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Real Estate Investing School Podcast
193. Mentors & Markets: How to Succeed in Real Estate with Steven Andrews
00:52:43
Welcome to the Real Estate Investing School Podcast, hosted by Joe Jensen. In this episode, Joe sits down with Steven Andrews, the founder of SOARX Consulting and Realty Management Group. Born into a hardworking blue-collar family, Steven’s journey...
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- [00:00]
A
You have to kind of know that going in and you have to kind of read between the eyes a little bit, be creative and just know that if it's cosmetic stuff, you can get that stuff fixed, pennies on the dollar compared if you bought the best house on the block. And so that would be my ultimate guidance of how you really scale is, is to go after properties like that.
- [00:25]
B
Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen. Our guest today is Steven. Stephen is the founder of Sorex Consulting and Realty Management Group. He, he was born into a blue collar hard working family that taught him work ethic and unwavering values. He studied real estate at High Point University but continued just working as a manager at a local retailer for years before finding a mentor, eventually getting into real estate full time. He's been in it over a decade, doing some amazing things and is continuing to not slowing down anytime soon. Welcome to this show, Stephen. I'm glad you're able to make it.
- [01:05]
A
Absolutely. Thank you so much for having me, Joe. Looking forward to it.
- [01:09]
B
Yeah, this is exciting. So yeah, why don't you, why don't you start telling the listeners a little bit about your story of how you kind of got real estate on your radar. I always think it's interesting because this is common where a lot of people see almost like get a taste of it, get the seed planted, have the vision. But then there's this gap years many times before they actually start taking action and putting that vision into reality. And it seems like that's. That was your story as well. But, but why don't you kind of fill us in on the gaps there?
- [01:38]
A
Absolutely. You know, so my story really started over a decade ago. You know, my parents instilled at a very young age what hard work meant, what owning a business meant. And when I get to High Point University my senior year, I took a real estate class there and it was taught by an adjunct professor that owned real estate in Chicago. So you own a bunch of different apartment complexes and, and really the purpose of the class was to get your feet wet into real estate, but then learn how to make real estate profitable. And so we did a project where you got a great grade. If you made the apartment complex profitable the first year, you got a not so great of a grade if it wasn't profitable the first year.
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B
Theoretical apartments or like actual ones.
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A
Well, so you had to go actually physically find one that was on the market, but then it was done all in a simulation. So, so, but was so cool because the different layers and different items you really look for in real estate. I learned so much and wasn't even in real estate yet, so took me several years. I knew that I wanted to get into real estate at that point. And then I was like most people thinking that you had to be well connected and that you had to have money to get into real estate. And you know, you don't need a ton of money to get into real estate. You know my story, when I graduated High Point university, I was $75,000 in debt. Some of that student loans, some of that. I made a wise decision as a 22 year old to go buy a brand new car. And so that's such a great investment, right? Yeah, exactly. And I was making $45,000 a year, so I didn't have a ton of money left over at the end of the day. And so I knew I didn't have a lot of money. And so I was scared to get into it. You know, what if I bought a property and I couldn't keep it rented? What if a tenant just tore my property up and I didn't have money to fix it up? I mean, just the normal things that your brain tries to play tricks on you. And I linked up with a guy named Joel here locally, here in central North Carolina. And he really helped me do away with those fears. And he told me to read a book called Building wealth by Russell Whitney. And it really outlined exactly what I've really done over the last decade in this business and what Russell did and what so many other people did. And, and so fast forward a decade and hundreds of properties later, flipping houses, loaning money. Now just wrote a book called the New American Dream, A simple roadmap to purchase investment properties. It hit bestseller and then now really giving back through Sorex Consulting. It's really done the complete 360, you know, back around to be able to kind of give back to that next generation. Getting into this business.
- [04:16]
B
That's awesome, man. That's super cool. So I always think it's interesting how many people have had partners or mentors that were a vital part of at least getting them going, if not taking them to the next level. Tell us a little bit about that. How did you find this guy? What was that connection? Like, what kind of partnership arrangements did you guys start with? Some of the details on these things? I think it's so interesting for people to be able to tap into that.
- [04:45]
A
Absolutely. You know, I always tell people, you know, tell people that you love what your dreams are, what your Admirations are because, you know, nine times out of 10, they can help you. And so I was talking to my parents and knew that I wanted to do this. And my dad actually knew Joel, and he said, you know what? I know a guy that's been in. Been in the rental property business for 30 plus years, and I don't know if he's willing to help you. I don't know any of that. Right. You know, you need to call him and have that conversation with him. And. And so I gave him a call, and Joel was very honest. Joel said, hey, you know, I get at least one to two calls a month of people that want to do this business, but nobody ever follows through. And so he said, before I even talk to you, you need to read this book called Building wealth by Russell Whitney. And so I read the book and I went back to him and I was just persistent, you know, And I think a lot of people don't understand that. Be consistent, be persistent, and go after your dreams, because when you're inconsistent about it, then people don't take you very seriously. And so, luckily for me, Joel was looking at downsizing a little bit. You know, he'd been in the business for a while. He wanted to, you know, spend more time with his family. And so he was wanting to sell properties, I was wanting to buy properties. And he had all these connections within real estate for financing, which really helps out. And it was just a match made in heaven. I mean, to this day, he's still my mentor. We still talk on a weekly basis and. And it's just so good because during that time, you know, certainly my mindset was way different than what it is today. I don't let the small stuff bother me anymore. But my goodness, when you're first getting into real estate and all the small stuff bothers you, right? You're like, my goodness, the world's coming to an end, you know, because the tenant complained about something. But now it's just part of the business, right? You know, you just handle it as it comes. But when you're new to this, it can be very overwhelming. And so it's just so vital for me. And what I teach people is have a mentor because they've been there before you. And so Joel told me everything that he's ever made a mistake on in real estate. And so I tend to believe I didn't make any of those mistakes. Certainly I made my own mistakes. But it helps you grow the way you want to grow and to be successful when you already know, like what you're looking for, you know, and some of this stuff just not taught in a book or a textbook or in a school. You know, some of the stuff, you know, you need that real life experience from a mentor or you have to, to live it yourself.
