\n<\/p>\n
Most real estate investors do a few deals a year if they\u2019re lucky. But today\u2019s guest was doing twenty to thirty real estate deals a MONTH<\/strong>. That\u2019s right\u2014not per YEAR, per MONTH. And he did it all while scaling his <\/strong>real estate business<\/strong><\/a> at lightning speed<\/strong>. The best part? He didn\u2019t have to use his own money to get there\u2014his deals were being funded completely by private partners<\/strong>, and if you stick around, you\u2019ll know exactly how to do it, too!<\/p>\n After closely observing investors while he was a\u00a0real estate agent<\/a>,\u00a0Don\u2019nell Greer<\/strong>\u00a0got the hang of finding and tackling profitable real estate deals.\u00a0After much analysis paralysis<\/strong>, he got his first deal under contract\u2014an $80,000 home<\/strong> that needed some heavy sweat equity to make it profitable. With high rents and low home prices, Don\u2019nell knew the deal would work, but he needed more money. Through a family loan,<\/strong> Don\u2019nell realized the power of private money<\/a>, and once he saw the possibilities, there was no turning back.<\/p>\n Fast forward soon after, and Don\u2019nell was borrowing hundreds of thousands of dollars from millionaire investors <\/strong>he met through his network. Thanks to the new source of funding, Don\u2019nell was able to flip dozens of houses a month<\/strong>, making a life-changing business in the process. But it wasn\u2019t all good news. Partnership problems, rising interest rates, and changing market dynamics<\/strong> forced Don\u2019nell to make a hard pivot\u2014a pivot you may have to make in the future!<\/p>\n Dave (00:00): Henry (00:09): Dave (00:13): Henry (00:40): Dave (01:08): Don\u2019nell (01:59): Henry (02:42): Don\u2019nell (03:05): Dave (03:13): Don\u2019nell (03:34): Henry (04:14): Don\u2019nell (04:38): Dave (04:40): Don\u2019nell (04:44): Don\u2019nell (05:36): Dave (06:09): Don\u2019nell (06:31): Henry (07:12): Don\u2019nell (07:50): Don\u2019nell (08:56): Henry (09:01): Henry (09:52): Henry (10:36): Dave (11:14): Henry (11:37): Don\u2019nell (11:54): Henry (12:36): Don\u2019nell (13:28): Don\u2019nell (13:47): Dave (14:19): Don\u2019nell (14:46): Henry (15:39): Dave (15:42): Don\u2019nell (15:50): Dave (16:11): Don\u2019nell (16:38): Dave (16:45): Don\u2019nell (16:47): Henry (17:10): Don\u2019nell (17:11): Henry (17:54): Henry (18:48): Henry (19:46): Don\u2019nell (20:46): Don\u2019nell (21:40): Dave (22:13): Don\u2019nell (22:15): Henry (23:45): Henry (24:24): Don\u2019nell (24:51): Dave (25:45): Don\u2019nell (26:28): Dave (26:53): Don\u2019nell (27:02): Don\u2019nell (27:57): Henry (29:07): Dave (29:21): Don\u2019nell (29:55): Don\u2019nell (30:55): Henry (31:37): Don\u2019nell (31:55): Henry (32:45): Don\u2019nell (32:49): Henry (33:02): Don\u2019nell (33:05): Henry (34:17): Don\u2019nell (34:52): Henry (35:26): Don\u2019nell (36:28): Dave (37:44): Don\u2019nell (37:59): Dave (38:41): Don\u2019nell (38:45): Dave (38:47): \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
Hey everyone, welcome to the BiggerPockets podcast. I\u2019m your host today ah Dave Meyer, and I\u2019m joined by my friend Henry Washington. Henry, how are you?<\/p>\n
I\u2019m doing fantastic, Dave. Love, love being here with you,<\/p>\n
Man. I\u2019m excited to be here too. I\u2019m just excited that you\u2019re my co-host today. I\u2019m excited that everyone is here listening to this podcast. I mean, you could listen to like 10 million different podcasts, but I am glad that whether you\u2019re new or you\u2019ve listened to 900 episodes of the BiggerPockets podcast, that you\u2019re still here with us today learning about real estate and how to be a successful investor. Henry, what do we have in store for all of our friends and listeners today?<\/p>\n
So today, today we have an investor story and we share investor stories weekly here to get you inspired and to take action and provide a glimpse into what are real investors doing, what kinds of deals are they doing, and what\u2019s happening right now in the market. So this week we\u2019re bringing on Don\u2019nell Greer, who\u2019s done over 150 deals. You\u2019ll hear about how he started investing in the Dallas-Fort Worth market, how he scaled his business there, and why he chose to exit that market.<\/p>\n
Don\u2019nell has such a cool story, it\u2019s just one of those stories of scaling really quickly, and I think he\u2019s gonna bear it all for us. He\u2019s gonna tell us the good parts about it, the challenging parts about it, how you get through some of those difficult times as an investor. He\u2019s also gonna share with us how he did something that I think is super cool, which is finding the right strategy that matches your personality and your personal circumstances, and figuring out really what\u2019s right for him. How he used my private money to scale. So there\u2019s so much good stuff in here that I think everyone listening is gonna gain some value from. So let\u2019s bring in Don\u2019nell. So Don\u2019nell, you bought five houses in 2018 in the Dallas Fort Worth area. Can you tell us a little bit about your strategy with those deals at the time and why you chose to invest in Dallas of all places?<\/p>\n
