Show Summary
Veteran real estate investors understand the importance of being comfortable with change in your real estate business, as change is inevitable. It’s critical that you always look around the corner to see what’s coming, so you can shift as needed. Mike Loughrey’s business has evolved many times over the last 10 years, primarily out of necessity from being in the volatile Phoenix market. He has great lessons to share during this interview…so don’t miss this episode of the FlipNerd.com Flip Show!
Highlights of this show
- Meet Mike Loughrey, Phoenix based real estate investor that has learned to continuously reinvent his business.
- Learn about Mike’s experiences from buying at auctions to buying in many other states to scraping lots and building new construction.
- Join us to discuss the importance of planning for and welcoming change in your business.
Resources and Links from this show:
- Collective Genius Mastermind
Listen to the Audio Version of this Episode
FlipNerd Show Transcript:
Mike Hambright: Welcome to the FlipNerd.com Podcast. This is your host, Mike Hambright, and on this show I will introduce you to VIPs in the real estate investing industry as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week, which are available in the iTunes Store, or by visiting FlipNerd.com. So without further adieu, let’s get started.
Hey, it’s Mike Hambright of FlipNerd.com. Welcome back for another exciting VIP interview where I interview some of the most successful people in real estate investing and entrepreneurs in our industry to help you learn and grow. Today I’m joined by Mike Lockery (sp), who is a veteran real estate investor, that’s going to talk to us about scraping lots and building new. Mike has a ton of experiences and a ton of deals, and previously was a large rehabber, a large turnkey operator, and now he’s found out that he can make the most money by scraping lots and putting more houses on a lot. It’s really interesting, and an intriguing lesson. And it’s an interesting story to hear how he got there. So before we get started, though, let’s take a moment to recognize our featured sponsors.
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We’d also like to thank National Real Estate Insurance Group, the nation’s leading provider of insurance to the residential real estate investor market. From individual properties to large scale investors, National Real Estate Insurance Group is ready to serve you.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.
Mike Hambright: Hey, Mike, welcome to the show.
Mike Lockery: Thanks, Mike. Thanks for having me, I really appreciate it.
Mike Hambright: Good to see you again. Some of you know that I’m in a group that Jason Medley has called Collective Genius, which is where Mike and I first met, because Mike is also a member there. So it’s kind of a powerhouse group that we’re both excited to be a part of. Hey Mike, tell us about your background and how you got started in real estate investing. I know you’ve evolved a number of different times, but how do you sell [inaudible 00:02:40]?
Mike Lockery: I started off back in 1997 as a loan officer, kind of a small beach town boy who moved to the city and started out as a loan officer. And it did really well; a very lucrative business. And then did a really good job in the BC market, the sub-prime market. And I had repeat clients who came back every six months. Every six months they came back, and were back in foreclosure again. And it just amazed me how here in Arizona in the Phoenix market the appraisal always supported the refinance. I said, wow, the property values are going up so much that they are able to refinance with all their back payments, and the closing costs at the back end of the loan are refinanced and they’re back safe again–and they never make a payment. So it got to the point where I said, well if I’m doing this for this large volume of clients who are coming to me, why wouldn’t I just buy houses for myself, because I could see how much profit is in these deals if these people would just make their payments.
Mike Hambright: Right.
Mike Lockery: And it didn’t lapse the mortgage. And in 2002 I bought my first property from one of my clients. I said, “Why don’t I just give you $10,000 and just have you walk away from the property?” And that was my first deal. And from there I rehabbed that property, and [inaudible 00:04:00] sold it. And then I realized that here in Maricopa County in Arizona we have an auction that goes five days a week. So five days a week on the Courthouse steps they are selling properties for people who are being foreclosed on. I think it’s such a high volume, because of the large turnover in the melting pot of people we have here in Phoenix. Pretty much the majority of the people have moved from somewhere else, or either [inaudible 00:04:25] adversity and moving back out again. So that was my start in 2002. And a lot of times what I was doing was buying properties and flipping them to other clients I had who wanted to buy houses. So I had a good [inaudible 00:04:44] of people who can always come through and refinance and realtors; I worked with realtors.
Mike Hambright: Yeah.
Mike Lockery: And I really just started to buy them homes.
Mike Hambright: These are like owner occupants that came to you and said, “Hey, I want to buy a house and I need to get financing.” And you said, “Well, I happen to have a house you might be interested in.”
