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Real Estate Investing School Podcast
257. The 50 Flip Formula with Wendell Butler
00:49:27
Welcome to the Real Estate Investing School podcast. In this episode, host Joe Jensen interviews Wendell Butler, founder of Hammerhead Capital, Inc. At just 30 years old, Wendell has rapidly built a real estate investment business that spans...
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- [00:00]
Wendell Butler
I sold it for $225,000 and because I lived there for a year, that was tax free. So that was kind of like the aha moment because I sold it and then I got that check and it was like 70 grand. And I was just like, I just made two times my salary after taxes with one transaction.
- [00:20]
Joe Jensen
Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen. Our guest today, Wendell Butler. Wendell's the founder of Hammerhead Capital Inc. Where he's built a dynamic real estate investment business spanning single family fix and flips to multi family syndications. With a portfolio of over 40 units, including rental properties and active renovation projects, Wendell is strategically scaling his fix and flip operations to systematically turn 50 properties a year. His goal is to accelerate active income growth, fueling long term investments in rental properties, business acquisitions and Beyond. At just 30 years old, Wendell has established a thriving real estate enterprise and is passionate about helping others achieve financial freedom through smart investing. Well, welcome to the show, Wendell. That's awesome.
- [01:10]
Wendell Butler
Yeah, thank you for having me, Joe. I'm excited to talk a little shop about real estate and just life and yeah, I'm excited to be on.
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Joe Jensen
Yeah, I mean, you're only 30 years old. You've only been doing this for like three years.
- [01:23]
Wendell Butler
Yeah, I definitely did not come out of the womb wanting to do real estate just like everybody. I mean, just like most people, I kind of, I guess fell into it. But yeah, I only been doing it for about three years and part of those three years was mostly kind of part time real estate. I didn't really get full time into it until June of June, July of last year is when I really just took a leap.
- [01:48]
Joe Jensen
That's crazy. But you already have 40 units and you've done syndications and flips and everything that fast?
- [01:55]
Wendell Butler
Yeah, yeah, I definitely look at back at it. I have grown a lot based on where I was before. Sometimes it's hard to get lost in like going forward and looking ahead at what's next. But yeah, sometimes I do reflect back and I'm like, yeah, it's only been three years and I've done pretty decent.
- [02:17]
Joe Jensen
Yeah. Yeah, that's awesome, man. So on the syndications piece, where were you? Are you running multi family syndications or are you just contributing towards like, as like a limited partner or what's your experience been with multifamily syndications?
- [02:31]
Wendell Butler
Yeah, so. So for multifamily syndications, I have one going right now that's a 32 unit that I'm a general partner on. So I'm the actual operator of the building. Okay, cool. So not a limited partner. I mean, I invest in my own deal as a limited partner, but sure. Like, you're actually a.
- [02:51]
Joe Jensen
That's crazy. That, That's a lot. I mean, that's a. That's a lot of units, a lot of experience so far. But it sounds like. How many units is that? Multifamily?
- [03:01]
Wendell Butler
32.
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Joe Jensen
Okay, so that's. That's 32 of your 40 units then.
- [03:06]
Wendell Butler
Yeah. Yeah. So that's a big, big portion of my portfolio for sure.
- [03:11]
Joe Jensen
Yeah. That's awesome, man. Well, that's cool. I mean, it's just cool to see how much can happen in three years because sometimes, you know, interview people on here have been doing this for 20 years, 25 years, and I think for listeners or newbies wanting to get into it, they're like, man, like, okay, I don't, I don't, I don't want to. I don't want to wait 25 years to get there, you know? And you're a great example of what can happen in just a couple years. I mean, you wouldn't even be done with a degree, like, if you went to school to become a. Whatever, you know, you're going to be four, five, six, seven years to get any sort of decent degree, you know, four minimum, probably three, bare minimum. And you've already built so much in the time. Most kids are just still going to school. You know what I mean? And obviously you're, you're past that age, but it's just so cool how much can get done so quick if you get focused. And it sounds like you weren't even wholly focused that whole time. You had other stuff going on as well.
- [04:05]
Wendell Butler
Yeah, yeah. Like when I first started, I was, I was actually going to school and I was pursuing, possibly going to finish an assistant school to become a physician assistant. But I had, like, the realization that I didn't like school.
- [04:21]
Joe Jensen
Yeah.
- [04:22]
Wendell Butler
So I'm like, why? I'm like, let's, let's put this on hold for a minute and let me just take a year off between, like, my undergrad until graduate school to kind of see what else is out there. Um, and I'm, I'm thankful that I did that because I, I basically got in contact and, and networked with a, A good amount of entrepreneurs that did numerous amounts of businesses in, in, in all tiers of business. So, like e commerce, retail, and then real estate as well. You know, crypto was going on a lot then, too. But I'm, I Wasn't really too into that. Cause I don't know, it seemed a little weird at that point. Um, but yeah, I ended up falling into real estate after kind of going down a path of trying out different businesses and yeah, haven't looked back since. I utilized a lot of like 9 to 5 type jobs as I was learning about real estate before I was ready to take the leap. So, you know, one of the biggest learning points or what's the word? I'm thinking of advice. I would say. Yeah, advice is 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. Because aside from what all the gurus say online and aside from even like the three years that I've done it, it's not a get rich quick scheme. No, you have to really build a stable base kind of idea of what you're going to do and then you want to at least be making some progress in that before you leave your nine to five. But you want to utilize your nine to fives to, or whatever you're doing now to help project that business to get going. That's like sort of what I did. I ended up getting into, you know, sales and then, and then lending because I knew I was going to get into real estate. So I got into lending and conventional lending and then hard money and private money lending because I know that, you know, as I was going to get in real estate, that's one of the biggest factors of real estate is lending. And that just set me up for just, I guess a large experience gap between someone that is just getting into real estate or leaving a different type of career to get into real estate. Because I was still doing real estate in my 9 to 5. And then the pour over of switching over to real estate was a lot easier. Easier transition for me.
