This is episode #315, and my guest today is Iris Veneracion. Iris is an active investor, but also inspires women (and men) to successfully invest in real estate through her club. Like me, she’s a Corporate Refugee, and puts a lot of focus on “Lifestyle Design”. Today we talk about the importance of networking and being active in your market, how to find a solid mentor, and the right and wrong ways to find partners. We also talk quite a bit about defining your goals, and making sure that you’re focused on building a no regrets lifestyle!
I’m excited to have Iris on the show…please help me welcome her now.
Mike: This is the FlipNerd.com Expert Real Estate Investing Show, the show for real estate investors, whether you’re a veteran or brand new. I’m your host, Mike Hambright, and each week I bring you a new expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility, and taking control of your life and financial destiny, you’re in the right place.
Hey, everyone. This is episode #315 and my guest today is Iris Veneracion. Iris is an active investor, but also inspires women and men to successfully invest in real estate through her women’s real estate investing club. Like me, she is a corporate refugee and puts a lot of focus on lifestyle design, and without creating another job for herself; that’s why she left Corporate America. So today, we talk about the importance of networking and being an active investor in your market, how to find a solid mentor and the right and wrong ways to find partners. We also, again talk quite a bit about defining your goals and making sure that you’re focused on building a life with no regrets, a lifestyle that you love. I’m excited to have Iris on the show. Please help me welcome her now. Iris, welcome to the show.
Iris: Hi, Mike. How are you?
Mike: Good. Good. Good to see you.
Iris: Oh, great to be back. Thanks for having me again.
Mike: Yeah. We talked a little bit beforehand. It was like 120 episodes ago. So we’re much more mature now. We’ve learned a lot. We have some great information to share with . . .
Iris: I don’t know if I’m more mature, but we’ll see.
Mike: Well, from a business standpoint. You still may be very immature, actually. Well, hey . . .
Iris: We like to have fun and make money.
Mike: Yeah. Hey, you’ve got to have fun along the way. For sure. In fact, that’s some of the stuff we’re going to talk about today, which is lifestyle design and kind of why do we work so hard, and all those things. Right?
Iris: I think so. It’s so important to know.
Mike: Yeah. So I’m excited to talk about these things because sometimes we forget about them. Before we kind of jump into the meat of the show, why don’t you take a couple minutes and tell everybody who you are and what you do, and a little bit more about you?
Iris: Sure. Okay. So I’m Iris Veneracion, by the way. I live here in Southern California and my background is mortgage finance. About, gosh, 13 years ago in the thick of things when the mortgage industry was just blowing up, I decided I was tired and working for corporate wasn’t for me anymore, and I jumped to the dark side and went to real estate investing. Actually, it’s the light for me.
Mike: You left the dark side, right?
Iris: Yeah, left the dark side. There you go. Just again, did what a lot of people want to do, which is totally just quit my job and went for it. So that was in 2003. My original goals back then were to get 100 doors behind my belt and I wanted to do it as fast as possible. Like I was mentioning earlier, in our conversation before, Mike, I got 50 doors in and I’m like, “I can’t deal with this anymore.” So I had to reassess what it was that I really wanted and why I was doing this real estate, and then go from there. It’s okay to change directions or change goals. It’s something maybe we’ll talk about a little bit later. Then, while all that was happening, the market tanked. 2007, ’06, ’07, ’08 happened, and that’s when I decided to start a real estate club. Everyone thought I was absolutely insane because, at the time, everyone hated real estate.
Mike: Yeah. Everybody was fleeing.
Iris: They were like, “Why are you starting a club?” That’s investCLUB for Women, and a lot of men come to our club too. Everyone is welcome. What I realized back then, that what was happening wasn’t just me. It was happening to a lot of people. I realized that it was really important to stick together and become a community where you can support one another, get good information, share your mistakes, find opportunities, and that it was critical to understand that there is help out there. If you quit, you’re never going to get it back.