Well, first and foremost, that was just the area that I, I currently reside in. And then secondly, I, I\u2019ve been an agent, I was an agent four years prior to that. I had a little analysis paralysis, uh, going in and uh, I mean that\u2019s why it probably took so long for me to get from 2015, 2014 ish to, to then, uh, is because just the reading everything and, and making sure all my boxes were checked, utilize bigger pockets to, uh, understand and learn. The brrrr strategy is, is how I was able to go to buy those five houses as quickly in that, uh, first year. And then from there scale to start doing more fix and flips.<\/p>\n
You\u2019re saying things that I think resonate with almost every investor looking to get started. Right. Especially if they\u2019re in a market like a Dallas-Fort Worth, where it\u2019s like, I am just over analyzing everything. I don\u2019t know when I\u2019m ready. And so what were some of the things that finally made you like, yes, now is the time, now I\u2019m ready to do this. Like what kind of eased that, that process for you?<\/p>\n
I don\u2019t think I actually ever got there. I just, I saw a house and I was like, I, this is the one I\u2019m gonna do just, just for, yeah, I\u2019m going after.<\/p>\n
So how Danelle did you learn to even analyze deals in the first place? \u2019cause I feel like that\u2019s what some people just stop. They\u2019re like, I\u2019m so overwhelmed. There\u2019s so many different things that I could possibly buy. And then they never actually start running the numbers or learning how to analyze deals. So what sort of, how did you gain that experience that you mentioned?<\/p>\n
Uh, I, I contribute a lot of that to just being an agent and running comps for, \u2019cause I, I worked with an investor and he finally kind of gave me, but didn\u2019t gimme his playbook. Um, and essentially I, I, I understood how he was analyzing deals and how he looked at comps, and I basically copied and pasted what his strategy was and how he viewed some of these things. And I just basically did the same thing. Uh, and then it, it helped that I had access to MLS to where I didn\u2019t have to go buy like prop stream or, or these other, uh, real estate softwares out there that, that do give or offer comps as a, as as a service.<\/p>\n
So your experience as an agent allowed you to practice running numbers, I\u2019m sure. \u2019cause you were probably running numbers that your clients wanted you to run on top of the fact that you had access to the MLS, and so you had probably the best set of data you could in order to run numbers. And so you found this property and you were like, I\u2019m just going for it. So how did you do it? Did you have any partners? Like what what\u2019d that process look like?<\/p>\n
I, BiggerPockets was my partner, uh, <laugh>.<\/p>\n
Nice. We like to hear that. <laugh>.<\/p>\n
No, it was, uh, I was like, all right, I got the house on the contract now what? And I at the time was trying to figure out between hard money and utilizing private money in which I was able to utilize private money, uh, to where I <laugh> I did a little audible and instead of utilizing the private money to just buy that one house, I utilized the private money of, it was about a hundred thousand dollars and bought <laugh> all five, the the other five houses essentially is what I did. And so yeah, that\u2019s, that\u2019s basically I utilized, yeah, my first deal was actually from MLS, so I utilized MLS to buy the deal. Once I got the deal, I started, yeah, I was literally all over BiggerPockets forums. Like, what do I, what do I do next? Uh, I\u2019m trying to find contractors. I\u2019m, I\u2019m like, oh shoot, I forgot I gotta get insurance.<\/p>\n
So all of this stuff is like happening. And mind you, like, again, like <laugh> in my head, I had all of that information and it\u2019s like different if you, if you\u2019re not putting it, putting it to practice. And so, yeah, like once I\u2019m in it, now, I\u2019m, I forgot everything from the previous years of what I\u2019ve read or, or watched or whatever. Uh, so yeah, o once I got in the game or yeah, when I, once I got my, my jersey a little, little sweaty and dirty, uh, is when, yeah, like it, I just, I had to swim is what essentially happened. So Don\u2019nell,<\/p>\n
I know you were, you were sort of joking about BiggerPockets being your partner, but I think a lot of people who listened to the show necessarily know how they can use the BiggerPockets website and the sort of broader BiggerPockets community to help them with their first deals. So do you have any advice for people about tricks or things that you did to leverage the power of the BiggerPockets community?<\/p>\n
Uh, BiggerPockets insurance contacts, right. <laugh>, like I, it literally was the playbook. Um, and I did have a few other investors that I, I asked them like, what were the resources that they were using? But again, like, I\u2019m like BiggerPockets, BiggerPockets basically I, I learned the brrrr strategy through BiggerPockets. I, I, I, I think I was connected with a few hard money lenders through bigger BiggerPockets. So that was, it was <laugh>. It was almost like my, my, my, uh, real estate bible at the time was this, is, this is the source that I\u2019m going to for all this information until I get to these first few deals. And then like figure out, okay, what are the, some other source or like other resources I can<\/p>\n
