May 28, 2025 • 34 mins
Ever wondered how some investors rapidly scale their real estate portfolios while others struggle to grow beyond a few properties? In this eye-opening conversation with Henry Washington, we uncover the strategies that helped him balloon from a single property to over 100 doors in just a few years and why he's now deliberately scaling back.
Henry reveals how he leveraged community banking relationships to finance his explosive growth, securing deals with 85% of purchase price, 100% of renovation costs, and creative solutions for down payments. His candid admission about "winging it" in the early days before implementing crucial systems offers a powerful lesson for new investors. The revelation that he sent 1,000 direct mail pieces for his first marketing campaign and scored two deals showcases the persistence required in this business.
What's particularly fascinating is Henry's evolution from growth-obsessed investor to strategic portfolio optimizer. After reaching approximately 130 doors, he's now selling properties that don't align with his vision, focusing instead on debt reduction. His current model—using profits from house flips to systematically pay off rental properties—represents a refreshingly pragmatic approach to building lasting wealth.
For anyone wrestling with scaling decisions, Henry's perspective is invaluable: "Large portfolios have large portfolio problems." His advice on implementing proper bookkeeping systems early, conservatively accounting for vacancy rates, and regularly evaluating portfolio performance against projections will save listeners countless headaches and potentially hundreds of thousands in mistakes.
Ready to refine your real estate strategy? Listen now and discover why sometimes the path to true financial freedom means knowing when to slow down your acquisition pace and optimize what you already own.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
Welcome to Northwest Arkansas Investing Podcast, your
go-to source for real estateinvesting in Northwest Arkansas.
Speaker 2 (00:13):
With your seasoned investor just starting out.
We bring you expert insights,market trends and practical
strategies to help you buildwealth through real estate.
Speaker 3 (00:20):
From buying and selling to property management
and long-term investmentplanning.
We cover it all so you can makesmart, informed decisions in
this fast-growing market.
Let's dive in.
All right, welcome back toNorthwest Arkansas Investing
Podcast.
I'm here with co-host BrianWagers and Mr Henry Washington.
Henry, thanks for coming again.
We had you back probably what?
(00:40):
Six months ago or somethinglike that on the podcast,
probably about that long.
So if you guys want to go backand look at, listen to a story
and a little bit more aboutHenry's.
You guys fall in hard timesbecause you have to go get Brian
yeah, exactly, we're pumped tohave you back and and we've got
(01:04):
a cool few cool topics that wewant to talk through.
That I think will be reallyvaluable to some listeners.
But before we get in, just incase somebody hasn't found you
online or know you would love tojust get kind of a high level
view of Henry Washington, whatyou've done and kind of what
you're doing currently.
Speaker 4 (01:21):
Yeah, yeah.
So I got started in 2017 andbought a single family home, uh,
just as a way to produce someextra income.
Um, I had no idea how powerfulreal estate was, but after I
bought that first one, I waslike this was kind of fun.
So, um, I started to learn howto ramp up and ended up buying
about 30 rentals in my firstyear.
(01:42):
And crazy, it's been all kindof crazy since then.
So now we're what?
Eight years in, We've got 100.
I think I've gotten up to like130 doors, but I've sold some.
I'm down probably closer to 100now.
Okay, yeah, and that's what Ido mostly buy and hold.
We flip about 15, 20 houses ayear.
Speaker 3 (02:00):
Amazing yeah, Some 100 doors long-term, short-term.
Speaker 2 (02:05):
What does that look like?
Speaker 4 (02:06):
Yeah, most of them long-term.
We have five short-term rentals.
Nice Five short-term.
I know you have some commercial, some multi-fin.
I've got one commercialbuilding 11 unit office and
(02:27):
store.
Speaker 2 (02:29):
Commercial building and then one mobile home park.
Mobile home park how many doorsis that?
15.
15 doors.
Are you still on thatmultifamily?
Speaker 4 (02:34):
Yep no, not the one in I sold.
I had one in Van Buren.
Van Buren I sold that one andI've still got the one by the
university A-Unit, by theuniversity.
Speaker 2 (02:46):
So about 80 single family property?
Do you manage those yourself?
Speaker 4 (02:51):
No, so I have third party property management.
Proex manages mine locally.
Plus some of those units are inJoplin and Pittsburgh, kansas,
so I've got some there, but themajority of my portfolio is here
.
Speaker 2 (03:06):
Gotcha yeah, 100 doors.
I mean that's a solid, and onthe next episode we'll be
talking about multifamily versussingle family.
I think you've had a uniqueinsight, and obviously we do too
, so that's an impressiveportfolio, thank you Absolutely.
Speaker 3 (03:20):
So yeah, I think something I was thinking about
earlier was that you know, crack, kind of cracking the code to
scaling and what that looks like.
Because I was reading Let meknow when you figure it out
Exactly I was reading the bookOne of the guys on Bigger
Pockets wrote the blue one howto invest in small multifamily
or whatever in this morning andjust kind of thinking about you
(03:41):
know, in there he talks aboutyou know buying, starting with
even if you started with asingle family, but kind of
growing and growing as as youbuy, and so maybe you start with
a single family and then youbuy a duplex the next year and
then you buy a fourplex the nextyear, and so I think I think
that strategy and some of thethings that he talked about in
there were super interesting andso I'd love to get first kind
(04:02):
of go into.
You know what it looked like onyour first.
Obviously, single family wasyour first unit.
But what did it look like afterthat?
Did you look up kind of excitedand optimistic or where were we
?
Speaker 4 (04:13):
Yeah, I was super pumped man.
I just wanted to go buy more,and so I just started doing that
and didn't really focus onanything systems or process wise
.
I actually didn't think aboutanything like that.
You know, I have one door andthen I had bought another two
family and I was house hackingthat one.
And then shortly after that Ibought another room, so I had
(04:35):
like four to five units.
Um, before I realized that Ineeded to have some sort of
system if this was going to besustainable.
So, like I don't know abouty'all, but when I bought my
first one, I was like I don'tcare how y'all pay me rent, as
long as you pay me cash check.
So I had like some people payme by check, some people
wouldn't like it, and I was like, as long as I was getting the
(04:57):
rent, like I was just excited.
And why am I driving to allthese places?
And then I'm having to likekeep note of who paid me what
and when, and I was like this,this isn't going to work.
So that's when I startedthinking about, okay, I need a
property management system, Ineed a way to do all this.
So that got me started thinkingabout process and so I was using
some free property managementsystem at the time.
(05:17):
But that really helped meunderstand, like, all right, if
I'm going to do this at any sortof scale, there has to be
systems and there has to bechecks and balances.
Um, because I quickly I wasworking a full-time job at the
time and I quickly realized that, you know, if you don't do
those things, then the businesswill eat you alive in terms of
your time Right.
Absolutely, that was my, thatwas like my way.
(05:39):
Five doors in was my wake upcall to realize that you
probably can't wing this rightand scale in any sort of uh, uh
at any sort of, you know, quicktime frame right, and that was
that.
Speaker 3 (05:51):
Were those five units year one, or was that I was?
Speaker 4 (05:53):
year one, year one, so it was in a few months yeah.
Speaker 3 (05:55):
So I mean for folks that are thinking about that,
was that like something that youstacked some cash away to do
that, or or were you?
Did you get kind of creative tobe able to make those?
Speaker 4 (06:04):
no, I was buying them , so I was using a local
community bank to buy them andthey were financing pretty much
100 percent between they'regiving me 85 of the purchase,
100 of the rehab, and then theyhad also given me a lot of
credit on one of my uh firstproperties that I was using as
the down payment, so which theytold me to do like they told me
(06:24):
how to do all I had no idea howto do this.
Speaker 2 (06:26):
Yeah, the banks are saying this is okay, I'm yeah
the bank.
Speaker 4 (06:29):
They were like they were pumped, they were like
these are great deals, like justuse this line of credit, keep
going.
So they were like wanting me tobring them the deals yeah, um,
and so it was great.
So I was doing that, and then Iwould either refi it, pay off
the line of credit or, if it wasa flip, I'd sell it, pay off
the line of credit.
But that's how I was financingthem.
And then, like I said, I gotinto using a property management
(06:51):
system to manage them.
Like I was still managing theproperties myself, but
systematically we were using aproperty management system.