So you’ve got to keep going and real estate is just a cycle. Things will come back. But know your timing. So it’s not just about how to do, but when to do certain things. Because you can make great money in real estate in any cycle. It’s just choosing what niches you’re going to be grabbing onto when the market is right. So that’s when the club was born, and now the club has been around for eight years now. We’re a strong community in Southern California, and if any of your listeners would like to stop by, you’re certainly welcome.
Mike: Great. We’ll add a link for the investCLUB for Women after the show here, kind of below the video so everybody can see how to get to it. So yeah, I know we’re excited . . . We’re going to talk about lifestyle design and stuff in Part 2 of the show today, in the Taking Action segment. But up front here, I know that because you formed a club, and in many ways, I’ve formed a big club in terms of FlipNerd, where I kind of have a community of people that we kind of believe the same things of the fact that it’s really easy to be . . . If you’re not doing stuff like this or you’re not participating socially, real estate investing is a pretty lonely place. Right? It can be. Yeah. You might be killing it. You might be failing or you might be killing it. But you’re usually kind of on an island unless you find some way to kind of socialize and share your knowledge, and learn from others and share your experiences, and all those things. Right?
Iris: Absolutely. I truly believe that you don’t have to be a lone . . . A lot of people are, but you don’t have to be a lone ranger in this business. It’s so important to, number one, surround yourself with like-minded people.
Everyone has heard that. One great way . . . I mean, I admire your community so much because it’s amazing with technology today there’s so much information that’s available. You can consume it 24/7, and great speakers you have on this show. There are a ton of podcasts. It’s all available. But I truly . . . Maybe I’m saying this because I have an actual brick and mortar club.
But I think it’s so very important because real estate is a people business will always be, and a relationship business. I think it’s really important for your listeners and people in their local areas to find the local clubs and meet the local people, and really develop those relationships. I think it’s really important too because when I first started out I didn’t have platforms like this, podcasts to listen to and all this education available online. So I learned everything by going to real estate clubs and educating myself further. I mean, there’s so many ways to make money in real estate. Right? So what are you going to choose? I assure you, there’s a niche for everyone in this business.
When you find that niche, when there’s something that fits your lifestyle and fits your personality, that’s really important. Then you need to pursue it. You need to get further educated because you’re not going to learn everything in these 30 or 40-minutes bite-size segments, or even in an hour and a half class in a real estate club. You need to further educate yourself because there are huge learning curves and people have that been there before that are sharing their information will really, really help you.
Mike: Yeah. I think that’s some of the challenge. It can get overwhelming with a lot of information out there. I mean, I realize, hey, we . . . [Inaudible 00:08:17] maybe we’re contributing to that by having so much content and stuff. With FlipNerd, our hope has never been that, “Hey, just come here and you can learn everything you need to do.” But it’s to inspire people by what’s possible, by meeting people that have done certain things and say . . . Because I think we talk about mentors and stuff like that a little bit, and it’s part of the importance of networking.
But it’s really important to not copy, but emulate somebody. Like, find somebody that’s done something that you do or a way that somebody does something and say, “I want to learn that because I think that’s my path.” I think some of the challenge is if all you do is consume information, you start to lose confidence in your ability to do anything because there are so many things that you might want to do or so many different approaches you might try to make. But it’s like, hey, maybe down the road after you perfect something, you can start to broaden out. But you need to find one thing that you can be really good at and go do that. Right?
Iris: Certainly. Certainly. Again, because I have a club, I know a lot of people in our community fall to the shiny object syndrome. Right?
I mean, everyone that comes and speaks is amazing, and they have a great system or they want to be like them because it’s always so fresh and exciting. But again, I just caution, you need to be able to take this stuff in and really kind of ask yourself, “Is this what I want to be doing? Do I want to be on the phone constantly, or would I rather be out in the field talking to people in person? Or would I rather be just analyzing deals?” So it’s really important, again, to look within yourself and determine what it is that you like the best. Now, sometimes, you’re not going to figure that out until you do something. Right?