- [07:14]
B
Yeah, well, so nuanced. Right? I mean, we talked about real estate. Such a broad, broad, you know, subject already, and then you do it. Okay, well, what about North Carolina versus California? Now it's very different. And, and then, and then what about your city? And then what about the way you're doing? Like, there's so many unique nuances that, like I said, any book or textbook or anything can't do it justice compared to living it a little bit, you know, and both are vital. You know, there's a lot to be had. Like I said, that's the first thing he did, is go read these books, go get some content, understand some basic broad principles. How did you add value to him? Because I get this. A lot of people, yeah, they want to, hey, I want to partner, I want to mentor. Like, I want to help. He said most people don't show up. They're not persistent. But a lot of times people, like, they don't know how to add any value, which makes it hard for the mentor to know who to pick and choose because they can't anyway. How did you actually add enough value that he, like, continued to give you the time of day?
- [08:17]
A
Absolutely. You know, I think when I look at mentorship, a lot of the people that have been in this business for a long time, they want to tell somebody those stories. You know, they want to add that value to somebody, but they're looking for almost themselves in somebody that might have been 20, 30 years ago. And so I think I added value from that standpoint of being consistent. Plus, he wanted to downsize his business. So it was, it was a great match, too, because he didn't have to list any of the stuff online or on mls. You know, he could just sell it directly to me for the price he was wanting. And, and so early on, that was the value. The value today is, is all the technology, you know, how you manage rental properties. Now a lot of it's changed. You know, he still did the old timey way of accepting cash and going to physically meet somebody and fill out a lease and that sort of thing. Yeah, and you don't have to do any of that anymore. I mean, there's rental portals, there's platforms you can use to manage the, your, your rentals.
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B
What. Where people can pay all do you recommend?
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A
Yes. I currently use a platform called Rent Ready. It is very inexpensive and really. Yeah, yeah. Don't get me wrong, there. There's platforms that are way more expensive, but for me, I just wanted something simple, something that my tenants could use and understand, but also me to use and understand. And it works so well. And so it's things like that. It's things that I can add value to them as well. There's other things about how you market properties now. You know, he was still doing the newspaper ads. I have never once ran a newspaper ad for any property. I don't even put four rent signs in yards anymore. I utilize everything online because that's what everything is going to. And there's a lot of very inexpensive ways to do it. Rent Ready's got several different platforms, but then I'll even use Facebook Marketplace. I get probably 5,000 messages a month on Facebook Marketplace about properties for Rent. And so it's like, you know, it's just a huge pool of people that want one property. And it's like, my goodness, it's kind of hard to choose, you know, because so many. There's just so many great, great people. And to, you know, he wasn't pulling background checks and credit checks and that sort of thing. And I'm like, hey, you know, if you utilize this app right here, it's very inexpensive and you get all the information you need. And so I've been able to help them from that standpoint, you know, because I know a lot of people that have been in this business a long time, you know, they like it the old school way, and I get it. But there's so many different platforms out there that really almost becomes an employee of your company that you don't. You pay pennies on the dollar for. Because, for instance, Rent Ready, you know, I have it set up where we send out a rental reminder every day. You're late. Well, that's just like somebody picking up the phone and calling, you know. So, you know, if you utilize the technology in your favor, you don't have to have a ton of people on payroll to do some of the stuff that the apps you're using already does for you.
- [11:33]
B
I love that. So, Steven, to give kind of the listeners an idea of where you're at, what kind of scope and scale are you at? Like, what kind of team are you running? What kind of portfolio? Portfolio. And then. And then after you kind of explain that, I want to go back to like the day one of how it's. How it Looked, you know, and how you bridge that.
