Partnering Up, Part 2: Two Real-World Case Studies with Amy Swayze and Chris Lawrence

Ashley:
This is Real Estate Rookie show number 31.

Amy:
If you talk to anybody and everybody, you may come up with somebody that says, “Oh, yes, by the way I know so and so that wants to sell this property.” There you go, that may be your next investment.

Ashley:
My name is Ashley Kehr. I am here with my co-host, Felipe Mejia. We are so excited to bring you part two of partnerships today.

Felipe:
Absolutely, super excited. We have Amy and Chris. Amy is a newbie who, the story is awesome. She literally bought a property, went hard money, gained $100,000 in equity, rented it for way more than she expected. I mean, a total home run on her first deal. She talks about the ups and downs of using hard money and then the contractor not showing up. I mean, it’s a great story.

Ashley:
One of the best things about the show that we’re doing today is they talk about how they do this with a partner. A lot of times, we hear the story just from one side and then there’s that silent partner over there. We have Chris on today who talks about how he’s the boots on the ground. He works with the contractors and then his partner has the line of credit, they handle the bookkeeping, do all of that.
Make sure you guys take a lot of value from this if you are looking to do a partnership or if you’re looking to grow and expand your partnership. Lots of great advice.

Felipe:
Amy, Chris, welcome to the show. Thank you so much for coming on. How you guys doing?

Amy:
Good. Thanks.

Chris:
Doing well. Thanks for having me, man.

Ashley:
Can you guys just give us a little background about each of you. Then, we want to jump right into partnerships. Amy, why don’t you go first?

Ashley:
Okay. I have only been investing since February of 2020. My son and I do it together. So far, we have got three houses that we are burring.

Felipe:
Did you say February 2020?

Ashley:
I did. February 2020.

Felipe:
What a great time to start investing in real estate right before COVID. Wow. I bet you’re like, if this is this hard. No wonder no one does it?

Ashley:
Yeah, exactly.

Felipe:
Chris, what about you, man?

Chris:
Yeah. My name is Chris Lawrence. I’ve been investing for about three years in real estate. I recently left my sales job and doing this full time. Married, no kids run around yet. We invest in Rochester, New York. We flip, do wholesales, rentals, all that sort of stuff. I’m fan girl a little bit right now to be on the BiggerPockets podcast, as I’ve learned so much from listening before I started, during and now, over the years. Hopefully, I can add some value and insights.

Felipe:
How close are you to Ashley?

Chris:
We are about an hour and 15 minutes.

Ashley:
Yeah. I’ve gone to visit Chris before. I’ve seen one of his flips in progress. Then, he came and saw one of my rehabs too.

Felipe:
Nice. Nice. She always complains because I get to meet all the guests because they’re all close to the south. I think finally she got one.

Ashley:
Amy. I met Amy last weekend too in Seattle.

Amy:
Yes, because I’m out here in Yakima, Washington.

Chris:
You’re across the map.

Amy:
Yes.

Ashley:
Yeah. Okay. Amy, let’s jump in. The first question I have for you on your partnership is what made you decide to do a partnership?

Amy:
It was basically my son. He came to me and he said, “I need to find some write offs and start investing.” He had listened to a couple of BiggerPockets podcasts. He’s like, “Mom, you got to listen to this.” This is kind of amazing and crazy all at the same time, what’s possible out there.
I listened to that podcast. I was at his house. I listened to that podcast on the way home and I couldn’t wait to get home to call him and say it’s done. We’re doing this. From then on, I have hit the road running. Like I said, we’re on our third property now.

Felipe:
Before we get into your portfolio and what you chose to invest in and all that. Can you give us a little background on yourself what you do prior to real estate investing?

Amy:
I still have a W2 job and my son still has a W2 job also. I work for a hospital but I work out of my house. I do everything remote. He’s an electrical lineman. I grew up with parents that had rentals but I didn’t see that much. All I heard was the negativity from my dad.
My dad was one of these that wanted to do everything himself. As we all know, if we try to do it ourselves, we get burned out really bad. That’s what happened to him. When I got to the time to where, really, I could have started investing when I was younger, I heard that negativity, so I didn’t look into it. Thankfully, my son was like, “Let’s do this, mom.”

Ashley:
How did you guys structure your partnership? Did you do an LLC? Is it in your personal names? How did you decide the equity?

Amy:
Yeah. We just decided that we were going to do 50-50. He’s kind of the money person and I take care of … I’m like the property management person. We just have it in the individual names. We don’t have it in an LLC, as of yet. Then, we just kind of divide our duties. I know he’s my numbers guy. We both look for properties and then I’ll be like, “Hey, look at this one.” I’ll run the numbers too, but he’s my numbers man. He’s like get my numbers. He keeps all the receipts, does all the spreadsheets, whereas, I am like more of the boots on the ground. I want to do the renovating. I want to do the decorating. I’m there to check on the contractors. If I have to meet somebody to open the house, that’s my job to do. We have divided. We know what each one of our jobs are.