Use, you know, I think that\u2019s helpful. \u2019cause a lot of people feel like sometimes with BiggerPockets they need to like dive directly into the forums and know exactly where to go look for things. And you can literally just do exactly what you did BiggerPockets house under contract and it will pull up all the articles and you can, you can read through like, the hundreds of articles of people who are in the same position of you. So I, I think that\u2019s great information for people to see. Um, I want to, uh, backtrack a little bit on this deal. So you were on the MLS, you found this deal. Um, how did you find this deal? Was it, uh, listed for a certain amount of days? Like what, what made this deal stand out to you for<\/p>\n
This particular deal? It was in the market that I was looking in because, uh, the rental rates were pretty, pretty high. Uh, and the, the, the values of houses were just low. And the demand in this particular area is Cleburne, Texas, uh, was just booming at the time. And so I saw the listing on MLS, it popped up and it was at like a 100k or something like that. Uh, and I saw in like, as y\u2019all know, like how, how the agents position or, or make the verbiage on a listing description, uh, like needs work or TLC stuff like that, or, uh, slightly dated or you wouldn\u2019t need. And I\u2019m like, this is all in my name. \u2019cause I was, again, not trying to get in over my head and I didn\u2019t want anything over like 150,000 to start with. Um, and so I started, I called the agent and I started asking questions, seeing what offers that they had, um, and seeing if the, the seller was interested in, in, well if the price was flexible, we negotiated it down to $80,000 on top of, since I was an agent, I got 3% commission.<\/p>\n
So I just basically rebated it back to, uh, or put that to towards the sales price.<\/p>\n
So, so there\u2019s, there\u2019s so much gold in what you just said because, um, a lot of really analysis kind of went into you finding this deal that I don\u2019t want people to miss out on. So if I heard you correctly, what you said was you knew the area of town that you liked, because typically the price points on those homes are lower, but the rents are fairly high. And so that\u2019s the kind of analysis I think investors need to be doing when they\u2019re trying to pick where they want to invest in. So you already knew if I can find a house and this price part of town for under $150,000, I think I\u2019ll be good because the rents are high and I feel like the price points are good in that area. So then you\u2019re looking on the MLS, you see a house pop up in that area, and then you\u2019re looking at the keywords of that listing and the keywords are indicating to you that this house probably has some level of distress.<\/p>\n
And if that house has a level of distress, what you\u2019re really saying is that the seller may be motivated to sell that property at even more of a discount. And so in order for you to figure out if that was true, you read the keywords, saw the distress, and then you reached out to the agent and had a conversation to say, Hey, what\u2019s really going on? And you said, you said, I want to know what\u2019s the seller\u2019s pain point? \u2019cause if I can solve for that pain point, I can probably get a deal done. And I don\u2019t want people to miss this because A, this is gold, but B, you don\u2019t have to be an agent to do exactly what you just did. You can find a market where you feel like the price point and the rents are gonna mesh for you. And then you can set up a search.<\/p>\n
You don\u2019t have to set it up on the MLS, you can set it up on realtor.com, or if you\u2019re not an agent, have an agent set up that search for you. Say, I want homes in this particular part of town under $150,000. And then in the keywords, please indicate or look for these keywords in the, in the, in the comment section. And then as those things pop up, you\u2019ll just get an email with those listings, and then you can have your agent reach out to those sellers and do exactly what Don\u2019nell was just talking about. Like, this is real estate investing deal hunting 1 0 1, and I think you did a really great job identifying your deals. Okay,<\/p>\n
So we\u2019ve been talking about how Don\u2019nell got started and how he\u2019s looking at deals, but the question is sort of how is he funding them? What would he do differently in his next partnership? And does he even like being a landlord? We get into all that right after the break. Hey everyone, welcome back. Henry and I are here with investor Don\u2019nell Greer. Let\u2019s jump back into our conversation.<\/p>\n
So you got your deal, you got the, the deal under contract at 80 grand, and you\u2019re like, oh crap, now I need money. And so you said you raised some private money, and so what did that look like? Was it somebody you knew? Did you go cold calling people and say, gimme money? Like where did, where\u2019d the money piece come in?<\/p>\n
It came from a family member. Um, and again, it, it was through, uh, some formal BiggerPockets about raising capital and basically the commentary or what their direction was or what they recommended was comparing it to, well, if you\u2019ve got it in your Bank of America Chase account, you\u2019re only making about, what, two, 3% on that in a savings account. And it\u2019s like, I could promise you 10% interest on your money, uh, which is far greater than obviously what you\u2019re getting now. Um, and that\u2019s how I position it. And they kinda already knew that I was in real estate. It was from a family member and basically just saying, Hey, here\u2019s what you\u2019re currently getting. Here\u2019s what I can give you.<\/p>\n