Mike Lockery: Absolutely, and what happened is that I actually [inaudible 00:05:00] the realtors and said, “Listen, I’m actually [inaudible 00:05:03] homes and have access to a lot of homes that I can help your buyers find and exactly what they’re looking for.” And we’d put them into a house that was fully rehabbed. We had fixer-uppers for them. And then I was doing the financing for them. So it was a really great mix for a long time, and up until about 2005, that was very successful.
Mike Hambright: Yeah.
Mike Lockery: So from 2002 to 2005 we were doing about four houses a month, just selling to some retail buyers, but mostly just clients I had on the mortgage side of the business. So then we hit the peak in the market, where things were really good. And the market was amazing. Everyone was making returns hand over fist. The returns were expediential, and actually I kind of held back the reins through that time period. And then I re-engaged again after the market had already started to fall. So really 2005 and 2006 I just went [inaudible 00:06:02] on home mortgage lending, where it was so busy then, that I just wanted to take advantage of that. I didn’t like how fast the market was going. It was moving way too fast for me.
Mike Hambright: Yeah.
Mike Lockery: It was beyond my comfort level. Once the prices started to fall in 2007, and they started to have some difficulties, then I started to re-engage, looked at the market a little bit and [inaudible 00:06:20] a bit in 2007, it really didn’t make a lot of sense, because the market was so fallen. So then I really laid low, got rid of the properties, and had some difficulties with those properties. And again in 2009 I revisited the market and said, “Wow! Where’s the value in the market at this point?” The properties were so cheap here in Phoenix. I think we were one of the first to really fall and hit the bottom, because of how fast our judicial process is here.
Mike Hambright: Yeah.
Mike Lockery: We have a 90-day notice of default, so within 90 days you could actually be in foreclosure and be foreclosed on. So at this point I looked at the market and said, how can I add some value here? And at the time the mortgage business was still good, and I still kind of had my hand in it. But I looked and said, “How can I bring some value to our market?” And I thought the value is going into these foreclosed properties, buying the property, fixing the property up, and putting a renter in there. [inaudible 00:07:17] sell it, so I could then pass it along to other investors across the country, and across the world. We started doing some marketing, a lot of marketing in California, where the values were so very high, the home prices. And then we also reached out to Australia, some Chinese, and Israeli market. So those three international markets we hit, basically selling properties at the net gap of 10%.
Mike Hambright: Okay, these are primarily just turnkey rental properties?
Mike Lockery: They were all turnkey rental properties, which ended up working really well for us. So it was actually myself, and I formed with a partner in 2009, and said, “This is what I see in the market; let’s give it a shot and see if it works.” And it worked very well for us, because at the time it was very safe, because we had a tenant in the property who was really servicing any sort of debt we had on the property.
Mike Hambright: Yeah.
Mike Lockery: So it was a very safe market, and it was a safe way for us to grow our business. The market rapidly, you know, regains its base, and before you know it, we actually were into a healthier market doing regular flips.
Mike Hambright: Yeah.
Mike Lockery: Those lower-end properties we were no longer able to buy. So at the end of 2010, moving into 2011, it was really just a flippers’ market, going in and doing paint and tile, doing some new backsplashes in the kitchen, your granite countertops; and then sell those properties for a great profit.
Mike Hambright: Yeah.
Mike Lockery: So it was a really healthy flipper’s market throughout to 2012. Once we hit 2012 our numbers had doubled; we had doubled the numbers we were at. The same house sold for twice as much as we were buying it for in 2010.
Mike Hambright: Wow!
Mike Lockery: So with that we kind of actually left the Phoenix market. We were still buying some homes here, you know, kind of cherry picking, you might say. The name of our business is cherry picking investments.
Mike Hambright: Yeah.
Mike Lockery: We cherry picked the good deals here, and we moved off to Orlando, Florida, Charlotte, North Carolina to do a turnkey model there, as well. And really we were just trying to sell the supply the market demand. You know, there was a lot of market demand for the turnkey products we offered, and so we went to those markets and to service that. We were still doing business here in Phoenix, throughout that time period, and really up until the beginning of this year, 2014, we actually decided to cut off the business in North Carolina and Florida, and then actually resume business here in Phoenix.
Mike Hambright: Okay.
Mike Lockery: And so we really got to the point where we said, “Well, we’ve evolved so much…
Mike Hambright: Yeah.