Felipe:
That’s really important in a partnership, because I feel like sometimes people come in and are looking for someone else that does what … They’re looking for a partner who is good with what they do and like, oh, we’re both good at Excel sheets or we’re both good at our numbers, so we’re going to work well together.
I think it’s quite the opposite. I love that you said that, like he’s your number guy, you’re boots on the ground. He’s the receipts guy. You can make a house look pretty and able to sell it. I love that, because that’s really important to identify your strengths and then feed off of that off of each other. You’ve accepted, you’re probably not the best at an Excel sheet, but you’re really good at decorating a home or doing a flip.
I want to jump into that a little bit. If you’ll tell us about one of your most recent deals that you did with your son, we’d love to hear about it, the nuts and bolts and everything about it.

Amy:
We bought a three bedroom, one bathroom house and decided we were going to turn it into a four bedroom, two bathroom. We were adding a bedroom and a bathroom downstairs in the basement, which at the time, we didn’t know anything we were doing. We didn’t know how complicated it actually was going to be to add the bathroom downstairs. It was great because we had all of these obstacles stop us, but we didn’t let them stop us. We found a different plan to get around them. Even though we had issues come up, we kept pushing forward and nothing ever stopped us.
It took us five months to pretty much do a full gut renovation on this house.

Felipe:
Wow, five months to do a full reno. That’s actually quite fast though. I’ve seen one go a lot slower. Run us through the numbers. What did you buy it for and all that information?

Amy:
We bought it for 135. We put about $30,000 renovation into it. We had it appraised for 103,500 more than we bought it for. That was really exciting and thrilling to us to see that all of that hard work actually did pay off. I got renters in it about three weeks ago. We ended up getting a much higher rent than we had expected on it also.

Ashley:
Congratulations. That is so awesome.

Amy:
Thank you. Yeah. It’s a huge win for our first one. It just keeps you pushing forward. The other thing that it does, since we’re talking about partnerships here, is we are actually wanting to find other partnerships to scale our business. Now, we can take this win and I’m going to do a portfolio notebook. I can take this with me when I go to find partnerships, so I can show that we can do this.
We have a deal history. It just gives us more credibility with other people.

Ashley:
You said before that your son is the money guy. Are you guys putting in cash offers or is he going to the bank and getting financing? How are you purchasing these properties right now?

Amy:
All three properties, we have used hard … Yes, he’s the money guy. He brings the down payment. We use hard money to get all of these. Now, that we’ve got the first one completed, we are in the process of doing the refinance and it’ll be in his name for refinancing.

Ashley:
Okay. You guys are first time investors and you got hard money?

Amy:
Yes.

Ashley:
Listen to that everyone. Don’t be afraid to ask. Don’t be afraid to go out there and try to get money because look at no experience and you got hard money.

Amy:
When I hear the word hard money, I was terrified. It’s like, oh no. I think of loan sharks. It’s like no, it can’t be.

Ashley:
You’re loaning from the mafia.

Amy:
Yes. I tell you what, that getting my hard money loan, our hard money loan for these properties has been 1000 times easier than getting my refinance loan.

Felipe:
It’s interesting you say that, Amy, because I feel like a lot of times, investors when they first start, they’re like, “Oh, bank money, that’s the only way to do it.” There’s so many other avenues to finance deals. I always tell them that the financing for me is important, but it really depends on what the deal is.
If I’m like doing a flip, then I’m going to go hard money. If I’m doing buy and hold, then I’m going to get bank financing. I’m not going to try to get bank financing to do a flip, because that’s going to be really, really difficult. I think you did it exactly the way you’re supposed to, which is that you used hard money for a flip that you’re doing. I think that’s amazing. Good for you.
When you and your son went out and look for the hard money lender what was the mindset that you had to go find that?

Amy:
Yeah. My mindset was this, like, oh, gosh, hard money, okay. My son, of course, he’s the one that went to find the hard money. I was going to say, I don’t even know if it took a day to get his credit ran and to get a $500,000 limit on hard money. He called me all excited and I’m like, “$500,000, what?” Not that we’re going to use that much because you have to have the down payment, but it was exciting.

Felipe:
I think one of the things that I want our listeners to get from here is that the reason your son wasn’t scared to do that was because he had his numbers down. He knew what you were purchasing. He knew the after repair value. You guys low balled what you thought your rent was going to be. You ran your numbers correctly. This is the importance of doing that. You’re not scared of hard money because now you know the outcome, worst case scenario, best case scenario, and I’m assuming he ran his numbers on worst case scenario. Now, hard money is not as scary as it looks sometimes. Kudos to you guys for that for sure.

Amy:
Exactly. Right.

Ashley:
What is some advice you can give to our listeners today about working with a partner, especially family, because a lot of times that can lead to problems, because it’s a lot harder to end a partnership with your family when you don’t want to ruin that relationship?

Amy:
Right. I would say trust is the number one thing in any partnership. He has to trust me, I have to trust him. We’re just kind of feeding off of each other, but the communication is huge also.
I think between trust and communication, if I don’t tell him that, oh, gosh, the contractor can’t be here for two weeks, and then we have an additional two weeks and holding costs that he’s not figuring into our loans and our holding and everything. That’s going to increase, I mean, that’s going to decrease what we’re going to be making in the end. That communication is key also in a partnership.

Ashley:
Has there been any obstacles that you’ve guys have had to overcome, like personal issues that have come up during this partnership so far? I mean, any disagreements about anything that you guys have had to work through?