Boom, man, I feel, I feel like you <laugh>, you ran the, you ran the real estate investor play to a tea -I-I-I tell people all the time, if you need money for a deal, there\u2019s probably enough money for your deal in your phone if you are willing to call people and have the right conversation. I tell people, like, when I call people and I\u2019m looking for money, I say, look, I am going to borrow this money anyway. And if I\u2019m going to borrow it, that means somebody\u2019s going to make the interest. And I would much rather pay somebody I know like, and trust this money rather than some stranger who knows nothing about me or cares about me, uh, at all. And so it\u2019s an opportunity for you. And you ran the play, you got the money, you were able to buy the deal, and so then you wanted to exit this deal, I\u2019m sure. And so what was the exit strategy for this deal? Was it a rental? Was it a brrrr, was it a flip?<\/p>\n
Yep. So we, it was a brrrr So we, I basically did a cash out refi, paid back the, uh, private money and then, uh, rents, rinse and repeat is essentially what, what happened. Um, and from there, after doing that, I realized very, very quickly that I, I did not like being a landlord. Why not<\/p>\n
<laugh>? Yeah. Tenant started calling and I\u2019m like, ah, man, I gotta, now I gotta find, I gotta find that contractor and then send them back to, to do X, y, Z. Now we\u2019re getting into disputes about bedbugs and all these, these things that you don\u2019t think about, read about really until like, once you get the deal, it\u2019s like onto the next one. Uh, but not like the in intricacies of like actually owning that real estate now. Um, and so that\u2019s actually when I decided I wanted to, to transition from doing the brrrrs to, uh, fix and flips.<\/p>\n
Well, Don\u2019nell, I I really like that \u2019cause I think it\u2019s really important for investors to find strategies and tactics that match their personalities. Like some people, me, I would never flip a house, it\u2019s just not for me. And I have a tolerance for tenant relations that apparently you don\u2019t. But I was curious if you, like, do you think it\u2019s your personality, like it\u2019s just not for you? Or did you have like just a bad luck first experience with being a landlord? It<\/p>\n
Was, uh, it\u2019s, I think it\u2019s a personality thing. \u2019cause uh, from the jump I remember going to a house that I own, that I had the direction of the, the rehab. I\u2019m talking to a, a prospective tenant and instead of saying, yeah, we can, when they ask the question is this, is the owner negotiable on price? Well, me being the owner and talking to the prospective tenant, like right there, I\u2019m like, ah, yeah, well let me, let me talk with him and see what he says. And like obvious little did the prospective tenant know that I\u2019m the owner. But again, like my personality is obviously non non-confrontational. So I\u2019m like, oh, I don\u2019t really like, and again, so when we got into tenants asking for repairs that technically they should be responsible for, I\u2019m, I\u2019m basically folding and, and doing it just because I don\u2019t want anybody to be mad at me. So<\/p>\n
What I hear you saying is, I won\u2019t bill for this.<\/p>\n
Yeah man, I wanna be your tenant Don\u2019nell, I\u2019m gonna come to your, to your property and just ask for a, a rent reduction <laugh>.<\/p>\n
And yeah, like that\u2019s the, that\u2019s the part where you gotta have either the spouse or a partner or somebody that has that like type A personality that, that they\u2019re like, no, like kick rocks. Like this is, this is what it is, take it or leave it. And me, I\u2019m like, well, like maybe I can work it out. But yeah, it\u2019s just, yeah, again, it was a personality thing for me. Well, well<\/p>\n
I we\u2019re just joking around, but I do, I do really think that is super important and honestly impressive. You just need to know what you like and what you don\u2019t like. Otherwise you\u2019re gonna burn out like you, and, and I respect the fact that you looked at this, tried it, said, you know what, there are other ways in real estate that I can make money. So what\u2019d you do next? Did you sell those properties and then go into sort of the transactional flipping side of things or how do you unwind that situation?<\/p>\n
So I actually still, uh, hold onto them to this day. Um, the next step for me was, I was talking with a<\/p>\n
But you hired a property manager?<\/p>\n
I actually, I actually didn\u2019t because, uh, of all of those tenants, uh, well, I\u2019ll take it back. Four of the tenants were perfect, three were felons. Uh, and what I\u2019ve realized or come across like mistakenly was as a felon, they <laugh> they don\u2019t have a lot of other chances and so they<\/p>\n
Don\u2019t wanna screw it up.<\/p>\n
Yeah. So they\u2019re, they\u2019re like, I, I\u2019m, I started texting him like, Hey, everything okay. Like, I, I hadn\u2019t heard from you. I, I hadn\u2019t heard from you. The rent comes and it\u2019s never late. But at the same time I\u2019m like, this other tenant\u2019s calling and, and like they\u2019re talking about a light bulb went out, but you don\u2019t tell me anything. And he\u2019s like, oh no, I, it\u2019s all good. And again, we had a heart to heart conversation. He\u2019s like, man, I just appreciate you giving me the opportunity because I don\u2019t have any other place to go if you kick me outta here. And so he\u2019s like, I could handle all the repairs or anything that is deficient in the house because again, I don\u2019t want you to be upset to where you gotta raise the rent or, uh, something like that or of that nature.<\/p>\n
