Scaling Up: Why Flip One House When You Can Flip the Whole Block?

Summary

Radical Wealth Plan – “Scaling Up: Why Flip One House When You Can Flip the Whole Block?”

Host: Paul Morris (Entrepreneur Media)
Guest: Chris Senegal (Social Impact Real Estate Developer)
Date: March 17, 2025

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Episode Overview

This episode of Radical Wealth Plan with host Paul Morris features a dynamic interview with Chris Senegal, a real estate developer focused on revitalizing underserved neighborhoods in Houston. Rather than flipping individual properties, Chris has pioneered strategies for acquiring and redeveloping entire blocks—prioritizing social impact, community ownership, and wealth-building for local residents. The discussion dives into Chris’s journey, innovative financing, crowd-funded development, building a mission-driven team, and lessons for listeners who want to scale or start their own real estate path.

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Main Topics & Discussion Points

Chris Senegal’s Background & Mindset (03:52–07:58)

• Origins: Grew up middle class in a split household, became a teenage dad at 16—"I was taught responsibility at a very early age" (05:44, Chris).
• Education: Won a full scholarship for civil engineering; started career managing $100M+ railroad projects.
• Corporate Frustration: "You were kind of put into a box... didn't matter how well you perform, somebody else has an ulterior motive" (06:25, Chris).
• Entrepreneurial Leap: Began flipping houses in 2008 recession, kept corporate job until real estate income matched salary.
• Catalyst Incident: Workplace conflict made him leave—"I told my boss, 'I'm just going to bet on myself now'" (09:00, Chris).

The Real Impact of Gentrification (04:32–05:17)

• Discussed how development often displaces long-term residents, making them “asset rich but cash poor.”
• Chris’s approach: Zero displacement—"We do zero displacement projects... Let people from the community invest... so they don't feel like they're outside of the fence looking in. They're part of the process." (03:52, Chris).

Building Wealth: From Single Flips to Entire Blocks (12:00–19:39)

• First Flips: Made ~$35-40K/house, scaling to $120-130K/year, while keeping select rentals.
• Success Triangle: "Three things you need to be successful: knowledge/experience, opportunity, and money. Come to the table with one—find the other two" (12:36, Chris).
• Partnering: Contractor mentoring, borrowing against 401K for capital, learning on the job.
• Lessons Learned: Flipping is high risk and often lacks integrity—“You only fix what's wrong. That family buys the house, but the roof only has two years left…” (14:37, Chris).
• Shift to Portfolio Deals: Acquired a whole block through owner financing from a ‘tired landlord’; structured creative deals focusing on community value, not solely profit (19:39, Chris).

Portfolio Strategy & Owner Financing Innovations (19:39–26:18)

• Portfolio Liquidation: Sold 11-house portfolio, reinvested via 1031 exchange and self-directed IRA.
• Owner Financing: Negotiated low-down, relationship-based deals—"10% down. With no underwriting. It's just based off a relationship" (22:15).
• Creative Structuring: Used joint ventures, self-directed IRAs for funding, provided seller extra profit via shared equity—"I essentially made the previous owner my business partner without him realizing it" (33:14, Chris).
• Neighborhood Context: Focused investment within 1 mile of planned $3B development—leveraged the big players’ R&D to guide small-scale, high-upside moves (35:12, Paul and Chris).

Community-Focused Revitalization vs. Gentrification (24:10–24:39)

• Chris distinguishes “revitalization” from gentrification:
  • “Revitalization is the alternative... rebuilding a complete community with all income levels” (24:31).
  • Maintains a strategy of zero displacement, involving community investors and guaranteeing long-term residents’ stability.

Scaling Up: Crowdfunding and the “Buy the Block” Model (43:37–51:15)

• Crowdfunding a Block: Acquired 20-house block via wholesaler, raised $1.1M through Regulation CF ($50/share, minimum buy-in).
• Social Impact: Enabled local residents to invest—“People that invested... never owned anything. Now they can say, I can drive past that block and I own a piece of it” (50:32, Chris).
• Business Structure: Investors received 40% of LLC, Chris retained 60% for project management and expertise; paid regular dividends and handled annual secondary share sales (50:12).
• Community Protection: Kept rents stable for tenants using extra revenue streams (e.g., event space), collaborated with local housing authority for subsidies.

Advanced Development & Major Partnerships (60:38–70:16)

• Church Redevelopment: Partnered with historic Houston church on 6.7M land deal; appraised at $11.4M within 2 years; partnering with Housing Authority for 340-unit mixed-income housing.
• Risk Management: Structured deals to cover friends/family investors’ downside with land value—even if project falters, underlying asset exceeds invested capital (68:23–68:35).
• Success Triangle in Practice: “I’ve never done a development of this scale, so I partnered with a developer that has done projects on this scale. I brought the opportunity and leveraged their knowledge and experience.” (64:07, Chris).

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Memorable Quotes & Lessons

On Scaling & Partnerships:

“Three things you need: knowledge/experience, the opportunity, and the money. Come to the table with one, find the other two.” — Chris Senegal [12:36]

"Most people don't agree with the risk I take by being the first to go into a market... When I hear about an announcement company, they say it's too much risk" — [85:55]

On Gentrification vs. Revitalization:

"We do zero displacement projects. Let people from the community invest and actually have ownership so they don't feel like they're on the outside looking in." — [03:52]

“I consider revitalization the alternative [to gentrification]... At one point doctors, lawyers, and business owners lived in the same community as employees—we've kind of isolated ourselves now.” — [24:31]

On Crowdfunding & Community Investment:

"I have people that invested that have lived in the neighborhood their entire life and never owned anything. Now they can say, I can drive past that block and I own a piece." — [50:32]

On Learning & Failure:

"Don't try to figure it out on your own. Every time I do that, instead of taking advice, it doesn't work. There are so many things I'm not thinking about that they already know." — [84:45]

"I call it real world tuition." — [77:22], on the cost of early mistakes

On Mindset & Motivation:

"You have to be internally motivated. You have to be able to withstand the frustrations of not finding the right deal or the failures and just keep going." — [85:06]

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Notable Segments & Timestamps

• Chris’s Backstory & Leap to Entrepreneurship: 03:52–07:58
• Zero Displacement/Community Investing Explained: 03:52–05:09, 24:10–24:39
• Success Triangle & Early Flips: 12:36–13:43
• Portfolio to Block Strategy: 19:39–26:18
• Crowdfunded “Buy the Block” Model: 44:00–51:15
• Creative Financing & Owner Partnerships: 22:15–28:42
• Church Redevelopment & Major Multi-Unit Project: 60:38–70:16
• Lightning Round Q&A: 84:10–90:10

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Practical Lessons & Takeaways

• Start small, learn with partners: Chris began with 1:1 flips, always seeking mentors (“It's always easier to learn when you bring value to someone else” — 13:23).
• Owner financing & relationship deals: Structuring creative purchases from tired landlords or heirs unlocked “buying the block” opportunities with little upfront capital.
• Scale impact with crowd funding: Reg CF allowed everyday people to co-own development projects and “learn and earn”—democratizing wealth building.
• Risk management: Always underwrite the “worst likely” (not worst imaginable) scenario; hedges like land value and location near catalytic development projects protect downside (72:33–73:22).
• Model, network, and build your team: “Everything you don’t know, someone else knows... go and see what value they bring to you” (100:04, Chris).

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How to Follow Chris Senegal

• Instagram: @chris.senegal
• YouTube/Facebook: Chris Senegal

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Final Thoughts

Chris Senegal’s approach shows how real estate can be a tool for both personal wealth and community empowerment. By creatively structuring deals, harnessing crowd capital, and partnering for knowledge, new and experienced investors alike can scale beyond single flips—and make a real difference.

Paul’s Closing:
“These deals do not have to be zero-sum games. For every dollar I get, there’s a dollar somebody loses... I feel like I am a great negotiator, but it’s not to get the absolute lowest dollar.” (102:43)

For more, follow the Radical Wealth Plan podcast and connect with Chris Senegal for additional resources, strategy guides, and educational opportunities.

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Transcript

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[A]

This is Radical Wealth Plan presented by Entrepreneur Media. If you have the drive, we'll give you the plan. I'm Paul Morris, New York Times best selling author, prolific investor and award winning entrepreneur. Join our real estate revolution.

Welcome to the podcast. I'm absolutely delighted. We have a phenomenal interview with Chris Senegal. Chris is a guy who shifted careers from something that was a little more boring, if I can say that, into something that he is very passionate about and that is focusing on revitalizing areas of Houston where he lives Taking properties that were really downtrodden and building something very special. Chris has an incredible commitment to his community and also sharing information back to people and help them recreate what he has been able to do. Really starting from buying one property at a time to what he now talks about, buying the whole block and beyond. Can't wait to share this episode with you.

Chris. Senegal.

[C]

Man, it's great to finally meet in person.

[A]

Thanks so much for joining us with Radical Wealth Plan, man.

[C]

I appreciate the opportunity to be here.

[A]

Yeah. And it's crazy you just said finally. Nice to see you in person.

[C]

In person, yes.

[A]

And one of the funny things is it's like for whatever reason, I feel like we've known each other and I had to like really go back in my brain about like, where did I. Where did I meet this guy?

[C]

Yeah.

[A]

Okay. So mutual friends, sort of fellow journeyman in a way.

[C]

Yes, definitely.

[A]

100%. That's cool.

[C]

Yeah.

[A]

So just give me a little background.

[C]

I consider myself a social impact real estate developer. I focus on neighborhoods that have had disinvestment for a long time, but there's some type of catalyst coming back to the community and it's usually in the form of one big project and a whole bunch of gentrification and a whole bunch of displacement around it. My approach has been more so figuring out how to create a narrative around the large projects where the community can be involved. We do zero displacement projects, whether it's new construction or buying rental portfolios to keep tenants in place and just finding creative ways to even do crowdfunds. Let people from the community invest and actually have ownership in some of the developments so that they don't feel like they're outside of the fence looking in. They're part of the process.

[A]

That's right.

[C]

Yeah.

[A]

And one of the things I've seen, even the word gentrification at this point in time has taken on a different meaning because for me, gentrification old school is like, oh, hey, a neighborhood is turning around. While that's great. But what we don't realize is the people that have lived there for so long and while they have built good equity in their properties and therefore have benefited by real estate ownership.

[C]

Yeah.

[A]

The real development side and the real upside is being grabbed by professional investors and people outside the community.

[C]

Yeah, yeah. So most of those long term owners are asset rich but cash poor.

[A]

That's right.

[C]

So they don't have the money to pay the taxes. A lot of times there's a lot of equity in the property, as you said. And they just don't know what to do in a lot of those scenarios to stay in the community.

[A]

Wow.

[C]

Yeah.

[A]

I have questions already based on what you said, but let me dial back a little bit and ask you, just give me some upbringing or where did you grow up? Or, you know, tell me some of the. What got you to.

[C]

Sure. Well, I definitely didn't grow up with a silver spoon. I grew up in a middle class separated households. Parents divorced when I was little. I was a good kid, great grades, but I got in a lot of trouble. I was a teenage dad and my son when I was 16.

[A]

Wow. Yeah.

[C]

So I was taught responsibility at a very early age. From the age of 16 through college. I was working the whole time where everybody else had time to party, you know, I had to keep my grades up. Still went to college on full academic scholarship, civil engineering.

[A]

Wow. Yeah. That's super cool. Yeah.

[C]

So. And then I had a full scholarship from one of the railroads. And when I graduated, I was an industrial engineer, project manager for them. So working 80, 90 hour weeks building $100 million project, like entire rail facilities under one project leader, that was over me. So I was managing HDR engineering contracts, like 40, $50 million. They threw me in the fire.

[A]

Wow.

[C]

Yeah. So. But that gave me the experience on the construction side, the engineering, architectural, management side. But I hated corporate. I really hated corporate.

[A]

What did you hate about it?

[C]

Man, you were kind of put into a box where I realized at some point it doesn't matter how well you perform, how good your intentions are, how hard you work, somebody else has an ulterior motive. And someone above you could be less qualified than you. But at any point in time, they can make a decision that's detrimental to your lifetime or your income. That's right, yeah. Rather it's out of malice, rather it's out of protecting themselves, or rather they just try to get somebody else ahead of you. And so I want to bet on myself more.

[A]

And so being an entrepreneur really is the epitome of a meritocracy because as you said, some people are making decisions about you for you. There's also safety net in that, which is that, you know, you get a paycheck, you know, as long as you keep the boss happy, you know, you're doing your little political inside thing, you know, that's good. But there's a lot of security in that. And as an entrepreneur, it's like you do the right thing, it works out, you make money. Probably.

[C]

Yeah, yeah.

[A]

You know, as market shift. Right. You can make mistakes and still make money. But also you could do the right thing as market shifts and lose money. So just time frame wise, you graduated college at how old and then you were working for the railroad for how long?

[C]

Okay, great questions, great questions. Graduated college at 22, a year out of school working for the railroad. I started just reading books on other income streams. And real estate just kept coming up over and over as a way to create first generational wealth. So I started flipping houses in 2008, in the recession, buying properties from home Vestas, which was a nationwide wholesaler, Right?

[A]

That's right.

[C]

Okay. So I kept the corporate job while building that business until 2015. So I was 32. Okay. Yeah, maybe 33. Okay. My math is off right now. Somewhere in that timeframe. Then I decided it was actually an incident happened at work where I had already like matched my corporate income with the real estate between the flipping and the rental property.

[A]

Interesting. Yeah, very interesting. Yeah.