Amy:
My son and I are pretty much just alike. We’re very laid back. No, there haven’t been any issues between us. We feed off of each other like when we were doing the rehab. I’d be like, “Oh, I want to knock this wall out and I want to put this and then I want to put this in.” He’s like, “Mom, you’re not living here. It’s going to be our rental.” Vice versa, there were things that he would want to do and I’d be like, “This isn’t our main home, so let’s think about that.” We feed off of each other very well.

Felipe:
What about dealing with contractors as a beginner? What about dealing with that? Can you give us some juicy stories on how that worked out?

Amy:
Oh, boy. For one, we did most of this stuff ourselves on this first house. The second and third house we’re having more people do it. However, a good story was we had to cut the window out of the basement wall to have a legal bedroom down there.
We had the concrete contracting company coming. That was the day that COVID hit. I got there to meet the guy and I saw the truck pull up and he would not get out of his truck. Then, my son calls me and said, “Where are you at? The company wants to know, they said their guys are there.” I said, “Yes, but he hasn’t gotten out of the truck.”
Long story short, we walked up to the truck, and he said he wasn’t getting out because of COVID.

Felipe:
Oh my God.

Amy:
They were sorry that they would send another guy out tomorrow. That is when everything got completely shut down, and nobody was doing anything.
Here, our plumber was ready to go to install the new bathroom, but our concrete construction company had to cut the concrete from the floor in the basement and the window in order to proceed. We’re stuck now. What do we do since they’re not going to come back? Therefore, we went and we bought a concrete cutting saw. We cut all of that concrete out of the basement and the wall ourselves.

Felipe:
Wait a minute. Hold on. Hold on. Pause. Wait, wait. I know those machines. That’s a really big blade. I mean, that’s really scary. You guys just went to town on the side of the house. What did your hard money lender think? What did you even tell him?

Amy:
I hope they probably didn’t know.

Felipe:
That is hilarious. I love that story, Amy. I hope it turned out well. I’m sure it did.

Amy:
It did. It was awesome. That’s why if there’s an obstacle, there’s always a way to get around that. There’s always another solution.

Felipe:
Good for you. I love that. Grind through it, grit through it. I think that’s what differentiates successful real estate investors from those who just quit. They’re like, “Oh, well, the guy can’t cut the hole in it, so I’ll just have to wait until COVID stops and whatever.” They end up hating the deal.
Amy, I’m going to ask you a selfish question here. What was it going to cost you to make that window in the basement?

Amy:
I think it was like $550 to have the window cut out and the concrete cut in the basement.

Felipe:
In the basement, okay.

Amy:
Felipe, it’s interesting, you ask that question, because that is what we base this on. Okay, it’s going to cost 550 for them to cut it out. We bought the concrete cutting saw for $500. We put in the hard work and did this ourselves. However, by doing this, we weren’t going to have to hold it for another three, four, five weeks. Who knows when businesses were going to open back up? The main thing that people have to remember is you have holding costs when you have hard money, or when you have any loan. You can’t just say, “Okay, I’m going to wait and sit for five weeks,” because you are losing money over those five weeks. Therefore, that was an easy decision for us to go down and spend $500 on a concrete cutting saw and put in the hard manual labor and do it ourselves.

Ashley:
Plus, you’ll always have that saw you can use it again or you could always resell it probably for at least half of what you bought it for.

Amy:
Exactly. Memories, we’ve made memories now.

Felipe:
That would have been a great YouTube video.

Ashley:
I just [crosstalk 00:18:05] YouTube how to.

Amy:
It would have been because our batteries, you could only do one to one and a half minutes cutting through that concrete, and then you’d have to go charge the batteries again.

Ashley:
Wow.

Amy:
We work a whole day there doing other stuff while our batteries were charging and we would run back and forth, cutting that out.

Felipe:
That’s so funny.

Ashley:
Do you guys have an end goal. Do you have a certain amount of properties you want to reach? A certain dollar amount and equity? A certain cash flow you want to reach together?

Amy:
That’s interesting. We were just talking about this yesterday. Yes, our goal is to get both of us out of our W2 jobs. He has two young children. We want to make sure that we are both set up and family will be taken care of and set up. As far as money goal, we haven’t set a money, a number, but we are wanting to get into our next purchase which we’re looking for right now. We want to start multifamily. Then, our ultimate goal is storage units.

Ashley:
Very cool.

Amy:
That’s where we’re looking to progress to.

Felipe:
Very good, that’s exciting.

Ashley:
What is your next step to reach that goal? You’re looking right now for multifamily? What are some action items you can give our listeners to what they can do to find their next deal, especially working with a partner where you have to take in consideration each one’s preference ideas, strategies, goals?

Amy:
That’s what we both look and then send what we find to each other. We are going to mail letters. I set and I look at the city maps. If I see something that looks like a multifamily, it looks like five, four, you can tell on the maps, the ones that are houses and the ones that are bigger multifamily units. I’ll click on those and I will see if I can find the owner’s name and address. If it’s an LLC, I’ll try and find who owns that and send a letter to them, asking if they’re interested in selling. If not, maybe they would know an acquaintance or another business person that’s interested in selling.
I try to get my name out there to anybody that I can, because everybody knows somebody that owns properties. If you talk to anybody and everybody, you may come up with somebody that says, “Oh, yes, by the way, I know so and so that wants to sell this property.” There you go, that may be your next investment.