- [06:50]
Joe Jensen
I love to hear you say that. I give that advice all the time that I'm like, if you're trying to get in real estate but you still are looking for a good job, it's like, get it, become a lender. You know what I mean? Become a property manager, become a real estate agent. Like. But honestly, out of all of them, I think lender's probably the best because you get such intimate knowledge of the lending side and the money side as a lender that most investors just don't really see. You know, agents get a taste of it. You know, property managers don't really mess with it at all. But like as an investor, the lending side is so huge to know how to do correct due diligence, what kind of deals can be funded, what can't. And if you understand that as the lender, the deep, you know, pieces of that the most people don't get, it really does give you a leg up. So it's such an awesome strategy you had. Like, hey, I want to get into real estate. So I'll go work with being with money, lending money in real estate, and then I'll be able to see kind of the underbelly of all of this. So where did it all start though, man? Like, where are you located? How did you first get real estate on your radar? You know, because obviously it was just a few years ago that you started making moves with it. So how did it all happen?
- [07:59]
Wendell Butler
Yeah, so I'm mainly from the New England area, so Massachusetts, Connecticut, Rhode Island, I kind of state hopped around there. So that's kind of where it started when I, when I took my one year break from school, 2018, I moved to Miami for about a year and that's where I met like all the entrepreneurial people. And I call it like a quarter life crisis because I was kind of just like, let's just go screw it. Yeah. And after I was there for a little bit, I was living paycheck to paycheck, just bartending and just learning about businesses and just really, you know, enjoying my early 20s, I guess. And then I realized, hey, I should probably start heading towards a certain career path or figure out kind of what I want to do. And that's where in 2019 I moved back to New England. And I knew like sales just from that experience of being with entrepreneurial minded people. I knew sales was a huge skill to have. Sales is everything. It's just relationships, it's understanding people, it's understanding products, how to communicate effectively with people, which you need, no matter what you do, you need that.
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Joe Jensen
Yeah.
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Wendell Butler
So then I got into like some sales jobs. I got into selling payroll with adp, which I will say that is one of the hardest jobs you can ever do. But I will say it is one of the best jobs you can do to start you off because you're calling businesses, understanding people that run businesses, building relationships with people that run businesses, try to sell them a product that is pretty much copy and paste across the industry to other companies. So you're trying to sell instead of your product, you got to sell yourself basically. So that gave me a lot of experience. And as I was doing that I realized, man, this kind of sucks. And I wasn't making a ton of money. And that's when I realized I started listening to Bigger Pockets and reading some of Brandon Turner's books in around 2021. 2022 was when I realized real estate is. It just seems so easy. They laid it out on the books and stuff. Like, it's. It's not that complicated. It's just being resilient, Just doing consistent work and just trusting the numbers is the biggest thing. So the first deal that I got into was, it was super simple. It was. I bought a condo, and I wasn't even thinking about investing at that point. I just wanted to buy a condo to own because I, you know, renting or a condo at that point, I was like, I'd rather own a property because of appreciation and things like that. And then once I bought the condo, then I started. Started reading those Bigger Pockets books more, and I'm like, maybe I can do like a live and flip type thing. So I started rehabbing the property as I lived there. And I also got a roommate there to do a little, like, house hack type condo hack thing. So the roommate was paying almost half my mortgage, a little more, actually. And then at the same time, I was flipping the condo for minimal money. It was only like $14,000, which, um, I pretty much had. But it was like the last amount that I had saved up. But I was like, you know, this will make sense. I lived there for a year, and I'll credit a lot of it to Covid. That helped, but I probably increase. I bought it for like $145,000, the condo in Worcester, Massachusetts, and put in about $14,000 into it to do, like, flooring. So we did the kitchen and did some painting. I did a lot of the work myself too. And then I sold it for $225,000. So. And because I lived there for a year, that was tax free. So that was kind of like the aha moment because I sold it and then I got that check and it was like 70 grand. And I was just like, I just made, you know, two times my salary after taxes with one transaction. And that's when I was like, all right, it's time to dig deep into real estate, start learning more. And that's kind of when I got into, like, lending and starting to do more deals after that.