[C]

And so I had an accident happen at work where assistant vice president threw me under the bus for something that wasn't my fault. Crazy story. So we were acquired by Berkshire Hathaway.

[A]

Right.

[C]

BNSF railroads where I worked. And there was a new refinery being built in North Dakota when the shale plays were really big. And one of the refineries, a public announcement. Warren Buffett then asked the CEO of the company, what's going on with the refinery. And that was one of my accounts. And I had been telling my avp, they're not giving me the information I need for us to set up their supply chain. But when it got down to me, the story was, he told the CEO that I didn't know what I was doing. He doesn't know why everything was going wrong. But I had a great relationship with my general director. So I told him, hey, I'm out. I'm just going to bet on myself now. But since I've already replaced my income, I'm not in a rush to leave. I'll stay as long as you need me to stay.

[A]

Oh, interesting.

[C]

So I stayed for two months and I trained my replacement. And then my general director threw a going away party before me at his house.

[A]

Oh, I love it. Yeah.

[C]

And then I became a consultant doing the same type of work. And listen to the real estate. It's industrial real estate, basically warehouse terminals and stuff like that. My old boss became one of my biggest lead generators for my consulting business. Wow.

[A]

Yeah.

[C]

Because he would send me all the smaller work.

[A]

And was that the old boss that originally threw you under the bus?

[C]

The guy under him. The one I liked. Yeah, the one I liked.

[A]

Yeah. So one of the things that's sort of striking about that story, my journey was very similar in the sense that I grew up in Pittsburgh, and again, definitely not a silver spoon in my mouth. My parents valued education a lot, so they pushed all of us into education. And I got a law degree, so I was working as a lawyer while I was investing in real estate, and I was doing the same thing. I was like, okay, I'm not ready to pull out yet. Let me see what happens. But then what happens with you is once you've matched your corporate income with your outside income, then when the bad thing happens, you could then handle. Maybe you would. Hey, listen, maybe you would have handled it with Grace no matter what, but with me, I was scared to death of being fired, because being fired, that'd be the end of my life, you know, if I got fired. Of course, that's not true. That's what I.

[C]

The mindset is thinking.

[A]

Yeah, but what a position of power that puts you in so that when something bad happens, you actually could get less angry maybe, and say like, hey, you know what? Actually, this isn't cool with me. You're not screaming and yelling because you're like, I'm already covered. And, you know, and I quit, but I'll help you guys move forward. And that interestingly creates a great path out. Do you think you would have handled it the same if you didn't have the other income?

[C]

No, not at all. I mean. Yeah, because you're right. You have established a certain type of lifestyle, and a lot of people that don't know how to generate income on their own through entrepreneurship, they're dependent on finding someone else to provide the income for them. So, yeah, you get stressed in those situations, especially in a down economy when nobody's really hiring.

[A]

Right.

[C]

And as a matter of fact, after I quit, the peak of the recession hit. Well, that mild recession we had in the oil and gas when the chill place went down, and like, six months after I quit, a quarter of my department got terminated.

[A]

Wow.

[C]

Yeah.

[A]

Yeah. It's so interesting, and I appreciate you saying that, because you said lifestyle, but certain portion of your paycheck goes to pay for, like, a roof over your head and groceries. Yeah. Lifestyle comes after that. So it's like, oh, yeah, it's a threat to my lifestyle, but if you have zero other income, it's a major threat. And then people. Right. Fully. So get scared to death. I've been there.

[C]

Yeah. I'll tell a Lot of people. Now, you don't have to be entrepreneur, but you should have some other source of income coming in so that you're not dependent on that one source at all.

[A]

Right.

[C]

Yeah.

[A]

What would you do? I mean, I guess you could have like a side gig.

[C]

Yeah. Or, you know, invest with other people that have other ventures, you know?

[A]

Yeah.

[C]

So that you can be the money partner for things.

[A]

Right. Yeah. So at that point in time, by 2015, you're flipping houses. Give me like income range, you know. What were you making?

[C]

Yeah, I was making 35 to $40,000 a house, and I was only doing one house at a time, so I was making maybe about 120, 130 a year doing that same thing as a corporate job.

[A]

Right. That's great.

[C]

Yeah. Then I realized, well, I can scale that up and increase my salary, my income, a whole lot better than waiting for a bonus or a 3% raise every year. Right.

[A]

If you're able to scale that business two times the number of years that it would take to double your income, you look at your boss and go like, well, he's not making double what I'm. So how's that going to work?

[C]

Yeah. Right? Yeah.

[A]

That's cool.

[C]

Yeah.

[A]

How did you learn enough to get into your first flip?

[C]

Okay, well, I have this success triangle I always talk about.

[A]

Okay.

[C]

It's three things you need to be successful. Number one, you need knowledge and experience. Number two, you need the opportunity. Number three, you need the money.

[A]

Yes.

[C]

My shortcut is come to the table with one and find the people that have the other two that can get you to your goal. So in this scenario, all I knew was I wanted to flip house. I didn't know much about it. One of my frat brothers worked for homevestors also, and he knew one of their contractors.

[A]

Okay.

[C]

So the contractor became my mentor. So now I had the knowledge and experience. I borrowed against my 401k for my job, got it for the hard money loan. That's how I got the money. And then we took the money and the experience and we went and found my contractor, showed me which house I should buy, and he renovated it for me. So I learned through that process. It's always easier to learn when you bring value to somebody else. So I was bringing value to him. He knew if I was successful, that would be a long term client with him.

[A]

The contractor.

[C]

The contractor, yeah.

[A]

And what a great idea to have the contractor pick the house for you because that contractor is really going to know better than anybody because you know that's what I do. I'm buying something, then I'd be like, you know, what do I estimate this is going to cost? Like I don't know. And then I got to bring a contractor in.

[C]

Yeah.

[A]

And then, you know, maybe I get it right, maybe I don't. But this guy already knows he's going to be doing the thing. So like it would be a bad idea to get you into a bad one.

[C]

Yeah. And he had several crews and he was renovating like 40 houses a month for the locals home vessel franchise. Wow. So he had a huge 40.

[A]

Yeah, yeah, that's right. I have heard of that franchise. And in fact there's a guy that I just interviewed, he's a real estate salesperson and he also does like 20 flips a year.

[C]

Yeah, yeah.

[A]

Even out here his margins on the flips are so small that I couldn't execute at that level. But he's been doing it for years and he just makes a few dollars on each one.

[C]

Yeah. So that's why I transition out of flipping. Because there's so many uncontrolled variables. It doesn't matter how well you put a budget together on the front end. You're going to get into that project and you're going to find something that's expense that you didn't account for, didn't plan for. Once you open the walls, once you look under the house.

[A]

No question.

[C]

Yeah. Plumbing. Yeah. So I like new construction now. That's why I got, I focus more on development because it's more just like project planning. Everything's brand new and you have a set process in place. It's like an assembly line versus problem solving. Another thing I don't like about flipping, just from the integrity perspective. And as an investor, you only flip what's wrong. So if that single mom or that young family buys that house from you and you left that roof knowing it had two years left on it and you're thinking they just put all their money up for that down payment. They're not going to have the seven, $10,000 to fix that roof in two years.

[A]

Right.

[C]

Or the AC system goes out, those types of things.

[A]

Right. Oh, now I know what you mean. You only fix what's right. You fix what's like broken right now. Exactly, I'm gonna fix that. But then there's all this other deferred maintenance that somebody's gonna go into.

[C]

Yeah, yeah. That was a self realization for me after I flipped a few and kept them as rental properties. And then two or three years later all these other issues started coming up, like, man, if I'd have sold this to somebody else, dealing with all of this.

[A]

Right. So I'll tell you, I rarely flip houses. I've done it a little bit, but it's been such a small amount of my real estate investment career. I put all my time and energy into finding the opportunity or evaluating the opportunity, and then a lot of time and energy into what I would call repositioning it, because that's what I would call if I'm holding it. But it would be like getting it ready to flip, and then you flip it and then you pay ordinary income on it, right?

[C]

Yep.

[A]

And as much money as you could say to me in a house flip, like, unless we were buying in Beverly Hills and, you know we're going to buy for $7 million and we're going to put 4 million into it, and, you know, a year and a half from now, we're going to sell it for 21 million and there's a 10 million profit. I'd be like, okay, yeah, let's talk about that. You know. But otherwise, even if we did that, you got to acquire the property, $7 million property. You're not going to be able to really say it's your primary dwelling. So now you're like, oh, like 25% of the 7 million. And then what percentage we have to come up with of the 4 million renovations? Now you've got $11 million. And then you're going to use hard money, so it's extra expensive, and it's this whole thing. And then even if we come out the other end, then you got the unexpected problems. We're going to go over a little, you know, next thing you know, the profit is only $6 million, right?

[C]

Yeah.

[A]

And it took us instead of a year, a year and a half. It took us two years, which wouldn't even be bad, and we made $6 million. It'd be like, like, wow, these guys are great. You know. So here's what happens to $6 million. We split it because we're partners.

[C]

Yeah.

[A]

Now we're down to 3 million.

[C]

Yeah.

[A]

And then we pay full boat taxes on it. So now I'm down to a million and a half each. And when I look at the enormity of the project, how much money, and that's saying we did it with our own money. Now you got to pay all the investors. It's like this whole nightmare. And even though that sounds amazing, that whole nightmare, which is bigger than a flip, than I've ever Done.

[C]

Yeah.

[A]

We're still walking away with like 700 grand, which again, it sounds great, but it's just too much risk, too much whatever. And I have always been bad at the execution. I'm great at finding the opportunity, having the idea of what to do with it, and then the execution of it has been, for me, not the greatest thing. But then guess what, I put it on the shelf and it's a hold and it's in my portfolio. And then what happens is we start at zero. And so now I'm putting all my time, energy and effort into something that's our next thing. I don't mind doing that time, energy and effort all the time, as long as I know when we're done, like at least some of them are going to go on the shelf into our portfolio so that we're building into the future. It's not just an income gain.

[C]

Yeah. And the long term revenue that you get from that over a lifetime of ownership adds to the returns versus the taxes taken away from the returns. Absolutely. Yeah.

[A]

Absolutely.

[C]

Yeah.

[A]

Do you go right from flipping and were you acquiring some of them too? I was holding on to them.

[C]

I was. I would probably flip to keep one, but then.

[A]

Not a bad ratio at all.

[C]

Yeah, yeah. So I was doing that, but I wasn't strategic with my investment plan. I was just buying houses wherever a deal was. So I probably all over the city, my property manager running around.

[A]

Yeah.

[C]

My maintenance guys run around the city. I realized it'd be much better if I have everything congregated in one localized place.

[A]

Right. Which is a great lesson. And I did the same thing, you know, making we make this. This is why we're doing the podcast. Because, you know, I did the same thing and eventually, you know, was doing, I will sell like a 4 Plex or, you know, an 8 or a 12 or whatever. Not even because it's a bad investment. I want it in my portfolio, but it's too far away from the other ones or whatever.

[C]

Yeah, those are better to trade. Just get them and sell them out. Trade them up. Yeah. So I did that for a while, but I ended up just liquidating that portfolio. I was like, I want to figure out how to do bigger impact projects in the communities. And what happened was, as a matter of fact, the same frat brother that brought me to HomeVestors, he was like their field property manager. So one of the old tenants called him and said, hey, I want to come back and move into one of your properties. My landlord is a tired landlord. He owns his Whole block, he's not taken care of it. He's in his 70s. We think he's on drugs. And so my fat brother called me. He's like, chris, I think this might be an opportunity for you. He's like, I know you flip houses, but this might be a bigger play. So we set a meeting with the guy, sat down with him, and sure enough, we talked them into owner financing the entire block of property.

[A]

Right? That's right.

[C]

Yeah. So that's when I started realizing I have more leverage by finding heirs of real estate portfolios or tired landlords that just want to liquidate the whole portfolio but aren't in a rush to get a cash payout. So for him it's like, well, you still get the rental revenue you were getting, but now I'm responsible for the property, for the insurance, for the taxes, for everything. And now you're just getting a mortgage payment from me every month.

[A]

And they don't have to. My experience with those acquisitions is that a lot of them were self managing, and so they're not fixing stuff they should. So the tenants are mad. And they're also spending too much money on stuff they shouldn't be spending. So, like wasting on one hand, they're underdoing some things, they're overdoing some things, actually go in and repurpose some of that capital and really make a difference. Right?

[C]

Yeah. And so this term that people throw around now, a lot about real estate is like, if you buy a bunch of real estate, you're creating generational wealth.

[A]

Yes.

[C]

I tell people you're not if you don't have systems in place. Because all these portfolios, like you just said, the kids watch the parents go from house to house, wringing their neck, trying to fix things, not really having a lot of money, not repairing the right things. And then when the parents pass, they don't want to take over, that they have their own lives, their own careers, so they just want to liquidate the portfolio and cash out.

[A]

Right.

[C]

Or sometimes. The last one I did, the landlord's kids were still alive. They knew they didn't want to do it and said they were willing to sell it.

[A]

That makes sense. Yeah. Now, what year did you liquidate the portfolio? Because you said, you know, you liquidated the portfolio, you went into the.

[C]

That was 2013. Okay, 2013. So I actually started this a year and a half before I quit the corporate job. I'd already owned this property before I quit the corporate job. Oh, wow.

[A]

So you're still, you're doing all this?

[C]

Yeah.