- [11:53]
A
Absolutely. You know, so I own and manage close to 300 units. And I have two people that do it. I have two virtual assistants that run the day to day operations. And then certainly I have one person, including myself, that runs the back end of it of paying bills and that sort of thing. I don't, I don't like people touching the money that goes out. Right. You know, like, I want to make sure that we're good with that and I want to oversee that. And so I'm very thin from that standpoint. Like, we are extremely productive. We have a process in place. I have a process for everything. I have processes in place that, for certain scenarios that my team already has, you know, I took the time whenever I went virtual to really sit down and write out every scenario that I've ever been a part of, good or bad, and I've given it to them where then when they come in contact with that scenario, they already know how I'm going to handle that. And sometimes they'll still ask. Right. But I wanted to empower them as much as possible to help me be kind of the business owner and make the right decisions. And that's worked out so well. Everything's 100% online. Yeah, you know, it's, it's, it was a ton of work. So I went 100% virtual a year ago. And so it took hours, hundreds of hours really, to put all this into place. But it has made my life so much easier on the tail end of it. And it's the best thing that I could have ever done. Because when you start comparing to what I was 10 years ago, you know, I was coming out of an office a year ago. Ten years ago, it was just me and my car and I'd go meet somebody in a parking lot to sign a lease, I would meet them, I'd go collect rent from tenants directly. And that's so hard to do when you start to accumulate a bunch of properties. Now it's somewhat easy to do when you don't have that many, but I would still to this day try to, even if all you had was one or two properties, manage it where you don't have to go to the rental unit, manage it where you don't have to go meet somebody because your time's money, right? I mean, that's the one thing about life that you can't buy more of. It's just time. And so you want real estate for a secondary income or potential primary income, you know, so you want to limit your hours. You want to be as productive as possible. And so I think even utilizing something like rent ready, even if all you had is one or two properties, that makes sense. It's so inexpensive. When I first got rent ready, I spent under $100 for the first year because they were running some sort of promotion. I think it's a little over $100 now. I mean, it's just so inexpensive and it works so well. So why not use it? You know, it's, it just makes so much sense to do that. And I'll also tell people that are just now starting out, get a separate phone as well. Don't utilize your primary phone just because you're going to get, you know, at times, you know, when something goes wrong. Get a rental unit. The tenant doesn't care that it's at midnight. They're just, they're just wanting to call somebody to at least let you know. And if that's your personal phone, it could be waking you up in the middle of the night or whatnot. Get a business phone. And that's one thing that I had to learn. When I first started, I used my personal phone. And so you would just get phone calls all hours of the night and stuff. And you want to make sure that work life balance is there. So it's just so many things I would go back and do different. But I'm glad I did it the way I did then because I don't think I'd be where I'm at today if I did it any differently. But yeah, certainly you learn as you go, right?
- [15:33]
B
Yeah, yeah. I think there's something to be said of like doing the dirty work at the beginning to truly experience it, understand it, you know what I mean? And then when you go speak to property managers and contractors and all these things, you're like, no, no, I've changed the toilets, I've taken the collected the rent. I've looked tenants in the eyes like I know what that is. So you can really build off of it more effectively. And again, you don't have to, but I've seen a lot of, I don't know, strength in that. But like I said, the goal is to get on the other side of that though, where you're not doing the menial, everyday tasks. Because at scale, I mean, with 300 units, that's a couple full time jobs. If you're doing it that way, and that's not the point, I don't think that's why you got into this, you know?
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A
No, not at All.
- [16:21]
B
And that's impressive. How small of a team you're able to run such a large portfolio, though. I feel like that's unique to most of the people I've talked to. You know, when you're running, you know, hundreds of units and it's just you and two VAs, like, that's pretty rad.
- [16:35]
A
Yeah, yeah. I mean, how we're able to do that is we have such a very specific process in place. And so you know how you have to submit a service request, you have to do it through rent ready. We don't accept those on the phone at all. You have to do it through that platform. And so you essentially eliminate one person that that's all they do is take in service requests. Right. And so then everything else, it's just so systematic. And on top of that, we have a great ideal tenant that we're looking for that really helps limit how much collections you have to do, how much evictions you have to do. And so for us right now, you know, you have to make three to four times whatever the rent is in income. You can't have an eviction in the last four to five years. You have to have a minimum of 600 credit score. You know, we ask for pay stubs, we ask for rental references. And your rental references cannot be a family member. You know, so one thing that I learned very early on is everybody would use their cousin, right? And I was like, no, you know what? Your family's always going to talk good about you, right? I want, I want to. I want your boss, I want your former landlord, I want two landlords ago, that sort of thing. Because I really want to know who you are as a person. And one thing that really helped us too, when I first got in this business, we didn't pull credit, we didn't pull background either. And so it's just one of those things. And so turnover was a lot higher. And so when you start eliminating turnover, when you start making sure properties are fixed up the right way before someone moves in, you have less maintenance to do. If you pick the right tenant that isn't going to tear up a property, have less maintenance to do. And so obviously you're always going to have some tenant, right? You always have that. That percentage of bad tenants that you're going to have, that's going to tear something up that you're going to have to file eviction or you can do all the right stuff, but they're still going to be bad. But for the most part, when you have these Other stuff in place, it helps out so much. And so our turnover rate has just tanked. I mean, it's just really, really low right now because we don't have any turnover. Nobody wants to go anywhere. And so very strategically, we have a ton of luxury apartments in this area, and strategically, we're 100 to $150 cheaper than they are. And there's a reason why, you know, I eliminate them as competition. Right. And so even with pricing, you know, you want to make sure you find that fine line where maybe you eliminate some competition, you know, because maybe people are pricing their self out. Plus, you want to be very, very cautious about, you know, you don't want to raise a rent where you cause yourself to have to file eviction because of what you did, you know, so if you have a tenant in place that all they can afford is just say 1,400amonth and you say, well, you know, I'm going to 2,000amonth, and you know, they can't afford that, well, you're causing an eviction yourself. And so you have to keep some of that stuff in mind too, and utilize some of the numbers for evictions and stuff like that. Of like, you know what, it might take me two or three months to rent it at 2000, but I can rent it today for 1500. Well, you're never going to get those two months of lost rent back. It's going to take you a couple years to make up the difference. I mean, it's just when I look at it from a business standpoint, I feel like it makes the business run so much more smoother.