- [12:09]
Joe Jensen
It's so funny because it's like, you know, we talk about how you're scaling, you're doing all these different things, and you got in lending and syndications, and, you know, you want to do be flipping 50 properties a year and, and all this, it's like, but literally if someone just did a live in flip every year, like say oh yeah, tax free. I really like how you mentioned the taxes because you might have a salary of, you know, 100k, but you're only walking away with 80 or 70, you know what I mean? If your salary is only 50k, you're, you're walking away with 30,000 or whatever after taxes. But if you do a live in flip and sell a primary, there's no taxes on the profit for up to 250,000 and you know, 500,000 if you're married. And it's like that's, I mean that could be your whole income for a lot of people, especially if you're a single dude just doing your thing, you know, I mean your whole income, like there's people that would be happy to live off 70,000 a year if they don't have to anything else the rest of the year. But fix up a house like that is the most safe, secure, simple, non scaling, no big dreamer. Just, just so you know, because the taxes is a big part of that. And that's just crazy to think about how the smallest little one piece could be life changing. But then no one stops there because they're like, oh, I got a taste of that. Let's just do more and more and more. It's just, it's just so cool, you know. But I just love to find pieces where it's like anybody could do that. You know what I mean?
- [13:40]
Wendell Butler
Exactly. So I always tell people like, if you want to get into real estate, people always try to go like super big and then they get burned out because they're like, I can't find deals. Or you know, they're too scared to take the leap. It's like the simplest thing you can do is just find, you know, a duplex, three family, four family, and buy it and then rent one, rent all the units out and live in one. And if you can even break even, like that's a huge win because you're cutting down your housing expense, which is the largest expense across every person across America. I think it's usually like that's the 40% of your expenses throughout the year. So if you're not paying a mortgage because your tenants are paying them, or even if you say you buy a single family house and rent out the friends and have a couple rooms, if you're not paying your mortgage, that just allows you to then start stacking more money to make that next, you know, decision or investment or, or step in the direction that you want to go. And it's the easiest, safest way because you know, you're not going and getting hard money. You're getting a conventional loan. You can utilize the tenants payments to help with your mortgage so you don't have like that, you know, expects expense on your back. Like if you all of a sudden get a job out of college and go buy a single family home and you're like cash like house poor, you're not that. And then at the same time, yeah, you can do like living flips too. And it's, it's, it's, especially when you do the work yourself, it's a lot less money. And then yeah, you can use the tax advantages of a primary resident and living there a year or two and walk away with that money tax free. And then you can start stacking. So it's called like house stacking. And that's kind of what I did. I went from a condo and I took that money and I went to a duplex and did a brrrr type situation and I utilized like a VA loan as well because I was in the military.
- [15:29]
Joe Jensen
Oh cool.
- [15:29]
Wendell Butler
So I put like no money down. I'm not going to say that I.
- [15:32]
Joe Jensen
Used PMI too, which is awesome. No PMI that can make difference between cash flow or not just having pmi, you know.
- [15:40]
Wendell Butler
Yeah, yeah, exactly. And I'm not gonna say that I used my $70,000 the best I could. I mean I was like a 20, I was like 26 or 27 or something. It was the first check that I got that was that big. Luckily I put it into that duplex. But a lot of the other money I kind of just like went on vacations and stuff with which looking back at it, I'm glad I did it. But at the same time I'm like, I should have put it into another property. But you live and learn. And that taught me in the future to really utilize the money that I get back in returns to just reinvest right away. But yeah, then I just got into duplex, did a burr type situation. Use creative money by raising money through family. Because I, because I laid out the plan and laid out kind of what I did with the condo too. Started building a little track record. So they helped me renovate the property and then I ended up buying that for like 370, put in like $100,000 into it and then did a refinance and made like $20,000 back on the refinance and paid everybody off and then had VA loan property that had tenants in it and a roommate. So then I was basically living for free at the duplex.
- [16:58]
Joe Jensen
That's awesome.
- [16:59]
Wendell Butler
That was kind of like the next step.
- [17:01]
Joe Jensen
So how did you get into this multi family? That's kind of a cool jump. So young, you know, so. So new in the industry to go be a GP in. In a multi family. Sounds like you're actually the feet on the ground helping run the thing, which is probably a lot of the value you bring into the table. But tell us about the business structure as far as the partnership, how that's arranged and why it's a win for everybody.
- [17:27]
Wendell Butler
Yeah, for sure. So Worcester, Massachusetts is, I would almost call it like the multifamily capital of the United States. It's like every single house there is either two family, three family, four family, five plus unit property, like every single house, basically. So a huge mindset of mine was obviously I was surrounded by multi families and that was kind of like what was presented to me at that time where I was. So I got really into multifamily underwriting, investing, looking at properties. And then I met a few individuals as well while networking that wanted to do the same thing. Fast forward to me moving to Charlotte, North Carolina because I was a little sick of. Honestly, I was sick of New England because of the weather, and I was just sick of living there and I wanted to go to Charlotte. I moved to Charlotte and I still had multifamily investing on my mind. So I immediately was just trying to find deals, trying to underwrite deals. And at the same time, those friends that I knew were building their business in New England as well with the multifamily aspect, they were growing pretty fast because they ended up having a good track record, started raising money, raising capital for their deals. And then I came across a 30s unit in South Carolina, which is right over the border of Charlotte. Like it's really close and underwrote it, found a ton of value in it and found a good opportunity there. And this is where like, you know, the saying is, you can, you know, work by yourself and you can go fast or you can, you know, work with others and build a team and move farther. I could not have taken down that property myself because I just did not have the opportunity to raise the amount of money that was needed. But I immediately brought it to them. I gave them the whole underwriting, like, scope of work and kind of what, what the plan was. We reviewed it.