Felipe:
Good for you.

Ashley:
Thank you so much, Amy. I’m so happy for you when I met you. Then, hearing your story about how you did 100,000 on your first deal in equity. Just that you took the risk of partnering with your son and you went and got hard money. You didn’t take the easy way, you took whatever made this work for you and to get it done. Congratulations.

Amy:
Thank you.

Ashley:
I can’t wait to see where you go.

Amy:
Our second deal or the one we’re working on right now is going to be even sweeter than the first one.

Ashley:
Oh my gosh, that’s awesome.

Amy:
That’s really exciting.

Felipe:
We have to do a follow up with Amy where she’s going to let us know how that’s going.

Ashley:
Yeah.

Felipe:
Amy, that’s such an inspiring story. That can be the norm for everyone. I mean, running your numbers, getting a good partner, finding the deal and then just getting through it and finishing and on the other side you’re going to have like Amy, $100,000 in equity and great rent.
Amy, thank you for the story. We are going to go to Chris now. He introduced himself a little bit earlier and hear a little bit about him. Chris, if you give us a little bit of background on yourself. What’s your portfolio look like? What you do? Get it all.

Chris:
Yeah, perfect. Yeah. Thanks so much. Currently, I’ve done like I said about investing. Three years, we have done about 15 to 20 deals. At this point, I don’t really know how much but it’s pretty much been a combination of like wholesales, flip and rentals. We currently have six buy and hold rentals and just keeping that marketing machine going. Like I said, I do it full time now, so it’s keeping the pipeline full with deals. That’s what our situation looks like currently.

Ashley:
When you started, Chris, did you start right off with a partnership or did you start on your own and then take on a partner?

Chris:
Yeah. I started on my own. My first, let’s say, four or five deals, I did it on my own and quickly realized, okay, I had limited capital, I wanted to do this, so I could scale it and leave my sales job. At the time, I think, I’d only done one or two deals. I met with my business partner, which is my wife’s uncle and his brothers and my wife’s dad and told them what I was doing. They’re like, yeah, it sounds good. You’re trustworthy kid, but you haven’t done it yet. I had no proof of concept that I could do it.
Then fast forward after I did a handful more deals. Andy, who is now my business partner, it’s like, “I think there’s something to this. I would love to partner with you.” He had what I didn’t have. He checked all the boxes, like he had the liquid capital. He had the business acumen like profit and loss and different stuff, where my weaknesses were his strengths, and vice versa. My strengths were his weaknesses. I have proof of concept. I have worked with contractors, networking, working with just getting deals, and then getting it from point one to all the way to the end. It worked out well.

Ashley:
Chris, before we get into too much of that, if I remember correctly, you’re getting a great interest rate in your own checkbook. Correct? As part of this deal.

Chris:
Yeah, we’re 50-50 partners. He has HELOC. It’s a home equity line of credit that we can draw from. We borrow money anywhere from like 4 to 5%.
As Amy mentioned, holding costs can eat you up over to the more time you hold on to it. Four or 5% that’s pretty much like free money. We’re super excited to be in that position. With that interest rate, we’re able to buy deals maybe a little closer to the number that we’d want to just because we’re not paying that much in interest.

Felipe:
Let’s talk about the HELOC situation there, Chris, because I love this strategy. I think it’s so underappreciated, underrated, whatever you want to call. It’s not sexy. It’s not cool. It’s not the, oh, I went and got hard money. The HELOC just doesn’t seem to be as interesting, but I love this strategy. A matter of fact, I have a rental property that’s completely paid off for the simple fact that I want to be able to reuse that money for flips and wholesale deals and whatever the case may be, and you become your own banker with a HELOC. Can you dig into it a little more? How you use the HELOC to you guys’ advantage.

Chris:
Yeah. The HELOC I look at like it just gives you the most velocity of your money. Say, your home is worth 100 grand, it’s paid off, you can then borrow typically 80% of that. You’d have $80,000 essentially to deploy at any time. Once you say you use that 80,000, you start paying interest on that, but you can make monthly payments until you’re flipping until you sell the property. When we buy a property and sell it, it’s usually four months. You pay four months of interest on that $80,000. You pay it back and then you can kind of rinse and repeat. In my opinion, it gives you great ability to buy a property with cash. It’s very convenient and stays open as long as you keep it up with banks.

Felipe:
What’s cool is you don’t have to draw it completely. You can draw as much as you want up to the limit and then pay it off as you need. Then, some of them are interest only, so that’s really good as well.
One of the other things that I like about the home equity line of credit is that you can purchase property at better prices, because you are an all cash buyer. Let’s say that someone has $100,000 home for sale on the MLS, and you’re like, “Oh, I’m going to go offer 90,000 cash,” none of the contingencies and someone offers 100,000 the full amount but with contingencies of the bank and this and appraising and all that. If I was the seller, I would go quickly with the 90 grand cash quick close, get out of there in two weeks.
I think you even have more leverage using a HELOC strategically, of course, you want to use it running your numbers and things like that. I think that’s an excellent strategy. How do you guys handle using HELOCs, refinancing paying them back the back end part of the strategy?