- [20:14]
B
I think so too. And a hack that I've realized lately is the lower the below market rent lets you have the pick of the tenant. Like say, you know, you. Yeah, there's a reason you're getting 5,000 people blowing you up because they're like, oh, you're 150 below, but it's still a quality place to live. And so you're truly below market, not just lower because there's lower than the competition because you're offering a lower product, but then there's just truly, you know, lower than market with the same quality product. And then you get to vet them out. You can have the pick the tenant. You can, you can be as picky as you described, where you're doing background checks and triple incomes. Like, you can't get away with that. If you're charging top dollar, they'll just go somewhere else, you know. But if you're charging Below top dollar, you can be really, really picky, which gives you again, the vacancies is the biggest expense that people sometimes overlook. And they say, you know, one or two months of vacancies can eat up a year or two or three of higher rent. So anyway, you already said that, but I just, yeah, I want to drive that home. I felt that personally in my portfolio. You, you've seen that. And for any listeners, it's like, take that super seriously. What kind of assets are you holding? What kind of properties are these, are these apartment buildings, single families? What size is kind of your niche?
- [21:35]
A
Absolutely. You know, so I have a pretty array of broad of different properties. I have single family homes, duplexes, triplexes, quad plexes and small apartments. 10 units or less is really kind of been my niche of how to do it. And to take that a step further, I cluster it all together. And what I mean by that is, you know, I'm in four different counties that own rental property. And you can get to, if you're in the middle of that county, you can get to any of those properties within that county within 10 minutes from the furthest property in one county to the furthest property in another county, you can get to those properties in 30 minutes. And so, you know, people might wonder why. Well, why, why would you cluster properties together? It's. Well, first of all, if you're the one going to look at the properties, you don't want to drive hours to go see something. If you have a maintenance team or if just say you have one plumber that services all your properties, you don't want them to have to drive from one hour to another hour to properties same way with H vac electrical and so on. And so I try to cluster it together because also I'm an expert in those counties in those areas for what things are renting for what's going on in that area. I'm not so spread out where, you know, I can really hone in and know what's going on. And so that would be my highly recommendation for anybody trying to get in this business, is to cluster things together because for me it just makes so much more sense. And that's what my mentor told me a decade ago. He said, you know, you want to cluster properties together for those same reasons. And, and he said it just makes things so much easier, you know, because now you're not having to find out different rental markets. You know, if you have 10 different properties in your 10 different rental markets, that's a lot of time and Energy that goes in to figure out what you need to do for each one of them.
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B
Yeah, you really, you know, you could be scaled on paper, owning hundreds of units, but if they're all so spread out, you get none of the benefits of scale. Like I said, having the cheaper labor, the cheaper, you know, maintenance guy, the property management team, like, all those things that have to be close to get the benefit of scale on, you know, so you could have many, many. And that's. That's actually my story. I'm spread out all over the place, and. And it's nice to have a lot of units, but I don't get to tap into that where I'm like, oh, that'd be so nice. Just be, like, one thing. It was an answer to 90 of my stuff. You know what I mean? It's all different answers, you know, So I. I see the advantage of that, and I think that's great. If people can do that, do it, you know, 100. So all your stuff are in. Is it North Carolina?
- [24:26]
A
Yep, North Carolina. So I'm in the Piedmont Triad. So I'm in Alamance County, Guilford, Rockingham, and Caswell. And so it's. All those counties touch each other, so it makes it quite easy. And I kind of live in the middle of it all, you know, so I could get to any of those properties within 30 minutes. And so that's awesome.
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B
And you own these all yourself, or do you own these with any partners?
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A
Own them all myself. So when I first got in the business I started, then I was able to get my parents in it, got my brother into it, and we shared a property management company for a while. And then when I went virtual, you know, we kind of. Everybody kind of wanted to do their own thing, which is fine. And. And so now my rental management company just manages the properties in which we own.
- [25:12]
B
That's awesome. So. So what would you say to somebody, you know, wanting to get into the game or maybe they're kind of experienced, but they want to grow a little bit more. Like, what are some of the, I don't know, guiding principles or, you know, kind of things you've stuck to? That's really helped you get where you're at with it.