- [19:33]
Joe Jensen
How did you find them? It's like a team that was already established doing this.
- [19:37]
Wendell Butler
Yeah, yeah. So this was a couple guys in Worcester, Massachusetts that I met at a meetup. Okay. And we just always stayed in touch and we had like masterminds together to help each other grow. And we always stayed in touch because we liked each other and we wanted to work together.
- [19:52]
Joe Jensen
They were doing real estate or doing multi family syndications already.
- [19:58]
Wendell Butler
They did not do. This was like their first big deal as well. They did one where they kind of brought it to somebody else because they'd never done it before either. So they brought it to like a bigger partner who kind of handled it all and they were just part of it. So they had like that experience. So this was like their first one doing it themself. And then it was my first one doing it myself as well. But it just lined up perfectly because they were growing. We were keeping in touch. We were always communicating with each other, helping each other grow personally and business wise. And yeah, I just basically brought them the deal. We underwrote it, we got it under contract. They basically we formed a partnership as like they were going to be the capital raisers and raise the capital for it and then help oversee the project from afar. And I was going to be the boots on the ground guy that set up the property managers in place, checked on the property, made sure it was going well and consistently helped stabilize the building. So I'm kind of the operator, so I'm the guy that's stabilizing the building. And they were kind of the overseers and capital raisers and helped communicate with the investors.
- [21:10]
Joe Jensen
So did you guys set it up as like a true syndication or like, like what was the legal entity you guys structured?
- [21:17]
Wendell Butler
Yeah, I say syndication because we basically set it up like one, but realistically it's not one. It's a joint venture agreement. No, not a joint venture agreement. It's a LLC. But we have GPS and LPs on it. But it's not syndication based because when we were going to purchase the property, we exploit syndication versus that. And just syndication is way more expensive. There's so many more legal costs. It would have been like an extra 50, $60,000 to do it. So much more paperwork too. So we communicate with the investors. We said we're going to do an LLC where you guys are technically LPs. Like we're going to have quarterly meetings and things like that. But it's not a syndication. So you're not like a silent partner. You're going to have voting rights and Things like that. But the way we structured the LLC.
- [22:04]
Joe Jensen
Is that patient structure, but just did it through an llc, which is cool because, like, for a lot of people, like, like you say that is so much cheaper, so much easier, you know, when you're doing, like, a smaller tackle. If you can raise the money with a small group. That is all cool. Being on the llc. Yeah, I mean, that. That's just. Anybody could just do that, you know, you don't have to go follow FCC guidelines and all this stuff and, you know, worry about if people are accredited investors, you know, you know, which. For your first little one and for their first big one, you know, it's. It's a great way to do it. So that's cool that I. I was wondering if you had done it that way. And I think it's a great way to tackle a big project. Like this is just get everybody, throw them on an llc, give them percentage ownership of the llc, the LLC owns the unit, and then you're good to go. You know what I mean?
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Wendell Butler
Exactly.
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Joe Jensen
Much cleaner and simpler.
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Wendell Butler
Yeah, it's cleaner, it's simpler. There's less legal paperwork. And it only works if you have, like, a certain number of investors involved. I think, in total, including ourselves, we got 13 people involved. So, like, anytime you get over, you know, 15 to 20, that's why, as.
- [23:16]
Joe Jensen
You said, that's kind of the upper end of doing it this way. I feel like already that's cool.
- [23:20]
Wendell Butler
Yeah, that's probably the max you can do. And we made sure we, like, talked to attorneys and stuff like that, and they were like, yeah, that's fine. Just once you get over a certain amount, you should probably do syndication because it can get a little hairy. But we made sure. And that's all part of just always do your due diligence and check with people, utilize, you know, other teammates within your, you know, sphere of influence. So, like, attorneys, accountants, et cetera, and talk to them about it. But, yeah, the way we set it up was, yeah, it's just in an llc, but we set it up like that. Us three, the gps, myself and the other two guys basically have to vote with the investors to make a decision. So, like, if we all three vote to do a certain thing with the property, we trump everybody else. So it's still technically, like. Yeah, yeah, a syndication where, like, they're silent partners, but we give them the opportunity to do quarterly meetings. We give them opportunities to vote on stuff. We always send out stuff like, hey, you know, this is our.
- [24:21]
Joe Jensen
Legally, you have to, like, have Them be active or else then you're. If. Because if not, if they're 100% silent, then you're just investing their money for them, which then you have to go follow all the syndication rules and legalities. So legally you gotta like say they have a voice.
- [24:37]
Wendell Butler
Yeah, exactly. And like we let they vote on stuff. So like they vote on like our marketing material. They vote on you know, the type of like unit turns that we do. We give them like options so they're actively participating. But yeah, that's where you can like it's a little loophole around like the syndication type thing, which is good to have.
- [24:59]
Joe Jensen
That's cool, man. Well, it sounds like you're doing some awesome stuff. Do you have like a favorite from you know, the, the fix and flips, the, the wholesaling, the long holds, like you just don't want to do it all. It sounds like you're leaning towards really building a flipping business that can be pretty extensive.