That’s okay. That kind of goes back to what I was saying before. It’s okay to figure out what your goals are and to maybe reassess them when you’re maybe in it for three months, six months, a year, three years, five years. Reassess it and just make sure that, “This is where I’m going.” Because again, there are so many opportunities in real estate, just you don’t have to live and die by one niche.
Mike: Yeah. Again, I’m definitely not saying that everybody needs to do what I do. But I can tell you, even recent experience, I’ve bought hundreds of houses, I mentor a team that buys nearly 1,000 houses a year, and I’ve been in single-family, fix-and-flip, wholesale, keep as rentals, and about as kind of plain vanilla as you can get in real estate investing. But I will tell you, recently I have a number of friends [Inaudible 00:10:47] on the show before. I won’t say any names, but they were having a webinar on something that was really fascinating to me and I was like, “I want to learn about that.”
Then, the next thing you know, it’s something that I might be able to bolt onto my business. I knew him so I just said, “Hey, I was on your webinar yesterday.” So we got on the phone and talked about how I might be able to pull it into my business. But I’m kind of bolting it onto something that I already have. So I think that that’s okay. You almost have to have your ducks in a row in terms of the foundation of what you do, and then if you start to want to bolt things on or say, “Well, I’m really fascinated with multi-family,” maybe I can start to lean in that direction. But at least I’ve got my foundation over here of what I know works.
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Maybe I can start to lean in that direction. But at least I’ve got my foundation over here of what I know works.
Iris: Yeah. I think you’re absolutely right. That’s so important to have your foundation. Exactly. That’s why I love real estate so much because, again, I can’t say . . . there are so many ways to make money in real estate. So once you have your foundation, there’s . . . Real estate is always so exciting and the market always changes. So sometimes you’ve just got to look, and maybe you’re focusing on this type of thing, your rentals, for example. When it’s time to flip again, maybe that’s when you focus all your energy . . . So it’s okay to be fluid and you need to be fluid.
Mike: You have to be. Right. Yeah.
Iris: Because just like anything, there are cycles and you have to play accordingly into the cycle. The best way to know what cycle is going on is to be in touch in shows like this, be in touch with your local community, and going to real estate clubs to see what the pulse of the market is. It’s different in every market.
Mike: Absolutely. Because the big thing is, if you’re by yourself you can’t see around the corner as much as you can if it’s group think, whether you go to a club or whether you’re listening in to experts on podcasts or other things. Because you can start to hear people now. Everybody is questioning, “Where’s the market going? I’m getting a little nervous here.” You can kind of feel that, where like two years ago it was like the sky is the limit. So you can kind of feel that general vibe going on right now.
But I think the important thing is not to say, “The market might shift so I need to figure out when to get out.” I think you say, “The market might shift so how can I thrive in that next thing that’s coming around the corner and how can I learn some lessons? Or what can I learn from challenges I had in the last cycle?” or whatever it is. I think that’s the best thing about seasoned real estate investors is they don’t kind of get in and out, necessarily. They just have different strategies in different markets. So if you can kind of watch for what’s going on, you can learn from people that have been around, some of the old sages and folks that have their ear to the ground. Then, you can plan to take advantage of that when it happens.
Iris: Yeah. I just have to say, there are a lot of those folks around that I’m sure they’re out there that are willing to help. Again, you might need them. How do you get around them? How do you get in their space? Where do they hang out? Maybe they’re at real estate clubs. I don’t know. So that’s why it’s really important to also just surround yourself with the community of the people that are doing the same thing as you. Because I know even myself, as a business owner, having great colleagues that maybe aren’t necessarily doing the same things I am specifically, they’re really good to have around. Because even as a business owner, I still have blind spots myself. Right? So it’s good to have an awesome community around you.
Mike: Let’s talk about mentors a little bit. So sometimes people go to clubs to find mentors. Sometimes they hire mentors in a private coaching type thing or group coaching, or whatever. There are lots of ways you can find a mentor. But what are your thoughts on just kind of mentors in general and how people can find somebody that’s a good fit?