I know you said something that I think is hugely important that a lot of people don\u2019t frequently talk about. And you said that you have, is it three tenants that are felons that have a felony conviction on the record and they are, um, great tenants. And so this is something that I think is hugely important because we as landlords have the opportunity to provide housing to people who really, really need it. And as landlords, landlords, I think we\u2019re often taught that if somebody has a felony conviction that that\u2019s a red flag, you should avoid them at all costs. Right? And, and that\u2019s just not the stance that I\u2019ve taken with my portfolio. Now I\u2019m not saying you want to go out and rent to anybody that has a felony conviction. It\u2019s not just, it\u2019s not just about that they\u2019ve made a mistake. It\u2019s about what is that mistake?<\/p>\n
When was that mistake? And, and then you make a call because you could be providing somebody an opportunity for housing who doesn\u2019t get much opportunity for it. I have a tenant who is a felon. He spent 14 years in prison for a nonviolent drug charge. And when he came to us to look at our place, he said, guys, I\u2019ve spent several thousand dollars on application fees, uh, in order to look at places just to have them turn around and tell me no, uh, not based on anything other than the fact that I\u2019ve been to prison. And so he, uh, he, he just wanted a shot. And so we pulled his record, we looked up everything we saw. It was a nonviolent conviction. He served his time. We met the guy in person. He seemed like a really great person, and he was remorseful for what he did.<\/p>\n
And he said, I just need an opportunity. And so we gave him an opportunity. And this guy has by far been the best tenant I\u2019ve ever had. He mows the grass for the whole place. There\u2019s an elderly woman next door, he mows her grass, he takes care of her. Like this guy just needed a shot and we were able to give him that. And so I love that that\u2019s something that you do because I want other people who are landlords to consider this, like, do your due diligence and make sure that that person fits. Obviously I\u2019ve had a, I\u2019ve had a convicted felon who wanted to live in a multifamily, but his crime was, um, a little more violent. And so we couldn\u2019t allow him to live in that multifamily \u2019cause there\u2019s other families that live there. Um, so you have to do your due diligence, but there are people who\u2019ve made mistakes who just need an opportunity. And we as people who provide housing can, can provide that, that opportunity. And I just love hearing somebody who didn\u2019t just see a felony conviction and turn somebody away. So thank you for,<\/p>\n
For doing that. As I transitioned from, uh, holding these and not hiring a property manager like I probably should have, but, um, I was talking with a buddy of mine <laugh> to, uh, to see how we can scale it up. Because again, it, I was, I was doing a cash out refi from these brrrrs, but at the same time I was, I was putting, putting it into another property versus like, not necess, well, not necessarily going into my bank account. Uh, so my net worth was growing, but not my, like, not my active income was growing. Um, and so talked with a buddy of mine and, and we were trying to figure out how to scale it up. And so he, he put me in touch with a, uh, guy. He, he had sold his scrap metal business here in Dallas, and he was sitting on about 30 or $40 million and he was, he\u2019s been ready and looking to get into real estate.<\/p>\n
So we, we met him over coffee one day, uh, I think it was maybe 30 minutes, and I think he showed up like 15 minutes late. Um, and so he, he heard all he needed to hear. We had the, the, the documents just kind of showing like what, what I\u2019ve done, like the ROI he could potentially make. And that day he basically lit, lit me $160,000 and it was like, what\u2019s, what\u2019s the catch? And, uh, no, like that <laugh>. I\u2019m like, are you gonna follow me? And like, what, what\u2019s what\u2019s happening here? Like, uh, don\u2019t<\/p>\n
Ask any questions, just go<\/p>\n
<laugh>. Yeah, no, I\u2019m like, in my head I\u2019m like, is is he gonna kill me after like I\u2019m, this can\u2019t be true. \u2019cause again, like I\u2019m like, that\u2019s $160,000. Like not a, like if I lend you $200, like next week, two weeks from here, I\u2019m, I\u2019m probably like, Hey, like, where\u2019s that $200? And like the, the beau the beautiful part about that was he, half the time I was trying to track him down to like give him updates. \u2019cause I\u2019m like, man, he\u2019s, he\u2019s reached a level of money that I know nothing about. Uh, so anyway, we, we\u2019ve utilized that $160,000, uh, to, to flip the first deal. He was all on, all on board from there, uh, when it was all said and done, he was, I think he was all in $750,000, which again, uh, I think we went like three months of sending him a text, trying to call him it, my man\u2019s this ghost, like didn\u2019t hear anything from him. And I\u2019m like, that\u2019s crazy that you\u2019ve got all this money sitting in an account with basically a stranger you met over coffee. Um, and so again, like I used to hear and read like people raising money and it was just like, nobody\u2019s gonna give you a hundred thousand dollars. Like, that\u2019s, that\u2019s, that\u2019s crazy to think about. Uh, but again, like as I, I I\u2019ve been on this real estate journey and just started asking, but also utilizing my experience to back like the reasons why you should basic, you should, uh, lend to me.<\/p>\n
