Podcast Summary: The David Greene Show – Episode 23: "Ripped Off By First RE Mentor In Rolls-Royce"

Introduction

In Episode 23 of Real Talk Real Estate, host David Greene delves into the often untold struggles of real estate investing with guests Don and Janelle Carlson. Unlike many success-focused discussions, this episode provides a candid recount of the Carlsons' early missteps in the real estate industry, offering invaluable lessons for both novice and seasoned investors.

The First Partnership Deal Gone Wrong

Don and Janelle Carlson open up about their initial foray into real estate through a partnership with their brokerage's owner, who appeared to epitomize success with his flashy lifestyle, complete with a Rolls Royce Ghost.

Don Carlson [01:45]: "We both had just graduated college trying to figure out what we wanted to do in life. [Our mentor] looked successful. He had a Rolls Royce ghost and all this stuff. Very flashy lifestyle, Rolex…"

Convinced by their mentor's success and trusting his reputation, they invested $35,000 into a flip project, expecting a $15,000 return within three months. However, communication ceased, and their mentor absconded with their investment, eventually leading to his house going into foreclosure.

Don Carlson [03:11]: "He ended up selling the property, didn't tell me about it, and didn't get me in touch with escrow or title… he ended up actually blocking me."

Recognizing Red Flags

David Greene probes into why Don and Janelle felt secure partnering with someone who turned out to be deceitful. The guests reflect on the misleading façade presented by their mentor, highlighting the importance of vetting potential partners beyond surface-level success.

Don Carlson [06:24]: "He was the broker owner of my office. That alone, I was like, oh, this guy knows what he's doing."

Janelle Carlson [10:24]: "Yeah, they could tell you make it kind of thing."

David emphasizes the psychological aspect, comparing the mentor's behavior to manipulative traits often found in deceptive individuals.

David Green [08:18]: "He was trying too hard to make you like him. … if this guy's whole livelihood is dependent on tricking someone into liking him, he's going to be syrupy sweet."

Lessons Learned and Moving Forward

Despite the financial setback and emotional toll, Don and Janelle chose to persist in real estate, determined to learn from their mistakes. They transitioned from relying on partnerships to handling investments independently, thereby reducing the risk of future betrayals.

Don Carlson [13:28]: "We wrote down everything that we learned from that deal to make sure that we never did it again."

Janelle Carlson [14:42]: "We ended up... doing everything ourselves, we didn't do partners. So we became really self-reliant."

The Second Deal: A Six-Unit Package in Indiana

A year after their first debacle, the Carlsons invested in a six-unit property in Muncie, Indiana, aiming to capitalize on cash flow opportunities. Believing the deal was sound based on initial numbers, they paid $20,000 in cash and earmarked an additional $35,000 for renovations. However, unforeseen structural issues emerged shortly after purchase, costing them an additional $20,000 to repair a compromised foundation.

Don Carlson [16:21]: "Three days after we closed escrow, the foundation completely caved in. On the right side of the building… we had to move everyone out."

Despite the hurdles, they managed to break even on the investment, learning critical lessons about market research and the importance of local expertise.

Janelle Carlson [21:06]: "Our very first deal, we bought for 20 grand a triplex in Anderson, Indiana, and put about the same 30 grand into it."

Advice for New Investors

Don and Janelle offer a wealth of advice to aspiring real estate investors, emphasizing due diligence, local market knowledge, and the importance of building a reliable team.

Don Carlson [22:06]: "Get a hyper local agent that is investor-friendly… Invest out of state? Go and visit the area, talk to other investors, network a lot."

Janelle Carlson [23:22]: "If we were going to spend like 100, 200k on properties… buy a plane ticket. Walk the streets. Get a feel for it."

They caution against assuming that cheaper properties equate to better deals, highlighting the hidden costs and potential headaches associated with low-priced investments.

Don Carlson [24:34]: "Just because a deal, a house is cheap does not make it a good deal. So just don't buy it or look at it."

Current Strategies and Future Plans

Transitioning from their early setbacks, Don and Janelle now focus on markets they understand well, such as Cincinnati and Indianapolis. Their strategies include flipping, long-term rentals, and exploring mid-term and short-term rentals to optimize cash flow while mitigating risks associated with tenant-related issues.

Janelle Carlson [28:25]: "We love the city as a whole… flipping… that's the main strategy we're into right now."

Don Carlson [29:30]: "Long-term rentals honestly do work really well… midterm or short term…"

They emphasize the importance of adapting strategies to meet market demands and maintaining flexibility to ensure sustained profitability.

Conclusion: Key Takeaways

The episode concludes with reinforcing the significance of resilience, continuous learning, and ethical practices in real estate investing. Don and Janelle's journey underscores that setbacks are integral to growth, and by leveraging their experiences, they have carved a more informed and strategic path forward.

Don Carlson [30:10]: "Wholesaling and flipping is definitely the best way if you're trying to get money right."

Janelle Carlson [31:06]: "We wholesaled there pretty exclusively for two years until we started buying our own stuff."

Final Thoughts

David Greene wraps up the episode by inviting listeners to connect with the Carlsons through their Instagram handle, Janelle and Don Invest, encouraging a community of shared learning and support.

Don Carlson [31:53]: "You can shoot us a DM… contact us there."

This episode serves as a sobering yet inspiring narrative, illustrating that real estate investing is fraught with challenges but also laden with opportunities for those who navigate its complexities with caution and perseverance.

Notable Quotes

• David Green [05:16]: "Let's break down how this guy came across that got you to feel safe…"
• Don Carlson [07:05]: "This guy was not legit. He was 100% running a Ponzi scheme with real estate."
• Janelle Carlson [10:58]: "We're not saying likable people, just stay away from him."
• David Green [27:14]: "Even sub $100,000 markets… you're kind of playing Russian roulette."

Connect with the Carlsons

For more insights and to engage with Don and Janelle Carlson, follow them on Instagram at Janelle and Don Invest. They are open to answering questions and providing guidance to fellow real estate enthusiasts.

This summary captures the essence of Episode 23, providing an in-depth look into the Carlsons' early challenges and the lessons they've learned. By highlighting key discussions and insights, listeners can glean valuable strategies to enhance their own real estate endeavors.