Iris: Absolutely. I think mentors are definitely so very important, and I’m sure your listeners have heard this before. So the question is, how do you find a good one? Right? You can go take some huge seminar and sign up for their coaching. But are they really a mentor in that sense or are they just on a call with you for an hour once a month? I believe in having someone localized because again, every market is different and the nuances in every market can change. So if you’re going to find a mentor, I would say to find someone who’s doing stuff in your community and, number one, who’s doing stuff that you want to emulate. So for example, if you’re a flipper why would you be following a mentor or a person who just only holds? Right?
I mean, I think it’s important to be a balanced investor to hold and flip, and that kind of stuff. But find someone that you want to emulate and the lifestyle that you are looking for. Okay. So that being said, I do know like in my community and for myself, there are a lot of people that have experience that are willing to help. All you have to do is ask.
But with that being said, I’m like, “Careful how you ask.” Because I’m willing to help anyone around me who is willing to help themselves. I mean, we can spot, or I should say I can spot, a time/energy vampire a mile away, the ones that come and just say, “Oh, my gosh. I want to pick your brain. Can I take you to lunch and pick your brain?” I’m like, “I don’t want my brain picked.”
I mean, it just doesn’t sound good to me. But if you have a specific question or something, yeah. I would love to help it. Or like something that happened recently to me was I spoke at a club and a lot of people asked, “Hey, can you take me around? Can I see your properties? Blah, blah, blah.” That’s great. That’s fine. I hear it all the time. One person actually came up, a really great guy, and he was like . . . He came up with a proposition where he was like, “Look. If I could offer you this, will you allow me to do this?” He really stuck out in my mind. What he asked for was essentially what everyone else asks for, could he follow me on a property, can he watch how I deal with contractors, things like that. But he so stuck out in my mind because he actually was willing to give something in order to get something in return. So I realized . . .
Mike: So what was that?
Iris: He was willing to give something.
Mike: Yeah. What was he offering?
Iris: Oh, so he offered . . . His name is Steven, by the way. He offered to help me update my website.
Mike: Okay. So something of high value to you probably, right?
Iris: Absolutely, and it’s something that he already does.
Mike: It’s better than like, “Can I buy you a $10 lunch and learn everything you know.” Right?
Iris: Which still, lunch is great, but yeah. Make it $100 lunch. No, I’m just kidding.
Mike: No, that’s awesome. I think that there’s a great lesson there because I think a lot of people . . . It just comes off this way sometimes of . . . I’m not saying people are bad people, but they sometimes say, “Hey, can you do this for me? Can you add a lot of value to me?” without any sort of offer to do anything in exchange of kind of like value or meaningful. That’s interesting because I think I’ve always wanted to help people. I mean, gosh, this is show #315. We’ve done a ton of stuff and we spend a lot of time sharing our knowledge with people, and people like you join and share their time.
So you can tell just from the fact that we’re doing this, there are no hard sales pitches or anything that we do on hundreds of shows. So everybody that’s involved likes to give back and they like to share. But you also kind of realize that, hey, you have limited resources and you have an opportunity cost of your time. So I think anytime you can approach people . . . Maybe you can kind of give some tips on the right way to approach people and ask for, “How can I learn from you, and then how can I benefit you for sharing that with me?”
Iris: Sure. Okay. So one example I can give, I’m a flipper in the community so I always reach out to people and say, “Hey, do you have anything that you want to wholesale? Because I will buy it,” for example. So a lot of wholesalers that will get potential deals, and maybe they’re not sure it’s a deal yet, or what not, or they have it under contract, either way, they’ll come ask for advice, and the first thing is to be really specific in your questions. If you’re asking me to evaluate your whole property and tell you what you should do with it, that takes a little more time and effort. So show me that you actually did your research and that you’re helping yourself or you’re doing something here before you just try to ask everything they need to know in order to move forward.
Mike: Or you meet them at a property and they don’t even have anything to write on?
Iris: Yeah. But you know, it’s . . .
Mike: “Tell me what I need to do, but just can you send me that in an email too?”
