Podcast Summary: Real Estate Investing School Podcast - Episode 257: The 50 Flip Formula with Wendell Butler

Introduction

In Episode 257 of the Real Estate Investing School Podcast, host Joe Jensen welcomes Wendell Butler, the founder of Hammerhead Capital Inc. At just 30 years old, Wendell has rapidly built a dynamic real estate investment business encompassing single-family fix-and-flips and multi-family syndications. With a portfolio exceeding 40 units, Wendell is strategically scaling his operations with the ambitious goal of flipping 50 properties annually to accelerate active income growth and fund long-term investments.

Wendell Butler’s Journey into Real Estate

Wendell's entry into real estate was not a predetermined path. Initially pursuing a career in becoming a physician assistant, he took a pivotal decision to pause his academic journey, leading him to explore various entrepreneurial ventures. During a year in Miami, he networked with diverse entrepreneurs and ultimately gravitated toward real estate.

[05:30] Wendell Butler: "If you're working like a 9 to 5 and you're looking to get into real estate, don't just make the leap into real estate... you have to really build a stable base."

Balancing part-time real estate endeavors with a traditional job, Wendell emphasized the importance of utilizing stable income sources to fund his real estate ventures, particularly focusing on lending—understanding both conventional and hard money lending proved crucial.

First Success and Aha Moment

Wendell's initial foray into real estate began with purchasing a condo in Worcester, Massachusetts. Without the intention to invest initially, he decided to live in the property and renovate it minimally, even taking on a roommate to offset mortgage costs. This approach not only provided a place to live but also turned the property into a profitable flip.

[00:00] Wendell Butler: "I sold it for $225,000... I just made two times my salary after taxes with one transaction."

This successful flip, yielding a $70,000 profit tax-free due to primary residence exemptions, was Wendell's aha moment, propelling him to delve deeper into real estate investing.

Multi-Family Syndications and Business Structure

Transitioning into multi-family syndications, Wendell discussed his experience as a general partner on a 32-unit property. Operating primarily in Worcester, a region abundant with multi-family units, Wendell capitalized on the high demand and limited supply.

[17:26] Wendell Butler: "Worcester, Massachusetts is, I would almost call it like the multifamily capital of the United States."

Wendell and his partners opted for an LLC structure over traditional syndications to minimize legal costs and streamline operations. This structure allowed for active participation from investors, providing them with voting rights and quarterly meetings, fostering a transparent and collaborative investment environment.

Strategies for Scaling and Networking

A significant portion of Wendell's success can be attributed to his strategic networking and relationship-building. By consistently delivering successful deals and maintaining open communication, Wendell built a reputable name within his investment circles.

[35:46] Wendell Butler: "If you just start talking to people, communicating with people, people just start to know you."

Wendell emphasizes the importance of treating real estate investment like a continuous learning process, akin to working out at a gym. Each deal, whether a success or a learning opportunity, contributes to refining strategies and expanding networks.

Lessons Learned and Advice for New Investors

Wendell shares valuable insights for those aspiring to enter real estate investing:

1. Start Small and Scale Gradually: Begin with manageable projects like duplexes or triplexes to build a stable foundation before scaling up.

2. Do Thorough Due Diligence: Always underwrite deals conservatively, accounting for worst-case scenarios to avoid financial pitfalls.

3. Leverage Existing Jobs: Utilize current employment to fund and support real estate ventures without overextending financially.

4. Build Authentic Relationships: Transparency and honesty in dealings foster trust, leading to repeat business and referrals.

[32:56] Joe Jensen: "When you can show them that you're doing real underwriting, it has nothing to do with trying to snake them."

Final Insights and Recommendations

In the concluding segments, Wendell offers personal reflections and recommendations:

• Favorite Deal: Wendell highlights a duplex in Worcester that appreciated significantly and included subdividable land, allowing him to sell the land separately for additional profit.

• Most Expensive Mistake: Purchasing a used truck without proper inspection, underscoring the importance of due diligence beyond real estate.

• Book Recommendations:

  • "Buy Back Your Time" by Dan Martell – Focuses on outsourcing and time management.
  • "The Power of One More" by Ed Milet – Emphasizes the impact of taking that extra step in various aspects of life.

[47:54] Wendell Butler: "Probably just freedom. Freedom because of that... you can really set up your business any way that you want."

Conclusion

Wendell Butler's journey serves as an inspiring blueprint for aspiring real estate investors. His emphasis on strategic networking, diligent underwriting, and scalable operations illustrates a path to rapid success in the real estate market. Wendell's blend of practical experience and insightful advice offers invaluable lessons for those looking to achieve financial freedom through real estate investing.

Notable Quotes:

• Wendell Butler [00:00]: "I just made two times my salary after taxes with one transaction."
• Wendell Butler [05:30]: "You have to really build a stable base... utilize your nine to fives to help project your business."
• Wendell Butler [17:26]: "Worcester, Massachusetts is, I would almost call it like the multifamily capital of the United States."
• Wendell Butler [35:46]: "If you just start talking to people, communicating with people, people just start to know you."
• Joe Jensen [32:56]: "It has nothing to do with trying to snake them."
• Wendell Butler [47:54]: "Probably just freedom... you can really set up your business any way that you want."

Follow Wendell Butler:

• Email: wendellhcapitalrealty.com
• Instagram & Facebook: @WendellP.ButlerIV
• Podcast: RealEstate Take