- [25:17]
Wendell Butler
Yeah, the reason I'm getting into fix and flipping is just the area that I'm in. So Charlotte, going from a multi family area of like New England and Worcester to Charlotte, it's kind of like a total 180 change because there's not a lot of multi families here. And the ones that are, they're selling at like a 2, 3, 4, 5% cap rate which just in this market it just does not work. That's for like if you're a value add stabilization type business, which we are, it just doesn't work. That's more for people that are already 20 years into it and they just want to place capital somewhere for like tax depreciation advantages, which is fantastic. I can't wait to get to that point. But that's where I kind of focused on fix a flip. Because a lot of the opportunity here are single family homes, you know, brick ranch style built in the 70s. They're just perfect for fix and flipping. And that's why I have hunkered down basically on systemizing a fix and flip business to be just systematically run itself with my supervision. And that's what I'm building towards to create that cash flow to then take that money into other business endeavors and then long term properties. But to go back to your, like one of my favorite deals that I did was, you know, I'll go back to that duplex because that duplex is a duplex, I call it duplex that just kept on giving because in Worcester, Massachusetts, the appreciation there has been phenomenal. That's one. So like I bought it for like 370, put in like you know, 100,000 and now so like that's like 470 all in. Now the property's worth like 650 within like two years. And additional to that, when I bought it it had land next to it that I didn't know at the time. Like I just looked at it and I'm like, this looks like it's subdividable. And I'm like, I have no idea how to do it. Don't know anything.
- [27:22]
Joe Jensen
Like the deal works even if it's not. So I'm going to go through with it. But if it is, that's going to be a nice cherry. We'll find out later.
- [27:28]
Wendell Butler
Oh yeah, yeah. So yeah, that's how, that's why I looked at, I'm like, oh, that land looks like it should be able to be built on and Worcester is like an area that's always wanting new units to be built because it's just there's not a lot of the kind of cap down on housing. So there's not a lot of land in that area of Massachusetts.
- [27:47]
Joe Jensen
I don't mean to interrupt. I just want to point out a couple things that people like, you're so smart, how you do things like why are you doing flipping? Because in my area it may, it works really, really well. It's like lean into what works in the area. And then the other thing you're like, yeah, the city is encouraging building. You're not fighting against the city and the politics and being like, I'm going to build this. And they're like, no, we don't want more units. You know, it's like, you're like, no, they want it. It's going to be a lot easier. You're going to get the go ahead and they won't be giving you hell during the process if it's something that they're encouraging and wanting anyway. And so like if you can find those situations where you're going with the flow as opposed to trying to like be your own thing or whatever, it just works so well. And it's like I think you're just, I don't know if you thought about it that strategically or just you're just naturally like, oh, this makes sense because it's natural, which is kind of how it sounds, which is just, it's just instinctively intelligent. So that's super cool. So anyway, sorry to interrupt.
- [28:42]
Wendell Butler
No, no worries. Yeah, it's like, I don't know, I looked around at Worcester. I'm like nothing's getting built. The rent cost is going up like this, housing issues, the supply issues. I'm like, why would they not allow me to subdivide this even if it's like a little bit smaller land than it technically needs to be?
- [29:02]
Joe Jensen
Yeah.
- [29:03]
Wendell Butler
So yeah, I started that process and that was a huge learning experience. Took about eight months to subdivide. I got it done. Even the appraiser and everybody involved was like, we can't believe that you subdivided Worcester. Like there's such a pain to deal with. And I'm like, well, it makes, it makes common sense. Like, why would they not let me do it? Like love it. And luckily they did. And then I turned it around and I sold that land for like $130,000 like within a week of, of subdividing.
- [29:28]
Joe Jensen
Well, what's so cool is the deal made sense on its own. Right. If there was no land and so the fact that it dragged out for eight months for you to subdivide, you're like, I don't care. Yeah, it didn't matter. It could have taken two years. It was still going to work for you because it was already a self sufficient, cash flowing, good asset that was gone up in value if the land never existed. And so it's like that kind of gave you a leg up as opposed to somebody else who was like, their whole strategy was to subdivide and that's the only way they were making money. And they're hemorrhaging money for eight months, nine months. That's when the people talk to me were like, I can't believe you got through this. You're like, well, you were able to get through it because it didn't matter.
- [30:06]
Wendell Butler
Yeah.
- [30:07]
Joe Jensen
You know, it wasn't, it wasn't a big deal to you. You know, went to somebody else with it really matter. And there was a timeline. Oh, could you imagine the stress of going through all that legal red tape and if it, if time was of the essence. Yeah.
- [30:20]
Wendell Butler
And I think a lot of investors, I wouldn't say a lot, but some get caught like with their pants down doing that because they're. The way I look at it is make sure the deal that you're buying, the portion of it that you can control yourself makes sense. Right. And can work. So worst case scenario, if the portion that you can control works, then the rest of it that, you know, whether it be land, whether it be subdividing, whether it be like adding a building, an ADU or something like that stuff that's kind of out of your control because you have to go through the zoning process and things like that. Don't underwrite based on that being like part of the deal. Always underwrite it based on worst case scenario. And if it works, then the rest is just icing on the cake. And a lot of investors, I've seen plenty here do that. And then they buy a property and they're like, oh, snap, I just got a huge no, and there's no way around it. And they're stuck in that property just losing money.
