you rely more on your back end you have a company called accruity yep they do my books because of the importance of this right so the closer we've got, I understood your model. And I said, okay, well, if you have a team that can do the same thing for me that they're doing for you, I'm in. So if people need bookkeeping and accounting services for real estate specifically, where can we have them go? Yeah. So maybe I'll just give a two second back story on it all, right? The way that we built our portfolio was accounting. I'm not a real estate guy.

I am now, and I know deal-making extremely well, but when I started five years ago, I had no real estate experience, right? And so we were able to build a business using purely numbers. That's what I'd look at. Is this a good deal or not? Then how do we scale it using numbers? And so about two years ago, when we were probably 60, 70 million, something like that,

we said, Hey, look, we realize, especially, you know, getting into masterminds and meeting a lot of incredibly talented salesmen, entrepreneurs, people doing flips, making millions of dollars a year that we can really help them because we've realized that, you know, I'm speaking to a lot of you out there where your back office is probably a mess. If you're answering the question, how do you manage your business? Well, how much money's in the bank account? That's a problem. And one day there's going to be no money in that bank account, right? And so we realized two years ago, we can really help a lot of people scale their business, scale and keep more real estate to get bankable, to be able to go to banks and get more money from them to scale, right? A lot of good friends and because, you know, a lot of people in the industry that I've been meeting, like, they're good people.

I want to help them. So that's when we spun out Accruity. Accruity is the name of our, you know, accounting business. And we only focus on real estate, real estate investors, you know, any vertical in the real estate space, right? So if you're a flipper, a wholesaler, you know, you have a brokerage, you have a team, anybody in that space that doesn't have a good back office, right? So if you're a flipper, a wholesaler, you have a brokerage, you have a team, anybody in that space that doesn't have a good back office, right? To me, fundamentally bookkeeping is core to everything that you do. You have to be able to make sure every transaction that's happening is being accounted for the right way. Going all the way back to high school, bro, I got kicked out of art class. Fresh freshman year. Go figure. Not very art.

I don't even write anymore because it's so bad. Yeah. And I got put stuck in accounting. And my teacher, my sophomore year in accounting class in high school, said accounting is the language of business. And it's always resonated for me because it is. Everything that happens in business, guess what? It equates back to money, which is a transaction, right? A transaction occurs. We exchange something. it always has to equal on every side. Well, that's

bookkeeping. And if you don't understand where every dollar is going, where all of your money is being spent and what it's returning for you, right? Because why do we spend money? For one reason, to get a return. In two ways. Certainly one is time. What do we want to do with our time though? Go make more money or two is to get a return on that money, right? Whether we're putting money into a home, right? Marketing people, anything that we're spending money, it's to get something back. And so if you're not understanding what it is that you're getting back and when, then you're fighting a losing battle. You're not really speaking the language of business, which is when am I going to get my money back or my time back to go create more money, right? So we created that company literally just

for that. So we can really help folks like you who are really good at selling, really good at business, really good at all those things that don't have the time, capacity, desire to make sure all of that back office is fundamentally perfect. Instead, we'll do all of that work for you, get it nice and cleaned up, get it perfect. And then we'll meet with you once a month if you want it. Some people don't even want it. They just want to know it's safe. And we'll have a conversation around what that looks like for you and how you can go make more money using that. So Crudy is the name of it. Again, we only focus on real estate verticals, if you will. And our goal is really to help people keep more real estate. And ultimately, the more real estate you keep, we haven't even got into this, the less taxes you have to pay, particularly when you're making money as a real

estate agent, investor, whatever you're doing in the space. And so that's ultimately what we're after to really help as many people as we can. So go, if they want to go talk to your team, go to accruity.com. Yeah, our website's accruity.com. We're in the middle of revamping it right now. We're not the best at marketing, but over the last two years,

we've been really focused on helping people. Now we're like, okay, hey, we've really mastered the product itself. We've really built the right team, the foundation, the processes. And so, hey, we can go help a lot more. So now we're revamping the website at crudy.com. Obviously, they can reach out to you, bro, right?