Mike Lockery: You’re turnkey guys, doing the normal fix and flip, a little bigger fix and flip, and now at the end of 2013, the beginning of 2014, we’re actually doing full-blown rehab. We’re adding additions, doing new truss work, knocking out walls. We’re reconfiguring homes. Until we got to our first house that we basically over improved. We did a great job with that house, and it sold within the first hour of the market. We bought it for $200,000; put $150,000 into it, and so we had $350,000 into this house, plus our closing costs–and our holding costs. And we had put it on the market at $450,000 and had buyers lined up. We had two back-up offers. People wanted to buy it, because it was a really cool, funky modern product. Bu then we got to the appraisal stage, and we couldn’t get an appraisal for higher than $375,000. That put us pretty much at a breakeven or a loss.
Mike Hambright: Yeah.
Mike Lockery: We had essentially three buyers in three different appraisals, and we just realized, wow, we’re really over improving the market. And there was such a demand for it, but we still had the appraisal issue that we’re dealing with.
Mike Hambright: Yeah, plus appraisals in Phoenix have been a little more strenuous anyway, but because the market’s been so volatile that appraisers are a little more skeptical; absolutely. Hey, Mike, before you start to tell us about some of the stuff that you’re doing now, I just want to recap what you did. You’ve evolved quite a bit. You saw new opportunities and went into new markets, or changed exit strategies. And I think that for folks that have listened to me for any period of time at all, they know the importance of being flexible and changing, ebbing and flowing with the market, and looking around the corner. And I think for a lot of people that have been investing in markets like Phoenix or Las Vegas for a long time, you kind of learn it the hard way that you had to evolve, right? But I think it’s really important for people to understand that lesson. Don’t be so tied to one exit strategy, or one way of doing business, that you’re not going to be able to adapt when the market changes, because the market is going to change no matter where you are.
Mike Lockery: Absolutely, you’re 100% correct. Every time we look at a home we have at least at a minimum two exit strategies if we don’t [inaudible 00:12:21] the home. So we always have at least two or three exit strategies. How are we going to back out of the property if somebody were to go along? And we’ve learned that obviously after the crash in the market. You really have to be creative in how you prepare some of these properties and sell them–and market the properties. And I think that’s what has really set us aside from a lot of other local investors. And it’s so funny, that in our market we’ll look back and we’ll see, you know, or on the news they’re talking about the market still is really depressed. But at the time the market was for the buyer. It was fueled and doing great. And I thought, wow, it’s so funny that the news is portraying it being so depressed. And then by the time the news is saying the market’s are for the buyer and it’s such a great time to flip your properties, this is the time to flip; we’re saying this is definitely not the time.
Mike Hambright: It’s overheated then, yeah.
Mike Lockery: And it was saturated, the prices are getting driven up so high. And so it’s kind of funny where the news leads people and where the actual market is. And that’s just part of keeping your finger on the pulse of your market.
Mike Hambright: Yeah, absolutely.
Mike Lockery: And I’ve always said to do that. And for us, we just said, we can never be too scared to move and change. We have to change with the market, because the market, the only constant in this business is change.
Mike Hambright: Yep.
Mike Lockery: And that’s the market. We never know where the market’s going to go, but we have to be able to move with the markets.
Mike Hambright: One of the other things I heard you say that I think is also a great lesson. And it’s something that I’ve learned myself over the past couple of years. You made a couple of comments about sitting on the sidelines. I think as real estate investors it’s tough because for a lot of real estate investors that have one business, like if you’re a rehabber, or even if you’re a wholesaler and you have that one exit strategy primarily that you’re using, you can never stop buying. You could never stop doing deals, because then your revenue stops, and that’s important. You had your lending business, so you had another source of revenue there. A lot of people have rental portfolios, just something that allows you to kind of sit on the sidelines and say, something is changing here. I need to pull back for a little bit and readjust. I think that is so important to real estate investors, to have that other source of income, and to be able to pull back. If you think about it, people who invest in the stock market, that’s what they do. The market gets overheated, or Apple is overheated, which is not right now. But any one stock that is buying too much, people will just say, “I’m going to sit on the sidelines. I’m not going to buy right now. I may even sell and reinvest somewhere else.” And so that same mentality doesn’t seem to move over to real estate investors, because they just get caught up I this I can never stop buying kind of cycle.
Mike Lockery: Absolutely, and that’s a great point. We actually have built a large portfolio of rental properties, rental homes here in Phoenix. And we bought them at $60,000, or a rental house. And we get $1,000 a month in rent for the property. And now the property is worth $180,000.