And then I realized I needed tohave a system to manage my lead
flow and deals as well, becauseI was just using my notepad on
my phone Like I really waswinging it when I first got
started.
(07:12):
But as you scale you quicklyrealize and it's like with
anything, like you know, welearned that in corporate
America just document what youdo, at least on some level, and
then that way, when you don'tlike doing something, you can
put together some sort of systemto not have to do the things
you don't like doing anymore.
Speaker 2 (07:32):
Right, so it took you about a year to get from zero
to five.
What does a road from five do?
Speaker 4 (07:37):
We went from zero to 30 in that first year.
Zero to 30.
Speaker 2 (07:40):
Zero to 30, that's right that you held, not that
you were holding, that washolding.
Wow, yeah.
Speaker 4 (07:45):
That's awesome.
Speaker 3 (07:46):
Yeah.
So I think I mean going backreal quick, though, to what
you're saying on the bank reallybeing a huge partner in all
this, like from a guy that, likeeven myself owning not much of
real estate right and having asmall portfolio of investment,
like just thinking about whatthe banks are willing to do as
(08:06):
far as helping me kind of keepthat momentum going, whether it
be in line of credit, in a lineof credit to help me maybe buy a
flip or, you know, get intoanother investment property, or
things like that.
How is that, what does thatpartnership look like, and how
has that been huge to?
Speaker 4 (08:23):
Oh man, I think anybody wanting to get into the
real estate space single, multi,it doesn't matter Like
relationship banking is huge.
So those local community banks,they truly do want to partner
with you.
So I think that the key is whatyou'll learn is that every bank
has a different specialty thatthey like right.
Some banks only want to lend onlarge multifamily.
(08:44):
You know, I've taken one of mysingle family deals to a bank
before and they were like wedon't want anything to do with
this.
And then some banks were likethey love the single family.
So I happened to go to a bankthat wanted those single family
easy deals because they werelike if you suck at paying your
loan, we'll just take yourproperty and it's worth more
than what you paid.
They were like if you suck atpaying your loan, we'll just
(09:05):
take your property and it'sworth more than what you paid.
So they were comfortable and itwas good.
So they were like you keepbringing us these and we'll keep
helping you.
So they really do want topartner with you and the local
community banks.
They have to lend in theirlocal community to make money.
So if they can lend to someonewho they trust, believed in, who
they see is going to bring themdeals that are less risky.
(09:27):
They're going to do whateverthey can to try to help you grow
and scale, so they really willpartner with you.
So if you're new and you'relooking for financial help like
finding local community bankswho want to lend in the asset
class that you want to invest incan really help you scale.
Speaker 3 (09:44):
Yeah, that's a great point.
I've talked to a lot of bankerslately that the conversation
has been hey, our, our bucketsare full over here in retail and
our buckets are full and, youknow, construction, but we're
really looking to fundmultifamily Um and those.
Those seem like the banks thatyou want to be chasing after um
at a time like that.
So so, zero to 30 in one year,though what I kind of just
(10:07):
curious too, before we get intokind of what, what common paths
are and everything like that.
But what did?
Were those all on market?
Speaker 4 (10:14):
for those that don't know, I mean uh, well, the one
of them was the house hack wason the market, but the rest were
all off market.
So I was doing direct mail.
I still do direct mail, but Iwas doing direct mail campaigns
at the time.
Um, and, finding them offmarket, the house hack that I
lived in was what I called likea misclassified deal.
(10:38):
So again, this was beforeeverybody wanted to house hack
like not many people knew whatyear was this?
2017?
Yeah, 2017.
So like it wasn't a big, likeevery podcast wasn't talking
about it, right?
Um, and I was looking for aduplex.
We had actually been like goingand viewing actual duplexes on
(10:59):
the market.
And I was at the office, I wasworking at walmart, and I was in
the bathroom and I overheardtwo guys talking about the house
, and this guy was like man, Ijust can't seem to sell my house
, like nobody seems to want themother-in-law unit, they just
want a single family home and soit's just taking too long to
sell.
And I was like I want that.
(11:21):
So when he walked out of thebathroom, I was like hey, tell
me about this house.
Speaker 1 (11:26):
Just surprised him.
Speaker 4 (11:29):
And so he told me about it and we went and looked
at it and it was perfect.
So we had it was a three tosingle family with a one one
mother in law house.
Yeah, In Springdale I'm likehalf an acre, and so I was like
man yeah, let's do it.
So I put in an offer an acre.
(11:49):
And so I was like man, yeah,let's do it.
So I put in an offer.
Um, there was some back andforth and we had to kind of get
creative with the real estateagent and the commission so that
he could get what he wanted outof it and so that I could buy
it for a price point that madesense.
But yeah, then I bought thatone and we moved into the big
house and rented the small house.
I tried to talk my wife intoletting us live in the one bed,
one back, and then rent the bighouse.
She is what that didn't like.
(12:10):
At least she was up for thehouse, she was up for the house
act the other way.
So we did that and that reallyhelped catapult us too in terms
of increasing our finances,because we took from paying.
I think we were paying like$1,300, $1,400 a month in a
mortgage.
We sold that house and then,with the house hack, we were
paying like 150, 200 bucks amonth.
Yeah that's crazy To be able tosave our cash.
Speaker 3 (12:31):
Yeah, but even I mean just thinking about even how
quickly that you were able toget 30 units.
You had to have gone all in onmarketing, right I mean.
Yeah, yeah Like maybe mostpeople would dip their toe, but
you probably went all in right.
Speaker 4 (12:52):
I mean, what did that look like?
Uh, my first campaign, I think.
I sent a thousand mailers andgot like two deals out of it,
all right.
So I quickly increased that andwe were getting a good response
.
And then, a few months in, um,I had ended up partnering with
somebody, um who, so I am nothandy.
So the part about real estatethat was intimidating to me was
like I'm walking into thesedistressed properties and I have
(13:13):
to figure out how much it'sgoing to cost me to renovate it
so I can make an offer.
No idea what it like.
I didn't know anything Like.
Now I know what it costs, Ijust can't do it.
Right Back then I didn't knowwhat it costs and I couldn't do
it.
So you know I was strugglingwith that part.
And so I found a guy, local guy,who had that experience, and so
(13:37):
we partnered together, we putour money together and we
started to market together andthen we would buy properties and
either keep them as rentals orflip them.
So we'd buy them together andif, for some reason, we don't
want to buy them together, thenone of us would buy it and keep
it or sell it.
So it really worked out becauseyou know, in business, in
partnerships, like one plus onedoesn't equal two, like one plus
(13:58):
one can equal 10.
Like we were able to do so muchmore together than I could have
done on my own or he could havedone on his own, so than I
could have done on my own or hecould have done on his own.
So once we put our moneytogether, it helped with the
marketing.
We could both take phone calls,we could both look at
properties, we could both makeoffers and that really helped us
grow quickly.
Speaker 2 (14:16):
Yeah, I love that he's still a partner to this day
.
Speaker 4 (14:19):
Yeah, we still own.
So we, yes, we still own acouple of those properties
together.
We actually ended up kind ofseparating our assets and
properties together.
We actually ended up, uh, kindof separating our assets and I
took some on my own and he tooksome on his own, and then
there's a couple we kepttogether.
So we're not buying togetheranymore, but we still own and
operate a couple together.
Speaker 3 (14:33):
Yeah.
Speaker 4 (14:34):
Yeah Cool, he went more into the multifamily space
and I stayed in the single space.
Speaker 3 (14:38):
Yeah, sure, I love that there's some.
I mean, there's just so manyways to do it, and I and I think
understanding that background,though, and kind of how you were
able to build so quickly kindof takes me to these other
points, and so I think,oftentimes what investors are
looking to, maybe, maybe it's abusiness plan that they're
looking to do over 10, 20 yearsor whatever, but like and it's
(14:59):
probably changed for you a lot,but even you know, a lot of
people talk about wanting to buya certain amount of properties
and then just completely focuson debt pay down and increasing
cash flow.
Yeah, and that's a great, yeah,that's a great uh path,
obviously, and and others wantto continue to leverage and
expand as much as they possiblycan.
What does that look like foryou?
Speaker 4 (15:19):
yeah, I, I was the latter.
I was like, let's just rack upthese units until I don't feel
like buying them anymore.
And um, over the past I'd sayyear, year and a half um, I've
just I've learned a lot in termsof what I want and um, you know
(15:41):
, I felt like I was growing forthe sake of growing before, and
I don't know, large portfolioshave large portfolio problems,
true, so you know.