I feel like you, you did all the things right, right? You went to this person who you were going to say, I would like a piece of this umpteen millions of dollars that you just had, but you didn\u2019t just say, sir, give me money. I heard you say you went to him and you had kind of like a portfolio or some documentation showing your success history. And I think that that\u2019s huge. I teach people to do that all the time. Every deal you do, just make it a slide and a PowerPoint and keep that PowerPoint running. Just a picture of the property before and after what you paid for, what you put into it, what you did to exit it. Like that\u2019ll go a long way to showing these people who have this money, who want to make more than you know, 1% in the bank.<\/p>\n
Like I\u2019m sure you showed him your success history and he was like, yeah man, let\u2019s do this thing. So if you\u2019re prepared and you speak from a place of confidence and uh, and you can talk about, hey, this is what we do, this is what we look for, this is how we monetize it, and this is the history that I\u2019ve done. I think you\u2019ve got a lot of opportunity to raise private money. And so I feel like, man, you ran, you ran that play to perfection. So you raised this private money, are you using it, were you using it just for flips at that point?<\/p>\n
Yeah, so I was, it was only flips. He told me to, it was we using a, a analogy of red light, yellow light, green light. And the, I had the green light. He was like, just go buy as much as real estate as you can. And which then that\u2019s what I did. So we started pretty slow again. I\u2019m like, is this, is this real life? Like was that a fluke? It\u2019s almost like that kind of like a imposter syndrome in the sense of like, am I good enough? Is this real? Like, was that beginner\u2019s luck? And so like, I kind of had a little self doubt in myself in the sense of like, <laugh>, if we lose on the house, like what, what happens then? Like, is he gonna pull all this money out? So like I\u2019m, I\u2019m like over analyzing deals just to make sure like this is the one, because again, like I, I, I don\u2019t wanna lose this, this opportunity, that opportunity that, that I\u2019ve been given and that I\u2019ve basically been reading about this whole time that I genuinely didn\u2019t believe I actually be done.<\/p>\n
But Don\u2019nell, I feel like it\u2019s that attitude that makes people want to invest with you, right? It\u2019s \u2019cause like, as someone who invest in private deals, I don\u2019t want someone who\u2019s like coming in there super confident over, you know, over aggressive saying that they\u2019re, they\u2019re gonna do everything super well. You, you wanna invest in the people who are gonna take the responsibility of managing someone else\u2019s money extremely seriously and are gonna treat it with the respect that you were talking about. Obviously you don\u2019t want you having imposter syndrome, you know what you\u2019re doing. But I think that mentality of, of being so careful of a steward to someone else\u2019s money is really what a lot of passive investors are looking for.<\/p>\n
Yeah, no, that is, I think I go to every deal with that mindset of if it comes down to it, like what would that look like if I lost, what would that look like? What would all these steps look like? And so a lot of that is, goes into my underwriting in a sense of just making sure x, y, and Z are checked. And then now do we have multiple exit strategies, which when the interest rates took a, a spike in the wrong direction, that\u2019s the obviously when things kind of went haywire.<\/p>\n
So tell us a little bit more about that Don\u2019nell, you know, what happened to your business when interest rates started to go up and what did you do about it? It was<\/p>\n
Rough coming from, it\u2019s like I went from being extremely like, tedious about everything, making sure like I\u2019m, I\u2019m, I\u2019m being careful in deals to like, it, it almost was like I started putting on that, that, that that cloak of Superman and was like, I can\u2019t lose. Like I\u2019m, I\u2019m crushing it now. Like I am I him like <laugh>. It\u2019s like, yeah, it\u2019s, it\u2019s almost like a invincibility, uh, until like the interest rates, uh, hit and then we were, I think we\u2019re sitting on 17 houses. Uh, and because our strategy, our strategy at the time was we were selling to a few hedge funds. We were selling as is. We were just listed on the market and people were just buying \u2019em up. So a lot of those re those houses that were sitting, uh, were not touched and they, they needed a ton of work.<\/p>\n