Yeah. So just on the application, I'm assuming there's some sort of application they fill or something. Yeah. Yeah. Connect with us. Shoot me a message on Instagram, Casey Ryan Quinn, Facebook. However you want to get ahold of me, right. We're happy to have a conversation. Essentially we call them exploratory calls.

You know, everything's sort of specific to you at the end of the day, your business, everybody has different things going on. Um, you know, the reality is a lot of people that are doing business already sort of have something in place, whether it's an old bookkeeper, probably a lot of times they have a CPA that doesn't know how to do their books. Right. And they're all frustrated with their existing cpa um but however you get a hold of me right obviously you know make sure you let me know that justin sent you through through his following through his podcast or whatever and um you know i'll personally jump on exploratory call

with you i like to take a lot of those calls early on to make sure we're a good fit early on um not everybody's a good fit for us uh well there's a lot of those calls early on to make sure we're a good fit early on. Not everybody's a good fit for us. Well, there's a lot of people out here like pad split world, right? So like if you're doing any pad splits, fix and flips, buy and hold long-term, short-term, mid-term, like this is so, so important for you guys to understand the power of understanding your numbers, your P&Ls. Are you actually making any money? To your point, right? Whether it's you're getting some tax write offs because you're buying some commercial assets, whether you're barely breaking even, but it's okay because you have, you know, 50% equity. There's a lot of these things that you need to

understand how to run the actual business side of it. Don't just go buy a rental to buy a rental because you read rich dad, poor dad. So you're like, Oh, I got to go buy an asset because that can quickly turn into a liability for sure. If you don't know how to run an actual business, which even one rental is like a little mini business, right? And you got to know how to run it. So accruity.com, let them know you heard him on the podcast. Let's not end here, though. Let's talk a little bit about the ability to scale and understanding your numbers on acquisition costs. This is kind of where I was going a little bit with like, there's so many ways,

if you know your numbers, you can pay yourself on the front end, you can pay yourself in the middle, you can pay yourself on the back, right? But this is understanding, you know, how much does it cost you to go acquire that property? What's involved in the cost? Let's dive a little bit more into that. Yeah, for sure. To your point, I'll touch that first. You could pay yourself a bunch of ways. We do, right? We have an acquisitions company.

Every deal that we buy, we make $10,000 on it. Our acquisition company does. This year, we'll buy 120 homes that we add to our portfolio, 10 a month. That's $1.2 million in revenue for my acquisitions company, right? The reason we need to do that and the reason we charge 10K, because we know exactly what it is that we're spending every single month to find the deals, right? Because listen, I'm not out finding deals. I'm here hanging with you. I'm running a business. I'm running an accounting business. I'm running our business. We got a thousand units. We have

$4 million a year, $4 million a year, property management company, $13 million a year construction. Like I don't have time, right? So we need to be in the numbers, understanding exactly what it is that's costing us every single month to go acquire this real estate. And the really key metric here is we might spend it today. So we're doing probably, and you're probably much better at talking through this than me on our lead generation. Yeah. Right. We were had like seven at one point. We're really all the way dialed back down to two. We crushed mailers a ton and we're doing our own branded PPC where it's our brand on there. Right.

To continue to build that in our market. Cause we're only in Pittsburgh. Those are our only two right now. And I think we're spending roughly 25 to 30 grand a month on that. But every dollar that goes out the door, we need to know when it's coming home. And so for us, the 10,000 per deal, and we're running through our KPI metrics to know exactly what it's costing us on a per deal basis for that $30,000, right? Now we're dialing back, we're dialing up. Hey, we're moving more to mailers, we're moving more to PPC, depending on how they're ultimately performing on when the money's coming home. What is our real customer acquisition cost for us? It's different if you're running, depending on your business, if you're in a coaching business, it's how many students did I get? Or whatever that is, it really depends on your business. But for us, it's homes. So what's it costing us to acquire a home? And then we need to make sure the money's coming back. And the way that we run that math is obviously pay ourselves a 10 grand. The 10 grand is based on historical averages of what it really is going to cost us. If you're buying 10 a month, you're spending 30, you're making 120, right? Yep. Exactly.