Chris:
Yeah. So far, we’ve only done flips with the HELOCs. After we buy the property with the HELOC, and then sell it, we pay it back to HELOC with all the interest. Then, we currently have a duplex that we bought that we have a combination of the HELOC and then just some private money. We’re going to keep that. Just keep paying the monthly payments on that until for a variety of reasons. There’s tenants in there. We don’t necessarily want to refinance until the tenants move out or they decide to leave and then we rehab it and then we’ll do a cash out refi.
Yeah. Just paying the payments for the flip and then for the rental just pay those monthly payments.

Ashley:
How do you guys decide which one? Because the buy and hold units are yours only correct? How do you decide for property? Is it going to go to the flip side or you’re going to keep it for yourself for a buy and hold?

Chris:
I have my own rental properties. Now going forward with this new partnership starting in January, anything we buy is through our partnership. We bought a duplex that we bought with the HELOC like I mentioned before. Really, when we get a lead in, we’ll just put it through the funnel like okay, is this a good wholesale? Is this a good rental? Is this a good flip? Then, again, Andy just says, “Chris, what do you want to do?” I kind of say, “Hey, this is what I think we should do.” He trusts me and then we pull the trigger on it and go forward. That’s how we handle that.

Felipe:
I think it’s smart, because a lot of times people will buy a deal with the wrong goal in mind, which is why it doesn’t work out. Every property I think in real estate has a great goal behind it. This is a great property to flip. This is a great property to buy and hold. It depends on location. There’s a lot of criteria that goes into it. It’s really important to know that and identify what that property is going to be used for. That way, you can decide what kind of financing you’re going to use? What kind of deal it’s going to become?
I wouldn’t use a HELOC to buy a buy and hold property, for example, unless I had the goal to refinance it right after. I would probably use my HELOC to do a fix and flip where I can sell it and then pay off the HELOC and then reuse that money again.
Every property has a definition goal behind it. It’s your goal as an investor to find that out. That way you can successfully use the right financing successfully. Know what you’re going to do with that property. How’s it going to affect you guys as partnership goals? I think that’s a great strategy to use.
Chris, sorry. I didn’t even ask you. Do you have a deal in mind that you want to run through that you’ve successfully done with one of your partners?

Chris:
Yeah, yeah. We’re currently working on one right now. This is a fix and flip in Greece, New York, right in Rochester. We actually got this lead through networking with a probate attorney. He sent one of those clients to us and we’re able to meet the lady that own the house. Her sister had passed away and she lived out of state. She just wanted to sell quick and it was a hoarder house. It seems like all the houses I bought in the past few months have been this hoarder houses so we’re used to it at this point.
We’re able to come to agreement on price and something that work for her and work for us. We bought it for 55,000 put about 35,000 in rehab and repairs and we’ve owned it for about 30 days. We’re actually going to list it beginning of next week, so end of September. We’re going to list it for 199. We should make right around that 20 to $30,000 mark, which we shoot for on our flips. That’s a mark to aim for.

Ashley:
That’s great. Do you guys do an LLC, a joint venture? How do you structure that? Do you have an operating agreement?

Chris:
Yeah. We have a 50-50 partnership and we have an operating agreement, which we drew up with our attorneys. I think before we even did any of that. I think Amy alluded to a little bit. Okay, do we have similar core values, beliefs, goals? Are we good communicators? Because things pop up, and sometimes things good, sometimes things not so good. You work through them and you have an understanding of okay, this is what we do. I think that’s what can really make a partnership great or kind of go the other way. So far so good.

Ashley:
That’s awesome. I want to bring up a story that you had told me before about before you had a partner and days before your wedding, you had put the money for your wedding into a deal. Your contractor didn’t show up and you had to tile your own bathroom. Something like that happened now, where are you contract or quit and you had to finish the job, because you needed that money? How would you handle that with your partner? Would you still be the one going out and doing that? Would you and your partner both be there working?

Chris:
Yeah. Hopefully, that never comes up again, because that was a super stressful time. If that came to it, I would more than likely just go tile it or find a new contractor to do it. Just because I said, Andy, his role is really providing the finances, the business acumen really just given me a different perspective. Again, it comes back to those clear expectations, and what are my roles, what are his roles. I’m sure if I need to ask him, he would help, but we could get it done and get it to the finish line.

Ashley:
That is really important to finding your roles ahead of time before a situation or scenario comes up like that, because it’ll be very easy to get into this mindset. I’m doing more work than you or you’re not doing as much as me, but we’re 50-50. Having those clear, defined roles ahead of time and written down.
What goals do you guys have? Do have like end date? What do you guys want to reach with this business?

Chris:
Yeah. It’s funny, we just had a meeting the other day, and we’re like we’re not as far along as we’d like in terms of we wanted to flip 12 this year, I think we’ll probably be close to the six, seven. It’s partly like, I don’t want to put too much on it. Could it be because of COVID or this or that? It’s like, okay, let’s give it another year. Our ultimate goal down the road is I want to be able to do 24 flips in a year. Two a month, making that $25,000 profit mark, to make it work for a partnership, because we talked in like, okay, if we can’t get to that maybe down the road, it doesn’t make sense to partner. I could do one deal a month on my own, but it’s really just, we want to grow this bigger and make it something where we can all benefit from it.
It’s really like, okay, if we can get to that 24 deal mark, we’ll continue to keep doing this. I think even if we get to that 12 deal mark a year, I think, we’ll continue to keep growing and see where we’re at.
Again, you never know how the partnership will shake out. We always have that constant communication and dialogue of okay, this is what we’re doing and so far, so good.