- [25:31]
A
Absolutely. You know, so when I read the book Building wealth by Russell Whitney, you know, the book was set in the 90s. He redid the book in the 2000s, but it still makes a lot of sense to this day, and some of the same principles are still there. And what I did was his guidance. And even my Mentor's guidance was, you buy the worst house on the block. If you buy the best house on the block, there's not nearly as much upside because somebody else is going to make the money or make on the transaction because they're the ones that fixed it up. Where if you buy the worst house on the block, you can go in, you can put sweat equity into it, you're going to get a much better deal when you buy it. Go in, fix it up, take it back to the bank, refinance and pull your working capital back out to roll into another property. And don't go buy a nice fancy sports car, nice shiny boat with that money. That's borrowed money. You don't want to be in a depreciating asset. You want to an appreciating asset. And so that's what I've done. I've rolled that into the next property and I've just done that hundreds of times. And so in order to do that, though, you kind of have to know what the vision looks like. I tell people all the time, not everybody has the vision of, of what a rundown house might look like if you actually fix it up. And I'm not talking about things like the roofs caving in or a foundation issue, any sort of structural issues. I'm talking about just cosmetic things that most people cannot look past. So broken window, hole in the wall, needs new carpet, needs new lvp. The yard's grown up, the bushes, you can't even see the house because the bushes are too high. I mean, it's stuff like. Or the outside might need vinyl. It's things like that, that if you can look past those items, you can get a much better deal. You're going to get a much better return on your investment because you can get those things done at pennies on the dollar. And compared to if you bought a property that was already fixed up, you're going to pay premium dollar because somebody else is going to make money on that sweat equity, not you. And so then you know, if you did that now, you're making a neighborhood better. Now the values of the properties are going up because most people can't see past the, the just the basic stuff that needs to be done. Most of them say, oh, that thing just needs to be tore down. Well, no, not really. Like the guts of it. The bones of the house is great. It just needs a little bit of off. And so that's what I've done. I've done it hundreds of times. And I believe that is the Best way, if you want to scale, that is the best way to scale and not have a ton of your own money tied up in it. When I first used that credit card for my first down payment for the first property I bought, I went in and put down my down payment on the property. Now don't get wrong, that credit card was only 7% interest. It's 20 some percent interest today. So it's a little bit different. But there are creative ways that you get back mortgage rate. Yeah, yeah. So I went in and fixed it up and I took that back to a bank and refinanced and pulled my money back out, paid off the credit card, rolled that money to the next property. But I would not have been able to do that if it was already the best house on the block. I would have just bought the property and I wouldn't have been able to refinance it and that money would have stayed in that property. And so it becomes very hard when you buy property at retail value because it's, it's all fixed up. So you have to kind of know that going in and you have to kind of read between the lines a little bit, be creative and just know that if it's cosmetic stuff, you can get that stuff fixed. Pennies on the dollar compared to if you bought the best house on the block. And so that would be my ultimate guidance of how you really scale is, is to go after properties like that.
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B
And is that still realistic today to do that kind of burr method where you buy it, rehab it, then go refinance it? You know, with today's interest rates and things like that. Is that something you're still actively doing?
- [29:35]
A
I am still actively doing it. Certainly I do it a little bit different today than what I did before. Everything just went through the roof. Much more selective. I sometimes I'm in a different neighborhood than what I was before. You know, I tell people, you know, I'm positioned between Raleigh and Charlotte, which is two very booming areas. And there's still parts of North Carolina you can find great deals. Like for instance, I'm currently flipping a house now that it was a three bedroom, one bath. I bought it for $32,000. And so it needed work. It needed probably $70,000 worth of work. So I got a little over 100 in it and I'm going to sell it for $250,000. And so don't get wrong, I can keep it. And I could, I could turn around and rent it. It's going to make, it would make probably eighteen Hundred dollars a month and that would be great. But I know for me now it's, it's more of a given and taken. So I no longer have all my eggs in one basket. So I'm just having rental property. I also flip some houses too to try to help off some of that. And so I'm taking like the house flipping money and I'm just paying properties off or I'm going to pay cash for rental properties where you know what, you know, just being a little bit more creative where you know, since the interest rates are a little bit higher, I can kind of help offset that. I will say that if you can't offset it like that, don't get so caught up on interest rates. And so what I mean by that is real estate's the only thing in the world where you can buy using someone else's money. A tenant, major mortgage payment. You're making a little bit of money at the end of the day every single month. But then you're also making money long term on their appreciation. There's nothing else in this world that allows you to do that. And so if somebody's telling me, well, hey, you know what, I don't want to get into real estate just because of interest rates. I tell them, hey, the two best times to buy real estate was 20 years ago and today. Because you got to keep in mind 20 years from now, this real estate's going to be over doubled in value. And so, you know, you, you gotta be careful comparing real estate to five years ago, 10 years ago, because everything has changed. But if you can still get in, get a decent interest rate, go find a good deal. Don't, don't just buy something just to be buying it where you're not gonna make any money on it. I think you got to be a little bit more creative. I think you, you know, I know for me, when I first started, I would drive neighborhoods and find the worst house on the block. And I call the people, I'd find out their name, number and call them, hey, do you want to, you want to sell it? That's harder to do today than what it was 10 years ago, but it's still feasible to do it. You know, you just have more competition of people doing it.
- [32:24]
B
Especially I always say this, it's like there's advantages if you're scaled right. If you're business, you can spend $10,000 on marketing and do blah, blah, you, that gives you advantages. But you also are doing things at scale, which means you need a hundred of those Deals to work out, you know, but if you're a one off dude just trying to build your portfolio a couple units a year, you can find that one deal and you don't have to do it 100 times. You know, you like say it's, you know, it's, it might be harder to do, but you don't need it to work a million times. You just need it to work once. And then you have that deal now and you're like, wow, I couldn't have scaled that, but I don't need to scale it. That was the only house left and I bought it. You know what I mean? Like, cool. That moved you up a huge bracket. When you're just this beginner slowly building your portfolio, it's like that's an advantage that the bigger companies don't have. So you just got to lean into your strengths, you know, So I love that.