[A]

Okay. That's why, that's why I asked for the time frame. Because you said 2015, you quit the corporate job, so you're building this portfolio and that where you're flipping to keeping one and that's really a side gig. And then when you sold that, how many houses did you have?

[C]

I had 11 houses at the time. Okay.

[A]

Yeah. And then I'm sure you had built equity just by turning them around or whatever. Was that a good payday? Did you use that money to then 1031 into the. Yeah. Okay. Okay. So you found the bigger opportunity first, Right. While you're holding the other ones, you're like, okay, I can do this, let me talk to this guy. Get it under contract or whatever you did. Right?

[C]

Yeah.

[A]

And then you go, okay, well here's where I can generate some of the money, not all the money, by liquidating the 11 houses.

[C]

Yeah, well, I took some of the profits from the sale and put it into a self directed ira. Okay. Just to have that nft, just in case the corporate job situation never changed.

[A]

Right.

[C]

And then by negotiating the seller financing with the owner, I mean there's actually better terms than I would have got from a bank because it's only 10% down.

[A]

Oh, absolutely.

[C]

With no underwriting, you know, it's just like.

[A]

Absolutely.

[C]

Based off a relationship.

[A]

Absolutely. I've done deals that, so like owner financing would be great if you didn't have the down payment, so you need the owner financing. But I've done deals that actually wouldn't pencil out even if I had the money.

[C]

Yeah, yeah.

[A]

And I generally did them when I didn't have the money, you know. Right. But even if I had the money, they wouldn't pencil out if I didn't have the owner financing. Because at the end of the day, consumers can't get the return that a bank can get. So you can go somewhere in the middle, be like, hey, you know, actually I'll give you more money on the loan than you would be able to generate. And it's still quite a bit less money than the banks that you create. This middle ground, the sweet spot.

[C]

Yeah, yeah, yeah. Another part of my strategy with this particular block was also, remember I said I didn't have a focused investment approach before.

[A]

Right.

[C]

So there's a, a three billion dollar development that was announced in Houston.

[A]

Right.

[C]

So I wanted to make sure everything I did from then on was within a 1 mile radius of that project because it had a 3 or 4 year timeline before it was even going to break ground. So I knew that I can get in and be first mover in the market. So that's what I did with that property. So that property loan, it was so cheap. When I owned a finance entire block, it was like half a million dollars. It's worth about 3 million now, but I've since sold it. But let me tell you the process. It had some houses on it initially, and I was not doing single room occupancy for parolees because it's still kind of a rough area.

[A]

Wow.

[C]

So a house that would usually only. You'd only get market rent, maybe $700. In Houston, it was making $1800 a month because I was doing like 600 per person per room. And it's hard for them to find places to live. The other half of the block that I had had an old grocery store on it. And so I tried to go to every grocery store chain and explain what was coming, but the current demographics just wouldn't support.

[A]

That's correct.

[C]

Yeah. And so they told me, you know, the average grocery store has a 3% profit margin, so they can't make it over there. They said we need higher incomes back in the neighborhood. Neighborhood. So what I realized, I was like, hey, well, there's an opportunity. Here's a way for me to rebuild new construction in the neighborhood without displacement. Because if I tear this grocery store down, I'm not displacing anybody.

[A]

Right. What gave you the idea of no displacement?

[C]

I just saw how other developers have those challenges all the time when they try to go into a neighborhood and change things and they don't involve the community and having family members that went through that process. On the bad end, like when a neighborhood turns over, the property taxes get really high.

[A]

Sure.

[C]

Investors come in and renovate the houses, but they price it so high that no longer represents the neighborhood.

[A]

That's correct. Yeah.

[C]

Yeah. But I also tell people there has to be a mix, because you said gentrification is a bad term. I consider revitalization the alternative to There you go.

[A]

Because I like it.

[C]

Yeah. Because a lot of these neighborhoods at one point in time, every income level live there. The doctors, the lawyers, the professors, the business owners live in the same community as the employees. And we've kind of isolated ourselves now.

[A]

Oh, for sure.

[C]

Yeah, for sure. So it's rebuilding a complete community, which should be possible. And it is possible. It's working in a lot of my projects.

[A]

There's just so much interesting stuff here. So you go to the owner of the block. Probably what you were offering him might have been higher than market.

[C]

Yeah, it was.

[A]

Because that's how that works.

[C]

There was absolutely no compare.

[A]

That's how that works.

[C]

There's no comparables there at all. Yeah, no new construction. I was the first new construction in that zip code. Also when I built the houses which.

[A]

If you ask people around that were really knew what they were doing, they would have said you're crazy.

[C]

Oh, all of them did. I had 23 lenders turned me down. So I had to get more creative on that part. Here's another great story. So I realized I wasn't going to get any conventional financing from a bank or anything for it because there was no market data to support what I was trying to do. But I knew there was demand ahead of what was coming. So I decided let me create equity in the project by going to approach the previous owner and ask him to remove the mortgage lien and then put the property into a joint LLC so that now we have half a million dollars in equity in the company. And then I went and got someone with the 401k, rolled it over to self directed IRA with a quarter million dollars in it and used that working capital to get the project going. So now I was able to get.

[A]

Okay, hang on now. Because I want it, because if it went past me, it's going to go past a bunch of people.

So you take the prior owner and let's just say his name is George.

[C]

George, yeah.

[A]

Okay, so prior owner is George and you say, hey, I'm going to pay $500,000 for this. And really market is who knows what, you know, 400 or less if you're lucky. So I'm going to pay more. That's how you get the owner financing too is because if they could put it on the market and somebody can get regular financing and they put it on the market, why are they going to sell it to you with owner financing? Because even if I only have 25% to put down, the owner is going to get all their money. So if the owner get $500,000 and you and I are going to offer the owner owner financing, but they can get $500,000, be like, forget Chris and Paul. Yeah, because I'm gonna get my cash, you know. Right. But it's like could I get 400,000? You know, I'm not 100% sure. Hey, you know what, we're gonna offer you 500,000, but we want this owner financing. Yeah, that owner financing is at, as you said, you put 10% down. So that gave you the ability to have more leverage, number one. And number two, you get a better rate. You give the owner a higher rate to. Than they would get in a CD or whatever. And you get a lot less rate from the owner than you would from the bank. And so when you actually run your numbers, that creates a different scenario.

[C]

Yeah.

[A]

Now that I summarize, the old thing.

[C]

Yeah.

[A]

So now we got to get to the new thing. So you go, hey, George, there was a lien on the property.

[C]

Your lien.

[A]

Yeah.

[C]

But it's going to hinder me from doing his lie. His lean.

[A]

Now I get it.

[C]

Yeah.

[A]

Okay, Now I get it. Now I understand. Okay. So we're doing this together.

[C]

Yeah.

[A]

George says, okay, let's do this.

[C]

Yeah.

[A]

How does he securitize? The 90% loan is we give him 50 grand on the $500,000 property, making it real concrete, and then the 450,000 that we owe him. And let's say we're paying 5% interest or something like that. Depends on where interest rates are. Or pay him 5% interest. And now the way he securitizes that is he takes a lien against our property. Just like a bank would.

[C]

Exactly.

[A]

For $450,000.

[C]

Correct.

[A]

So you go, hey, George.

[C]

Listen, George, I know we've got this plan for me to pay this mortgage off over 10 years. How would you like to get paid over 3?

[A]

Oh, that sounds great.

[C]

Okay. Then he asks, how are you going to do that? Well, this is what I need you to do. Release the lien and let me bring all the capital to do a development on the site. And then I just need you to put the land into the joint venture, and that's your equity. And you have the right to reverse the transaction and take the land back if I don't perform and I don't do the development. What I'm going to do is, as I build houses, I'm going to give you 20% of the profits of each new construction home until I pay off the $450,000.

[A]

Wow.

[C]

So now you get it in two years in. George, you're 77. I hope you live to be 100. But I think it'll be better suited for you to get more of your money right now as you get older.

[A]

That sounds great.

[B]

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[A]

Did you have to give him a little spiff on top of that or no?

[C]

That was.

[A]

Yeah, just like.

[C]

Yeah, he was good.

[A]

Let me give you the opportunity to. And you're still securitized because if I don't do what I going to do, you're going to still be able to take that back. And did you do that in like the management agreement, the LLC management. Makes sense.

[C]

I let him use his own legal team. I had my own legal team and we drafted a mutual beneficial agreement.

[A]

Okay, I still have other questions too, because this is. This is good stuff. See, it's easy to sit here with Chris Senegal, and Chris is going to tell you how he did all this stuff. And it's cool because we're going to learn how he did all this stuff now because I've been there, I can go back and go like, okay, so now I'm going to tell you why people listen to this and aren't going to do this exact deal that you just talked about. She teaches the deal. They're like, oh, wow, I found a place exactly like Chris's. You know? Exactly. I'm still not going to do the deal. Here's one of the reasons why I'm not going to do the deal. You're in a bad neighborhood and you're going to rent single rooms. See, what Chris did, was Chris overpaid. So now he's got to do something. If you have a plan while overpaid. So, yeah, how's this going to work? Because if you overpay, you don't have a plan. You're just underwater. Yeah, okay, so overpay. Now you got a plan. But Chris's plan is he's got some great vision. But that's longer term vision. The plan right now is how am I going to make this thing? You know, cash flow, all that kind of stuff.

[C]

Yeah.

[A]

And I do want to get into the vision and I have specific question on that. But let's get to the short term.

[C]

Okay.

[A]

Now you're going to rent to parolees who have a hard time finding housing. How do you do that? How are you able to do that without being freaked out?

[C]

Okay. So I have a property manager that has an existing relationship with the parole office because she has other investors that do the same thing. So what we're looking for is nonviolent offenders that are still on parole that have to keep a job, have to keep a roof over their head, and preferably have a trade. So they're so happy to be there when things would break down on the property.

[A]

They'll fix themselves.

[C]

I just buy the materials and they fix it it. And there's some of your lowest risk people because a lot of them don't want to go back to prison. The stigma that most of those incarcerated people have is not true for a lot of them.

[A]

A lot of them really non violent.

[C]

Right? Yeah, yeah.

[A]

Depending on what year it was, it could be marijuana charges, which is now legal.

[C]

Right. It could be insurance fraud. I mean, financial things, you know, nothing where anybody would be physically in harm on the property.

[A]

Right.

[C]

Yeah.

[A]

But in that, I picked out another great piece of Chris Senegal wisdom, and that is Chris doesn't know the parolees. Chris doesn't know this. Chris doesn't know that he knows a property manager that does this. Now, how did you spot that property manager? Like you're just looking around be like, how are they making so much money?

[C]

Well, I was already working with her. She works with a lot of investors. And she actually found me. That's when Craigslist was still a thing, when you were. So she found me on there. I had posted a rental for one of my units, and she said, hey, I might be able to bring you more rental properties.

[A]

Oh, you're interested in that?

[C]

Yeah, yeah. So that's how we met. And as we started talking, she started telling me about that program she had. And it just coincided with the same time that I was negotiating to buy the property. So it all kind of worked out. And then another thing I want to reiterate is the fact that I know everything I was doing was a big risk, but because I was three quarters of a mile from that $3 billion development, I knew my bet was hedged. Because worst case, if I Had to exit. I could still sell it for more than the 500,000. In a year or two, it was going to be worth 750 or 800, you know, so I essentially made the previous owner my business partner without him realizing it.

[A]

That's correct. Oh, that's correct.

[C]

Yeah.

[A]

And one of the ways you might say, well, how did you make him your business partner without him knowing it? But I know the answer to that. That. The answer to that is you paid him more than he would have gotten at market rate. So therefore he enjoyed the benefit of your vision.

[C]

Yes.

[A]

While also facilitating your thing. So I totally get that. Yeah, you mentioned before. So this is why I highlighted it. You mentioned before a catalyst. It is. And then I wrote down the term urban inner fill. Yes, that's the right term.

[C]

Yep, it is.

[A]

Okay. And so what's urban interval?

[C]

Yeah. Okay. So it's like when you're going into a community that now has blight, it has properties that have a lot of deferred maintenance need to be torn down. And instead of a developer going out and buying raw land and doing the whole subdivision, you go lot by lot and you fill in the gaps in the community. So that's really what this is. You're gonna move some neighborhoods, Some owners have been in 30 years, they're not gonna wanna sell. You have to figure out ways to maneuver around what's there. And what I do is if I'm buying income producing property, I want to buy something with long term stable tenant in it that I know it's not going anywhere.

[A]

Okay.

[C]

So the returns are going to be a lot lower on investment like that. But it's like buying a bond versus buying an option.

[A]

Right, right. Okay.

[C]

Yeah.

[A]

See, I'm glad I asked the question. And then I'll have to like go to investment PD or whatever. We're talking about two cool things. I could have called it the wrong thing. I was talking about something different.

[C]

Okay.

[A]

I totally get what you're saying. That's a cool thing that may in fact be urban interfill. And I'm just using the wrong term. But what I was thinking about was back to when you see the $3 billion development coming in. One of the things that small investors don't understand is that big investors have to do big projects. That's all they can do.

[C]

Yeah.

[A]

And so when there's a big project going here and there's a big project going here, there's all these little things in and around. And that's what I call urbaners. I'm not sure who's right on the term. I don't think it matters. These are two interesting concepts.

[C]

It's probably a double entendre. I think it may be used both ways. Yeah, yeah, yeah.