Felipe:
Chris, let me jump in here real quick. What was the biggest learning curve that you would say when starting a partnership with someone?

Chris:
Yeah. The biggest learning curve, I would say is figuring out … because I work a certain way and my partner is a different type personality. Just figuring out how we work well together, his strengths, my strengths, and vice versa. Just really having that communication and great partnership, because at times, it can be challenging for sure.

Ashley:
What about you had mentioned that you and your partner might split up if you can’t reach the goals that you want? It might be better to go in separate ways? Can you elaborate a little more on that, so that maybe some people realize they don’t need a partner and when does it not make sense to take on a partner?

Chris:
Yeah. I first started, we’re like, okay, we want to do this and we want to do 24 flips in a year and I had some good success before we started with the partnership. These deals were off market. I’m like, oh, shoot, we can easily do that with marketing and learning this whole machine on how to do that. It’s been a little slower, to be honest. I don’t know if that’s with COVID, like I mentioned, or what the case is, but we’re like, okay, if we can get the 24 flips and make our number to where we both can make what we want and make the money and have the lifestyle we want and we’ll continue to do it.
If not, maybe we split off and just do some deals together different stuff like that. It’s really just, I think, it really just comes back to that communication piece and like okay, here’s what I want to do. I left my sales job to do this full time. I was making six figures had all the benefits, and you’re learning as you go. I’m a ready, fire, aim person. Let’s give this a go and worst case scenario, I can go back to a sales job and do four or five flips, because I’ve learned so much that I can make money on the flips and stuff that you can’t ever take away.
Yeah. At this point, we’re like, let’s give it a year and see what we can accomplish, and so far, so good. I think we’ll be in a good spot come a year from now.

Felipe:
I would agree. I think you guys are going to crush it. I think you and Amy are perfect examples of starting out and then already in the middle of it, but running your numbers and the importance of other people in your deals, and just working well together. I think this is going to be a good segue for moving on to the second part of our show, where we’re going to ask you about an MVP.
Someone that’s been super great in your real estate investing. Someone who’s been a positive influence. Amy, I’m going to start with you. Who has been someone that’s an MVP in your investing so far?

Amy:
I would have to say my mentors and my mastermind groups that I’m in. I have two mastermind groups that I’m in and that I follow. My mentors are awesome. Not only that, in my mentorship in the mastermind, I learned so much just from the other people that are in there also. I would say that just having somebody that you can go to with questions at any time is huge for me.

Felipe:
I agree. I think that’s really important. The power of having a community around you that’s going to support you, when it just hits the fan, because it’s going to happen and you want to be able to ask questions, or you want to be able to reach out to someone that maybe has had that situation happened to them. I think that that’s a great answer.

Ashley:
Not even just asking questions, but the accountability to having somebody. That’s what’s nice about having partners too, is that you can hold each other accountable.
Chris, what about you, who would be your most valuable player that has helped you succeed in your real estate business?

Chris:
Yeah. There’s been so many people and having a good network of people. In particular, when I first started, I met one of … Just a girl I went to school with. Her dad invest in real estate, he’d done it for 20 years, and still continues to do it, fix and flips and that sort of stuff and was actually able to connect with him. Now, when we first started, he was my mentor, but now we’re friends. We talk pretty regularly. Like you said, things pop up different stuff. He’s like, yeah, that’s fine, but you can do this and you’ll have different exit strategies.
He just gives you insight and can calm the nerves and anxiety and things that you go through, because investing in real estate, when you first start, there’s so much emotional and there’s so much of a mental side to it of real estate, like a mindset. It’s just great to connect with someone that can shoot you straight and give you insights into real estate. If I was to ask my parents or someone else that doesn’t invest, they might not give me the best advice. It’s super important to have a good mentor.

Ashley:
Chris, when you went and first talked to him, was he annoyed? Was he bothered? Or was he excited and passionate to find someone else to talk to real estate about and happy to help you?

Chris:
Yeah. He was super excited, because it’s like, you’re a real estate investor, so you love talking real estate, and you just can help people out. For me, people reach out to me on Instagram. I love to help people out. If I can give them advice, I will certainly give them advice.
Again, I give them my perspective. People love to talk real estate, if you’d like to invest in real estate, chances are if you’re genuine and have a great approach, people are going to be open to giving you insight.

Ashley:
Have you done anything to provide value to him? A lot of people say, if you are looking for a mentor, make sure that you’re providing something back in return for them helping you.

Chris:
Yeah. If he needed something out of one of his flips or just needed me to do something, we would meet up and link up and just certain tasks that he’d ask. I try to help out in any way I could and not be burdensome and just, hey do you need help? Or what are you gone through? We’d call and connect. Yeah.

Felipe:
I think a lot of times, it’s really important to just make yourself available. You can allow yourself to be available to the people that you want to give mentorship from or help from. I think that’s super, super crucial. Then, showing up to meetings is also really important.
You follow me on Instagram, you know the story, just showing up at the top of the funnel.
Okay, let’s move on.