So I got 100 and some units.
When it gets hot, I have toreplace like 10 x max, not one
right, like I've got um, and soI just started to realize that
(16:05):
and I think people need toreally truly understand, like,
what their goals are.
Like, what are you really doingthis for?
Like, what do you want at theend of the day?
Like, what's that freedom looklike for you?
For me, the first phase was Iwanted to get out of my nine to
five.
I wanted to get my wife out ofher nine to five, and so we
achieved that after a few years,right, and so I had two kids.
(16:26):
Um, you know, after I, I gotstarted and I'm older, right, so
I say that there's a lot of I'molder now because of podcasts
like this and popularity andaccess to information.
Like, people are starting to dothis business at a much younger
age.
Right, this was always just anold white guy business.
Right, now it's a youngeverybody business, right,
(16:47):
everybody's like into realestate and um, and so, like,
I've got young kids.
I'm 40, I just turned 44, andso I'm like I want to be able to
hang out with them, um, and Iwant to be able to pass
something on to them.
And so, having a portfolio ofyou 300 units I don't know that
(17:09):
that was like necessarily what Iwanted to.
How long was it going to takeme to get there?
And then, when do I startpaying those things off?
Like I don't want to be 70trying to pay off these assets
so that my kids can take themover, like I want to be able to
enjoy life with them, and so, um, I kind of shifted focus and so
(17:43):
I'm not buying a ton morerentals.
Don't get me wrong.
Send me a good rental in agreat neighborhood.
I'm probably going to buy it.
But I'm not trying toaggressively grow my portfolio
anymore.
I like right.
I'm looking at my assets andI'm selling the ones that I
don't really love, eitherbecause of their performance or
just because of where they are.
Maybe they're too far away andI'll sell those.
I'll get to the manageableportfolio size and then we're
paying off assets, like I'mlooking at paying off one of my
(18:05):
houses like next week.
That'll be my first free andclear one of that portfolio.
And so I flip houses, becausethe house flipping generates
cash faster than you know.
A hundred dollars a month on arental property, right, um?
And so we live off the flipmoney.
And so the plan is we'll takethe flip profits, we'll live off
(18:27):
of that and then we'll pay offthe portfolio obviously one
house at a time, and at somepoint I'm not going to want to
flip houses anymore either.
And so if I can flip houses, payoff assets.
The more assets I pay off, themore cashflow it produces, the
less house flips I need to do.
So I can taper down on thehouse flips as I pay off more
(18:47):
assets, and then at some pointI'll be sitting around with 50,
60 free and clear real estateyou know, houses and or ministry
families, and then I can trulydo what I want.
And if what I want is to go doit again, I'll go do it again.
But I need to like, if you'vegot debt on your properties, you
don't own them, the bank ownsthem, right?
(19:07):
Like, yeah, I could say I got ahundred doors, but the bank can
take those if they want to.
Yeah, right, so you've got toget to a point where you're
protecting what it is that youown, right.
So that's the focus now Flip,pay off debt.
Reduce the flips till thedebt's paid off.
Yeah.
Speaker 2 (19:31):
And then maybe I'll just do it all again when it's
yeah, I love that, it's such a,it's a clear vision to how
important do you think thatvision is in a real estate
investor?
And and is it okay to you know,okay to pivot because mr 110
percent leverage goes to?
Now I'm paying some house, youknow, maybe I will own some free
and clear, maybe I don't, youknow, want that that peace of
mind?
Speaker 4 (19:44):
yeah, yeah, yeah, yeah, yeah, absolutely you
should pivot Like you don't knowwhat you don't know when you
get started.
There's entrepreneurship ingeneral, but especially real
estate.
Like I thought I wanted onething and then you do a couple
of deals and you learn what youlike and what you don't like.
I learned what I don't wannabuy.
(20:05):
You were asking me about thosedeals in Van Buren.
I don't want to buy those.
Cleansing yeah, right, thoughthat deal was like it was pretty
on paper but on paper it's likeyou can't not buy this.
But a lot of the things thatdon't show up on paper but show
(20:30):
up in real life.
Management of those assetstaught me that that's not an
asset.
I want to own it like.
I don't want to own that typeof asset anymore.
Right, um and for.
For people that are wondering,like that asset was probably d
class um and we made it nice um.
But the problem was when peopleit doesn't matter if you have
(20:50):
an A-class building or a D-classbuilding I'm going to ask you
this A-class building or D-classbuilding?
In an A-class building, do youhave people that don't pay rent
sometimes?
Speaker 2 (21:00):
A-class building.
Yeah, we have a 376 unit thathas zero debt on it, but there
are some large ones and we'llhave maybe one.
Speaker 4 (21:07):
you know, someone gets behind someone gets laid
off and in a D-class you'regoing to have people who don't
pay rent sometimes, right, soit's not the class.
The problem is, if you've got adeclass property and you have
to evict somebody, they haveless options of where they might
end up going.
Right, and it was just toughfor me to have to think about
evicting people who have kidsand may not have a place to go
(21:30):
anymore.
Like it was just I just didn'twant to be making those
decisions.
Right, makes sense.
It was just tough for me.
So that's just not an asset Iwant to own.
Yeah, I didn't know that before.
I owned it, right, yeah, soyeah, to answer your question,
like it's absolutely okay topivot, like you have to pivot
because your life may change,your wants and needs may change.
(21:50):
I didn't have kids before Istarted doing this, so my goals
changed.
Speaker 3 (21:54):
Right, yeah, it seems like kind of even like you're
saying, tapering back from 130to 100, you now can be not only
picky with what you're buyingnext, but also, you know, you
can kind of start to pick outthe bad eggs and really focus on
the best properties you haveand paying those off Sounds like
that's kind of the bet Of that100,.
Speaker 4 (22:16):
I think I'm looking at selling.
I think I've got an offer tosell seven of them right now and
then I'm going to sell another11, hopefully soon.
Speaker 2 (22:27):
You're talking about right, yeah, Is there anything
you would have done different?
Like now you're being morepicky and you probably couldn't
have been very picky in thebeginning.
Is there anything looking backnow on this journey from 130 to
100,?
Speaker 4 (22:46):
is there anything you would have done differently?
Or don't think no, no, cause Ihad to buy them to learn the
lesson, like I didn't.
I didn't know what I didn'tknow before.
Um, and that's what I'dencourage everybody to do is
like first and foremost, if youtalk about growing and scaling,
one of the most important thingsI think people need to do as
they grow on scale is to take alook at the performance of their
portfolio on a quarterly, atleast every six months.
(23:07):
Because what I learned is likejust because you underwrote it
to perform a certain way, itdoesn't mean it's actually
performing that way.
Um and um, so two things thatare involved in that get uh, get
a bookkeeper and an accountantas soon as possible.
That's the one thing that Ithink a lot of investors, as
(23:30):
they get started, becomes anafterthought.
You're like, oh crap, it's taxtime.
I should find somebody to helpme with these books and do the
taxes.
And then you can't strategizebecause there's not enough time.
But if you get those people andthose systems on board early
enough, then once you buyproperties and you underwrite
them, you can truly look at theP&Ls and say, okay, these are
the numbers I thought it wasgoing to have.
(23:50):
These are the numbers it'sactually having, and so then you
can either get better atunderwriting by looking at your
property performance, or you'lllearn a lot about.
You know the properties youwant to buy or not buy, or why.
because you can see, like,what's costing you the most
money, maintenance wise, orright you know I underwrote this
to perform this way, but it'snot renting like I thought.
Um, the more that youunderstand how your portfolio is
(24:14):
actually performing versus whatyou thought it was going to do,
it helps you make betterdecisions as you're going to
grow and scale.
So for me, I didn't startlooking at that until probably a
couple of years in, where wereally were paying attention,
and then we started to trim thefat and sell some of the assets
that just weren't worth it.
Even though I got a great dealon it, it just wasn't worth it
to continue to operate it.
Speaker 3 (24:34):
Yeah, that makes sense.
Even when you were starting,though, and underwriting deals
were you.
Obviously you have third-partyproperty management now, but
were you underwriting to haveproperty management you're
managing?
Speaker 4 (24:45):
yourself always.
Yeah, that's a fundamentalthing I did from the beginning.