Um, and so once that hit, now we found out that buyers are way more picky now, now there\u2019s a lot more competition that we we\u2019re having to take a whole step back to, to assess all of this situ, like this whole situation to now make a plan. And at the time we had lost our, before we had crews, and then as we were just like blowing through inventory. \u2019cause everything was selling and obviously it was, in my opinion, it was just a momentum market, at least here in DOW everything. I felt like time just stopped once, uh, the, the interest rates rose. And again, like you, I we, you kind of could hear the chatter, uh, from like we were utilizing hard money at the time, uh, from our har hard money lenders kind of pulling back too. Um, and so yeah, that affected our business, uh, even to the point to where our partnership was dissolved, uh, based on just, uh, differences. And I think a lot of it was had to do with too many cooks in the, in the kitchen to where somebody wanted to do this, somebody wanted to do this, and the other person wanna do that. And it just kind of made things difficult to where everybody could work together.<\/p>\n
Alright, everyone, we\u2019ve gotta take one more short break, but when we come back we\u2019ll hear about how Don\u2019nell is evaluating markets today. Stick around. Welcome back. We\u2019re here with investor Don\u2019nell Greer. Let\u2019s pick up where we left off.<\/p>\n
Sorry. Yeah, so, so this was in 2022, I assume, just based on the timeline. Yeah. And so at that point, who were your partners that you were working with? And I\u2019m just curious \u2019cause partnerships are such a challenging part of real estate and a great opportunity too, but like, who are your partners? And were some of the cracks that sort of evolved in 2022 apparent to you before interest rates go went up? Or was it sort of the stress of this new paradigm shift that started to cause some issues with your partnerships? It<\/p>\n
Was, yeah, it was, it was after that. And now again, we were, it was arguments about who was doing what. And I think the partnerships are extremely important and needed in real estate if you want to get to a certain level now, if you just want to be like two, three deals a month, yeah, you probably could do it on your own. But, uh, <laugh> being as ambitious as I was, we were, we were probably around 20 to 30 a month at the time, uh, deals per month. Um, and so yeah, once that stuff started cracking and, and, and buyers what weren\u2019t buying like they were, uh, is that\u2019s where yeah, just differences were just spotlighted. I feel like. Um, and again, just going back to your question, uh, I think it just, you have to have clearly defined responsibilities in a partnership because ours was pretty loose.<\/p>\n
It was like, oh, I know this guy we\u2019re cool. Like, I like what he does. And then we had another, a capital partner come in from uh, uh, Massachusetts to where he saw what we were doing and he was, he wanted to be a part of it as well. And so again, like we just kind of came in and everybody was doing their own thing and nothing was really defined until like, there had to be, it is almost like the come to Jesus meeting <laugh> of, alright, like, what, what exactly are we doing here to like get through this inventory so we can continue to move on? And it just, it was just too many differences at the time to where we could even reconcile, uh, what was going on.<\/p>\n
Yeah. So it sounds like you, to backtrack, it sounds like you found your private money partner, you went out there, you started doing deals, and then somewhere along that path you decided I, I can do more volume and I could do more volume if I had partners. So it sounds like maybe you found another investor in the area that you partnered with.<\/p>\n
Yep. So, so it was, so it was a friend of mine, so initially it was me and a friend, and then we partnered with an, uh, the, the guy that sold his scrap metal business. Uh, we went with that partnership for about 18 months. And then from there we met another guy, uh, who was I guess even further along and, and he was ready to, he was ready to put literally millions into real estate. Uh, and that\u2019s when we actually, we were buying houses in cash and we transitioned to, uh, leverage. Uh, it\u2019s like, well, why don\u2019t y\u2019all just buy 15, 20 houses and obviously ultimately we got to like 25, 30 a month doing this this way. Um, and so yeah, that\u2019s how we transitioned from buying all cash to now we\u2019re, we\u2019re leveraged, uh, through hard money lenders. Okay,<\/p>\n
Got it. So you were buying cash and then refining them, putting \u2019em on leverage?<\/p>\n
Yeah, well we were buying cash and just flipping. We, we were just flipping from at that point and then we, we were still flipping, but we just, we utilized leverage and then with, with that leverage, we, we, we found that,<\/p>\n
So the market shifted when you started to use leverage <laugh>? No,<\/p>\n
No, no, no. Well, thankfully, no. Uh, we, we did a a a huge run, thankfully. Um, but unfortunately we were left with, yeah, it was about 17 houses that had leverage. So now you\u2019ve got these hard money lender payments coming every month on top of, now we have to enlist contractors to get some of these, these houses rehabbed to get \u2019em on the market, uh, to get \u2019em sold and off the books. So, um, yeah, it was, uh, yeah, again, it was eye-opening because at the time I was, I, I mainly was doing the acquisitions, the, the, the managing projects and dispositions because our business was built off of relationships, so we didn\u2019t, we didn\u2019t spend any money on marketing. Um, so yeah, like that\u2019s where it was like, all right guys, I\u2019m, I\u2019m, I\u2019m, I\u2019m trying to figure out like whose role is what, and again, like I love partnerships. I\u2019m in, I\u2019m still in other partnerships, but just going back to making sure you just have clearly defined roles and responsibilities versus like trying to wing it. Like I\u2019m, I\u2019m, I\u2019m usually used to<\/p>\n