Ashley:
Let’s go to the rookie request line. Is that what you were going to say?

Felipe:
No, Ashley, what if I wanted to take it somewhere else? No, I’m just kidding. Yeah, go ahead.

Ashley:
If you guys want to call into the rookie request line, it is 185-ROOKIE. Today’s question for Amy is.

Amber:
Hey, it’s Amber from Tampa. My question really is like I’m very, very rookie. I’m very new into the real estate gig. I want to learn more. I’m more of a hands-on learner. I definitely want to be able to find a mentor or something in my city. I have looked through BiggerPockets Forums and things like that. My question is to be able to gain more hands on experience, I do have a full time job, how do I navigate those hours and be able to still work on the side? Because my hours, I feel like are very inconvenient for people that might want to help me or train me or mentor me.
Do I need to give up my job and maybe find a different job in the real estate field? Or do you think I can still keep my job and navigate this real estate gig? Thank you so much.

Amy:
My advice, I would try and find a contractor. Like my mentor always tells me, “Go to Home Depot that open at 6:00 in the morning. Go to Home Depot and look at all of the trucks in the parking lot. There are so many contractors, electricians, you are going to get numbers from there and just start calling and tell them what you’re wanting to do.” Like Ashley said, try and bring value, don’t just go and say, “I want you to show me this is.” Why do you want to? Tell them what your goal is. Tell them what your why is and ask them what you can do for them to help get information.
Go work for them. Tell them you’ll go work on the job with them for free. Take a couple days of vacation. Whatever you can do when they see that you’re willing to do something for them, then they’re more likely to do something for you.

Ashley:
Single Ladies, I just want to say that this is also a way to find a partner for free is by going to Home Depot and finding a contractor who will do your rehabs for you.

Amy:
Ashley, why do you think I’m at Home Depot every morning?

Felipe:
Amy’s not trying to just find a contact. She’s trying to bring home a man. I can’t [inaudible 00:42:19]. Chris, we’re going to go do our own podcast on our own. We’re going to go do our own thing. That’s hilarious. I love that. Okay. Let’s move on to Chris’ rookie request line.

Connor:
Hello, my name is Connor from New England, more specifically, Rhode Island. We have a very hot market up here right now where properties off the MLS are showing very low returns. My question for you guys is, do you think that it would be acceptable for me or a good option to go through a wholesaler that’s already quoted me some pretty good deals? Get a hard money lender involved and then refinance out for the low interest rates that we’re seeing at the time? Or is that something that’s a little bit too risky for a newbie like myself? Thank you.

Chris:
Yeah. I think, really, all this comes back to do the numbers make sense for your criteria? For example, if it’s a rental and you want to make $200 in cash flow, doing the rehab, paying the wholesaler after buying the property doesn’t meet your criteria, I guess, it has to meet your criteria and your numbers. Because you can find a deal anywhere whether it’s your wholesaler or off market. Just make sure the numbers work. When I first started, someone told me a really important kind of lesson that still stood with me today is, don’t count the wholesalers money whether they make 10, 15, 20 grand. If the numbers work for you, buy the deal and congratulate the wholesaler like, “Man, that’s a great deal.” Bring me more type stuff. I’d say, the numbers have to make sense for whatever that is, if it’s a flip or a rental.

Felipe:
I would agree, I think as long as you are running your numbers, that’s crucial. Like we said earlier in the show, it’s really important to run your numbers based on what that deal should and is going to be. Is this going to be a bur? Is this going to be a flip? Is this going to be a wholesale? Run your numbers based on that. There should be no reason to be scared of getting a hard money lender. Amy, perfect example, 100,000 in equity, everyone at the table made their money, the lender made their money. Amy made her money, her partner made her money, her son. I think that’s the key to real estate.
If there’s a secret sauce to real estate, it has to be that everyone wins. If everyone wins, it’s a happy transaction all the way around.

Ashley:
Okay. Let’s move on to our random questions. We’re going to ask two questions to each of you today. They can be a little bit real estate related, maybe not. Felipe and I really just picked them randomly as we are going. I’ll start. I got one ready. Chris and Amy, I’m going to ask you both the same question. Amy, if you want to go first, let’s see, what is one thing you should have in your partnership agreement that isn’t the norm? For one thing I always recommend is having life insurance policies on your partner.
Okay. Is there anything else? Even if you don’t have it in your agreement now, something that you would do in the future to put into your operating agreement to maybe save some trouble down the road? What would you say?

Amy:
I was actually going to say life insurance.

Ashley:
Oh, I’m sorry, I stole it.

Amy:
No, that’s okay.

Ashley:
Explain to everyone the benefit of doing that.

Amy:
Even though my partnership is with my son, you never know what’s going to happen. We’re looking to scale now. When we get partnerships with somebody else, I don’t know their family, I don’t know their wife, I don’t know their children. If something were to happen to them, I don’t want to be the burden and say, “Okay, there’s still a business to run. We still have all this other stuff that we have to take care of.”
By having life insurance, you can just say, “Okay, here’s the life insurance, I’m going to basically cash them out. Then, I will become 100% owner, 100% vested on those properties so they don’t have to worry about them anymore.” For me, that’s one of the biggest things that I would say is having life insurance and just having an agreement.