Iris: Huh? Oh, yeah. Right. So show me that you’ve actually done a little work behind it and ask me some specific things that I can answer quickly. Obviously, if it’s an interesting deal, I will dive in there a little bit deeper in with you. But you’ve got to show me that you’ve already done something, versus asking me to do everything.
Another great thing that I’ve suggested to people is if it’s your . . . Let’s say you want to flip and you found a deal. Flipping, there’s a huge learning curve when you flip a house. So I always tell, if you’re going to do your first one, please partner up with someone who’s done it before. Because you’re going to learn a lot, and you’re probably going to save a lot of time and definitely a lot of money in doing so. So how do you approach that? Let’s say you’re someone who’s a new flipper and you maybe don’t have money. But you certainly have time, and you can put in effort, and you found the deal.
So what if you could bring it to your local flipper and say, “Hey, look. I want to wholesale this deal to you. But how about this? Why don’t you give me my wholesale fee when you’re done with the project and you sell it?” Maybe you can ask for a bigger wholesale fee because of it. Right?
Then, there’s no money out of their pocket. It’s just going to come out of the proceeds. But in return, what if you ask, “Hey, can I follow you on this project? Can I set up some contractors? Can I meet some people? Can I see how you deal with certain things? Can I see your timeline, and can I help you with the budget?” Then, that way, you can see, first, what a great opportunity not only for the person who’s flipping, but they can have someone they can maybe have run around the city for them. But then, it’s a great opportunity because you get to see the thing firsthand.
Or another suggestion is maybe you have the deal and you have some money sitting around. So how can you participate? Maybe you can be a private lender. But again, in exchange you have to specifically ask, “Can I be at that property? Can I be there when you’re there? Can I help you get some contractors?” But I think that is the best seminar you can take here when it comes to flipping.
Mike: Yeah, learn by doing.
Iris: [Inaudible 00:23:02] so much. Just be [Inaudible 00:23:03].
Mike: . . . got to do. Right. Even at this point, we’ve bought hundreds of houses, I’ve done hundreds of rehabs, and there’s stuff that happens to me very often on new projects that’s never happened to me before. But what you start to develop is just the confidence to say, “Something is going to happen to me that I have never seen before, and never thought that would happen to me. But I’m not worried about it because I’ll just make a decision in like one minute and move on.” I think the confidence is the big part that’s hard to learn without doing. Right? Yeah. Because you can’t read every instance of what could possibly happen to you on a flip in a book or at a seminar, or anything else.
Iris: Yeah. I’m a big proponent of the real learning is in the doing. It’s exactly like you said. It doesn’t matter if you take a 60-day challenge or a weeklong seminar, or 12 months of mentorship. There is stuff, like you said, that happens to you and me, experienced, seasoned investors, that you have never seen. Yes. Having the confidence makes all the difference in the world. But if you’re out there doing it on your own and you don’t have any experience, you don’t have anyone that you can reach out to, ask for a hand or any advice, if you’re a lone ranger, for example, that’ll sink you so fast and get you so discouraged. So again, important to have community.
The other thing too, when it comes to mentors, I don’t know how many times I tell people in my community, in our clubs and what not just, “Here’s my number. Give me a call. Send me an email.” So many people just don’t and I really applaud the people that do. But at the same time, kind of like what we had talked about earlier, if you’re going to ask me a question, please be specific. Don’t ask me to just give you mentoring and . . .
Mike: Make it easy for you to get a response. Otherwise, you may just not respond, or you may kind of hold back because it’s like, “Well, they made this too hard for me to give them a thorough response.”
Iris: But don’t be afraid to ask either. So [you need to] be conscientious of who you’re being, who you are being when you’re asking that. What are you giving, instead of just trying to get everything? [Inaudible 00:25:15]
Mike: Well, Iris, in just a second I want to jump into the Taking Action segment, Part 2 of the show here. But before we do, I’ve got a question that I want to ask you that kind of fits right in. This is the question of the week, which fits perfectly into what we just talked about. What are the biggest mistakes that you see people make with finding a mentor? I know we just kind of talked about this, but maybe some of the things that we didn’t talk about. What’s the biggest mistake that you see people making when finding a mentor, or trying to find a mentor?