Mike Hambright: Yeah.
Mike Lockery: So if you’re getting $1,000 a month rent, on $180,000 property, that’s not a good return. It is a good return if you paid $60,000 for it.
Mike Hambright: Right.
Mike Lockery: But the problem for us is we can sell it for $180,000, and then reinvest that into other markets, and we could probably get $3,000 a month, that same money.
Mike Hambright: Right.
Mike Lockery: That has been a big lesson for us to learn, because we didn’t want to let go of the properties. We get so attached to them, and we only paid $60,000 for it.
Mike Hambright: Right.
Mike Lockery: It was kind of scary to let go of that. But you may be able to sell the property and leverage it into markets where we’re paying $25,000 and $30,000 per home. And we’re getting $700 a month rent for those properties.
Mike Hambright: Right.
Mike Lockery: And so by being able to really let go, sell the properties, and adapt to the change has been very lucrative for us.
Mike Hambright: Yeah.
Mike Lockery: Really, it’s hard. And now for the same money we have six homes versus one home, and so if you look at your numbers, it’s always a lot safer to have six versus one, as far as your numbers go.
Mike Hambright: Absolutely.
Mike Lockery: It has been a huge lesson, but it has been very lucrative for us.
Mike Hambright: So tell us a little bit about what you’re doing now with repurposing land, and all sorts of stuff that I don’t think anybody else is doing, so it’s pretty interesting.
Mike Lockery: Yes, it’s super exciting for us, and a huge learning curve. And obviously, your 20-29 [inaudible 00:16:50] is always the best. We should have been doing this same thing when the market was really on fire, but we didn’t. So again, it’s the evolution of the real estate investor. But we got to the point where we had that one instance where we sold that house, and had the appraisal issues. It was a beautiful house, an amazing home, and it had some really cool stuff. But one thing that we do when we go into different markets, even here in Phoenix; I don’t say markets in different states, but there are different markets within your own home town. And you have areas where you have your younger, college-age, clientele. You have older clientele, and you have more of your clientele that wants to have more land, more space to put up all their toys. We really go in and design the houses for those specific markets. We’ll go in and put up a tract in those different markets. So for us, we like the real modern, very fun type of homes that are really great for entertaining. That’s a big market for us. What we did is we said, “Most of those markets in our community are all landlocked. There are no homes available, no land available.” And we realized that; we gave it a shot. We said, “When we spend $150,000 to rehab this house, what’s it going to cost us to build a brand new home?”
Mike Hambright: Yeah.
Mike Lockery: So we went in and we did our first house and it cost us about $250,000 to build a similar home. We had that number down, written down, so about $202,000 to build a 2800 sq. ft. home with really nice finishes. Now we say that we go in and we buy that house for $200,000, and we scrape the house. Now we add another $200,000 to it and we’re at $400,000. We’ll go four for a rehab product and you’re at $350,000. Now we’re at $400,000 for a brand new home.
Mike Hambright: Yeah.
Mike Lockery: A brand new home and now we don’t have our appraisal issues. It’s a brand new home and it’s built in 2014. We’re going to sell that home for $600,000.
Mike Hambright: Wow! And you say you don’t have appraisal issues, and that’s just because they are just not using the other traditional comps because of the age difference?
Mike Lockery: Yes, the age difference. You’re looking at and comparing a 1950s home, to a 2014 home.
Mike Hambright: Yeah.
Mike Lockery: So the appraiser has to be more lenient on that product. There are really no comps for that product, so they have to allow it. It’s like if you go into a new home community, and you say, well, the home starts off at $200,000. By the time you get out the door you’ve added your carpet, your upgraded carpet, your tile, some two-tone paint, and granite, you’re at $300,000. And how can they allow those adjustments? Well it’s because it’s a brand new home.
Mike Hambright: Yeah.
Mike Lockery: And demand creates the value there. And we still have some appraisal challenges; but not nearly as much as we’ve had with the conventional rehabbed homes.
Mike Hambright: Right.
Mike Lockery: Some of the stuff we’ve learned to do, and now we’ve done about ten of these homes this year. Now we’re saying, “Well, what do we get if we buy one home, and then we do the neighbor’s house, who also looks really rough, and why don’t we buy their home?” And then we’ll buy the two houses behind it. So we’re starting to do assemblies of homes. We’re going in and assembling a new lot. So we’re taking four old homes that we can buy, and we’re scraping all four of the homes. And now we’re going through and we’re replatting that area for eight new homes.