[A]

And in fact, I had a friend who. And this would be interesting for. Certainly it was interesting for me to hear. It should be interesting for investors listening to this podcast because I had a friend that was such a phenomenal, sophisticated investor, and he said to me, I wish I could do what you do. I'm like, dude, stop. You know? Right. Like, you have to explain this to me. And he. I try to get him on the podcast, but he won't do it because he had this huge exit. And he's like, I want to lay low for the radio, you know.

[C]

Yeah.

[A]

But I had an idea before he did this. I have a lot of good ideas that I don't do. And one of the things that I was thinking about was as he goes into these cities, so he had a big fund, and he had the really big players, the pension funds and all these things, like big institutional investors in his thing. And that has its difficulties because you got to meet with the board and. And he wasn't able to be nimble. So one of the things that you can do and that I can do is you can, like, look at this little property.

[C]

Right.

[A]

Start thinking crazy stuff. We're gonna put some parolees in there because they're actually. They need a good place to live, and it's doing a community. All this, like, crazy stuff that, like, you think about and I think about. We both do. Yeah. And I'll tell them stuff like that. And he'd be like. Like, oh, that's amazing. You know.

[C]

Yeah.

[A]

And I'd say to him, like, hey, how do you find your assets? Because I buy stuff that's on the market.

[C]

It is.

[A]

But, you know, we also do door knocking from wholesalers, all that kind of stuff. So I'm asking him that, which is actually a naive question to ask a guy like that. And he's like, what are you talking about? You know, like, if you have an asset that's $100 million asset or a $200 million asset, there's no door knocking.

[C]

Right.

[A]

These people, they're going to put it on the market, you know, and then I've got to fight with everybody else that's in that. That price range, which there may not be that many, but my ability to be nimble is very low.

[C]

Yeah.

[A]

So that's where he was saying, you know, boy, I Wish I could do that cool stuff that you do. Kind of paid out what he did for himself. Paid pretty good, but that's another story. But I had an idea, which I didn't do, which was I'm gonna hitch a ride on his corporate jet when he goes out to look at. Yeah, okay, right. You know where I'm going with this. Right. And so, by the way, not only that, I use all of his brain power and analysis, because one of the things that you did, and knowing you, you did it knowingly, but the people that are doing a $3 billion investment, they have spent how much on research and development. They know the traffic flow pattern. They know the demand curve. They've hired a professional research team that they probably paid 300 grand or more.

[C]

Yes.

[A]

You decide. This is exactly where we're going to build our $3 billion thing.

[C]

Yes.

[A]

So when you go, hey, I'm going to go near where they are, you know, you're taking a lot of that brain power from the $300,000 research. Yeah. Or it's almost like I have an analogy for that. Like, I forget which franchise it was. I won't mention names. They don't have to, like, bleep me out or whatever. But there was one major.

[C]

Yep, I'll do it.

[A]

Yeah. One major. Fast food.

[C]

Yeah. The hamburger franchises. Then you got the pharmacies that do it.

[A]

Right.

[C]

The cvs, the Walgreens.

[A]

Right. They're like, oh, well, hey, we're going to let the big hamburger franchise do all that, figuring out where to put theirs. And as soon as we know they know what they're doing, then, okay, we'll just put it across the street because we'll draft off of them.

[C]

Yeah. I tell people all the time, it's okay to be a copycat. Just copy the right cat.

[A]

Copy the right cat. Yes. Let's mark that one for social media. You know. Right. It's okay to be a copycat. You just have to copy the right cat. I like it. So you're doing this stuff near and around the $3 billion development. I gotta tell you, I even did the opposite one time. I had a fourplex that was. I'm a really good neighborhood, but I bought it as a dump. I fixed it up, you know, I could sell it for a certain amount more. And then they were doing the $3 billion development near me, and somebody was coming around and saying they were trying to do to me or with me what happened with you. And I'm like, okay, well, here's my number. It's like two times more than what the thing is worth right now. I know the $3 billion thing is coming. I know like 10, 15 years from now I might kick myself for doing this, but if you can really pay me twice as much.

[C]

Right.

[A]

I'll take it.

[C]

Right.

[A]

And they eventually did. They made sure they wouldn't do mine unless the neighbor sold hers. You know, that was a whole aggravation because I had to, you know, clean up some of the mess on the other side of the street just so that I could get the deal done. But that's the creative thing. So they're coming in with the 3 billion. So anyway, what I would call urban inner fill, I don't know. But I had this plan where if I knew that this guy's firm was going to be buying and renovating, you know, they buy an old office tower and that's a bad thing now because office space is terrible. Sorry. Buying a huge.

[C]

You know, they are doing a lot of conversions of old office in the residential kind of.

[A]

So he was doing a giant revitalization of a big, huge multi family thing, you know, say 100, 200. He told me he couldn't invest unless it was 200 million. So $200 million deal. Big deal. And I'm like, let's buy the burger joint across the street. Let's buy the four units across the street. That's a dump. And I'll do my fix up the four units while he's fixing up the $200 million thing. Yeah, there's got to be a lot of good stuff happening.

[C]

Yeah, yeah.

[A]

I haven't done it, though.

[C]

Yeah, I know.

[A]

Just talking about it.

[C]

But I had a friend that talked to a big developer in Atlanta who's doing like a $400 million deal. He's renting his office. He's like, I just want to buy my own building. Can you help me? He's like, the developer said, son, I have no idea how to help you do that. It's not in my wheelhouse when I do these big projects. I can't think that small or I can't operate in that space.

[A]

I have a syndicator friend who would love to mentor and do some of these deals with me. He's like, oh, I love. It's a different guy. He's like, oh, I love the way you do things. You know, bring me the deal. I brought like six deals. They're all good. And he's just like. Like, it doesn't move the needle.

[C]

Yeah.

[A]

You know, I'm like, it Moves the needle for me a lot. He's like, yeah, it just doesn't move the needle. I can't devote brain space to figuring that out and devote some of my team to like, yeah, do whatever.

[C]

And then, I mean, you think about a project that may have like a one or two million dollar profit in a year, but the salary of your staff is 4 or 5 million. It's not worth your time.

[A]

It's not the worth of time.

[C]

Right?

[A]

That's right, yeah. Yeah. So I love the way you did that buy the block deal for sure.

[C]

Okay.

[A]

Okay. So that was your buy the block deal deal?

[C]

No, that was a block I bought. But the buy the block deal was the crowdfunded project.

[A]

Okay.

[C]

Yeah.

[A]

Okay, so tell me what happened with that block that you bought in 2013?

[C]

So now I've built all the new construction homes and they've been sold to young working professionals that probably would have went out to the suburbs and had slow value appreciation. They've owned those homes for about two years now and they have over a hundred thousand dollars in equity, each one of them, just because of the vicinity of all the activity going on.

[A]

And how many homes were you able to build? And what did you do with the grocery store?

[C]

The grocery store was demolished.

[A]

Right, okay.

[C]

Yeah. So we built and sold five of them. And I have some students that built up some more on the other side of that block. We're holding it right now to do a small multifamily project on.

[A]

Okay, so that's still all part of that one piece of land?

[C]

That one piece of land? That one acre site? Yeah.

[A]

Okay, One acre site, built and sold five.

[C]

And then it backs up to one of the major highways, interstate highways in the city. So that side is going to be commercial. So we're going to do some type of retail on the first floor.

[A]

What's sitting there now?

[C]

Nothing's just grass.

[A]

Okay.

[C]

I removed everything so I wouldn't have any maintenance or anything.

[A]

Right. Okay. So you basically, what did you do with the existing houses that were there? You leveled them?

[C]

Yeah, the level them, they were all building the 40s and 50s and wood frame, so it wasn't much left to them.

[A]

Right, yeah. Instead of renovating, just have at it.

[C]

Yeah, yeah. So from there, when I started doing new construction, of course the community started saying, well, you're building things for people that aren't existing. And then they remember, what can you do for the existing people? So that's when the idea of, hey, maybe I can go find another landlord or heir of a Portfolio that has rental properties and I can do the right thing by the tenants because once again, I know that I'm going to get a tremendous amount of value appreciation off of just the land. So I don't have to worry about, you know, you get your return off of either cash flow or for asset value increase. So I figured this play, the ROI could come more from the asset value increase than the roi, as long as I'm still positive cash flow. So that's what I was able to do. I was able to find another portfolio that had like 20 properties in it, all on one block a few blocks away, actually, closer to the big development and talk the family into seller financing to me as well.

[A]

Okay, how did you go about finding it?

[C]

Wholesaler brought the deal to me this time.

[A]

Okay.

[C]

So a wholesaler had found one of them that they had listed on like Redfin or something, reached out to him and said, I'd like to offer, make you offer. And they told them, well, actually we were selling the whole block. We have the whole block of properties. And so he called me and first he asked me if I could help him sell it. And then when he told me the scenario, I was like, actually, this may be a play that I want to keep cheap. So sat down with the family. They wanted like 1.2 million for it and still very cheap for a whole block.

[A]

Sure.

[C]

They wanted 50% down. So 600,000 in closing, which I thought was reasonable. And since it had all these long term stable tenants in it, I figured this is an opportunity to try to do a crowdfund model because there's a cash flow, cash flow, base level cash flow. Like even if I'm not profitable, at least I can take the rent profits and pay it out to the investors at some type of ROI while waiting for the values and everything surrounding the area to go up. So that's what I did. At that point in time, you could do a reg CF fund, but the cap was like $1.1 million. So I raised 1.1 million.

[A]

Hang on a second. A reg CF CF.

[C]

Okay. So when you syndicate funds or you do a big capital raise, it used to be where only accredited investors could have access.

[A]

That's right, yeah.

[C]

Reg a reg D. Those types of funds, right?

[A]

That's right.

[C]

So you had to have a net worth of over a million dollars, excluding your primary residence income, over 200,000 per person or 300,000 as a household. So that excludes a lot of people from being able to ever get into the pooling money to buy Assets in that neighborhood, too. Yeah, yeah. So now with the Reg CF, that's part of the Jobs act, where anybody can invest up to $10,000 in a small fund. But the cap on the fund is 1.1 million. But that was enough for me to raise the 1.1 million, give them the 600,000 down and have some money to repair, deferred maintenance, do some upgrades on the property, do some energy efficiency improvements for the tenants, like screens on the windows, patching the roofs, making them feel like we really wanted them to stay in the community. And there was two vacant commercial buildings on the site. I turned those into event spaces. Well, why is it Event Space one is going to be a podcast studio. I haven't opened the second one yet. But the event space generates seven to $10,000 a month. So it generated so much extra revenue that I didn't have to really focus on raising the rents on the tenants at all for a while. Yeah. So now we're raising the rents a little bit, finally, after two years. But the difference in what they're paying, what they were paying then and what it's paying now is going to come from the Housing authority.

[A]

Right.

[C]

Because the housing authority identified what we're doing in the community and they said, hey, we respect you. We want to subsidize your rental revenue so that the tenants can stay. They just saw us doing good for the right reasons in the neighborhood, basically. Yeah.

[A]

And I was going to ask you, like, are you approaching city council people? Are you?

[C]

I was the opposite. I tried to stay out of politics as much as possible as long as I could, but my project started getting so big and I was like on the COVID of the Houston Chronicle. That's amazing.

[A]

Yeah, yeah.

[C]

So of course the politicians start coming around because they want to be able to hang their hat on what you're doing in the community. So, yeah, I'm involved with them now, but the quasi government entities have been who I'm partnering with, like the housing authority, more so.

[A]

Right.

[C]

Than the actual politicians or the city itself.

[A]

Right, okay. Yeah, got it. So with the crowdfunding and the other thing you said was, oh, hey, the owner had a good lawyer and I had a good lawyer. You're talking about the old guy that had the, you know, I mean, now we're talking to people who have either not invested in real estate or maybe they have. Or they have a bunch of single family homes. They have a bunch of. Of duplexes or fourplexes, and they're not really papering this stuff up.

[C]

Bad shit. Yeah.

[A]

How did you know about Reg cf?

[C]

Yeah, Well, I knew about it for a few years just from keeping up with all the things going on in Washington. And I knew it was a tool that I wanted to use at some point. I just felt like ground up development was too risky to take that many people's money in such small increments. By the way, it goes back to what you were talking about earlier. The guys that do the $200 million projects thought I was crazy. Why would you. You bring a thousand people on to raise a million dollars?

[A]

Yes.

[C]

Well, how you want to deal with so many small people, just go to one person and get that million dollars.

[A]

That's right.

[C]

Yeah. But for me, it was more of a social impact project and a model to show that a community of people can work together and build or own things in their own neighborhood and kind of protect the community.

[A]

And when you crowdfund that, how did you advertise to get the crowdfunding and how did that work?

[C]

Yeah, so I have a pretty large social media following, of course.

[A]

Yeah, yeah.

[C]

And so.

[A]

Including me. Yes, I'm following you. Yes. And everybody should follow Chris. So we'll. We'll put your Instagram and other stuff on.

[C]

So I'm a big believer that when you're solving a problem, it's a lot easier to get the money.

[A]

Uhhuh.

[C]

So I was just telling the story of, hey, this neighborhood is going through the same gentrification that we always know that happens. Instead of us sitting on the sidelines, we have an opportunity to all invest, have ownership, and protect the residents at the same time. And so just telling that story on podcasts, on my own social media page, I raised the entire 1.1 without any marketing dollars spent.

[A]

Wow.

[C]

Just conversations.

[A]

That's cool.

[C]

Yeah.

[A]

How long did it take you to raise the.

[C]

Seven months. And it was a very new concept at that point in time, right?

[A]

That's right.

[C]

Yeah. So people are used to GoFundMe, where you're just donating money, or they've never really invested before or they're used to using Ameritrade or something.

