In this video, we delve into the fascinating journey of our real estate business, where we navigated the challenging landscape from risk to reward.
In this insightful discussion, we’ll dive into the intricacies of the real estate industry, exploring the risks and rewards associated with it.
We’ll share personal anecdotes and stories of the hurdles we encountered along the way, and how we turned them into stepping stones towards success.
Whether you’re a seasoned real estate professional or just starting out on your entrepreneurial journey, this video is designed to inspire and empower you.
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It’s time to turn risks into rewards and elevate your real estate game!
Transcript:
Chris Bounds 00:00
Start with an earnest money because earnest money for single family house, most of them I can buy no earnest money. In almost all the tuner flips that we’ve done probably didn’t put any earnest money down a little different for multifamily. Did did you raise that? Did you bring a partner in for that? Or did you have the cash on hand? Because tuners haven’t unions? It’s, it’s a sizable amount.
Rob Beardsley 00:23
No, yeah, for sure. So that’s another good point that I forgot to mention. Yeah, earnest money is another element of the deal that you need to have organized and taken care of so. So us Fortunately, we’re able to borrow money from family members with a personal guarantee in order to put the money down on earnest. So essentially, we were out risking money that we didn’t have to close a deal that we needed to go raise capital for. So really, we put our backs against the wall and took a lot of risk. And looking back on it, you kind of look at and go, Wow, that was a lot of risk that we took.
But I think it’s really valuable to have those moments in your experience in your career, because it really forces you to grow the most and the fast and the fastest, right? If you are working out in the gym, without a trainer, you’re not going to work as hard if you have someone pushing you. And in this case, we had money pushing us and the risk of losing money and the risk of you know, really tarnishing our reputation before we even got our business off the ground.
So really, there was no chance of failure, we couldn’t not let ourselves fail. And so putting ourselves in situations like that, where you know, failure is not an option, essentially, I think is actually a really great way to get where you want to go faster.
Chris Bounds 01:45
So I’m sorry to borrow the money for family for the EM didn’t know you’re trying to raise you get a loan, look for a loan guarantor partner, did you bring on an operating partner as well, to solve that problem for the equity investors.
Rob Beardsley 02:05
So we, in the end, partnered with a group that signed on loan to satisfy those requirements, as well as brought the management company to the table and the operating expertise. So I think that’s a very smart way to go is obviously bringing partners in to rely on other people’s assets such as their track record, or their experience or their infrastructure, their team for the execution of the business plan. And yeah, so that’s, that’s what we did. And it was a very rough experience.
And the problem with what we did was we scrambled, and we didn’t find this partner, when we weren’t under contract, when we had the luxury of time. Instead, we scrambled and had to find somebody last minute. And that meant that there was a higher chance of us not being with the right partner. And in the end, we were not with the right partner in that case.
And so we had to make moves after closing to change partnership and move on. And this experience actually pushed us in the direction of vertically integrating and bring property management in house on a much quicker timeline than what most firms on that track do. So we actually brought property management in house two years ago now. And it’s just been a fantastic experience. And we really are grateful for the business that we’re building and that we have more control and transparency in our organization.
Chris Bounds 03:39
You almost have to if you’re going to be had any reasonable density within a marketplace. It just makes sense. I mean, if you’re spread out, across multiple markets, maybe not. But that makes sense. No, that in the beginning, did it come across your mind to hey, we could bring on a partner, but maybe let’s not and let’s do it ourselves.
So well, you know, you know, protecting your equity, protecting your your abortion. That was it. Was that a debate? And then you figured out later on, hey, we really need to bring someone else on to solve this experience problem. Now, how did that? How did you see that? From the very beginning versus what actually happened?
Rob Beardsley 04:27
Yeah, I think you’re absolutely right. We were ambitious and wanted to do as much as we could on our own. But with that being said, I did have this belief in my mind that I held on to as we went through the process, which is, it doesn’t matter how many pieces of the deal we have to give away. It doesn’t matter in the end how much money we make from this deal.
The important part is getting the first one done. And keeping that in mind. kind of kept us sane. As we were or bringing on partners and you know getting negotiated against ourselves and having to give up more of the pie than we wanted to. But in the end like I said, we stayed the course because we knew that the bigger picture was what was important.
Chris Bounds 05:15
Yeah. I think the last part is very curious it’s not so much that it doesn’t matter it does matter I mean, there’s there’s money at stake and but there’s other things at stake. And that’s what the more important part is that you got to I went through the same thing like when my wife and I bought our first multifamily as a small 29 unit. And it was our I had done for deals in college fast forward time.
Now we’re buying houses so this is together between the two of us this is our fourth fourth deal and we both had jobs baby on the way and I think this 500 You know, half a million dollar hard money loan to buy this dilapidated 29 unit and there’s gonna be this monstrous project management that I was gonna have to deal with along with a full time job and all that stuff and but I went long gunden Because I could do it but I think you can relate to this if I didn’t know what I didn’t know.
And long story short, I went to go refi and all the due diligence I did didn’t matter because they were like okay, well yeah, you don’t have you don’t have experience with multifamily. So love your single family experience no more the payment experience.
Sorry, couldn’t refi and long story short, we sold it made a good profit. But it was a fraction of what we could have made if we brought on a partner. And being greedy ended up costing me costing me money.