- [31:24]
Joe Jensen
Yeah. And I say the same thing with short term rentals. People like, oh, I want to go buy an Airbnb. I'm like, cool, make sure it works as just a long term boring rental, even if it's just break even. Like, just make sure it works that way. And if it does, then go do all the Airbnb stuff. And if that works out, awesome. But if the city changes the policy or, you know, this happens or that happens and you're not able to get the vacancy you wanted, you have a backup plan that you know is stable. You know, you don't want to, like you say, have your 100 of your strategy tied into assumptions that you have, you don't have full control over. So I love that advice.
- [31:58]
Wendell Butler
Yeah. And I think I, I just conservatively underwrite everything. And that again, comes back to just being having the lending experience. So I don't let emotions get involved. I just look at the numbers and I just lay it out as it is. And even when I'm negotiating with people to get deals, every deal and every offer that I make, I lay out exactly why I'm making that offer. I don't think a lot of investors do that. They kind of just blurt out a number and they're like, take it or leave it. But I've gotten so many deals from wholesalers, from, you know, sellers on the retail market just by making an offer and then explaining exactly how I came to that exact number and telling them like, you know, I could have gone higher, blah, blah, blah, and giving them like just feedback. And they're usually very appreciative of it compared to just throwing out an offer. Yeah, but that just sets you up for like, just a better conversation and being able to close more deals as well.
- [32:57]
Joe Jensen
Well, that's what's really cool. So if you can really learn to underwrite and you have like, you know, your spreadsheets and your asset analyzer, you can show, hey, this is what metrics I need to hit the Return I need where my, you know, reserves are and all of that. One, like say you go have that conversation with somebody, even if you give them like a low ball offer. It's not really a low ball offer. It's just, hey, these are the numbers that work. It has nothing to do with trying to like snake them. And you, when you can show that to them, sometimes it's actually eye opening to the seller because then it's like, they can't just be like, oh no, it's worth more than that. Screw you. It's like, here's the numbers. Like, this is the only way it makes sense for me. And then they can kind of like, oh, shoot, I'm not holding such a golden apple as much as I thought. Like, if that's what the numbers really look like, especially if you're buying from like a, you know, more of like a non professional mom pop, like they don't really know how to do it right anyway. They might be kind of an eye opener, which means maybe you could talk them down. But at least like you said, you're going to have a more intelligent contact and a greater respect for the next deal, you know, that that person might have. Because like, man Wendell knows his stuff. Like, he presented us like real underwriting, not just, hey, I'll give you, you know, X amount. And they don't know why and they just think you're being a jerk.
- [34:15]
Wendell Butler
Yeah. I mean, and it comes back to again, the sales experience and understanding that real estate isn't just about buying properties and properties. Right. It's all about people to people and relationships. So like when you're talking to sellers, wholesalers, you know, banks, lenders, etcetera, it's all about communicating effectively with that person and building relationship. And if you just morally come into every deal, you know, laying out the facts and just showing them exactly what you're looking at and where you're coming from. It just goes such a long way compared to just kind of blurting out random, you know, numbers and being like, this will give you, take it or leave it. Because I mean, if someone came up to me and like, so they were trying to buy my car or something and they're like, I'll give you like 10,000 bucks for it. And that's it. I'd be like, hey, screw you. Like, yeah, you're just trying to like, yeah, like steal something from under my feet. But yeah, if you like present and have a normal conversation and actually an intelligent conversation with someone and treat them like an actual person rather than a transaction. It just goes such a long way.
- [35:16]
Joe Jensen
Well, and you've mentioned a lot about how it's about networking, right? You've used a lot of strategic networking to do what you've done. And. And it's like the next deal, the next deal. You know, there's probably deals coming down the pipe in two years from now from contacts that you've made today that you don't even know is going to happen. But because they know you're doing it right and they trust you and they like you, you know, it all just kind of adds up. Especially you do keep buying in the same area and people do get to know your reputation. You know, it can pay back dividends, which is cool.
- [35:46]
Wendell Butler
Yeah, that's when it gets fun. Because once you build a track record and people kind of know you, they just start sending you deals. And I actually just had. It's funny you brought that up because before I left New England, I did do like an eight unit deal there, which was phenomenal as well. That's my. That's probably equal to like the other favorite deal. That's what set me up to kind of go off on my own. But I did that deal, did really well with it. But the seller loved the way that I did the transaction because I was very. Just easy to work with. I kind of just told him how it was. Kind of just really helped him get it off his hands because he was sick of the property dealing with the tenants, et cetera. And just this year. So that was about, you know, two years ago or two to three years ago, we did that deal. Just this year he reached back out to me just with like another property that he had, same situation. He's like, hey, you should look at this. Like, I mean, I'm open to selling it and I see what you do and you were easy to work with before. So take a look at it. And I actually, we have it on a contract right now looking to close at the end of this month. And it's mainly just like him just reaching out to me, just DM me on Facebook. Then I'm like, oh, David, I haven't talked to you in a while. He's like, yeah. He's like, here's another deal if you want it. Like, I'll give you first, like, dibs on it. I was like, all right, cool.
- [37:04]
Joe Jensen
I love that. That's so cool. And it's such a win win for everybody because the last thing they want to do is go put it on the market and have to deal with, you know, showing it a ton and paying agent fees and blah, blah, blah. You know, they can just go to somebody they know and trust. It's like, sweet for you. Sweet for them, you know?