I think that was something Ilearned from brandon turner when
I first got started.
That's why I was like, if youdon't, you're gonna manage them
yourself.
But you need to either bepaying yourself for it or
budgeting to pay yourself for it, because I promise you because
I was on, I was big on the trainof like yeah, I'm always gonna
manage my own properties.
No one's gonna take care of mytenants in my like, I love, yeah
(25:07):
, people and I love taking careof people.
And so I took a lot of pride inmanaging a certain way and I
was like no one's gonna managelike me, I'll always manage my
own properties, mm-hmm.
And then you know people's likewell, you need to budget for it
, because one day you are goingto not want to do it or your
wife is going to not want you todo it, so you're going to have
to hire somebody, you don't loseyour cash flow.
So we always budgeted for it.
(25:27):
Sure enough, man, sure enough,I turned it all over I think
that's why it's one of thehappiest days of my investing
career I bet.
Speaker 3 (25:35):
I think that's wise, though, because there's a lot of
younger investors that I'llwork with that are wanting to
underwrite deals and makesomething work.
Speaker 4 (25:44):
Yeah.
Speaker 3 (25:44):
You know, putting 0% on the vacancy fee or the
management fee?
Yeah, because they're like I'mgoing to manage it myself so I
can make these numbers work moreand eventually, especially if
you want to scale, it soundslike you need to.
I mean, again, you've got to bemore conservative with your
underwriting and stuff like that.
Speaker 2 (26:02):
So what's some common uh underwriting things that you
see?
You know, obviously themanagement yeah, uh, you, you
almost said vacancy, so I thinkthat's probably someone not
accounting for enough vacancy.
Yeah, what are some commonunderwriting misses, do you
think?
Speaker 4 (26:15):
yeah, uh, a big underwriting miss is absolutely
vacancy, because I don't thinkpeople really research it Like
they know they need to do it andthey're like, oh, count for
like 5% vacancy.
But if you live in Fort Smith,vacancy is like 10%.
Speaker 2 (26:32):
And Fort Smith isn't a bad place, it's just you could
better know that it's going tobe 10%.
That's the market.
Speaker 4 (26:37):
Yeah, the market.
That's what it is there,Fortunately for us.
Here we get the Skyline reportevery year and it tells you what
the vacancy is.
But not every city has that.
But Chad GPT can research itnow for you.
People don't account for enoughvacancy.
Speaker 2 (26:53):
Are you using Chad GPT to do some of that, to do
market research?
Speaker 3 (26:56):
Yeah, you can do interview Washington research on
Chaz UBT.
I don't know if you've donethat before.
Speaker 4 (27:02):
Market research.
I do it for market research allthe time.
But yeah, man, and it's vacancyplus, right.
So whatever your vacancy is inyour area, you probably need to
add a little bit, because you'vegot like turnover happens in
months, right.
So like, yeah, it could take mesix weeks to renovate a place,
(27:24):
but that's two months of vacancy, not a month and a half, right?
So it's always vacancy plus alittle bit.
That makes sense.
Speaker 3 (27:33):
I love that.
I think we'll wrap it up here.
Just just wanted to go through,though, some highlights about
you know what, what it lookslike to scale a little bit and
talk through, uh, your strategy,how it started, and then
obviously talk through kind ofwhat your plan looks like moving
forward um, with that pay downand using some of that cashflow
to to be able to do so.
(27:54):
Um, but yeah, Henry, thanksagain, We'll.
We'll hop to the next, wherewe're going to talk a little bit
about single family versusmultifamily.
Yeah, looking forward to thenext episode.
Speaker 1 (28:02):
Thanks guys.
Thank you, shane.
So our next sponsorship is 1440Photography.
1440 Photography is a localcompany here.
I love getting local companiesto sponsor this podcast.
They're local, they do greatservice and personally I can
speak that they do a great jobon mine and my client's stuff.
If you're an investor or agentin Northwest Arkansas, you need
(28:23):
1440 Real Estate Media in yourcorner.
They're not just photographers,they're real estate market
experts and it's the only thingthey do.
Mls photos, drone video,matterport whatever your listing
needs, they've got it.
Everything.
Everything is a la carte andit's totally customizable.
And here's the best part justbook online whenever works for
(28:44):
you.
They confirm and show up readyto go.
Fast, easy done or qualitymeets speed.
Book now at 1440photographycom.
Our next sponsor is advantagetitle and escrow.
They're a local company.
They do great work.
Specifically, kayla Phillips.
I can speak personally on thissponsor because I use Kayla for
(29:06):
all of my transactions.
It's been two, three, fouryears now and Kayla and I have
done a ton of deals.
We probably do between 65 to 80deals a year together and they
do a great job.
The SOPs, so systems andprocessing that they have over
Advantage Title is justincredible.
Clients love it.
They do a great job from startto end communicating.
(29:28):
When I give a deal to AdvantageTitle and escrow, I know that
it's going to be taken care of.
There's no second guessing.
I almost am able to treat themlike a second transaction
coordinator to my transactioncoordinator that I already have.
I know that they're going tohandle the systems and processes
correctly.
As an agent, as a homeowner, asa buyer or seller.
(29:49):
They do an incredible job ofhandling a transaction and
communicating throughout theprocess.
They do a great job withcommunication, especially Kayla
Phillips over there.
I would highly encourage you ifyou're looking to close on a
home, buy a home, if you're anagent listening to use advantage
title and escrow, specificallyKayla Phillips.
(30:09):
So you're going to reach Kaylabest at 501-358-1601.
Or you can email her KaylaC-A-Y-L-A at GoAdvantageTitlecom
.
Advantage is A-D-V-A-N-T-A-G-Etitlecom.
(30:33):
Again, thank you guys for tuningin.
I'm going to go ahead and listsome sponsors off here.
We're going to start with FlatBranch Mortgage, specifically
Colton Kennedy.
Colton and I personally dobusiness together and he's a
wonderful lender here in theNorthwest Arkansas corridor.
Want to invest in real estateor purchase a home but feel like
you need a secret decoder ringto understand the process.
(30:55):
You're not alone First-timeinvestors, house hackers and
future homeowners.
Colton Kennedy has you covered,thank you.
He'll bring the lending gameplan.
(31:16):
Let's make your firstinvestment a smart one.
Colin kennedy, with flat branchhome loans.
Contact him today by calling417-437-0086 or emailing c as in
cat k, as in kimberly, e, n, n,e, d y at flat branch home
(31:39):
loans.
That's f b, h lcom.
That's 417-437-0086.
Or emailing c, k, e, n, n, e, d, y at f b, h lcom.
So much, colton.
Speaker 2 (31:59):
Special thanks to one of our sponsors, who I've
worked with personally onmultifamily commercial loans as
well as business acquisitions.
People's Bank works withentrepreneurs, investors, deal
makers and risk takers.
They're the ones who seeopportunities where others see
obstacles, whether it's a vacantlot with a plan for a thriving
business or making an old spacenew.
They work with creators whothink big and are not satisfied
(32:21):
with the status quo.
People's Bank helps you buildArkansas, deal by deal and brick
by brick.
They don't just see numbers ona spreadsheet, they see your
passion and vision.
People's Bank, it's wherepeople come first.
Member FDIC.
If you're needing loanassistance, reach out to Dakota
at 870-883-1706 or dhedden atpeoplesbankarcom.
Speaker 1 (32:47):
Our next sponsor is TDSIT.
That's T as in Tim, d as indocument S as in solution I as
in information.
T as in technology this onehits personal, it's close to
home.
T as in technology this onehits personal, it's close to
home.
My dad, tim Stanley, runs TDSIT and he decided to sponsor our
(33:09):
podcast, so I can speak frompersonal experience.
I've been able to work for mydad in the past as well and
they're a great, great solutionfor business technology.
If you're a local business owner, or even out of state, if
you're running a business, needprinters, need information IT
services, if you need phones,scanners, printers all the way
(33:30):
up to you, know you're printingbooks to.
Hey, we just need something inthe office.
Tds IT is that spot.
They provide the best in-brandbusiness technology with proven
best in local service, and theycan prove it.
Our next sponsor is fromWinstone Private Lending.
This episode is brought to youby Winstone Private Lending, one
(33:51):
of the top private and hardmoney lenders now serving
Northwest Arkansas.