- [33:13]
A
Yeah. And don't try to do what, what a company that's already scaled doing. Right. Like, I mean, that's, that's the hard part, you know, during they're to, they're playing at a different level. But there's so many ways to do this business. You don't have to do it like they do it, you know. And most people, I'll say this much too. When you go into these neighborhoods, most people would rather sell it to somebody local anyway or sell it to that person that only wants that one or two deals a year than to sell it to this huge company. Because a huge company is going to want some sort of huge discount off of it. Potentially they want to do it their way where you as an individual that might only want a few deals a year can be a little bit more flexible with what you do. And I think you could probably actually convert a much higher percentage when you do it that way. I agree.
- [34:02]
B
I think you have an unfair advantage when you're just the real person buying it for you and your family and your kids or whatever. You know, it just, it hits different. I like working with individual humans more than corporations and I think most people do, you know. I want to ask you though, Steven, do you. Oh, go on.
- [34:20]
A
And that's one thing that, that if you are scaling, don't act like a big company. And you, you got to act like where you come from of treating people like a human being. They're not just a number. And we still do that to this day. You know, we don't treat any of our tenants or anybody that we buy properties from as just a number. We treat them like we're still a small company and in retrospect, you know, we are a small company compared to somebody that owns 5,000, 6,000 units. But, but we, you know, we want to treat them like they deserve to be treated, you know. And I think in my book I go into further detail about how to create those authentic relationships. But you have to keep in mind real estate is a relationship driven business. You know, somebody doesn't, you know, especially if you own a property, you know, and if it's a good deal, you know, if you treat that person bad, they don't have to sell it to you, they just sell it to somebody else. I mean, it's just you have to make sure you treat people the right way.
- [35:18]
B
I'm interested in your book. If people wanted to find that, where is the best place for them to find your book and your resources?
- [35:26]
A
Absolutely. So you can go to soretsconsulting.com and I have the book right there where you can buy. You can also go to Amazon.com and search for the New American Dream by Stephen Andrews. A simple roadmap to purchase an investment properties. You can also do it there. I will say this, if you go to the website tesorixconsulting.com we are doing a giveaway that allows you any sort of purchases. There is a free way to join as well. But if you make any purchases on the site, for every dollar you spend is a dollar entry into the giveaway. So if you're interested in the book, I tend to push people in the giveaway where you can have a chance at it went in a half a million dollars.
- [36:12]
B
A half a million dollar giveaway for people to participate in like buying your stuff. That seems like a pretty big prize for buying a book. You don't usually win half million dollars for buying a book. You might go make half a million dollars from the content of the book. That that's more typical. So why are you doing that and how are you doing that?
- [36:34]
A
Yeah, absolutely. You know, my whole journey has kind of come full circle. You know, I've had a ton of success in the rental business and flipping houses and loaning money and, and I wanted to do something. I thought about this a couple years ago. I wanted to do something to give back and to kind of pay it forward to the next generation getting into this business and, and that's what I've done with the book, you know, and, and soarts consulting is just really an extension of the book. I have a real estate course. You can take that. It's an 11 module course that takes you through everything that I've learned over the last decade. It gives you downloadables, it gives you worksheets about different things of what makes a good deal, how you run those numbers, to maintenance, to first things first, how to create an LLC to the rental process. I mean it's just so in depth. And then that's why I created Sorettes. I wanted to be able to help people get into this business. And so earlier this year I started thinking about what's a crazy way to get people engaged, talking about real estate, but also they can buy things to get to help further their education and to help further their success in real estate. But then just something fun and so come up with this crazy idea. And between now and the end of the year, we're gonna give away $1,000 a month. Starting in June, one time a month we'll draw a winner and give away $1,000 to go towards the real estate journey in whatever capacity they want to take it in. And then in January, we're going to draw a person's name that will eventually find here to North Carolina. They'll have a chance of winning a half a million dollars. And so to go towards real estate is our hope. And so we want to empower people. You know, when I first got into this business, I didn't have money. And I know it's harder to get money today, but then there's also because of the interest rates, but there's also so many new avenues today compared to 10 years ago too. And so I just want to really empower that person to be able to get into real estate and to have the success I've had or have the success that they want to have. Because I think everybody's journey in real estate is so different, which is the great part.
- [38:46]
B
Yeah, I love that. And I just wanted to talk on briefly you mentioned like, oh, things are different now than they used to be. And it's like, yeah, there are so many more advantages now that didn't exist then and there are disadvantages now that you didn't have then. And that's how it's always going to be is, you know, so many times people like, oh well, yeah, well interest rates or purchase prices or whatever back in the day were so much better. It's like. But it was content was also harder. Support was also harder. Financing was also harder in a lot of ways. Even though the rates might have been good, it was like impossible to get a loan. Like there was just so many aspects that if you can get caught up in trying to compare now is better than then or now is worse than this. Like, it doesn't matter. There are advantages, like saying with like even the softwares we can use that like the actual end product of being in this game is more enjoyable than it was back in the day. And you know, there's so many strengths that we have now that we didn't. And this, there are weaknesses too, and disadvantages, but you just, you just make the best of it and not get caught up in, oh, I guess I missed the boat. You know what I mean? It's like, you know, you got to keep rolling.