Mike Hambright: Yeah.
Mike Lockery: Now we’ve just reduced our bottom line costs; we’ve reduced it by 50%. So now instead of paying $200,000 for the house, it’s going to cost us $100,000, plus the cost of the land. And with that we’ve really started to have some fun, because we’re building some really cool little communities, subdivisions, within these older neighborhoods, these [inaudible 00:20:45] neighborhoods. And this is where we’re really starting to see a huge learning curve, for someone who just goes in and we just kind of plot out the house, what we want to do. And then we go down to Home Depot and buy all of our goods and we build the house; and our guys rehab the house. Now we’re really looking into a lot of planning, we do a lot of planning.
Mike Hambright: Sure.
Mike Lockery: It’s a whole new process, but you’re looking ahead and you’re saying, “Well, now it’s not one home at a time. I’m doing eight homes all at the same location.
Mike Hambright: Yeah.
Mike Lockery: So time wise, it takes you probably about nine months to get all those completed, versus the one or two months that it took you with the one house. But you have eight homes to sell. And by the time we really get through half of those homes, the rest of the homes are selling very easily, because people want to live in a brand new home in these older areas. [inaudible 00:21:35].
Mike Hambright: Yeah.
Mike Lockery: These older areas are really attractive to people to live in. You’re close to all of the downtown amenities, all the restaurants, all the cool places. People really want to live there. So really, right now we’re in Phoenix, and in order to buy new you have to go to the outskirts of town to buy the newer tracts of homes.
Mike Hambright: Is there more of that going on in these neighborhoods? Are there some other people who are scraping? When you started, does it kick off somebody else to doing it? I’m curious; what type of neighborhoods are these? Effectively they are paying probably it sounds like nearly double per square foot what the 1950 older house is in that neighborhood. How do people justify? Of course it’s newer, obviously, and a brand new house. But talk about the types of neighborhoods you’re going into and you’re able to do this.
Mike Lockery: These are some really attractive neighborhoods. In Phoenix, obviously, we’re in the desert. But in some of these neighborhoods in the central location areas you have a lot of the old orchards. They used to be, back in the days, they were old orchards where it’s very green, very lush, lots of trees, lots of grass. People want to be in those neighborhoods. People who moved west from back east, they come here and they don’t necessarily want to live in the desert.
Mike Hambright: Right.
Mike Lockery: They don’t like all of the rock grass and the cactuses in their yard. They want to have some nice trees and nice grass. It still reminds them of being back home, but yet they still get the amenities of being here in Phoenix, and with our low cost of living. So a lot of these neighborhoods are very up and coming, very trendy neighborhoods. We have lots of really cool restaurants, not your chain restaurants. They are singularly owned by small businesses. There is a multitude of restaurants, who are just you know, onesy, twosy, mom and pop restaurants that are really attractive to people, where people want to go. It’s really cool, funky, and mod.
Mike Hambright: Yeah.
Mike Lockery: And so these are the people who really want to live there, and the benefit is a lot of people who have these nice 1950s homes, they have inherited those homes. They’ve lived there for ages. And so when they come in and they realize that they can get $250,000 for a home, it’s very attractive to them.
Mike Hambright: Yeah.
Mike Lockery: They’ve never seen those types of numbers in their community, for just [inaudible 00:24:00] home in a long time.
Mike Hambright: Usually when I buy a house, we’re usually doing the marketing, generating leads for people that are willing to sell at a discount, typically. And so that first house that we buy, you know, probably I assume the same for you, that’s probably the deepest buy. And you probably have to pay more to get the neighbors to cooperate. Is that true?
Mike Lockery: Sometimes yes; usually the last house is the most expensive, yeah.
Mike Hambright: Yeah, I’ll bet.
Mike Lockery: You get the first one tied up at a pretty good price. We do some marketing and we do the mailers, and we do some follow-up phone calls, and you know, get some dialers. And we get that person to sell. We get a good price on the house. And we’re looking at it and we’re saying, “Okay, we needed that house for sure. What do we have around this house?” And we go in and we tell them we have this one sold. We usually get a similar price for the first couple of homes, as we’re paying for the first one. It’s usually that last person that maybe has rehabbed their house already, or bought it at a little higher than the other ones, that the house is a little nicer. But this is the key to completing the project. We can actually get that house and increase our subdivision by three more houses, by just that one house.