Whether you need short-termcapital for a flip, a bridge
loan or creative financing,they've got you covered with
very flexible products to fitnearly any deal, including 100%
financing.
What sets them apart is theirdeep expertise, fast response
times and ability to thinkoutside of the box to help
(34:13):
investors like us close quicklyand efficiently.
If you're looking for a reallending partner, check out
Winstone Private Lending Link isin the show notes.
If you enjoyed the show, makesure to give us a follow on your
favorite podcast platform soyou never miss an update.
Speaker 2 (34:27):
Don't forget to connect with us on Instagram,
facebook and LinkedIn for morereal estate insights and behind
the scenes content.
Speaker 3 (34:33):
Have a question you want us to cover, send it our
way and if you're interested insponsoring the show, visit
nwainvestingcom to get in touch.
Thanks for.
Welcome to Northwest Arkansas Investing Podcast, your
go-to source for real estateinvesting in Northwest Arkansas.
Speaker 2 (00:13):
With your seasoned investor just starting out.
We bring you expert insights,market trends and practical
strategies to help you buildwealth through real estate.
Speaker 3 (00:20):
From buying and selling to property management
and long-term investmentplanning.
We cover it all so you can makesmart, informed decisions in
this fast-growing market.
Let's dive in.
All right, welcome back toNorthwest Arkansas Investing
Podcast.
I'm here with co-host BrianWagers and Mr Henry Washington.
Henry, thanks for coming again.
We had you back probably what?
(00:40):
Six months ago or somethinglike that on the podcast,
probably about that long.
So if you guys want to go backand look at, listen to a story
and a little bit more aboutHenry's.
You guys fall in hard timesbecause you have to go get Brian
yeah, exactly, we're pumped tohave you back and and we've got
(01:04):
a cool few cool topics that wewant to talk through.
That I think will be reallyvaluable to some listeners.
But before we get in, just incase somebody hasn't found you
online or know you would love tojust get kind of a high level
view of Henry Washington, whatyou've done and kind of what
you're doing currently.
Speaker 4 (01:21):
Yeah, yeah.
So I got started in 2017 andbought a single family home, uh,
just as a way to produce someextra income.
Um, I had no idea how powerfulreal estate was, but after I
bought that first one, I waslike this was kind of fun.
So, um, I started to learn howto ramp up and ended up buying
about 30 rentals in my firstyear.
(01:42):
And crazy, it's been all kindof crazy since then.
So now we're what?
Eight years in, We've got 100.
I think I've gotten up to like130 doors, but I've sold some.
I'm down probably closer to 100now.
Okay, yeah, and that's what Ido mostly buy and hold.
We flip about 15, 20 houses ayear.
Speaker 3 (02:00):
Amazing yeah, Some 100 doors long-term, short-term.
Speaker 2 (02:05):
What does that look like?
Speaker 4 (02:06):
Yeah, most of them long-term.
We have five short-term rentals.
Nice Five short-term.
I know you have some commercial, some multi-fin.
I've got one commercialbuilding 11 unit office and
(02:27):
store.
Speaker 2 (02:29):
Commercial building and then one mobile home park.
Mobile home park how many doorsis that?
15.
15 doors.
Are you still on thatmultifamily?
Speaker 4 (02:34):
Yep no, not the one in I sold.
I had one in Van Buren.
Van Buren I sold that one andI've still got the one by the
university A-Unit, by theuniversity.
Speaker 2 (02:46):
So about 80 single family property?
Do you manage those yourself?
Speaker 4 (02:51):
No, so I have third party property management.
Proex manages mine locally.
Plus some of those units are inJoplin and Pittsburgh, kansas,
so I've got some there, but themajority of my portfolio is here
.
Speaker 2 (03:06):
Gotcha yeah, 100 doors.
I mean that's a solid, and onthe next episode we'll be
talking about multifamily versussingle family.
I think you've had a uniqueinsight, and obviously we do too
, so that's an impressiveportfolio, thank you Absolutely.
Speaker 3 (03:20):
So yeah, I think something I was thinking about
earlier was that you know, crack, kind of cracking the code to
scaling and what that looks like.
Because I was reading Let meknow when you figure it out
Exactly I was reading the bookOne of the guys on Bigger
Pockets wrote the blue one howto invest in small multifamily
or whatever in this morning andjust kind of thinking about you
(03:41):
know, in there he talks aboutyou know buying, starting with
even if you started with asingle family, but kind of
growing and growing as as youbuy, and so maybe you start with
a single family and then youbuy a duplex the next year and
then you buy a fourplex the nextyear, and so I think I think
that strategy and some of thethings that he talked about in
there were super interesting andso I'd love to get first kind
(04:02):
of go into.
You know what it looked like onyour first.
Obviously, single family wasyour first unit.
But what did it look like afterthat?
Did you look up kind of excitedand optimistic or where were we
?
Speaker 4 (04:13):
Yeah, I was super pumped man.
I just wanted to go buy more,and so I just started doing that
and didn't really focus onanything systems or process wise
.
I actually didn't think aboutanything like that.
You know, I have one door andthen I had bought another two
family and I was house hackingthat one.
And then shortly after that Ibought another room, so I had
(04:35):
like four to five units.
Um, before I realized that Ineeded to have some sort of
system if this was going to besustainable.
So, like I don't know abouty'all, but when I bought my
first one, I was like I don'tcare how y'all pay me rent, as
long as you pay me cash check.
So I had like some people payme by check, some people
wouldn't like it, and I was like, as long as I was getting the
(04:57):
rent, like I was just excited.
And why am I driving to allthese places?
And then I'm having to likekeep note of who paid me what
and when, and I was like this,this isn't going to work.
So that's when I startedthinking about, okay, I need a
property management system, Ineed a way to do all this.
So that got me started thinkingabout process and so I was using
some free property managementsystem at the time.
(05:17):
But that really helped meunderstand, like, all right, if
I'm going to do this at any sortof scale, there has to be
systems and there has to bechecks and balances.
Um, because I quickly I wasworking a full-time job at the
time and I quickly realized that, you know, if you don't do
those things, then the businesswill eat you alive in terms of
your time Right.
Absolutely, that was my, thatwas like my way.
(05:39):
Five doors in was my wake upcall to realize that you
probably can't wing this rightand scale in any sort of uh, uh
at any sort of, you know, quicktime frame right, and that was
that.
Speaker 3 (05:51):
Were those five units year one, or was that I was?
Speaker 4 (05:53):
year one, year one, so it was in a few months yeah.
Speaker 3 (05:55):
So I mean for folks that are thinking about that,
was that like something that youstacked some cash away to do
that, or or were you?
Did you get kind of creative tobe able to make those?
Speaker 4 (06:04):
no, I was buying them , so I was using a local
community bank to buy them andthey were financing pretty much
100 percent between they'regiving me 85 of the purchase,
100 of the rehab, and then theyhad also given me a lot of
credit on one of my uh firstproperties that I was using as
the down payment, so which theytold me to do like they told me
(06:24):
how to do all I had no idea howto do this.
Speaker 2 (06:26):
Yeah, the banks are saying this is okay, I'm yeah
the bank.
Speaker 4 (06:29):
They were like they were pumped, they were like
these are great deals, like justuse this line of credit, keep
going.
So they were like wanting me tobring them the deals yeah, um,
and so it was great.
So I was doing that, and then Iwould either refi it, pay off
the line of credit or, if it wasa flip, I'd sell it, pay off
the line of credit.
But that's how I was financingthem.
And then, like I said, I gotinto using a property management
(06:51):
system to manage them.
Like I was still managing theproperties myself, but
systematically we were using aproperty management system.
And then I realized I needed tohave a system to manage my lead
flow and deals as well, becauseI was just using my notepad on
my phone Like I really waswinging it when I first got
started.
(07:12):
But as you scale you quicklyrealize and it's like with
anything, like you know, welearned that in corporate
America just document what youdo, at least on some level, and
then that way, when you don'tlike doing something, you can
put together some sort of systemto not have to do the things
you don't like doing anymore.
Speaker 2 (07:32):
Right, so it took you about a year to get from zero
to five.
What does a road from five do?
Speaker 4 (07:37):
We went from zero to 30 in that first year.
Zero to 30.
Speaker 2 (07:40):
Zero to 30, that's right that you held, not that
you were holding, that washolding.
Wow, yeah.
Speaker 4 (07:45):
That's awesome.
Speaker 3 (07:46):
Yeah.