Iris: The biggest mistake when trying to find a mentor. Okay. Well, this kind of goes to the whole lifestyle design, and what not. When you go to clubs, when you go watch webinars and stuff like that, I think it’s really easy to glop onto someone who’s been really successful and lives the lifestyle, and what not. I think the biggest mistake is people try to follow mentors, or try to be like mentors, or have these mentors’ goals when it’s not their own. The biggest mistake is trying to follow someone that maybe isn’t really who you want to be, or what you want for you and your family.
So I think it’s really important, number one, to assess what it is, what lifestyle you want, what goals you have, and then find a mentor that is living the life you want. So for example, if you want to flip 100 houses, there are guys out there and maybe even women that are doing that every year. So find them, and be that and do what they do. Or for example, there are mentors in our community that all they do is hold. But if you’re a flipper, he may be rich and unhealthy or maybe very stingy, or frugal. If that’s who you want to do be, and you want to hold, that’s all you want to do, then you need to follow. But if you’re a flipper, that’s the wrong person to be flipping. So find a mentor that fits your goals and your lifestyle design. I think that’s really important.
Mike: Yeah, that’s great. I’ve told people this forever, is that I think it’s easy to say, “Oh, I like that. I want that,” without really thinking, well first off, they may not be who you think they are or who they say they are. Right?
Iris: That’s true.
Mike: Some people have a face like, “I’m a pretty face on FlipNerd, but you don’t want to see me at night.” No, I won’t say that. I’m joking. But my point is this. Sometimes people are not who you think they are in real life. They may not be who they position themselves as if they market themselves. But I think more importantly is . . . Because I mentor a lot of people, and it’s always like, “I could tell you how to go do what I’ve done or how I would do this, or whatever. But what is it that you want? What do you want to accomplish?”
The funny thing is that one of the biggest things that . . . It makes sense to everybody whenever I say it, but nobody thinks about it is, it has nothing to do with the number of units and homes you do. Because ultimately, it comes down to dollars and lifestyle, but it’s not . . . I know people that do a ton of houses, but in their mind, they’ve convinced themselves to do thin details so they can do a lot more volume. It’s like, “Well, maybe you could kind of meet your financial goals by doing half of the volume if you have a different exit strategy or if you do things a little bit differently.”
So I think that is really important to kind of be able to lay out and document what are your financial goals and what your kind of lifestyle goals. Because just saying you want to do what somebody else does, you may not know how hard they have to work to do that or what’s happening behind the scenes.
Iris: Sure. I also want to emphasize too that there are a lot of mentors around you. They just may not be the ones on the webinars. They may not be the ones that are onstage speaking. But there are a ton of people that I meet every day, for example, when I’m like trying to vet a deal or get something under contract. I mean, I meet incredible people that have amazing portfolios, and they’re just maybe older and they’re trying to get rid of some of their stuff. Oh, my god. Some of my best mentors for sure. So again, there’s an opportunity in finding people that are willing to help you and that maybe you can help as well just in the community itself. But are you aware? Are your ears open? Are you looking around? Because there’s a lot of experience out there and it’s all around us.
Mike: Yeah. Well, Iris, let’s jump into the second part of the show here, the Taking Action segment, and let’s kind of get into lifestyle design and some of those things. Talk about it a little bit more on how people can go . . . Maybe what we do is we talk about how people . . . I guess, I’m thinking of two groups of people now. One is the person that got into real estate investing and they’re doing deals and all that stuff, but they’ve kind of forgotten why they got into it in the first place, which is easy to happen. Right? The next thing you know, you just created another job for yourself.