[A]

One of the issues there, though, is so the first 10,000 in, they're sitting there for seven months. So did you. Usually a fund has a certain amount of time to open and close? Did you give yourself like a year to open and close?

[C]

So that's a great point, because with RayXF, you have to. To set a goal and you have to meet that goal in like whatever time frame you set. So it could be three months.

[A]

Otherwise you have to give the money back.

[C]

You got to give the money back. The other alternative is to let everybody know that invested, hey, we are electing to extend the timeframe. And they all have to agree they have the right to pull their money out.

[A]

Right. If they don't agree, it doesn't kill the whole deal. They just pull their own money out.

[C]

Yeah, pull their own money out. So I did that twice to get to the seven month part, to get to the full race, but I had nobody to pull out.

[A]

Oh, I love it.

[C]

Yeah, yeah. Because I think everybody identifies and then.

[A]

You hold it in like an escrow account or something like that.

[C]

Yes, yes.

[A]

Okay.

[C]

Yeah, yeah.

[A]

So that they know their money's safe. You're not going to the horse races.

[C]

It's a third party platform that's gotten SEC approval that holds the funds.

[A]

Okay.

[C]

And they don't release them to you until you reach your goals.

[A]

Yeah, okay.

[C]

Yeah.

[A]

Are we allowed to say like what platform or.

[C]

Well, it was actually a platform called Buy the Block, but they're no longer in existence.

[A]

Uh huh.

[C]

Yeah, yeah, I think.

[A]

But there are other.

[C]

There's a lot of them. There's a lot of them. Yeah.

[A]

So we'll do some, some research and put it in the podcast notes that if you want to do a crowdfunded thing, you can use. This platform's very smart. Yeah, yeah, I had to scratch my head on that one because I actually have a relative, my sister in law's sister is doing something like that. It's not for real estate. And I talked to her about real estate.

[C]

Yeah.

[A]

And they're like, well, that's not what we do, but that would be a good resource. So I'll find out. Like that's not that uncommon of a thing, right?

[C]

Yeah, it's very common now.

[A]

Yeah, yeah.

[C]

A lot of venture startups now that don't want to get VC money will do their own crowdfunds.

[A]

Right. It makes sense. And when you take the investor money, what's the kind of split that you do with investors? So you're going to take a piece as the developer, you're going to use their money. How does that work?

[C]

Yeah, so with the crowdfund, you're actually investing in the business, not the asset directly.

[A]

Okay, that makes sense.

[C]

Yeah. So the LLC, what I did was I sold 40% of the company through those individual micro shares. Basically $50 a share.

[A]

$50 a share.

[C]

$50.00 a share. Wow. But they had to buy at least.

[A]

Five shares, so it was a 200, 250 investment. Still cool.

[C]

Very cool. Because I have people that invested that have lived in the neighborhood their entire life and never owned anything. And now they can say, I can drive past that block and I own a piece of it.

[A]

I'll tell you another interesting thing. For the $250 investment, unless I'm wrong, they're getting a Chris Senegal course.

[C]

Yes.

[A]

Along with it.

[C]

Yes.

[A]

Because here's the thing. Hey, I think it's cool. I'm gonna invest $250. You know, here's my credit card. Swipe. Never mind. You know, I'll check on it. Whatever happens, happens. That's certainly a possibility. I would imagine a lot of people do that.

[C]

Some do that. Yeah.

[A]

Another thing is, like, I'm now gonna own my first piece of real estate for $250. I'm gonna see what this guy is doing.

[C]

Yes.

[A]

Worst case scenario, guess what? I lose all my money. And I learned a great lesson. One of the things that I'm always talking to entrepreneurs about and talking to real estate investors, like, get off the sidelines. You know, getting off the sidelines is very expensive. And then the lessons you learn are very expensive. And I've managed to invest for 25 years and acquire 600 units and never lose money on a single deal. We'll do an episode on here for that. And, you know, I'm just knocking on the door right now of one. I'm like, this actually might be the first one I was running on. You know, like, this is interesting, you know, because it deviates from my model. So I'm now working into something different. And by the way, I have now figured it out. But the first five places that I bought with one other partner.

[C]

Yeah.

[A]

And I think I figured it out now.

[C]

Yeah.

[A]

And now I'm thinking about a scalable model to use on and on and on, which other people are going to get the benefit of the kick in the pants that I got on the first five.

[C]

Yeah.

[A]

But to be able to say, I can invest in real estate, I can invest with this guy, I invest with somebody else, and then really follow the project.

[C]

Yeah.

[A]

I would pay $250 for a Chris Senegal seminar right now, but instead, I'm gonna own this piece of property.

[C]

You get to learn and earn. Learn and earn.

[A]

I like it. I like it.

[C]

Yeah. So, yeah, I give these biannual updates. I'm saying, this is what happened. Hey, the first year, everybody was paying rent. Second year, we had a few people fall off the height of COVID everybody was still Paying. But we had a couple months where we have several tenants that aren't paying. Now we have to finally start helping them transition to other locations. Repairs, hurricanes, property taxes going up. They get to see somebody that knows how to navigate all those processes and those challenges while they're still making money. But they can see how hard it would have been if they were trying to figure it out on their own.

[A]

That's so cool. I just had an idea because one of the things we're doing is we're doing, and obviously with radical wealth, plan this educational platform, you know, and I'm super appreciative to entrepreneur media to get behind this and make this kind of conversation possible. And one of the things that Chris Senegal and I could do together, so, you know, there's going to be courses and stuff like that that come out of this, but one of the things that we could do together. See, one of the things that got me was you said you've got your biannual report.

[C]

Yeah.

[A]

So now I invest my 200. $250. Oh, I have another question for you. If you took $250 at a time, as is always the case, there are the people that are like, they're just no problem. But then are there some people hollering at you?

[C]

Oh, yeah, definitely. 100%. Yeah. I hate to say it, but it's the truth. The people that invest the least are the ones that scream the most.

[A]

Absolutely, Absolutely. It's like we talk about in real estate sales. Like the ones that chisel you on commission are the ones that chew up more of your time.

[C]

Yes, you're right. The ones that put in 10,000. Some of them I haven't heard from. I have to reach out to them and say, hey, I sent an update.

[A]

Out two months ago.

[C]

Did you check it? They're like, no, I didn't check it. But when you're living with that level of novice investor, they may have bought a couple stocks or they saw something on the news, they can go on their app and exit.

[A]

Yeah, that's right.

[C]

You can't do that with crowdfunding.

[A]

I was thinking the opposite, which is, oh, you know, hey, I bought one share of Apple. I'm not exactly sure how much that is, but it's a lot of money.

[C]

Exactly. That part, too. Yeah.

[A]

And you can't call them ballmer, like.

[C]

Hey, yeah, I need my money back. But yeah, some of them, they have real life issues too, because they have never really had enough money to invest in anything substantial.

[A]

Sure.

[C]

So they may actually really have a bill they need to pay.

[A]

Oh, you know, I'm not a $250 investor. I'm a thousand dollar investor. But you know, I need my money back.

[B]

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[A]

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[A]

Are you able to redeploy it?

[C]

Yes. So this is what we have to do. Once a year, we hire a legal team to do it. We try to go through the major platforms that handle the $50 million raises, $75 million raises, but the cost of that third party facilitation of the buying. Selling the secondary market is what it really is.

[A]

Right.

[C]

It's too expensive. It would wipe out all the profits. So we had to hire an attorney, SEC attorney and his team. And once a year, we allow people to elect to sell and we allow existing investors to elect to buy more shares if they want to double down. And so first the company has to buy back all of the shares and then the company can then sell them to existing investors.

[A]

But you don't have to do.

[C]

You don't have to.

[A]

That's right.

[C]

You don't have to.

[A]

And so if I had had 20 investors that wanted to sell a thousand dollars worth of their stuff, so Now I got $20,000 worth of essentially supply, I would go back to my crowd base. By the way, one of the things we could probably do would be like, hey, you know what, we could take them too.

[C]

Yeah.

[A]

Can you? Or you could buy them back yourself.

[C]

Yeah. Of course, you actually have to. Otherwise it looks like it's Ponzi.

[A]

I see.

[C]

Yeah.

[A]

Yeah.

[C]

Or it's a secondary market.

[A]

So if I see you have to buy them Back. Okay. So we would go to our fleet of investors, be like, hey, you know, a few people want to get out because they got to pay bills or whatever. Life changes. Does anybody want to step up and buy more? And then you get $30,000 worth of hand raises. You go to the $20,000 people that want out. You go, all right, come on, let's go.

[C]

Yeah.

[A]

Are they buying them? Are they selling them for more or less or.

[C]

Yes. So that's the other thing we have to do. We have to make the market, because the only way you really get share value increase is understand what people are willing to pay in the market for the share at that point.

[A]

Right.

[C]

So we started off at $50 a share. Right now we're at about $75 per share.

[A]

Yeah.

[C]

All the investors have a pretty good return with the underlying asset also going up in value about 140%. We bought it for 1.2. It's worth about 2.8 already.

[A]

Wow.

[C]

Yeah.

[A]

Okay, so here's my idea for us, and that is create a course and have the people that are paying for the course invest in the property.

[C]

Yes.

[A]

And then instead of a biannual update, we get on there and can give a monthly. Yeah, you know, whatever. Say, hey, here's what's going on. You know, and it becomes a shareholders meeting. But it's really also educational.

[C]

Yeah. 100.

[A]

How do you like that?

[C]

I love it. I love it. Takes a team.

[A]

Yeah, we'll talk about that.

[C]

Yeah.

[A]

Okay, so you sell 40% of the company for 1.1 million, correct? Yep. So you are already valuing your company at.

[C]

So watch this.

[A]

Yeah. Okay.

[C]

When I did the capital raise, my projection was that the valuation would be 3 million in seven years. So I sold the 40% of that 3 million doll. But I just told you it's only been two years, and it's already at 2.8. So it's going to far exceed the initial valuation. I thought it was going to.

[A]

So you projected out, you said, hey, I believe I could be wrong. The market could tank. You could lose all your money. You do all those things. But I believe that three years from now, we're going to be at a $3 million valuation. And then when you sell the shares, you're selling the shares at what valuation? 3 million.

[C]

Yeah. So that's no different than what. What any other company does when they go public. Why Whole Foods? Not even profitable. But they're valued at billions and billions of dollars.

[A]

Correct.

[C]

Right.

[A]

And then what's your projection after the three years you're like, hey, three years from now. So I'm not a big investor, but I at least understand. So I'm gonna put my thousand dollars in now at a $3 million valuation. You're telling me my thousand dollars not even to be worth a thousand dollars until three years happens?

[C]

No, no, I'm saying it's worth that in the beginning.

[A]

Okay, yeah.

[C]

So they'll be able to get. Yeah, the share.

[A]

I see what you're saying.

[C]

Yeah, yeah.

[A]

You're saying that the buy that we have and the plan we have, this thing right now, is worth $3 million, but obviously it would have to exceed that in order for me as an investor to make money.

[C]

Yeah, well, you also have the rental profits coming out, so I'm taking 40% of the net profit of the rent and that gets distributed amongst the shares, just like a dividend.

[A]

How much cash did you put in this one?

[C]

I put about 120,000 on the front end.

[A]

Okay. And so what cash commitment do you have into the project? So when you, you first start out, you're like, hey, I'm going to commit X percent because you're getting 60% of the company.

[C]

Right.

[A]

To be clear. And you're getting 60% of the company because you're putting some capital in and you're also putting like your whole brain power and all your sweat and all that stuff.

[C]

The whole operating team, you know, we run the project, we manage the construction. We. We basically do everything.

[A]

How big is the team?

[C]

So is me, my assistant, I have a property manager that manages mainly the. We turn one of the units into a short term rental and we have the event space. And then we have one other person, we just borrow the team. So it's four. Really.

[A]

Four?

[C]

Yeah, he just kind of helps everybody else out.

[A]

Okay, and what year did you do the crowdfund?

[C]

So we started in November of 2019.

[A]

Okay.

[C]

And then we closed the fund that summer. We actually purchased the property in like March of 2020. So as 600,000 was raised.

[A]

Right.

[C]

That's closed. Yeah.

[A]

And you probably had to have it locked up. Okay, so bring me up to date where you are on different projects.

[C]

So it's a whole lot more going now from those two projects we talked about. I was approached by a church that had a mega campus right by downtown and right across the freeway from a $3 billion project.

[A]

Right.

[C]

They asked me if I could do something with their site because they needed to downsize and it was a historic site in the community. So I did a small family and friends Raised. Long story short, we bought the property from them for 6.7 million. They recently appraised 11.4 and I'm partnering with the Houston Housing Authority to do a 340 unit mixed income development on the site.

[A]

Wow. Yeah. This is what you were telling me about one of the times that we were talking, because I wasn't doing the whole origin of it. You were telling me this like crazy huge project. So the church needs to downsize. You're going to buy the church for 6.7 million. You're going to put 340 units.

[C]

So yeah, we're going to remove the church infrastructure altogether and come back in with the 340 unit mixed income development. So 49% will be market rate and then 51% of the building will be affordable, which is the new model that HUD is pushing across the country for affordability in the community so that the lower income people aren't concentrated all in one building. And when we think low income, most people think about people that aren't working. But we're Talking about the 911 dispatcher, your administrative assistant in the front office, the cashier at CVS or Walgreens. Some of them should be in the same buildings and have the same amenities, especially if they live in that community. Be close to their jobs, be close to everything that's going on.