So I think I mean going backreal quick, though, to what
you're saying on the bank reallybeing a huge partner in all
this, like from a guy that, likeeven myself owning not much of
real estate right and having asmall portfolio of investment,
like just thinking about whatthe banks are willing to do as
(08:06):
far as helping me kind of keepthat momentum going, whether it
be in line of credit, in a lineof credit to help me maybe buy a
flip or, you know, get intoanother investment property, or
things like that.
How is that, what does thatpartnership look like, and how
has that been huge to?
Speaker 4 (08:23):
Oh man, I think anybody wanting to get into the
real estate space single, multi,it doesn't matter Like
relationship banking is huge.
So those local community banks,they truly do want to partner
with you.
So I think that the key is whatyou'll learn is that every bank
has a different specialty thatthey like right.
Some banks only want to lend onlarge multifamily.
(08:44):
You know, I've taken one of mysingle family deals to a bank
before and they were like wedon't want anything to do with
this.
And then some banks were likethey love the single family.
So I happened to go to a bankthat wanted those single family
easy deals because they werelike if you suck at paying your
loan, we'll just take yourproperty and it's worth more
than what you paid.
They were like if you suck atpaying your loan, we'll just
(09:05):
take your property and it'sworth more than what you paid.
So they were comfortable and itwas good.
So they were like you keepbringing us these and we'll keep
helping you.
So they really do want topartner with you and the local
community banks.
They have to lend in theirlocal community to make money.
So if they can lend to someonewho they trust, believed in, who
they see is going to bring themdeals that are less risky.
(09:27):
They're going to do whateverthey can to try to help you grow
and scale, so they really willpartner with you.
So if you're new and you'relooking for financial help like
finding local community bankswho want to lend in the asset
class that you want to invest incan really help you scale.
Speaker 3 (09:44):
Yeah, that's a great point.
I've talked to a lot of bankerslately that the conversation
has been hey, our, our bucketsare full over here in retail and
our buckets are full and, youknow, construction, but we're
really looking to fundmultifamily Um and those.
Those seem like the banks thatyou want to be chasing after um
at a time like that.
So so, zero to 30 in one year,though what I kind of just
(10:07):
curious too, before we get intokind of what, what common paths
are and everything like that.
But what did?
Were those all on market?
Speaker 4 (10:14):
for those that don't know, I mean uh, well, the one
of them was the house hack wason the market, but the rest were
all off market.
So I was doing direct mail.
I still do direct mail, but Iwas doing direct mail campaigns
at the time.
Um, and, finding them offmarket, the house hack that I
lived in was what I called likea misclassified deal.
(10:38):
So again, this was beforeeverybody wanted to house hack
like not many people knew whatyear was this?
2017?
Yeah, 2017.
So like it wasn't a big, likeevery podcast wasn't talking
about it, right?
Um, and I was looking for aduplex.
We had actually been like goingand viewing actual duplexes on
(10:59):
the market.
And I was at the office, I wasworking at walmart, and I was in
the bathroom and I overheardtwo guys talking about the house
, and this guy was like man, Ijust can't seem to sell my house
, like nobody seems to want themother-in-law unit, they just
want a single family home and soit's just taking too long to
sell.
And I was like I want that.
(11:21):
So when he walked out of thebathroom, I was like hey, tell
me about this house.
Speaker 1 (11:26):
Just surprised him.
Speaker 4 (11:29):
And so he told me about it and we went and looked
at it and it was perfect.
So we had it was a three tosingle family with a one one
mother in law house.
Yeah, In Springdale I'm likehalf an acre, and so I was like
man yeah, let's do it.
So I put in an offer an acre.
(11:49):
And so I was like man, yeah,let's do it.
So I put in an offer.
Um, there was some back andforth and we had to kind of get
creative with the real estateagent and the commission so that
he could get what he wanted outof it and so that I could buy
it for a price point that madesense.
But yeah, then I bought thatone and we moved into the big
house and rented the small house.
I tried to talk my wife intoletting us live in the one bed,
one back, and then rent the bighouse.
She is what that didn't like.
(12:10):
At least she was up for thehouse, she was up for the house
act the other way.
So we did that and that reallyhelped catapult us too in terms
of increasing our finances,because we took from paying.
I think we were paying like$1,300, $1,400 a month in a
mortgage.
We sold that house and then,with the house hack, we were
paying like 150, 200 bucks amonth.
Yeah that's crazy To be able tosave our cash.
Speaker 3 (12:31):
Yeah, but even I mean just thinking about even how
quickly that you were able toget 30 units.
You had to have gone all in onmarketing, right I mean.
Yeah, yeah Like maybe mostpeople would dip their toe, but
you probably went all in right.
Speaker 4 (12:52):
I mean, what did that look like?
Uh, my first campaign, I think.
I sent a thousand mailers andgot like two deals out of it,
all right.
So I quickly increased that andwe were getting a good response
.
And then, a few months in, um,I had ended up partnering with
somebody, um who, so I am nothandy.
So the part about real estatethat was intimidating to me was
like I'm walking into thesedistressed properties and I have
(13:13):
to figure out how much it'sgoing to cost me to renovate it
so I can make an offer.
No idea what it like.
I didn't know anything Like.
Now I know what it costs, Ijust can't do it.
Right Back then I didn't knowwhat it costs and I couldn't do
it.
So you know I was strugglingwith that part.
And so I found a guy, local guy,who had that experience, and so
(13:37):
we partnered together, we putour money together and we
started to market together andthen we would buy properties and
either keep them as rentals orflip them.
So we'd buy them together andif, for some reason, we don't
want to buy them together, thenone of us would buy it and keep
it or sell it.
So it really worked out becauseyou know, in business, in
partnerships, like one plus onedoesn't equal two, like one plus
(13:58):
one can equal 10.
Like we were able to do so muchmore together than I could have
done on my own or he could havedone on his own, so than I
could have done on my own or hecould have done on his own.
So once we put our moneytogether, it helped with the
marketing.
We could both take phone calls,we could both look at
properties, we could both makeoffers and that really helped us
grow quickly.
Speaker 2 (14:16):
Yeah, I love that he's still a partner to this day
.
Speaker 4 (14:19):
Yeah, we still own.
So we, yes, we still own acouple of those properties
together.
We actually ended up kind ofseparating our assets and
properties together.
We actually ended up, uh, kindof separating our assets and I
took some on my own and he tooksome on his own, and then
there's a couple we kepttogether.
So we're not buying togetheranymore, but we still own and
operate a couple together.
Speaker 3 (14:33):
Yeah.
Speaker 4 (14:34):
Yeah Cool, he went more into the multifamily space
and I stayed in the single space.
Speaker 3 (14:38):
Yeah, sure, I love that there's some.
I mean, there's just so manyways to do it, and I and I think
understanding that background,though, and kind of how you were
able to build so quickly kindof takes me to these other
points, and so I think,oftentimes what investors are
looking to, maybe, maybe it's abusiness plan that they're
looking to do over 10, 20 yearsor whatever, but like and it's
(14:59):
probably changed for you a lot,but even you know, a lot of
people talk about wanting to buya certain amount of properties
and then just completely focuson debt pay down and increasing
cash flow.
Yeah, and that's a great, yeah,that's a great uh path,
obviously, and and others wantto continue to leverage and
expand as much as they possiblycan.
What does that look like foryou?
Speaker 4 (15:19):
yeah, I, I was the latter.
I was like, let's just rack upthese units until I don't feel
like buying them anymore.
And um, over the past I'd sayyear, year and a half um, I've
just I've learned a lot in termsof what I want and um, you know
(15:41):
, I felt like I was growing forthe sake of growing before, and
I don't know, large portfolioshave large portfolio problems,
true, so you know.
So I got 100 and some units.
When it gets hot, I have toreplace like 10 x max, not one
right, like I've got um, and soI just started to realize that
(16:05):
and I think people need toreally truly understand, like,
what their goals are.
Like, what are you really doingthis for?
Like, what do you want at theend of the day?
Like, what's that freedom looklike for you?
For me, the first phase was Iwanted to get out of my nine to
five.
I wanted to get my wife out ofher nine to five, and so we
achieved that after a few years,right, and so I had two kids.
(16:26):
Um, you know, after I, I gotstarted and I'm older, right, so
I say that there's a lot of I'molder now because of podcasts
like this and popularity andaccess to information.