I think the second part is the person that hasn’t gotten into real estate investing yet, and they understand lifestyle design. They think, “Oh, this is going to get me a better life.” But they don’t really plan for that up front. They just kind of jump in or they try to jump in without . . . Even though they know it’s important and, “I don’t want to work this much anymore. I’m tired of traveling,” whatever it might be for your job or your other business, but they just see it as, “It’s greener on the other side of the fence. So let me just jump in,” without any real planning as to how to accomplish why they’re probably making the shift.
So maybe let’s start with them, the folks that just see the grass must be greener on the other side, and have no real kind of plan from a lifestyle standpoint when they jump in. Maybe you can kind of share some thoughts on . . . I guess, let’s pretend you’re talking to that person right now.
Iris: Well, yeah. Certainly, that saying, “The grass is always greener,” in certain is always true. When I first started out, I quit my job fairly quickly because I read that book, “Rich Dad Poor Dad”.
I think it influenced a lot of lives. It certainly influenced mine. I realized after reading that that I was making a lot of money for the corporate entity, and I should just be minding my own business. So I quit my job fairly quickly. But in doing so, I kind of . . . Not necessarily burned the bridges. I knew I could always go back. But there was like this fire now that I had to do this. Like there were no more excuses left. So at that time, I did acquire a lot in a short period of time. I think that eventually led to my implosion when I couldn’t handle so many because I acquired them so fast. Anyway, that’s another story. But I also realized too that a year into this, Robert Kiyosaki came out with another book that was called “Before You Quit Your Job . . . ” It’s like, “Dang.”
Mike: You’re like, “Too late.”
Iris: “[Inaudible 00:32:24] did it.” So the point of all this is, yes, you do have to build a foundation. Yes, the grass is always greener. Yes, everyone wants to fire their boss and be their own boss. But you also have to understand, creating your own business, a lot of things that someone takes for granted, for example, that corporate handles, like your corporate job handles, your payroll, your payroll taxes, human resources, insurance, all those things that we take for granted when you work for corporate, guess what? When you’re a business owner, you have to handle all that stuff. So that . . .
Mike: Light bulb is out, toilet won’t flush.
Iris: Yeah. Overhead, employees with personal problems, I mean, things like that. So yeah, it may feel like the grass is always greener and you want that lifestyle that that guru just talked about, all the properties they have. But it is a process. It is a building process. So what I suggest to people that are getting into it is figure out, number one, why are you doing this? Right? Everyone hears that.
“What’s your why? What’s your why?” But it’s so very critical. Then, create your goals, your financial goals, and also go into this understanding that it’s just not going to happen overnight. I mean, everyone that talks about having this great portfolio, and they can choose to work or not work, it didn’t happen overnight, I don’t care what they say. It took work. It took time, and I always tell people, “You’ve got to create that balance.” I am a flipper. I love flipping. Yes, it is a job, but it doesn’t feel like a job to me because I’m passionate about it and I love doing it.
At the same time, I realized every time I sold a house, I didn’t have that asset anymore. So you’ve got to create that balance. You’ve got to have that passive portfolio. I don’t care if you’re doing notes, you’re buying rentals, doing vacation rentals, or something that’s passive. You’ve just got to create that portfolio, and that just doesn’t happen overnight. Now, will flipping allow you to get there? Can you use that capital to help you get more? Absolutely. Okay. So back to my original point, before you quit your job, just make sure you have a foundation and you have some income coming in before you take a leap.
Because it is pretty scary, and unless you have a ton of reserves that you can go balls to the wall, I suppose, which is kind of what I did, it can be scary. Again, going back to what we talked about earlier, it’s okay to ask for help. All of us at different levels of our real estate careers, there’s always someone out there that is two, three steps above you that you can ask for help. Who are you being? Who are you being when you’re asking for that help? What are you bringing to the table?
Mike: I think we kind of talked about . . . I said, “Hey, let’s split it up and do a newbie versus somebody,” but you kind of . . . It’s the same things for that person. Right? One of the things that the person that is already doing some deals, but they got into it for lifestyle and the lifestyle that they wanted, and they’ve just created another job for themselves. Well, I think an important thing is to know what your goals are, and not just know what your goals are. I know this sounds totally nerdy. Right? But once a year, my wife and I get together for like a day, and we just plan out our goals for the next year. We kind of review our business.