[A]

And you said the Housing Authority is going to partner with you. What does that look like?

[C]

They partner with developers so that they don't have to do all the development in house now.

[A]

Right.

[C]

So they'll come in and they'll. A lot of times we'll do a land lease where they'll take over the land ownership. It takes it off the property tax rolls, which is one of your biggest operating expenses. And then depending on how much affordability you put in the building, they determine how much equity they'll put into the deal. Sometimes they don't put any. Sometimes they'll put substantial amounts and then they participate in some of the rental revenue in exchange for the dollars they put in and for the tax abatement with the tax exemption status.

[A]

And you qualify for that by doing it under their rules?

[C]

Yes, and in areas that they want to see it in. And you have to have a long term commitment for affordability with them, usually 10 to 15 years.

[A]

Understandable. So on the 6, 7 million dollar buy, how much cash does it? Yeah.

[C]

Okay. Another creative deal structure.

[A]

I love it. I love it. No, I love it. Right, yeah.

[C]

So we got a bank to commit to 4.3 million in a loan. Then I raised between my capital and few investors raised like 1.2 million. And then we talked the church into taking a second loan for the difference was, I think it was like 1.25. So that's how we got to the closing table.

[A]

And then inside of your capital raise, what kind of a upside are you taking? So you're the general manager of the project. How much of your own capital, how much of it is friends and family, and what does the deal look like with them?

[C]

So in this deal, I put in about 10%, I put in 150,000. And then I had one fellow real estate investor, they put in half a million. The other investors incorporate, like a dentist, a radiologist, a lawyer, and a financial advisor for Wells Fargo.

[A]

That sounds like you're going to start with a joke. You know.

A dentist, a lawyer or whatever, walk into a bar and they say, hey, let's invest in. Yeah, yeah, okay, that's cool.

[C]

So, yeah, that's how the capital stack was put together. So, once again, my success triangle, I have never done a development of this skill. So I partnered with a developer that has done projects on this skill.

[A]

Oh, I remember you telling me this. Okay. That's right.

[C]

I brought the opportunity and leverage their knowledge and experience.

[A]

Right. Okay, I'm back to your triangle.

[C]

Okay.

[A]

Right. You brought the opportunity. Right. Okay. And what people need to hear loud and clear on Chris's success triangle is the first thing that people say is, I don't have the money. And then I think, like, sometimes the opportunity and the knowledge and experience go together. They seem to go together, but actually they don't really always. So I like the separation of that, for sure. Because you're saying, hey, hey, I've been doing this now for a lot of years.

[C]

Yeah.

[A]

And I don't know how to do this.

[C]

Right. Exactly. To put it in, like, relatable terms, you may know somebody that's about to lose their house.

[A]

Yeah.

[C]

You know, there's a lot of equity in it, but you don't know where to start. So you have the opportunity, you got to go find the knowledge and experience, and then collectively, y' all go ask for the money.

[A]

Got it?

[C]

Yeah.

[A]

So tell me how this deal structure works. So between you and your investors, where's the developer come in? Is that the person with the 500K?

[C]

No, no, those just investors and mean, we're just giving them a preferred return on their capital. So we're telling them, based off of what we're going to do, we're looking at about 20% returns on your money over a three year timeline, which is from the time we acquire time, we do planning, we start construction and we do lease up. And then once it's leased up and stabilized to where we can get conventional financing or we can refinance into a long term multifamily loan. And at that point you recapture what you invested in the project.

[A]

Do they get a preferred return plus a piece of the upside or it's all wrapped into like a preferred return for this group.

[C]

And each deal can be structured Absolutely. So many different ways. Yeah, yeah. So this one would. They would exit once they got the return.

[A]

I see, yeah, yeah. And is that, that's a cumulative, not compounded return.

[C]

No, it's compounded. It's compounded. So essentially they would at the end of three years.

[A]

So I, if I invest a hundred thousand and it's three years later, am I getting 120,000 or am I getting.

[C]

A little over 200,000 back?

[A]

Wow. Yeah.

[C]

Because. Yeah, it's compound.

[A]

So it is compounded.

[C]

Yeah. And then you asked about the developer. So developer comes in with the heavyweight. So let's say there's this $80 million project.

[A]

Yeah. Because we're just talking about land acquisition.

[C]

Right.

[A]

Land acquisition at 6.7 million. And then how much is the construction?

[C]

Right. Yeah. Construction is like 60 million.

[A]

Right, that makes sense.

[C]

Yeah. Then you got all your soft costs, which is about 10 million somewhere from there. Yeah.

[A]

And by soft costs. Yes.

[C]

Architectural designs, engineering designs, planning, civil engineering work planned out, construction drawings set to be submitted to the city, fees you got to pay the city for.

[A]

It's all the cost of construction. It doesn't like actually hammer a nail or put a wall in.

[C]

And that's why developers usually make a big chunk of the profit. They take a big chunk of the risk on the front end. Because all that soft cost, if something goes awry with the project is worth it.

[A]

Yeah, that's right.

[C]

So, yeah, so the developer, they'll bring a larger chunk of equity or they'll have an equity partner that will come and bring the, let's say, the loan for the project. Project. They're only going to loan you 60% of what the total cost is.

[A]

Right.

[C]

You have to raise the cash equity for the difference.

[A]

Right.

[C]

So having that strong developer that's got an extensive track record, they have the relationships to bring that equity in.

[A]

And you're talking about 28 million in cash.

[C]

Right? Yeah. And then you have to calculate in what the returns are going to be for those investors. Usually it's high teens, low 20s is what they're looking for also. And then the bank's going to tell you, hey, yeah, we'll give you the loan for the difference. But who on your team has a net worth or asset to back that?

[A]

That?

[C]

Yeah, so that's where the big developer comes in at the part of it.

[A]

Unless you get institutional money, which sometimes isn't recourse, non recourse fund.

[C]

Yeah, there are some loan products and programs like that. A lot of them had dried up during this time frame.

[A]

Yeah, that's right.

[C]

Commercial real estate was like a curse word.

[A]

That's right. That's right. What a crazy, interesting project. And one of the things that, I mean, one of the things that amazes me is because you've got me all the way until this project and now I'm like, okay, I tap out because I'm like, now it's gone over my head. And I understand what you're saying, you're saying it's gone over your head too, but I'm gonna go out and get the professional developer.

[C]

Yes.

[A]

Yeah, that's the point where it would be making me nervous too. But do you have sleepless nights?

[C]

Oh, a ton of sleepless nights, yeah. Yeah, for sure.

[A]

Yeah. Because the friends and family money are like, okay, well you know, if this whole thing goes sideways, you know, then my, my dentist friend loses this. And yes.

[C]

So thankfully, the way everything's structured, the friends and family control the land asset to the poor. So like I said, with the current valuation of being 11.4, we're only 6 million in.

[A]

Right.

[C]

Worst case covered. Yeah, worst case, yeah.

[A]

Okay. Okay, I like that. Yeah, I like that. Covering the downside piece, I had somebody pitch me a deal which I really didn't understand and generally I'm like, if I don't understand the deal, I'm not going to do it, period. It was a care facility, but sort of very low level care facility. It's sort of the same business model as the like parole thing, but it's a little more complicated. So you can get a lot more rent than usual. And the sweet spot where you can really make the great money on that was like 60 units or higher. And he was looking at places, you know, he found one that was like 80 units but it was on the outskirts. And then you buy the business and the land. And the other one that he looked at was right in the center of LA in a slightly iffy neighborhood, but it was already running as that kind of facility. And what I looked at is I picked the one that was less likely to make it as the care facility because I knew if it crapped out that I've got this amazing piece of property in the city and it eventually did crap out. And then, then we turned it into great units and we ended up, you know, all the time, energy, effort spent, all the carrying costs, all the everything, the money we put in and still made, you know, I mean, if I could find a way where we've got a huge upside and I know my exit is at least break even, I would do that. But this is one where the upside wasn't as huge. But I knew my upside if we had to go out the other side was pretty good. So I'm like, okay, I'll do that.

[C]

Yeah.

[A]

And that's the only reason why I did that deal.

[C]

But it goes back to what I said initially, that being within a 1 my radius, $3 billion project is going.

[A]

To give you that.

[C]

Yeah. Protects the downside.

[A]

It will protect that downside.

[C]

Yeah.

[A]

So where are you in the course of this huge project?

[C]

So the housing authorities are just now getting on board to start the planning for the full development project now.

[A]

And then the development partner is not going to go out and raise the capital, commit the capital until a certain level of that approval.

[C]

Yes, yes.

[A]

So there are really right now, as an advisory, they're a partner. So if it goes, they're in, but if it doesn't go, they're out. And then if it doesn't go, then you're back left with your friends and family money on a piece of property that's actually worth more than what you paid for. So that's how you got the whole. Now I understand how you have the whole upside downside, you know, covered. These are very specific, but it creates this really great broad stroke lesson. And that is what happens if this thing, you know, and the project that I was referring to earlier was, you know, I'm going into a new sector, short term rentals. Doing it in a very, very popular area, which is sort of against the grain of what I usually do because once it's like already blown up, that's a little too late.

[C]

Yeah.

[A]

However, we were looking at properties and the ones that were ready to go, ready to go, they were counting all this massive short term rental income baked into their price.

[C]

Okay.

[A]

And I'm like, all right, we can't have those. Right. Even though the rate of return was still really good. Like if I did a proforma, you know, and I gave it to doctors and Lawyers and dentists and stuff. They'd be like, wow, that's going. And I have all the proof of concept because here's what the one next door is making, you know, so this is a comparable D, let's go. They would have said that's go. Yeah, but I didn't do that because I'm like, the market's hot, you know, this thing's oversaturated. I want to get in the game. But I nervous. So I bought the ones that were dumps that I, you know, was going to take a long time to figure out how to, you know, to reposition them. And then the market in fact did correct. And then the short term rental market did come down and I'm still like, I would be completely underwater if I had done it the other way. But I protected that downside by, by doing it in a value add way.

[C]

Yeah, you always kind of of underwrite the worst case scenario versus the best case scenario. Yeah, yeah.

[A]

One of the things that I do is I, you know, I know you're already thinking about this, but for our listeners, I don't. And you can say if you're different, I don't actually underwrite the worst case scenario because the worst case scenario is a lightning strike, you know, And I also don't project for the best case scenario because the best case scenario is a lotto ticket, you know.

[C]

Right.

[A]

Yeah. So really, I think worst case, best case for people who've been doing it for a while like us, is really shorthand. And what I look at is what's the best likely scenario?

[C]

Right, yeah, yeah.

[A]

And what's the worst likely scenario? So a market shift, that's not unlikely.

[C]

Right.

[A]

You know, so you gotta, okay, we gotta worry about that, you know.

[C]

No, yeah, you're right. You got the best and the worst scenario. One end is here, one ends here. You do that linear interpolation, you find out where in the middle is a comfortable spot.

[A]

Right.

[C]

But you still know that it could get this bad in the worst case and it could be up there. But what you move off of is where you feel comfortable at.

[A]

Right? That's right. And when I look at what's the worst likely scenario, and I can live with that, and then the best likely scenario is enough to offset that risk and time, energy and effort, then that would be a green light.

[C]

Yeah.

[A]

Back to. So where you are now is you're working on this giant project. Project which is a quantum leap for you as developer, which is super cool. We're going to check back on this for sure.

[C]

Yeah.

[A]

When will you know whether that thing's a go?

[C]

Probably next six months. Wow. Next six months? Yeah, we'll know for sure.

[A]

Yeah. That's cool. And that's going to basically be the housing authority buy into this thing. Yeah.

[C]

I started preliminarily with the architectural designs and what they call the programming of the building, which is how many? One bedroom, two bedrooms. What's going to be market rate, what's going to be affordable? Affordable. So we're building out the pro forma side, and then the housing authority has to identify the amount of capital they want to put in and the source of that capital.

[A]

Sure. And you can probably go back and forth with them a little bit, like, oh, hey, we like a little better this way. Be like, okay, great.

[C]

Definitely a working model that continues to.

[A]

Change as you go, but it requires somebody good on the other end. Good working relationship.

[C]

Yes. And we do have great relationships with them. So. Yeah, I mean, that's great. So that project is long term, but I have a few smaller projects I'm doing now. Now kind of in the same vein of community investment, where I'm working with landowners that may have an acre or two want to develop on it, but don't know how. So I have them once again put the land into the dealer's equity, and then we do all the land development, which is bringing in all the infrastructure, you know, planning all that part out, and then we subdivide the lots. And then I have students that want to learn how to do new construction. So I bring them on and I have to make sure they're financially in a position to facilitate the construction of. Of property. So then we subdivided to sell the last of those students, and then we have one architect, one engineer, one contractor doing the entire project. But now everybody that's paid to be in this new construction program actually can walk through their entire project from start to finish with a team of experts that I've assembled that I've been working with for a long time.

[A]

Wow, that's so cool. And I saw some of that on Instagram, so that was looking cool. And when you do that deal and I get the land development piece for sure. Or you also said students. So is that because they're enrolled in your course or. Okay.

[C]

Yep. So I have a few different levels of courses. People ask me all the time how to get into new construction. So, I mean, I have a course, usually one if you're an experienced investor you've been rehabbing, flipping apples, you know, how to manage contractors. You may just need the checklist and step by step process of what to do. So I have that level where you just buy the course. Then I have another level. I call it the no Flip society.

[A]

Yeah, I saw that.