Like, people are starting to dothis business at a much younger
age.
Right, this was always just anold white guy business.
Right, now it's a youngeverybody business, right,
(16:47):
everybody's like into realestate and um, and so, like,
I've got young kids.
I'm 40, I just turned 44, andso I'm like I want to be able to
hang out with them, um, and Iwant to be able to pass
something on to them.
And so, having a portfolio ofyou 300 units I don't know that
(17:09):
that was like necessarily what Iwanted to.
How long was it going to takeme to get there?
And then, when do I startpaying those things off?
Like I don't want to be 70trying to pay off these assets
so that my kids can take themover, like I want to be able to
enjoy life with them, and so, um, I kind of shifted focus and so
(17:43):
I'm not buying a ton morerentals.
Don't get me wrong.
Send me a good rental in agreat neighborhood.
I'm probably going to buy it.
But I'm not trying toaggressively grow my portfolio
anymore.
I like right.
I'm looking at my assets andI'm selling the ones that I
don't really love, eitherbecause of their performance or
just because of where they are.
Maybe they're too far away andI'll sell those.
I'll get to the manageableportfolio size and then we're
paying off assets, like I'mlooking at paying off one of my
(18:05):
houses like next week.
That'll be my first free andclear one of that portfolio.
And so I flip houses, becausethe house flipping generates
cash faster than you know.
A hundred dollars a month on arental property, right, um?
And so we live off the flipmoney.
And so the plan is we'll takethe flip profits, we'll live off
(18:27):
of that and then we'll pay offthe portfolio obviously one
house at a time, and at somepoint I'm not going to want to
flip houses anymore either.
And so if I can flip houses, payoff assets.
The more assets I pay off, themore cashflow it produces, the
less house flips I need to do.
So I can taper down on thehouse flips as I pay off more
(18:47):
assets, and then at some pointI'll be sitting around with 50,
60 free and clear real estateyou know, houses and or ministry
families, and then I can trulydo what I want.
And if what I want is to go doit again, I'll go do it again.
But I need to like, if you'vegot debt on your properties, you
don't own them, the bank ownsthem, right?
(19:07):
Like, yeah, I could say I got ahundred doors, but the bank can
take those if they want to.
Yeah, right, so you've got toget to a point where you're
protecting what it is that youown, right.
So that's the focus now Flip,pay off debt.
Reduce the flips till thedebt's paid off.
Yeah.
Speaker 2 (19:31):
And then maybe I'll just do it all again when it's
yeah, I love that, it's such a,it's a clear vision to how
important do you think thatvision is in a real estate
investor?
And and is it okay to you know,okay to pivot because mr 110
percent leverage goes to?
Now I'm paying some house, youknow, maybe I will own some free
and clear, maybe I don't, youknow, want that that peace of
mind?
Speaker 4 (19:44):
yeah, yeah, yeah, yeah, yeah, absolutely you
should pivot Like you don't knowwhat you don't know when you
get started.
There's entrepreneurship ingeneral, but especially real
estate.
Like I thought I wanted onething and then you do a couple
of deals and you learn what youlike and what you don't like.
I learned what I don't wannabuy.
(20:05):
You were asking me about thosedeals in Van Buren.
I don't want to buy those.
Cleansing yeah, right, thoughthat deal was like it was pretty
on paper but on paper it's likeyou can't not buy this.
But a lot of the things thatdon't show up on paper but show
(20:30):
up in real life.
Management of those assetstaught me that that's not an
asset.
I want to own it like.
I don't want to own that typeof asset anymore.
Right, um and for.
For people that are wondering,like that asset was probably d
class um and we made it nice um.
But the problem was when peopleit doesn't matter if you have
(20:50):
an A-class building or a D-classbuilding I'm going to ask you
this A-class building or D-classbuilding?
In an A-class building, do youhave people that don't pay rent
sometimes?
Speaker 2 (21:00):
A-class building.
Yeah, we have a 376 unit thathas zero debt on it, but there
are some large ones and we'llhave maybe one.
Speaker 4 (21:07):
you know, someone gets behind someone gets laid
off and in a D-class you'regoing to have people who don't
pay rent sometimes, right, soit's not the class.
The problem is, if you've got adeclass property and you have
to evict somebody, they haveless options of where they might
end up going.
Right, and it was just toughfor me to have to think about
evicting people who have kidsand may not have a place to go
(21:30):
anymore.
Like it was just I just didn'twant to be making those
decisions.
Right, makes sense.
It was just tough for me.
So that's just not an asset Iwant to own.
Yeah, I didn't know that before.
I owned it, right, yeah, soyeah, to answer your question,
like it's absolutely okay topivot, like you have to pivot
because your life may change,your wants and needs may change.
(21:50):
I didn't have kids before Istarted doing this, so my goals
changed.
Speaker 3 (21:54):
Right, yeah, it seems like kind of even like you're
saying, tapering back from 130to 100, you now can be not only
picky with what you're buyingnext, but also, you know, you
can kind of start to pick outthe bad eggs and really focus on
the best properties you haveand paying those off Sounds like
that's kind of the bet Of that100,.
Speaker 4 (22:16):
I think I'm looking at selling.
I think I've got an offer tosell seven of them right now and
then I'm going to sell another11, hopefully soon.
Speaker 2 (22:27):
You're talking about right, yeah, Is there anything
you would have done different?
Like now you're being morepicky and you probably couldn't
have been very picky in thebeginning.
Is there anything looking backnow on this journey from 130 to
100,?
Speaker 4 (22:46):
is there anything you would have done differently?
Or don't think no, no, cause Ihad to buy them to learn the
lesson, like I didn't.
I didn't know what I didn'tknow before.
Um, and that's what I'dencourage everybody to do is
like first and foremost, if youtalk about growing and scaling,
one of the most important thingsI think people need to do as
they grow on scale is to take alook at the performance of their
portfolio on a quarterly, atleast every six months.
(23:07):
Because what I learned is likejust because you underwrote it
to perform a certain way, itdoesn't mean it's actually
performing that way.
Um and um, so two things thatare involved in that get uh, get
a bookkeeper and an accountantas soon as possible.
That's the one thing that Ithink a lot of investors, as
(23:30):
they get started, becomes anafterthought.
You're like, oh crap, it's taxtime.
I should find somebody to helpme with these books and do the
taxes.
And then you can't strategizebecause there's not enough time.
But if you get those people andthose systems on board early
enough, then once you buyproperties and you underwrite
them, you can truly look at theP&Ls and say, okay, these are
the numbers I thought it wasgoing to have.
(23:50):
These are the numbers it'sactually having, and so then you
can either get better atunderwriting by looking at your
property performance, or you'lllearn a lot about.
You know the properties youwant to buy or not buy, or why.
because you can see, like,what's costing you the most
money, maintenance wise, orright you know I underwrote this
to perform this way, but it'snot renting like I thought.
Um, the more that youunderstand how your portfolio is
(24:14):
actually performing versus whatyou thought it was going to do,
it helps you make betterdecisions as you're going to
grow and scale.
So for me, I didn't startlooking at that until probably a
couple of years in, where wereally were paying attention,
and then we started to trim thefat and sell some of the assets
that just weren't worth it.
Even though I got a great dealon it, it just wasn't worth it
to continue to operate it.
Speaker 3 (24:34):
Yeah, that makes sense.
Even when you were starting,though, and underwriting deals
were you.
Obviously you have third-partyproperty management now, but
were you underwriting to haveproperty management you're
managing?
Speaker 4 (24:45):
yourself always.
Yeah, that's a fundamentalthing I did from the beginning.
I think that was something Ilearned from brandon turner when
I first got started.
That's why I was like, if youdon't, you're gonna manage them
yourself.
But you need to either bepaying yourself for it or
budgeting to pay yourself for it, because I promise you because
I was on, I was big on the trainof like yeah, I'm always gonna
manage my own properties.
No one's gonna take care of mytenants in my like, I love, yeah
(25:07):
, people and I love taking careof people.
And so I took a lot of pride inmanaging a certain way and I
was like no one's gonna managelike me, I'll always manage my
own properties, mm-hmm.
And then you know people's likewell, you need to budget for it
, because one day you are goingto not want to do it or your
wife is going to not want you todo it, so you're going to have
to hire somebody, you don't loseyour cash flow.
So we always budgeted for it.