Ashley:
Yeah. It’s a benefit to you. It’s a benefit to your partner’s family, too. Because a lot of times, they don’t want to have to take on a rental property too. Yeah, thank you for sharing and explaining that. Chris, what about you? What’s something you think is really important to have in the operating agreement with your partner that may not be the norm?

Chris:
Yeah, I’d say, obviously, you have the boilerplate operating agreement. We don’t have this, but I think if you’re going to … it might be helpful to have what your roles are and state like, “Okay, these are the clear expectations and what you want to do,” because the way I might think of something might be different how my partner interprets it. If it’s on paper and you guys agree on it, you could kind of just refer back to that operating agreement as a manual. That I could see prevent stuff, issues down on the road.

Ashley:
Yeah, I really liked that. One thing I like to do too is add almost prices on there. Like, “Okay, whoever is acting as the leasing agent, they may get paid this amount. Or, if someone’s doing the maintenance, this is the hourly pay they’re going to get on top of their equity.” For someone who really is concerned about, like, I know it’s not going to be 50-50, I don’t want to do a partnership, then do it that way. Get out and write a pay scale for those extra jobs and what that person is going to be paid.
Like my partner and I, we are 50-50 and we used to do everything 50-50. Now, everything’s just given out to property management. That solves that too. You can also outsource as much as possible. Yeah, that’s a great advice to write out the job description of those roles.

Felipe:
Yeah, I agree.

Ashley:
Felipe, you want to ask your question?

Felipe:
Sure. I want to know from both of you guys, what is one … and I love this question because I think it adds a lot of value to people, what is one piece of technology that you’ve used to continue growing your business and that’s helped you tremendously in what you do with your partners?

Ashley:
Chris, I want to know something about finding deals. What are you using?

Chris:
Yeah. Finding deals, that’s always evolving. We’re shaking out what works and doesn’t work. Right now, we’re really focusing in on online marketing. Like your SEO, search engine optimization, we’re doing pay per click, we actually started doing radio commercial. We’re doing that for three months. For us, it’s building that credibility and having that celebrity feel. When you hear me on the radio, then you go to our website. Building all of that out, because a lot of times, we’re doing text message marketing and people get a lot of deals through that.
For me, it kind of went against what I believe in people who are kind of angry and sassy and not really happy to hear from us. They’re like, “You’re a real estate investor? Are you even real?” A lot of that building credibility and building that trust and authority so when they see us on the website and all that, they already know what we do, what we’re about, our core values, and just normal people that genuinely want to help you out.

Ashley:
I actually saw one of your ads on Facebook this morning, because it was the same background that you have right now. Yeah. It was good. It looked really nice.

Chris:
Yeah. Thanks.

Ashley:
Amy, what about you? What piece of technology would you say?

Amy:
We’re so new that we’re still trying to incorporate our systems down. I would say my first, when I got on the MLS, I just thought that day and knew I had to offer on it. Our second ones, we actually sent letters out to non-occupied owners. That’s how we got our deal on our second one.

Ashley:
How did you find those non-occupied owners? Did you buy a list?

Amy:
Yes, we bought a list. This time, we’re not. This time, I’m going to be hands on. Like I said earlier, I’m just looking at my plot map for my city, pulling up whatever looks like a multifamily to me, getting that phone number, that name and either sending a letter, sending a text, doing a cold call, that’s what we’re doing. That’s what we’re doing now to find our multifamily that we want.

Chris:
Then Amy, when you get those properties or you talk to them, I’m assuming then you tell your son, “Hey, this is probably a good one,” you guys run the numbers together and then kind of the ball starts rolling. Is that about right?

Amy:
Yeah. If we get a call back, like he was the one that got the call last time and so he’s like, “Hey, look at this. I looked at it.” Yeah, I like it. I ran the numbers. He ran the numbers. Yup, it looks good. Then, we make contact with the owner and we started talking back and forth. That’s when we made the offer. Yeah, we’ll do the same thing. I don’t know if he’ll get the call or I’ll get the call. We will decide that. Then, filter them out, run our numbers and if the numbers look good, then starting the offering process.

Ashley:
Thank you guys so much for sharing that. Can you guys tell us where we can find out some more information about you? Where people can reach you? See where all your deals are going on? Amy, do you want to go first?

Amy:
Yeah, okay. I’m Amy Swayze. I live in Yakima, Washington. You can find me on Instagram at Amy Swayze.

Ashley:
Okay. Chris, what about you?

Chris:
Yeah. I’m very active on social media platforms, namely Instagram. It’s Chris Flipsrock. C-H-I-S Flipsroc, R-O-C. I’ll get my website in the show notes. You can check out the website and certainly DM me or ask me any questions. I’d love to help and add value any way I can.

Ashley:
Great. What’s your website, Chris?

Chris:
Yeah, yeah, website is www.helpinghomesrei.com.

Ashley:
Great. Awesome. Thank you, guys, very much for being on the show today. We loved hearing about your partnerships. This is going to air pretty soon here. I’m sure there will be lots of questions for you guys in the Facebook Rookie group. If you guys haven’t joined yet, make sure you search Real Estate Rookie on Facebook and join the group. Chris and Amy will be in there to answer more questions you guys have.
Thank you so much for joining us. My name is Ashley @wealthfromrentals. This is my co-host Felipe @Felipemejiarei.