[C]

Right, yeah. So and weekly I'll bring on anybody from my team, from the lenders to the architects, to the engineers, the contractors, surveyors, real estate attorney. And every week you get to hear from somebody for a little while talk about what they do and what their role is in the new construction process. And then I have the elite group that actually wants to pay $10,000 or more to actually learn the process from me. And that's the group that actually gets the first opportunity to buy the lots and to work with the entire team. You know, my lenders will get them pre qualified and then whoever brings me the initial deal, they get all the land development profits as well.

[A]

Well, how many folks do you have in the. Let's see.

[C]

So the elite program, we have eight people that are going to start new construction projects this year. I have a few individual students that have already built and sold duplexes or built and cashed out refinance duplexes. They end up with usually about $120,000 equity per property. And some of them still have corporate jobs that are making 60, $70,000 a year. So they make more money doing this on the side than they do with the corporate job.

[A]

That's cool. How many are in the no flip society?

[C]

We're about 40 people, I believe. Literally we just started this maybe about a month ago.

[A]

And what do you charge for that?

[C]

It's 197amonth. Very reasonable.

[A]

I like it.

[C]

Yeah. Well, you know what we didn't talk about on that first new construction project? How I lost over $40,000 trying to find the right team and assemble the right team of people. Oh yeah.

[A]

Losing 40 trying to find the right team. You know, that's money well spent.

[C]

I call it real world tuition. Real world tuition? Yeah.

[A]

Yeah, that'll be another one for you. I'm getting some real world tuition on my SCHW short term rental business right now. Like I said, I feel like we've got it really wired at this point. And then if we use that real world tuition, if I take the kick in the pants and go, nevermind, then I've got my first losing deal.

[C]

You have that degree now?

[A]

Yeah, I have the degree and that's okay. And if I take those properties and manage to work my way through them and then create a big syndication around that or A much bigger project. It could turn into be real world tuition well spent that.

[C]

Yeah. Another part of the society. Well, everybody that's in my training, I bring on people that have projects that did fail that I'm helping get back on track or exit out. Even if they're at a loss, they can come and tell where they went wrong, what they should have done. Some of them were people that I had given guidance to and they tried to do it their own way and it didn't work out. So they could hear all the real world stories about that too. So it kind of shortens your learning curve.

[A]

And the elite group, I guess they're going to be in Houston because you've got.

[C]

Right.

[A]

Yeah, you've got the deals right there. And the no flip society, are they also in Houston or is that they could be anywhere.

[C]

And I teach them how to assemble the team. You just have to find one key player in that new construction process. Whether it's a real estate agent that works with other clients that are doing new construction, then that person can then point you to the other client's architect, the other client's builders, or you meet a builder, then they can tell you who the architect is and who the real estate agent is. But once you get in that circle, like don't go to investment meetups and just take people's words and things. Find people that have. You have third party validation by credible sources and that's how you build your team, whatever. Marketing.

[A]

Yeah, I don't believe in investment meetups. I really don't because you got people that aren't qualified. And I did see an Instagram post where you're like, hey, you know what? Find your people outside the area and pay them. And one of the things that I found is that I've been able to find people inside the area that I didn't even have to pay because they have such a big scale and like LA is such a big place or you know, even Pittsburgh is such a big, big place. Like people are, hey, Chris, I'm so impressed. This is a script, you know, hey, Chris, I'm so impressed with what you've done. You know, what would it take for me to earn the right to take you to lunch or whatever? Y And most people just don't say no to that. Be surprised how few people get that kind of question asked. I've done it with billionaires and had those conversations and meetings.

[C]

Yeah.

[A]

And you know, you'd be surprised. Now I also. That's my screen script to get the meeting, the Other thing I'll do is I'll find out what sort of gift that's very personal to them that I could give them. And the other thing is, man, I come prepared. I come with my list of questions, you know, and so they feel like their time is well used. And that's my formula for getting mentors, you know. But I don't disagree. Like, how invaluable it would be to get somebody from out of, you know, like, the people that I want to talk to, like, they're worth a few hundred million dollars, so what am I going to pay them that's going to be worth their time? Nothing.

[C]

Exactly. Yeah.

[A]

So I'm going to be like, hey, I'll fly to you, or I'll do whatever and I'll take you to lunch. And I ask their staff, like, hey, what's their favorite wine or coffee or something that's affordable? And any kind of a gesture is nice, but then I come with my list of questions. Y. And generally you get a follow up on that, right? Yeah.

[C]

And what I tell people, too, is try to bring value even if you can't bring the value yourself. Let's say you go somewhere, you meet somebody at the bar, at a restaurant that says, hey, I work for a funeral fund that we do $50 million enough projects. And, you know, you don't have anything like that. But then when you want to go sit down with that developer that's doing a $200 million project and says, hey, I'm about $20 million short in my capital stack, hey, I met this guy. You might. You might want to reach out to him.

[A]

Yeah. Yep.

[C]

And bring value like that.

[A]

One of the things that I do because I run a big real estate salesforce, big real estate brokerage company. And honestly, I'm not the best. I'm certainly not the best networker at a party because I find it boring. And I'm a great network worker. If I'm on a plane or, you know, first class, you know, I got money. It's almost worth the ticket. You know, I can almost always justify the extra cost for the person that I sit next to most of the time. And the thing that I talk to people, the advice that I talk to people about, even at a networking event, is find the homework. And so if I'm talking to you, I'm like, oh, you know, hey, what's going on? And it could be anything. It could be an extraordinarily wealthy person that doesn't have a handyman. You know, I'll ask The questions, ask the questions until I get the homework. And soon as I get the homework, I don't have a photographic memory for sure anymore. You know, I'll be writing that down. You know, I'll be like, hey, that's exchange information, you know, whatever. And then when I actually do what I say I'm going to do, which most people don't, which is sending the handyman or send them the referral or, you know, this is the great restaurant, you know. Yeah. My billionaire friend is like, hey, you know, I'm taking my wife to dinner. You know, I know, you know, cool spots. So I take that as a big ass. Yeah. You know, he means it as like, hey, if you got any ideas. But I'm taking that on like a big ask. I'm like, all right, well, here's the place. And it takes you like three months to get in there, but I'm a regular or whatever. I've called ahead. I got your spot for your wife's birthday, you know.

[C]

Yeah.

[A]

And we won't tell your wife. You be a hero, you know. Right. And he's like, wow, you know, because I just thought about my wife, my wife's birthday, and it's tomorrow.

[C]

Right.

[A]

I can't find a place in LA to take her that's halfway decent.

[C]

Right. Yeah.

[A]

So that's the homework. And you always can add value.

[C]

Yeah.

[A]

And even if you cannot add value, the coming at them with, how can I? You know?

[C]

Yeah. The intent.

[A]

Yeah. Even though my script is like, what would it take to earn the right to, you know, have a 15, 20 minute coffee with you? Just the way you ask that question. I have rarely ever had anybody saying it in like. Like, oh, you know, you already have, or, you know, that's cool. But then I do make sure I'm doing some kind of homework.

[C]

Right? Yeah.

[A]

In addition to that.

[C]

There you go.

[B]

So you're about to make a trade based on a friend's text, but which you do you listen to, is it, we could buy a house in Tulum.

Get optioning those options.

We could lose everything.

Or let's do a little research.

[C]

Get your head in the trade and.

[B]

Make the investment decision that's right for you. Learn [e-mail] TradeSmart.

[C]

Here we have the Limu Imu in.

[A]

Its natural habitat, helping people customize their car insurance and save hundreds with Liberty Liberty Mutual. Fascinating. It's accompanied by his natural ally, Doug.

[C]

Limu is that guy with the binoculars watching us. Cut the camera.

[A]

They see us.

[C]

Only pay for what you need.

[A]

@Libertymutual.Com Liberty, Liberty, Liberty, Liberty Savings.

[C]

Very underwritten by Liberty Mutual Insurance Company affiliates. Excludes Massachusetts.

[A]

Picture with the fire rounds.

[C]

All right.

[A]

Okay, we're go a half hour on any of these, but here we go. What's one thing inside of one of these investments that you least expected?

[C]

To have one of my partners actually turn on me once we saw profitability and trying to get more out of the deal.

[A]

What's a common myth about real estate investing?

[C]

That it's easy. If it all worked out, there would be no such word as foreclosure.

[A]

What's the biggest challenge right now facing you in your development business?

[C]

I would say right now time is the biggest challenge because everything takes twice as long as you think it's going to take to get that.

[A]

What's the most important lesson you've learned so far as an investor?

[C]

The most important lesson I've learned is definitely don't try to figure it out on your own. Every time I do that, instead of taking advice to somebody else thinking I'm coming up with something new, it doesn't work. There's so many things I'm not thinking about that they already know.

[A]

In your opinion, what's the most important personality trait or strength that someone would need to have in order to be a great real estate investor?

[C]

You have to be internally motivated. You have to get out. You have to be able to withstand the frustrations of not finding the right deal or the failures and just keep going.

[A]

What's one piece of advice you give to someone just starting out in real estate?

[C]

Get a mentor. Learn from somebody that's already doing it.

[A]

Who's been your best mentor?

[C]

Wow. I have several. I have several mentors. From construction is definitely the first contractor I work with. From development, it's my current development partners, a group called Integral that's got a billion dollar pipeline. Well, several billion dollars in that pipeline right now. Now.

[A]

Did you always want to be a real estate developer?

[C]

I wanted to be a preacher and a doctor when I was growing up and somehow ended up going to school for civil engineering. But I just wanted to create an early exit strategy from corporate America and real estate and then development just kind of fill in my lap.

[A]

What's one thing about real estate investing that almost no one agrees with you about?

[C]

Most people don't agree with the risk I take by being the first to go into a market. When I hear about an announcement company, they say it's too much risk. Risk tied to it.

[A]

Do you have any favorite productivity hacks for Investors.

[C]

I would say my productivity hack is the same as my success triangle. You know, leveraging other people. It's not school. You don't get any accolades for trying to do it all on your own.

[A]

If you weren't doing real estate investing, what would be your second choice for career?

[C]

Probably something in the financial markets. Trading. Tried there for a little while, just didn't stick with it long enough.

[A]

Do you have books that you would recommend to the audience?

[C]

So my books are going to be more mindset books of course. The traditional Think and grow rich 48 laws of power and then Darren Hardy's the Entrepreneur Roller Coaster. It's a great book.

[A]

Wow. Yeah. 48 laws of power I think is an interesting one for sure. What gets you out of bed?

[C]

What gets me out of bed is the opportunity to do something that most people say can't be done.

[A]

What's the best advice you'd give your younger self?

[C]

I would tell myself don't stress about not knowing everything. Everything comes with time and experience.

[A]

What would you most like to be remembered for?

[C]

Creating opportunities for other people.

[A]

What do you use as a best way to rest or decompress outside of alcohol?

[C]

I'm just. No just I've been getting more into self care like going to the spa and just relaxing, getting out of it and then a little bit of travel.

[A]

What are you most excited about right now in your life?

[C]

Finding balance in the sense that I no longer going to tread my wheels too much on, working too hard on things. I'm going to find the right team and realize that you come the most successful by the great ideas that you don't pursue.

[A]

Wow. What's your most treasured possession?

[C]

Time.

[A]

What is a talent that you don't have that you'd most like to have?

[C]

I wish I could dunk.

[A]

When I was. When I was between 18 and about. About 28, I could dunk a basketball.

[C]

Oh really?

[A]

It's pretty good for a six foot Jewish kid. What's your greatest extravagance?

[C]

I would say the ability to adapt to any environment.

[A]

What do you consider the most overrated value?

[C]

Money. I've met people that are extremely successful and wealthy and still miserable and depressed.

[A]

What do people most misunderstand about you?

[C]

Most people look at where I am and they say oh, but you had it so easy.

[A]

Yeah. What's your favorite childhood memory?

[C]

My 12th birthday when my dad bought me a bicycle and redecorated my entire room with Charlotte hornets paraphernalia.

[A]

Wow.

[C]

Yeah.

[A]

That's cool. Yeah. What was your biggest Failure to date. And what did you learn from it?

[C]

I'm saying it's a failure, but it really was a blessing. I was getting my girlfriend pregnant at 16 and having to be more responsible at your early age and, you know, things like that can either be a crutch or they can be motivation and became motivation for me.

[A]

And how's your son doing?

[C]

He's doing a lot better. Yeah. So, you know, after graduating college, full academic scholarship, getting his real estate license, working for the city of San Antonio in the economic development department, found out he had leukemia about a month and a half ago, but it's already in remission, so they caught it. It was one of the very curable forms.

[A]

Wow.

[C]

So there's no active leukemia cells in his body right now. They're just doing preventative chemo trans treatment to make sure it doesn't come back.

[A]

That's amazing.

[C]

Yeah.

[A]

It's one of the cancers that they've made the most progress on. Yeah. There are some that they've been working on forever and done nothing. And there's some leukemias they like, completely cured.

[C]

Yeah. Yeah. I mean, that form has a 92% survival rate.

[A]

Yeah.

[C]

Of all age groups. Yeah.

[A]

And thank God. Happy to hear that.

[C]

Yeah.

[A]

If you be remembered for one thing, what would it be?

[C]

Impact. Impact on how communities can be rebuilt.

[A]

What's an insult you received that you're proud of?

[C]

That I'm an asshole.

[A]

Wow.

[C]

Because you have to be straightforward with people sometimes. And delivery may not matter as much sometimes. If it's important.

[A]

Yeah. Sometimes having that conversation people shy away from so much.

[C]

Yeah.