(25:27):
Sure enough, man, sure enough,I turned it all over I think
that's why it's one of thehappiest days of my investing
career I bet.
Speaker 3 (25:35):
I think that's wise, though, because there's a lot of
younger investors that I'llwork with that are wanting to
underwrite deals and makesomething work.
Speaker 4 (25:44):
Yeah.
Speaker 3 (25:44):
You know, putting 0% on the vacancy fee or the
management fee?
Yeah, because they're like I'mgoing to manage it myself so I
can make these numbers work moreand eventually, especially if
you want to scale, it soundslike you need to.
I mean, again, you've got to bemore conservative with your
underwriting and stuff like that.
Speaker 2 (26:02):
So what's some common uh underwriting things that you
see?
You know, obviously themanagement yeah, uh, you, you
almost said vacancy, so I thinkthat's probably someone not
accounting for enough vacancy.
Yeah, what are some commonunderwriting misses, do you
think?
Speaker 4 (26:15):
yeah, uh, a big underwriting miss is absolutely
vacancy, because I don't thinkpeople really research it Like
they know they need to do it andthey're like, oh, count for
like 5% vacancy.
But if you live in Fort Smith,vacancy is like 10%.
Speaker 2 (26:32):
And Fort Smith isn't a bad place, it's just you could
better know that it's going tobe 10%.
That's the market.
Speaker 4 (26:37):
Yeah, the market.
That's what it is there,Fortunately for us.
Here we get the Skyline reportevery year and it tells you what
the vacancy is.
But not every city has that.
But Chad GPT can research itnow for you.
People don't account for enoughvacancy.
Speaker 2 (26:53):
Are you using Chad GPT to do some of that, to do
market research?
Speaker 3 (26:56):
Yeah, you can do interview Washington research on
Chaz UBT.
I don't know if you've donethat before.
Speaker 4 (27:02):
Market research.
I do it for market research allthe time.
But yeah, man, and it's vacancyplus, right.
So whatever your vacancy is inyour area, you probably need to
add a little bit, because you'vegot like turnover happens in
months, right.
So like, yeah, it could take mesix weeks to renovate a place,
(27:24):
but that's two months of vacancy, not a month and a half, right?
So it's always vacancy plus alittle bit.
That makes sense.
Speaker 3 (27:33):
I love that.
I think we'll wrap it up here.
Just just wanted to go through,though, some highlights about
you know what, what it lookslike to scale a little bit and
talk through, uh, your strategy,how it started, and then
obviously talk through kind ofwhat your plan looks like moving
forward um, with that pay downand using some of that cashflow
to to be able to do so.
(27:54):
Um, but yeah, Henry, thanksagain, We'll.
We'll hop to the next, wherewe're going to talk a little bit
about single family versusmultifamily.
Yeah, looking forward to thenext episode.
Speaker 1 (28:02):
Thanks guys.
Thank you, shane.
So our next sponsorship is 1440Photography.
1440 Photography is a localcompany here.
I love getting local companiesto sponsor this podcast.
They're local, they do greatservice and personally I can
speak that they do a great jobon mine and my client's stuff.
If you're an investor or agentin Northwest Arkansas, you need
(28:23):
1440 Real Estate Media in yourcorner.
They're not just photographers,they're real estate market
experts and it's the only thingthey do.
Mls photos, drone video,matterport whatever your listing
needs, they've got it.
Everything.
Everything is a la carte andit's totally customizable.
And here's the best part justbook online whenever works for
(28:44):
you.
They confirm and show up readyto go.
Fast, easy done or qualitymeets speed.
Book now at 1440photographycom.
Our next sponsor is advantagetitle and escrow.
They're a local company.
They do great work.
Specifically, kayla Phillips.
I can speak personally on thissponsor because I use Kayla for
(29:06):
all of my transactions.
It's been two, three, fouryears now and Kayla and I have
done a ton of deals.
We probably do between 65 to 80deals a year together and they
do a great job.
The SOPs, so systems andprocessing that they have over
Advantage Title is justincredible.
Clients love it.
They do a great job from startto end communicating.
(29:28):
When I give a deal to AdvantageTitle and escrow, I know that
it's going to be taken care of.
There's no second guessing.
I almost am able to treat themlike a second transaction
coordinator to my transactioncoordinator that I already have.
I know that they're going tohandle the systems and processes
correctly.
As an agent, as a homeowner, asa buyer or seller.
(29:49):
They do an incredible job ofhandling a transaction and
communicating throughout theprocess.
They do a great job withcommunication, especially Kayla
Phillips over there.
I would highly encourage you ifyou're looking to close on a
home, buy a home, if you're anagent listening to use advantage
title and escrow, specificallyKayla Phillips.
(30:09):
So you're going to reach Kaylabest at 501-358-1601.
Or you can email her KaylaC-A-Y-L-A at GoAdvantageTitlecom
.
Advantage is A-D-V-A-N-T-A-G-Etitlecom.
(30:33):
Again, thank you guys for tuningin.
I'm going to go ahead and listsome sponsors off here.
We're going to start with FlatBranch Mortgage, specifically
Colton Kennedy.
Colton and I personally dobusiness together and he's a
wonderful lender here in theNorthwest Arkansas corridor.
Want to invest in real estateor purchase a home but feel like
you need a secret decoder ringto understand the process.
(30:55):
You're not alone First-timeinvestors, house hackers and
future homeowners.
Colton Kennedy has you covered,thank you.
He'll bring the lending gameplan.
(31:16):
Let's make your firstinvestment a smart one.
Colin kennedy, with flat branchhome loans.
Contact him today by calling417-437-0086 or emailing c as in
cat k, as in kimberly, e, n, n,e, d y at flat branch home
(31:39):
loans.
That's f b, h lcom.
That's 417-437-0086.
Or emailing c, k, e, n, n, e, d, y at f b, h lcom.
So much, colton.
Speaker 2 (31:59):
Special thanks to one of our sponsors, who I've
worked with personally onmultifamily commercial loans as
well as business acquisitions.
People's Bank works withentrepreneurs, investors, deal
makers and risk takers.
They're the ones who seeopportunities where others see
obstacles, whether it's a vacantlot with a plan for a thriving
business or making an old spacenew.
They work with creators whothink big and are not satisfied
(32:21):
with the status quo.
People's Bank helps you buildArkansas, deal by deal and brick
by brick.
They don't just see numbers ona spreadsheet, they see your
passion and vision.
People's Bank, it's wherepeople come first.
Member FDIC.
If you're needing loanassistance, reach out to Dakota
at 870-883-1706 or dhedden atpeoplesbankarcom.
Speaker 1 (32:47):
Our next sponsor is TDSIT.
That's T as in Tim, d as indocument S as in solution I as
in information.
T as in technology this onehits personal, it's close to
home.
T as in technology this onehits personal, it's close to
home.
My dad, tim Stanley, runs TDSIT and he decided to sponsor our
(33:09):
podcast, so I can speak frompersonal experience.
I've been able to work for mydad in the past as well and
they're a great, great solutionfor business technology.
If you're a local business owner, or even out of state, if
you're running a business, needprinters, need information IT
services, if you need phones,scanners, printers all the way
(33:30):
up to you, know you're printingbooks to.
Hey, we just need something inthe office.
Tds IT is that spot.
They provide the best in-brandbusiness technology with proven
best in local service, and theycan prove it.
Our next sponsor is fromWinstone Private Lending.
This episode is brought to youby Winstone Private Lending, one
(33:51):
of the top private and hardmoney lenders now serving
Northwest Arkansas.
Whether you need short-termcapital for a flip, a bridge
loan or creative financing,they've got you covered with
very flexible products to fitnearly any deal, including 100%
financing.
What sets them apart is theirdeep expertise, fast response
times and ability to thinkoutside of the box to help
(34:13):
investors like us close quicklyand efficiently.
If you're looking for a reallending partner, check out
Winstone Private Lending Link isin the show notes.
If you enjoyed the show, makesure to give us a follow on your
favorite podcast platform soyou never miss an update.
Speaker 2 (34:27):
Don't forget to connect with us on Instagram,
facebook and LinkedIn for morereal estate insights and behind
the scenes content.
Speaker 3 (34:33):
Have a question you want us to cover, send it our
way and if you're interested insponsoring the show, visit
nwainvestingcom to get in touch.
Thanks for.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com