- [37:23]
Wendell Butler
Yeah, yeah. It's. Especially in this market. I mean, I'm not gonna lie, it's a little bit of a. At least where I am right now, it's a buyer's market. So when you try to sell a property, it's definitely taking a. Than normal. So I think some investors know that. So they're just really enjoying going off market instead directly to people that they know. Yeah, it makes it just easier and more seamless. Which.
- [37:47]
Joe Jensen
The way to get in that is to take action, start doing stuff, do a deal, do it. Two deals, you know, like, the more you're in it. I've got lots of deals that the first deal I did in an area, it was okay. It was kind of honestly, like, I could have done without them. But then the second deal I got in that area was a lot better because now I got it off market because I knew the people.
- [38:05]
Wendell Butler
And.
- [38:05]
Joe Jensen
And then the third deal I did there, it was actually really good, you know, and so sometimes it takes that. Just take an action to. To kind of sort of break into those networks and. And again, these networks don't have to be like, oh, like, I'm super network, right? Know everybody, we're all best friends and we hang out. You know, it's just contacts and a little bit of experience and track record can. Can make a lot of momentum.
- [38:28]
Wendell Butler
Yeah. If you just start talking to people, communicating with people, people just start to know you. And then even if they don't know you, they'll ask, like, their network, hey, do you know this guy? He's trying to buy my property. And then someone in the network probably knows.
- [38:42]
Joe Jensen
Yeah, that's cool.
- [38:43]
Wendell Butler
And tells them about it. I've had that here many times. Like, people call me randomly and they're like, oh, this person told me to call you because I have a property here. And they said that you like buying in this area. And I'm like, sweet. Yeah, send me the deal over and vice versa. If I, like, make an offer on a deal, I'm like, you know, I'm really easy to work with. This is, like, where I'll be at. These are the numbers. And, you know, you can see I buy a lot around. I buy a lot around here. And I don't. I don't bs. I don't back out. I really just make it as easy as possible. And they'll go ask, like their network and the network, usually someone comes up and says, like, yeah, I know Wendell, he's a cool guy, very straightforward, and I'm sure he'll get the deal done. Easiest, easy and seamlessly with you. And another thing you said there was super important too. Yeah, I treat real estate just like anything in life. It's like going to the gym, right? So the first day at the gym, it's like exciting, right? Super exciting. And you work out, but then you source shit after, you're like, dang, that was tough. And then the next one, next time you go, you just get stronger and you keep going. You get stronger, stronger, stronger. You get better at what you're doing, right? And the same thing with real estate. Like, the first deal you do doesn't need to be a home run grand slam. It just needs to be a base hit. And honestly, your first deal, if you break even, that's a huge win because you basically just got a free college, like experience or education in real estate by doing that one deal for free. Right. And that's going to set you ahead, do much better on the next deal and then on the next deal and then on the next deal. And it just exponentially grows from there.
- [40:18]
Joe Jensen
I love it, man. Well, this is sick. I want to move into our final four questions before I do. What's the best way for people to reach out and keep in touch and follow your journey?
- [40:27]
Wendell Butler
Absolutely. So you can always email me@wendellhcapitalrealty.com the other email is just managementhcapitalrealty.com and then my Instagram handle and my Facebook handle is Wendell P. Butler iv. And then I have a podcast at realestate Take. And then my Instagram is also for. My business is Hammerhead Capital Inc. I am fighting with Meta right now because they're. It's happened to me again. Second time it happened, but like the automatic robot that like bans accounts banned me for no reason. So dealing with that right now, but they should be back up. Luckily I had like a blue check mark that I paid for. So, like I can actually communicate with a person in Meta. I recommend everybody that has like really good Instagram accounts just get the blue check mark even though it stinks to pay that it saves you from getting banned because you're verified and vice versa. You can always reach out to an actual human in meta rather than being absolutely screwed if they delete your accounts. But those are the best ways to reach out to me. I always try to get back to Everybody. I pride myself in always answering to whoever reaches out.
- [41:38]
Joe Jensen
Awesome. That's Wendell P. Butler IV is the handle name.
- [41:42]
Wendell Butler
Yep, exactly.
- [41:43]
Joe Jensen
Awesome. That's such an east coast name. Dude, when New England. Wendell P. Butler the fourth, you know?
- [41:49]
Wendell Butler
I know, right?
- [41:52]
Joe Jensen
You're royalty. Well, that's sweet, man. Well, I want to roll into my. Our final four, so first question of our final four, we ask all of our guests, is if you could send a text bomb to the world. Everybody's phone's gonna blow up, they get a message from. From you. What? What's it gonna say?
- [42:11]
Wendell Butler
It's gonna say you try to, like, I'll really relate back to, like, the book. It's called the Gap and a Gain. Don't get so caught up in chasing after, like, what you want to the fact that you don't appreciate what you've done. And also don't get so caught up in kind of what you want and what you're striving for to not appreciate your current time and where you are today. Because you can be chasing, you know, money, you could be chasing, growing a business, et cetera, and this time is flying by and passing you by, but you never get that time back. So always, you know, obviously, always try to do the best and be the best version of yourself, but be grateful with where you're at, look back at where you came, and just appreciate life as you live it today. Because life is short. It can end in any moment. And if you're spending all your time chasing money, building your business, and not appreciating your time now with your family and loved ones, it just. It. There was no point to it, because the reason you do that anyway is probably for your family and your loved ones. So you might as well appreciate them and spend time with them today as you try to achieve that next level 100%.