[A]

So you take a hike. Sort of difficult climb. You go all the way to the top, and you get to the top, you look down and there's your son and your family and your business team and your whole community. And you shout one thing off of that mountaintop. What do you shout?

[C]

Thank you.

[A]

I love it.

[C]

Yeah. Because the other motivation, they're the reason I'm there.

[A]

So. Just did a phenomenal podcast with my friend Chris Senegal and, you know, follow him on Instagram. He's got killer stuff. And I figured because I asked him so many tough questions that it would only be fair to flip the script. So ask me anything.

[C]

Okay. So my first question is 7.9 billion in sales in 2022. How do you keep a level head?

[A]

It's totally leveraged. So I run the brokerage business like anyone would run a different business. So I focus only on very top level stuff. Like, for example, even the volume is not as this Mind bending. It's a mind bending volume, but it's not as mind bending as the number of transactions. Like you know, 8,000 transactions. You know, it's like, so if I looked at one transaction, my whole world would blow up because I can't look at transactions. So having to have the people in place, the broker of record in each office, it's the deal doctor and all that sort of thing. So I stay at a higher level and manage just key performance indicators.

[C]

Okay, okay.

[A]

It's almost like, you know, I don't want to equate myself to a CEO of an airline that's way more fancy, but if you're like, oh, hey, you know, you've got like 400,000 flights, you know, how are you managing the 400,000 flights? And the CEO will be like, dude, I don't wear anything. Is flying at any particular time.

[C]

So what percentage of your client base right now is institutional versus individual buyers and sellers?

[A]

For my client base, it's, it's primarily a residential real estate company. Yeah. So we do. It's just like an agency. So our clients are the clients of the realtors. So we have a fairly strong commercial presence. So we do pretty strong. Like that number alone, I don't have it off the top of my head would sound like a really big commercial brokerage. But it is a small fraction of what we do in terms of total deals.

[C]

Okay, let's talk Hot Topics now. How do you feel about the whole lawsuit around the commissions being paid by the seller?

[A]

Interesting. So I wish I had a more informed. It's almost back to the same. Like, how do you manage all this stuff? Yeah, one of the ways I manage it is I don't pay attention to so much stuff. Like the amount of stuff that I don't pay attention to. Like I knew about the commission dispute for so long and I'm like, not paying attention. Not paying attention. Yeah. And then, you know, I saw the big verdicts come out. I'm like, oh, wow, this is, you know. But now I'm curious as to how it's going to affect individual realtors. Now one of the things is that people have been trying to use technology to get rid of realtors for a long time. Yeah. So you've got Expedia. Expedia really did away with travel agents. I, by the way, would still be a good client for a travel agent because I know so little about like, oh, where should I go? Should I go to Bali? What's the difference between Bali and, you know, wherever else? And you know, what's the temperature? Like, I want to go to Tokyo. I went with my daughter, but, you know, I went at the wrong time of the year. Like, I need a travel agent. But. Yeah, but travel agents got put out of business because you've got seat 6A on the flight from LAX to Houston is the same, you know, no matter what. So people will actually buy that seat for like $1 less. I'm guilty of it, too. If I see it for $1 less, I'm gonna click on the $1 less. But real estate is a personal experience, number one. Unless all the homes were absolutely cookie cutter, it's very difficult, difficult to get rid of the realtor. It's also almost always the largest transaction or at least a very important transaction. For my celebrity clients. My clients that have a lot of money, that home purchase is still a big transaction relative to their net worth and also to their happiness. So when I buy real estate myself, like, when I bought this house, I know the area. I know all this stuff. I know I went out and asked two or three realtors that, that work for me that specialize in this area to the point where I'm like, oh, I'm looking at this house and it's whatever. And they're like, yeah, I've stood in that house three times. I know exactly what house you're talking about. So that's the kind of information that I think makes a big difference. And that's why I don't think that, you know, is it going to be. Technology is going to be a big piece. Okay, so is it going to be the technology aided by realtors, or is it going to be realtors aided by technology? It's going to be realtors aided by technology. If I have to rule it, look into the future, I will say that I think there'll be less numbers of realtors doing more business, and they'll be more professional, and that's not a bad thing.

[C]

Yeah, I agree. The restaurant analogy, you walk into a restaurant was just a kiosk. You can't ask, well, what do you recommend, the steak or the spaghetti? The machine can't tell you any of that.

[A]

That's right.

[C]

Yeah. No person.

[A]

And that answer, by the way, could vary day to day. Yeah. So the person is like, really, like next to or near the kitchen? Like, well, actually, you know what? We got this shipment of steak steaks in. They came from this special place. And like, I normally recommend the spaghetti, but today, go for the steak. Yep.

[C]

Very different. So during our interview, you dropped A very casual bomb. You said 600 units. How did you build your portfolio?

[A]

I mean, I almost want to say one at a time, but it was gradually, then suddenly. So I didn't even consider myself a real estate investor, at least not a developer would be the wrong word, but like a professional investor until I had a lot of units. And I, I wish I could go back and look for the exact number, but I probably own 40 rental units before I even own my own house. Yeah, not what I recommend for other people, but the issue that I was having was that I was buying in Pittsburgh, where I knew the area, and then I was living in Washington, D.C. when I bought my first house. So I was living in very expensive places. It was easier for me to buy. I'm renting while I own, you know, 40 units because it's just the way the math happened. And then eventually, you know, just sort of trading up and also using some of the equity that I had.

[C]

I love it. I love it. So what haven't you done that you want to get done in 2024?

[A]

So one of the things is that, you know, I focused on the brokerage business a lot, and it is the highest volume, least margin business that you could ever imagine. If I sometimes I talk to, like my sort of cabinet members, you know, I'm trying to find very rich people that have been very successful or whatever, been very successful in business, and when they see the volume that I do and the amount of profit that I take home, they're astonished. So the margin is so small, and yet the margin in real estate sales is actually relatively much, much, much, much higher. So I'm moving more into real estate technology because driving the leads is really an important thing. One testament to that, which I know a guy that likes numbers and looking at companies, you'll be able to find this easily, is that if you look at the market cap, which is total value of a company of gigantic publicly traded real estate companies, they're a fraction, absolute fraction of like a Zillow. And what does Zillow do? They're just an ad company and they're collecting leads. So I see leads as the, you know, who's going to lead generate. How do you lead generate? That's the future. What is the technology that's going to be best at helping Realtors lead generate? That's a big piece. And then also I spent all this time while I have a cadre of wealthy clientele or whatever that I would just never service, put together a team to service that group. That's one thing and maybe that's it.

[C]

Okay, so you, you rather sell the shovels then mine the gold?

[A]

Sell the shovels.

[C]

Have you heard that analogy where the guy during the gold rush, he made more money selling shovels than the people that actually.

[A]

Oh, yeah, yeah. Picks and shovels. Yeah, yeah, yeah, for sure. Yep, yep, yep. So if we can give advice to someone who's never invested in real estate, what's, what's the advice we would give them?

[C]

Okay. If they've never invested in real estate, I'm going to tell them to put their money in a deal with somebody that's very successful where you can see their closing statement, see the profits, and then walk through that first project with them and ask questions before you go and try to jump into it on your own.

[A]

I like it. One of the things, if they've never owned real estate, if the question includes people that don't own their own home, I would say invest in your own home first because there's such amazing tax breaks for home ownership and you can get financing that's much more favorable. Agree. So we were asked, what's the number one pitfall to avoid when investing in real estate?

[C]

I would say the number one pitfall is investing off of emotion and off of research and market data and your team of experts in every sector, whatever you're doing.

[A]

I'm just going to have to second that. I've, you know, even in my last go round, I was working off of data that didn't really work for that particular area. Instead of going direct to the source, which is what I usually do, you know, going to that neighborhood expert. Yeah, that's what I would do. So we're asked, what's the number one thing on our minds going into 2024? Go for it.

[C]

Well, at the think for 2024, my focus is going to be maybe adding one or two more projects, but getting the rest of the projects across the finish line or close enough to the finish line where I feel comfortable. I'm not spreading myself too thin in the process.

[A]

Oh, I see. Interesting. First of all, I think one of the things, I think we're going to get a little correction in interest rates, which will change things a little bit. But my philosophy remains the same. And that's, you know, you could always find great deals. It's not about the market, it's about the deals. And I certainly have seen people lose money in a great market and I've seen people make money in a terrible market. So I always look at like, what's the particular deal. So I'm digging deeper into the great opportunities and I am seeing more opportunities right now than I've seen in a long time. So I'm looking forward to that in 2024. Hey, so we were asked, I know Chris is going to get strong on this one. We were asked, what's the role of networking in building a great real estate investment man group?

[C]

But man, for me, networking is the key to everything, because everything you don't know, someone else knows. And you won't find those people if you're not out networking, having conversations and going and seeing what type of experience and what projects they've done and what value they can bring to you.

[A]

And one of the things I do, this thing called modeling, it's actually in my book Wealth Can't Wait. You know, it's one of the seven pillars of business is modeling. And what I mean by modeling is you go out and you find somebody that's doing, doing what you want to do at a very high level. Unless you're inventing the light bulb or whatever. Most things, you know, have been done before. Yeah. And you can reverse engineer so much and you could just go even somebody's website, let alone inquiring or going out and asking people. So I would say model it. And there's so much that's a form of network.

[C]

There you go.

[A]

Yep, yep. So people want to know, how can real estate be a hedge against inflation?

[C]

Well, one thing's for sure, they're not making any more land and value of land. And real estate is always going to go up or it's going to be in demand. So you may be in other investments that inflation is going to hurt heavily or your cost of living may be hurt, but you always have that value appreciation if you're buying in the right areas at the right time in real estate, which can offset those higher expenses than everywhere else in your life.

[A]

Yeah. And one of the things that kind of leads me into is I grew up in Pittsburgh and, and the blue chip stocks were United States Steel, for example. And people thought that was, you know, the be all and end all. Now you've got the Fang stocks, right. Facebook, Apple, Alphabet, which is Google, you know, and do we really know where they're going to be in 30 years? And my answer, my answer to that is no, we really don't. Right. And do we really know where the duplex in West Hollywood or a great neighborhood in Houston is going to to be 30 years from? I mean, I guess you don't 100% know, but I'm going to tell you, you can bank on that way more historically, you can bank on that duplex in that great area, you know, for hundreds of years, whereas anything can happen in the stock market. Agreed. Y so, Chris, people wanted to know specifically with regard to you, what's one thing that you do as an entrepreneur that you think would be helpful to other people?

[C]

You know, helpful to other people. And I think I would want more people to try to do larger scale projects but not be focused on the profit so much, be focused on the product. Because then more opportunities come to you when you try to be greedy and you go for the big money grab every time, it could be a win, it could be a loss. And you often burn people in the process. So I think the business and industry of real estate, especially wholesaling, when people try to go for the big money grabs, somebody that's on the other than that transaction losing, it's not really a win for the industry.

[A]

Right. These deals do not have to be zero sum games. For every dollar I get, there's a dollar somebody loses. And when I talk to my investor friends or if I'm leading an investment group, I will tell them right out of the gate, if you're looking for getting this piece of property or getting any piece of property at the absolute lowest dollar possible, I'm not your guy. I feel like I am a great negotiator, but it's not to get the lowest possible dollar. I'll make sure we're negotiating on the right deal and I'm going to make sure we're going to get in that deal. I can get us in it. If it's a deal we really want to be in as good as anybody. But getting it for the least dollar. The number of times, like I've seen a piece of property and I had a partner, it was another property in the desert and it was like the most phenomenal property ever. And he's like, well, the guy wants $160,000 for it. I'm like, give him the 160. He's like, well, you know, I'm gonna keep chiseling my thing. I can get it lower. I'm like, dude, I'm afraid we're gonna lose the deal now. Now we got it for 120. So he was right. Yeah, if I had a redo, I'd pay 160 because I don't want that risk of losing that. Because that piece of property I think is worth several million dollars now. Yeah, I'm not Gonna make or break.

[C]

It right in that.

[A]

Yeah. So great negotiator to get us into a deal that we really want to be in. Not the hardest grinder.

[C]

Yeah. And you. You also lose the ability for referrals because that person may feel like, I got cheated for 120. Well, they may have had two friends that could have sold your other properties for 160.

[A]

You never know.

[C]

Yeah.

[A]

Chris, thank you so much for coming here. I've enjoyed this. I really believe that this could be, you know, step one of some cool stuff that we'll do together. Yes, I really believe that. And also tell us where we can find you on social media, because you have a great social media. I think people should be following you.

[C]

So everything's pretty simple. My branding team told me, just use my name. I love it. Chris. Senegal. On every platform. YouTube, Facebook, and mainly Instagram is where I do most of my informational posts. And I love it. Updates. Yeah.

[A]

Thank you again so much. There's incredibly valuable information.

[C]

Thank you. Thank you. I appreciate the opportunity. It was great. It was great, man. All right, man.

[A]

Thank you very much for joining us today. I hope you got a lot out of today's episode. Our intention is to bring on great guests that tell captivating stories and relatable stories and at the same time, give us phenomenal education and things we can act on right away to start building wealth in real estate Now. See below for our show notes, more about the guests, where you can find and follow me on social media. And also, a great way to support the podcast is to go to YouTube and whatever other platform you listen to the podcast on and make sure you follow and subscribe. We'd love to have comments. I'll definitely review the comments and add as much as I possibly can to what we've done on the episode today. In addition to that, if you found this podcast useful, we would love to have a great review from you.

It.