So it's a nice little ROI. And those numbers have to work on the back end, right? And then the other piece is you need to understand what your overhead costs are. Totally. And that is need to evaluate in, right? We have people that do all of that work for us. Now we've been able to scale our company that it's not us doing it anymore. So. The other component of that is if you're going to pay yourself in the front end, you need to make sure that there's still a back end profitability, right?

And this is why I say there's times not even paying myself on the front end. But there's times where just because the interest rate becomes so low, I'd rather just go take the quick cash and turn it. But the reason why I say that is because I'm in the volume game for the rest of my life. Like I don't ever see myself leaving real estate, right? So this isn't a quick turn and burn two or three years. So I don't mind taking some chips off the table. If something turns into like $78 a month net to me, but I can go make 40, I'll take my 40 because I'm not going to stop buying next year or the year after. I can continue to accumulate and double and triple down when the interest rates are a little bit better. It doesn't mean it's still not a good time, but that's why I'm willing to do that is because after all the costs come out, after the $10,000 to yourself and all these other things, you need to make sure it's still a profitable scenario. is you know those numbers now. Yeah. Like you've learned that, hey, if I go buy this, I renovate

it, I burn it, I go to a bank afterwards, I get all the way through, it's going to be $78 a month. Yeah. Right? You see all that to know, hey, no, I'll take 40. Yeah. The reality of it is nobody's doing that. That's right. But they need to be doing that to say, hey, look, maybe that 78 is actually 500 a month, right? Six grand a year. And oh, by the way, I'm buying in a market that's going to appreciate a ton or 40 grand less, 10 grand selling costs, right? So it's 30 or six grand. Like what is better than, oh, by the way, if I do that, I'm going to pay taxes on my 40. You know, I'm in a high tax bracket or massively evaluating all the way down to the very end of what I would say IRR. I don't do that on every deal, but that's the real way to do it. It is. My business model is very similar to yours,

I think, in the sense of every property I buy, I do the same thing. I underwrite it the same way. I'm doing a full remodel on every single property. That way, if it works for both, I green light the property no matter what. And then I figure out at the end of the remodel, what I want to do. The other component, what you're talking about is paying yourself on the front end. People fix and flip because they think there's a bigger payday. Sometimes there is, sometimes there's not, right? We just did a fix and flip. It took us almost nine months. We ended up breaking even because the city stopped us. And then we had to fix this thing that was over budget and all these different things. And you're like, what if that was the only flip I was relying on for income? That's not very fun. Right? But if people could understand the numbers that you're talking about, they could wholesale a flip

to themselves, run a model like myself, where you basically say, I'm either going to flip it instead of making 40, I'm making 30 on the back end because I already paid myself 10, or I'm going to keep it. And I still made $10,000 because the numbers are so good. The equity is so good. I'm willing to take a hundred dollars a month. They would actually keep more because they're paying themselves handsomely on the front end. This all goes down to negotiating and getting the right deal, right? You can't just arbitrarily do this, but people would keep more properties. If they understood the model of wholesaling it yourself, take your acquisition fee, wholesale it yourself, whatever you want call it, on the front end, they'd keep more properties rather than going for the fix and flips. Yeah. And to get really grim for a second, I'm not expecting everybody

to do this, particularly if you're buying one a quarter, which hopefully everybody starts to doing as of today. But we have asset managers in place now for our business. We charge 2% to every property that's in our portfolio, 2% asset management fee per month. Our asset managers are now evaluating, right? When we buy a home and we go to renovate it, you said you fully got it, not fully got it, but you fully renovate it, whatever that looks like for you. I take it to market, right? Everything looks like a flip. Yeah. And the valuation is that we need to look at on the back end is what is, how is that reducing my maintenance costs if I decide to keep it? It significantly is.