Mike Hambright: Right.
Mike Lockery: So we could really afford it. And you really get into analyzing the numbers and see where you’re at. Sometimes it doesn’t make sense. Sometimes you let one house out of contract and just buy two homes, and then you can put three homes in there where there were two.
Mike Hambright: Yeah.
Mike Lockery: So it just depends; you have to look at the zoning, what your zoning requirements are, what the density is in that area and see what you can put on the property.
Mike Hambright: And if you can’t get any of the neighbors to cooperate, then you just rehab that house and move on?
Mike Lockery: Yes, just scape that house and go on to a new one.
Mike Hambright: Okay.
Mike Lockery: In some instances we have bought houses that we bought cheap enough, and the houses are nice enough, that we just rehabbed the house.
Mike Hambright: Yeah.
Mike Lockery: Then it’s back to the basics; back to just rehabbing homes and selling them, and it makes sense for us. Obviously we’re not into it for $200,000 plus; we’re in it for less. So it makes sense for us to do that as well.
Mike Hambright: Yeah, and back to what you said, it’s important to have multiple exit strategies. So if your best case is you’re going to convince a bunch of the neighbors to sell at the right price, your worst case is well we’ll just rehab this one and move on to another neighborhood.
Mike Lockery: Absolutely, and that makes sense. And one thing we’ve recently done in our fall back mode, a lot of the county records and the city, we looked it over and said, “What builders had tied up properties back in the peak, 2005 and 2006? They got these properties all set up to build on, and then the market crashed and they weren’t able to build on these properties. And what do they have platted out, which means the property has already been broken into lots. So the property is broken into the single-family lots, and you can build on them. But they never had the opportunity of building these houses. So we’re willing to go in after those sellers who have sewn up those properties and try to go into those areas and build out those subdivisions.
Mike Hambright: Yeah, that’s pretty cool.
Mike Lockery: There are pretty new tools for us to find people who want to sell. They were willing to sell in the peak of the market, but they just never had the opportunity because the buyer couldn’t perform because of the condition of the market. And it’s now we’ll go back into those neighborhoods and talk to those sellers and talk to them as well. We picked up a few good deals recently.
Mike Hambright: Yeah, that’s pretty interesting stuff. So Mike, tell us little bit about what kind of advice you’d give to people to basically have their ear to the ground and be thinking about how to evolve and how to find opportunities. Some of the most successful real estate investors, on one hand you could say, they are always looking around the corner to see what’s next. But on the other hand you could say they have their nose to the grindstone, and they’re just totally focused on right now and making the opportunity they have as fruitful as possible. But just talk about generally speaking how people should be thinking about their business and their future.
Mike Lockery: I think you just touched on one of the biggest things. You need to always be ready to change. Make change your friend, not your enemy. Be willing and open to it. It’s always good to have a mentor, someone you can reach out to and really talk with about the market. One thing that’s been good for us, we have the CG Group, which is a group of investors across the country that we can reach out to and talk about trends; what everybody else is experiencing in their home markets. And it gives you a lot of good ideas; someone, a good mentor like yourself that you can reach out to and say, “Hey, you have your finger on the pulse. What’s going on across the country?” Right now this is what’s happening in my market; it’s not working any longer. For us, we’re big, you know, auction guys. We go down to the auction house every morning. We buy properties, we honor them, and we have had to evolve into doing mail-ups, doing our own marketing of these properties. And so, you always have to be ready to change. I think that’s the one thing that’s key. The second key is just analyze the property with reason. Don’t be unreasonable. Always think about worst case scenario, and multiple exit strategies to get out of those properties.
Mike Hambright: Yeah, that’s great.
Mike Lockery: You can’t always be pie in the sky. You have to be optimistic as an investor; the role is optimistic, but we always think we’re going to sell for top dollar, but what if we don’t?
Mike Hambright: Right.
Mike Lockery: What if it only pays 10%? Then with a decrease; what if it costs us 10% more to finish the property? Will I still make money? And will I still be able to get out of this property without hurting myself or my investors?
Mike Hambright: Right. Hey, Mike, thanks so much for joining us today. I definitely appreciate your time and allowing us to learn from your lessons, and you’re doing great stuff out there.
Mike Lockery: Thank you so much for having me, Mike. I really appreciate it.
Mike Hambright: Yeah, we’ll be talking to you soon, okay?
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