- [39:54]
A
Absolutely. You know, a couple years ago, you know, interest rates were 4% and you know, now they're over double that. But I tell people that historically interest rates have been somewhere between 5 and 7%, you know, so, so what we had a couple years ago was very historically low numbers. But then 20, 30 years ago, they were very historically high when it was 17%. And so, but still people made money then. You know, when you think about my mentor, he was buying property when it was 17% interest rates and he made it. And so understand that if you do your homework, you can make it through those seasons. I call it seasons of raining. You know, so my parents taught me at a very young age, you have to save for a rainy day because the rain always comes. And so you don't know when it's going to come, but it's going to come. And so it could be interest rates, it could be financing, it could be a tenant messing up a house, it could be a tree falling through a house. I mean, it could be so many different things. And so you have to be prepared for it as much as you can. Right? You know, certainly nobody could have predicted Covid over the last couple of years and nobody was ton of prepared for it. But for me, I saved for that rainy day and I was okay.
- [41:08]
B
I love man. I did want to ask you how do you have a rule or do you just kind of go on the moment of you buy a place, you rehab it, you have this equity and you can choose, like say, do I, do I hold on to this and just put some debt on, you know, 50, 80% because I got equity in it or do I, or do I just flip it and take the cash? Do you have a rule of when you decide to hold versus flip based on like an income ratio on it or what? How do you decide that?
- [41:37]
A
Absolutely. You know, a couple different things that I take into account. Where am I at currently, financially, how's the rentals doing compared to how the flips are doing? But for instance, the house that I bought for low 30s, I'm gonna have about 100 in it between buying the house and then, and then the work and I can sell it for 250. I look and see that would take me 10 to 15 years to recoup that money. And so if I can make that money today and then go take that money and buy another rental property with it that would just be paid for, then it makes more sense for me to sell that property today and then reuse that money in other capacities.
- [42:21]
B
So how many years would it, would it not make sense? I mean, is it seven years, five years?
- [42:25]
A
Three?
- [42:26]
B
Like three? Like where do you hit? Like I should hold it somewhere between.
- [42:30]
A
Five and seven years because I know that real estate's going to, it tends to double every, every ten or, excuse me, eight to ten years in value. So I'm like, you know what, if I can get my return back five to seven years, I'm going to get a bigger return at the 10 year mark. And then if I continue to hold it, I'll get even bigger return. But you know, once it gets over that five, seven years, sometimes I'll even stretch into eight years. It's like, okay, maybe it makes more sense to flip the property just because now I can utilize that income and that's almost like hitting a grand slam. And then I can utilize that income to then go buy more real estate that I'm going to make money from day one because if it's paid for or whatever the case may be. So because you're looking and you're going.
- [43:16]
B
To make five or seven or more years worth of rent cash flow just off selling it today after taxes and after expenses like running real numbers. You know, people like, hey, if I'm going to, if it's going to take me eight years of renting it out to make this much, I'll just take it now. But if it's going to only take three or four years to make this much, I'll just keep renting it out because then I get that three and then another four or five, six, indefinitely. I think that's a good rule of thumb. I like that, that five to seven years, that feels good. I'm always interested in how people decide on that. Exactly. And it's funny because real estate's a funny thing. I have some properties that have like very little equity in them, like almost not very much equity at all. But they're cash flow kings. They're great, and they can be headache properties. And I thought about selling some, and I was running the numbers, like, wait, I can never sell these. There's no equity. I'm not making anything. I'm just throwing it away for a couple bucks. But the cash flow on them is amazing. So it's like, I don't really have the luxury to just sell it for something better because there's no equity. But the cash flow is awesome. And sometimes it's the opposite. You've got killer equity and, like, virtually no cash flow. It's like, well, maybe pivot that, you know.
- [44:27]
A
Right, that's right.
- [44:29]
B
Stephen, this is awesome. I do want to dive into our final four questions before we let you go back to tackling your life and doing the things you love to do. So. So question number one. If you had to start your real estate journey over Today, though, in 2024, but, you know, everything you know now, what would be, you know, your first, second, or maybe third move?
- [44:54]
A
Absolutely. You know, I would continue to buy the worst house on the block. You know, I think that strategy for me is just proved so well. I would continue to broaden my horizon when it comes to financing, to have as many financial institute institutions, whether it's private lenders, your traditional community banks, hard money lenders, to be able to loan money, you know, because if you don't have the money, you can't make this dream a reality. So I would continue to do that, and then I would continue to leverage the technology that I have found out about to help scale. And so I wish I would have known some of that earlier in my career. Right. But, you know, I think if I would have known those three things that I'm just now starting today, I would. I would leverage those items absolutely, as much as possible, and know that authentic relationships matter and continue to drive relationships. Because, you know, looking at it now, I mean, I get several calls a week, hey, do you want to buy this? And it's all because I've created so many relationships over the years. And so if you have those relationships, you're getting deals that aren't on the market, and you're going to potentially get a better deal. And one thing that I would continue to do is just not buy a property, just to say I own rental property, make sure it makes your money. You know, I have some friends that got in this business, and I tried to tell them, you don't want to just say you own rental property and not make a dime for the next 10, 15 years of your life, you're going to hate this business if you're not making any money. And so also continue to do that. Run the numbers the right way, guys.