So it sounds like if, if I\u2019m hearing correctly, you were doing a lot of hotels. It sounds like you were buying \u2019em so cheap that you were able to not have to do much rehab, stick \u2019em on the market and you were making a profit. Interest rates started to shift and buyers could be a little more picky. And so now you\u2019re like, okay, we need a plan. And that plan was to go ahead and bring in the contractors, renovate everything to where the point that it needs to be renovated to flip those properties and get \u2019em off the books. Yep. And you were able to then unload the properties by doing the full rehabs and flipping those. How\u2019d that go? Did you make money on all of \u2019em? Were you losing some money? What did that look like?<\/p>\n
Uh, we lost money on the majority of those. Uh, but, um, the one thing I do, I, I, I guess I love that we were able to accomplish was our investors, if we had any investors, \u2019cause we were trying to raise other pro out, like outside capital because we were still looking into doing like land development and some other deals. We didn\u2019t allow them to lose any money. Uh, and we stayed true to our promise. So whatever their principle was, they were paid back. Plus the interest that we promised<\/p>\n
Fact is why you are a person people are gonna want to continue to do business with. I tell this to students all the time. You have got, if you\u2019re gonna borrow money, private money, you have got to make sure your investors get made whole. Whether you lose money or not, that is first and foremost. \u2019cause if you ever want to be able to borrow money again, you\u2019ve gotta make sure your investors are made whole. And not everybody does that Don\u2019nell, like not everybody will bite that bullet. There\u2019s a lot of people who start making calls and asking for more money to try to keep the ship afloat and borrowing from Peter to pay Paul. And sometimes you just have to bite the bullet and you make sure your investors are made whole. And to, to hear someone say, look, we started to scale. We got into some trouble, we pivoted that pivot meant we lost money, but my investors did not lose money. Like, that\u2019s the kind of operator that people want to work with. And I hope people listening to this like understand it\u2019s not just about borrowing money to scale, it\u2019s about borrowing money to scale and staying true to your word, no matter what happens with that deal.<\/p>\n
Yeah, I mean, through all of that is then we shift it to different markets. \u2019cause obviously now you\u2019re, I think Dallas, Dallas, the Dallas market was tough because now you\u2019re battling high interest rates and you\u2019re battling high taxes, um, on top of like these inflated sales prices. So finding, trying to buy deals and trying to sell deals was, it was, it was tough to call. And so we shifted, shifted to the St. Louis market, Raleigh Durham, North Carolina, um, and even started looking into Nashville, Tennessee, uh, and St. Louis market. That was just a unique place just because it\u2019s like taxes are like two, two grand a year. And I\u2019m like, that\u2019s, that\u2019s two grand a a month in Texas, like <laugh>, um, on top of like, you can buy a, a livable house for $75,000. Like if you try to buy a house for $75,000 in DFW, it\u2019s, yeah, you\u2019re definitely in, in the hood like Oak Cliff or, or stop six or one of those places. So, um, which again, like even the rental, the rental rates in St. Louis was like, I\u2019m like, is this really like somebody, somebody playing with my emotions right now.<\/p>\n
That\u2019s awesome. So Don\u2019nell, you obviously went through some setbacks and I\u2019m, I\u2019m sorry to hear that. That\u2019s never fun. But how would you say you got through that and bounced back to kickstart your business?<\/p>\n
Yeah, it was more so just utilizing the mastermind that we were a part of because it was like, a part of that was, man, we\u2019re <laugh>, we\u2019re taking a beating. Like, nobody knows what\u2019s happening in the market. Like what are other people, what are other investors experiencing? It was just eyeopening to see we\u2019re not the only ones that, that we\u2019ve experienced this. There\u2019s like, there\u2019re tons of others out there that are experiencing the same thing and now they\u2019re just basically sitting on, sitting on the sidelines and, and waiting to see what the market does or like us just expanding to different markets to see if we can still real estate invest, uh, at scale as we once were doing, obviously just in a different market.<\/p>\n
Well, thanks so much for joining us today, Don\u2019nell. We really appreciate you join, uh, being here. I<\/p>\n
Appreciate y\u2019all. Thank you, sir. I<\/p>\n
Appreciate you. Or if anyone wants to connect with Don\u2019nell or know to find more about him, just check out our show notes or the show description below for BiggerPockets. My name\u2019s Dave Meyer, he is Mr. Henry Washington. And we\u2019ll see you for an episode real soon.<\/p>\n