And you can start to evaluate over time how much for us, because we have asset managers in place, we actually do the evaluation to say, hey, look, we could fully renovate it for $50,000 or we could put $35,000 into it, save $15,000, knowing that it's going to increase our maintenance costs 3% over the next three years. And then we'll add in $8,000 in three years and then refinance it again at that point in time, because it doesn't need a new roof yet. Or, hey, we're not going to go fully renovate this bathroom. We know we could get an extra $80 a month in rent, but it doesn't make sense because it's not going to change the appraisal. So we're not going to get more money out of it. Let's not spend that $10,000 on the bathroom.

Let's add it to our asset management list, and three years from now, let's do it then. When we think the rates will be better, we're going to sell it, right? Yep. And so we're doing all kinds of CapEx evaluation too, where we're now, you think about it, right? How many homes we're buying. If we do that for 25 homes, that's $150,000 in cash.

By evaluating that and then just making sure we're putting it in the asset management plan. We're okay having a maintenance guy go out once every six months to fix the toilet. We didn't replace because, you know, obviously the less you fully renovate, the more maintenance costs you're going to have. And so then we put those in buckets. Hey, we're at 11% maintenance. Our goal is always eight. But we save $15,000. We're okay paying 11

percent you're definitely getting people just went like this yeah so i get it and i'm actually thinking right now but that's that's how you scale that's how you go from zero properties to a thousand units plus a ton of flips on along the way in five years that's why they need to evaluate the numbers 100 they need and i'm telling all of you watching this on youtube listening to this on apple instagram you need accruity for this exact reason. If you have a team that can manage to these numbers, that would change whether you put 50 grand in or 35 grand to his point. And then you can move a lot faster. If you haven't over the 15 grand in your pocket, you can buy probably another rental that year, that quarter of that

month, just because you saved some money on that. I know we're doing a raising capital masterclass next few weeks. Two weeks in Seattle, yeah. Few weeks in Seattle. If anybody's in Seattle, you should come out to that. What I would like to do is really run through a powerful example of cost of capital and how important that is to deal making. I can't tell you how many people I've talked to students different things in the past where they'll wait three weeks for a to say 200 on a window right on the renovation or whatever it is and they're not evaluating the real cost of capital that it's taking them and i don't care if it's their own money you have to put a premium on even like you know people have a lot of money and say it's just just my own, whatever. That's still real cost of capital. Like right now you can put it in a bank and make 5%. So every day that you're not evaluating that

you're losing 5% on that example. For us, I started with no money, bro. Like five years ago, we had nothing and nobody would lend to us because I didn't have a balance sheet. So we were paying premiums through the roof, 20, 23%, 25% certain deals. And like, you know, at one point in time, I'll never forget the example. I was paying $59 every day on one deal and my cost of capital. I'm like, so four days, the difference of $200 in a window, I'm out, I'm out of, I'm out, I lost. Right. I don't care. Spend two extra dollars, get the damn deal done. Right. Cause I'm paying so much of my cost of capital. The example that I'll give around the cost of capital and ultimately on keeping the asset long-term over five years,

how much wealthier you can ultimately get on both of those, man, it is staggering the difference, right? I'll tell you what the difference is. I'm sitting here hanging out with you. Five years ago, I couldn't rub a penny and a nickel together. I had no money, right? Now you have a $100 million portfolio. Now I have a hundred million dollar portfolio. I'm going to catch you, dude. I'm getting, I want you to, I want to help you get

there. I am. Let's go there. You are guys. I appreciate this. If you love this, you should make sure you're following Casey, Ryan Quinn, Instagram, Facebook, everywhere else. And if you are already active in investing, wholesaling, flipping, or buying rentals, make sure you contact accruity.com or just hit up Casey Ryan Quinn because he'll just direct you in the right place. He'll jump on the call with you, all that kind of good stuff. So I appreciate you being here, bro. Appreciate you having me. Keep more real estate in your portfolio. You'll thank yourself later. Let's go. That's it. Another great guest on the next episode. Peace.