- [46:34]
B
Click, rewind. Listen to that again. That. That was solid, solid advice. He said it so smooth, so simply. That seemed like, okay, cool, like re. Listen to that. Those were very, very solid points. I'm excited to dive in more of your stuff. Stephen, obviously you have so much value to add beyond your book, which I'm excited about. Do you have any other book or podcast recommendations for people to check out?
- [46:58]
A
Absolutely. You know, there's another book that I certainly live by, and I said it several times here, Building wealth by Russell Whitney. Yeah, it is a game changer. Even though it's. It's not dated 2024, those same still principles are still good to this day because you got to keep in mind, real estate's the backbone of real estate. Those principles don't necessarily change. It's just how you manage rental properties, how you find them. Those things kind of change, but those same principles really stay the same. And telling you what, there's so many great podcasts out there, including yours, that you can learn so much. And I would not overlook a local mentor or a local person that is there for you. That boots on the ground that's been around for a while, the knowledge they have is so valuable.
- [47:51]
B
And that's great. I think that's great. I'm excited to read that book. And there's something about the old school books that still stand. You're like, man, they, they really taught it right because, you know, if something's so niche, that only works in that moment, that's awesome for the people in that moment is probably super valuable. But, man, the ones that like that, that are like, still going and like, man, all these principles still work today, like that they. They hit something real. So I'm excited to read that one. All right, so question number three. What is one of the most expensive or interesting mistakes, mistakes you've made in real estate investing?
- [48:26]
A
You know, I think when it comes, it's maintenance, right? So, you know, for me, you know, I think if you hire the wrong person, which I have done several times, you know, I still think back to my early career in this business. And, you know, this guy gave me a great price. He was by far the cheapest. I didn't have a ton of money. I said, okay, this just makes sense. Come to find out, he gave me the cheap price because he did cheap work. And the product that he was using was also cheap. And I was turning around and redoing that less than a year later. And so what I tell people is, don't cut those corners. Make sure you have a solid maintenance team in place, whether that's somebody on payroll, whether that's. You sell it out to somebody, but you want to make sure the quality of work is there, even if you pay just a little bit more for it, because you're not having to redo it. And so I have wasted thousands of dollars, tens of thousands of dollars doing that early on in my career instead of just doing it the right way, because I was telling myself, hey, I don't really have a ton of money, so I don't want to spend all my rent doing that. And all that is just the wrong decision to make. Do it the right way, because most of the time this form is going to be around for years. So if you did it the right way, you don't have to deal with it again for years. If you don't do it the right way, you're going to be redoing it very, very quickly.
- [49:46]
B
Yeah, I think that's solid advice. The maintenance, you know, is, it's, it's so easy to overlook, but, man, it can add up really quickly. So I love that. All right, last. Last question. One word or maybe a short sentence to encapsulate why you love real estate investing, man.
- [50:06]
A
That's a good one. I love what I do because of my family. I love what I do because of what I can provide for my family. You know, I don't get it. I didn't get into real estate just to say I own hundreds of properties and make a lot of money. I did it to, to better my life. I have the saying that I don't live to work, but I work to live. And so the reason why I do that is, you know, the one thing that you cannot buy more of and life is time. And so, luckily for me, I've been extremely blessed and I've created this that creates time, that I get to go enjoy life with family and friends, which is the most important thing to me. And so just make sure you're. You're not living to work, but working to live and you'll be good to go.
- [50:57]
B
I love it, man. Well, this was great. So again, people can find you. Is that a website or Instagram? What's the best way for people to track you and find that you know everything that you're doing? Getting in that half mood, million dollar entry, getting your books, your consulting whatnot. What's the best way to reach you?
- [51:14]
A
Absolutely. You know, so we're on Facebook and Instagram. So@soraxconsulting.com for Facebook, Sorex underscore consulting for Instagram. And then go to our the website sorettesconsulting.com that's our website that has a lot of different things on it, but top right corner says giveaway. You can click on giveaway and it would take you to our giveaway website. You can also go straight to the giveaway website@shop.soretschconsulting.com to enter as well. And we're super excited over these next few months to see where that leads us.
- [51:49]
B
That's awesome. That's so a R X Sorex when he says that. And we should put these in the show notes so everybody can access them easy. But this is great. Stephen, any last words of advice or thoughts before we go? Glad you had you on, man.
- [52:05]
A
Absolutely. You know, say thank you so much for having me and go after your dreams. You know, that's the biggest thing that I have for people. Don't let your brain play tricks on you and discourage you from doing this. Understand that some of the greatest blessings in life is when you embrace the uncomfortableness of your comfort zone. And getting out of your comfort zone. You have some great blessings come your way if you do that.
- [52:30]
B
Absolutely. Well, this is Joe Jensen signing off for the Real Estate Investing School podcast, reminding you to dream big and act now.