- [43:26]
Joe Jensen
And we're lucky. We live in a world where we can have it both. Like, we really can have it all right now. You know, there might have been a time, a day and age our grandparents, you know, they just had to freaking grind and slave and a mine or something just to get food on the table. Like, they lived a different time. You know, we really can have a very wealthy lifestyle and make money, but also have. But also just be there for our friends and our family and our hobbies and the things that matter to us. We don't have to choose if there's ways to balance it. If you take the time to figure it out, which is. Which is awesome. You know, we're super lucky. There's so many resources and opportunities in our day and age to just kind of have the best of both worlds.
- [44:10]
Wendell Butler
Yeah, definitely.
- [44:12]
Joe Jensen
All right, question number two. What? Besides anything we're associated with, what's a book or podcast recommendation?
- [44:21]
Wendell Butler
A book. I just. I haven't finished this book, but I just started reading Buy Back youk Time.
- [44:28]
Joe Jensen
Is that Dan Martell?
- [44:30]
Wendell Butler
Yes. Yeah. So that book's awesome. It basically just shows you how to, you know, hire or expand kind of your business in a way by utilizing other people or things to buy back your time, like the minuscule tasks that you don't need to be doing that anybody can really do. But another one is that I read all the way through so far is the Power of One More by Ed Milet. That one's really great. And it's. Because basically what it means is one more. Anything can be that next thing that brings to the next level. So whether that, you know, throughout your day, it's one more phone call throughout your week, it's one more networking event throughout your year, it's like one more vacation, whatever. That one more thing that you do might be that thing that changes your life. So anytime that you're about to just call it quits, just always tell yourself, hey, I'll just do one more. Because who knows, that next one more will really set you up for what you want to get to.
- [45:37]
Joe Jensen
I love that. What's one of the most expensive or interesting mistakes you've made in real estate investing?
- [45:47]
Wendell Butler
Expensive and interesting. I'm pretty conservative, so I haven't. Knock on wood. Is this even wood? This is, like, fake wood. But I don't know. Made, like, a huge expensive mistake. I will probably say, I'll talk about it right now. Like, I. I just bought. When I went out on my own, I. I bought a used truck, and I did not do any research on it at all. I'm the kind of person that just like, once I see something, I'm just like, I'm a little lazy, which is weird, right? But I'm, like, lazy to the point that I'm like, I don't really want to look anymore. Like, this seems fine. It seems great. I'm just going to buy it.
- [46:27]
Joe Jensen
Yeah.
- [46:27]
Wendell Butler
So I went out to, like, buy it, to, like, depreciate it and just have, like, a truck on my business. And I'm running into issues of, like, possibly paying, like, seven grand on it because I had issues that I could have easily just found out if I had someone go inspect it. So again, it comes with, like, anytime you do. And that relates to real estate, because I did that to tax deduct from my real estate gains by, you know, buying a business vehicle. I would just say anytime you get into, like, any type of area that you're not experienced or knowledgeable at, really utilize other people to make you make the right decision. So I should have brought it to, like, a repair shop and said, I'm not buying this truck until it's inspected fully and then renegotiated at the table with the dealership at that point. But that was kind of just.
- [47:17]
Joe Jensen
Yeah, and it's funny because in real estate, you would have never done that. Like, you would do your due diligence, right? You would do your underwriting, you would have an inspector, you know, you're gonna do that stuff. But it goes across the board with other purchases as well. It's like, do do your underwriting. You know, it's buying a vehicle or dating somebody. Like, you know, just do your research before you get committed to something.
- [47:38]
Wendell Butler
Ah, seriously? Seriously.
- [47:40]
Joe Jensen
I love it, man. All right, well, we'll end off on our last question. Wendell, what's one word or a short phrase to encapsulate why you love real estate investing?
- [47:54]
Wendell Butler
Probably just freedom. Freedom because of that baby. Yeah, I feel like a lot of people probably said that. Yeah, freedom. Because you can really set up your business any way that you want. So much flexibility to the point that the world is realistic. The world is your oyster in real estate. Like, you could set it up however you want. There's so many ways to make money, so many ways to do things, and you can really, really bring freedom back into your life and get your time back to focus on things that you love and care about most.
- [48:23]
Joe Jensen
To be able to actually prioritize your priorities is a gift. You know, most people are spending the majority of their time working for somebody else's priority. You know, it's not really their priority. Like, if they didn't need to, if money wasn't a thing, that most people wouldn't be doing what they're doing the majority of the time, you know, and if you can lean life more to, hey, I would do this regardless of money at all, how would I be spending my time? And if you can do more of that, then, you know you're on the right trajectory.
- [48:55]
Wendell Butler
Oh, absolutely.
- [48:57]
Joe Jensen
I love it, man. This is super cool. Thanks for being on the show and sharing your journey with us. I feel like you're just getting going, but you're already killing it. And we look forward to seeing what you do in the future, but thanks for being here.
- [49:08]
Wendell Butler
Yeah, absolutely. Thank you, Joe. And, yeah, looking forward to the future as well, and we'll definitely keep in touch.
- [49:14]
Joe Jensen
Cool. This is Joe Jensen signing off for the Real Estate Investing School podcast, reminding you that you're capable of more than you realize.