The thing is if you kind of document what you want to happen . . . In real estate investing, it’s like any business. You have to go execute to that. Like, “I want to buy this many houses, and I know my leads are going to . . . This is how much it costs me to generate a lead and I need to get 20 leads to close one. Therefore, I need to advertise this much in order to do x number of houses.” I mean, you can reverse-engineer that just like any business. But I think having that foundation of saying, “This is what I want to accomplish,” and then the important thing is looking at it regularly, like at least monthly to say, “This is our goal for the month, the stepping stones to get here. Am I on track?” I think, absent of that, people are just kind of flailing.
They’re like, “You’re worried about . . . ” I think real estate investors are always in this feast or famine situation. Right? They’re always worried about the famine, so they just feast. But they never enjoy what they’ve done because they’re worried about it being taken away or something. We’re a bunch of weirdos. We’re a bunch of weirdos.
Iris: Well, in some ways. That fear factor is also good because it keeps you on your toes. I just want to add too that you have to constantly assess your goals and reassess them. Because I know for me, personally, my goals changed as I got older. My goals changed as other things, changes in my lifestyle and other things came up that were important. So it’s okay to . . . I was headed toward a specific goal, and then I realized, “Hey, man. I don’t want that goal.” So I wasn’t so frigid that I’m like, “I’m going to do this before I start this.” I’m just like, “It’s okay because this is not what I want anymore. This is what I want.”
So again, earlier I talked about when I started I wanted 100 houses. I got to halfway through that and I’m like, “Oh, man. This is not the lifestyle or the job I want. So how can I make it different, and are there other opportunities and other things I can do to really accomplish what it is that I really want?” But I didn’t realize what I really wanted was different than . . . So again, it’s very important to assess your goals, and then reassess them. So my partner and I, what we do, Mike, is we go to Vegas every quarter . . .
Mike: You bet it all on black and . . .
Iris: . . . for our quarterly meeting.
Mike: That’s great. Yeah.
Iris: It’s a nice write-off.
Mike: Yeah. What I think is an important lesson there, though, is it’s okay to change your goals. The goalpost can move. Because I know, for me, I’ve been through some of that too. It’s like, “Hey . . . ” At one point a few years into it, I realized I could make the same amount of money by rehabbing more and wholesaling less, and do fewer deals. That’s one kind of lesson.
Iris: [Inaudible 00:38:44]
Mike: I’m not saying don’t wholesale because I think it’s still an important thing. I’ve also been through this phase of, “I want to get as many rentals as possible,” to saying, “Well, let me just pay down the ones I have so they cash flow better.” There are things like that that are totally okay.
Iris: Yeah. Well, it’s really funny that you brought that up and something that I’m really hot on right now, which is so fun.
Mike: Two T’s, H-O-T-T?
Iris: H- . . .
Mike: You said you were really hot on it.
Iris: Hot on, yes. I went to my portfolio earlier, [Inaudible 00:39:17] Airbnb. You’ve heard of this, right? Airbnb? [Inaudible 00:39:20] you have. So oh, my god. They’re advertising like crazy right now. The vacation rental system is something that I just have been so, again, hot on. What ended up happening was, I have a nice rental portfolio in Southern California. Now, granted, we have great weather here. What an opportunity to do vacation rentals. Right? So we took some of our just normal rentals and turned them into vacation rentals, and nearly tripled our income on each of these properties.
So part of my goals is to have more free and clear properties in Southern California. So one of the things that we’re toying with right now is . . . Obviously, the income from the Airbnb rental has just been tremendous. Right? So now, like you just mentioned earlier, what if you could take that triple income, and if a third of the income is covering the mortgage and you’re enjoying the passive on the other two-thirds of the income, what if you could take one-third of that income and pay down your mortgage? You would still have this huge passive income [Inaudible 00:40:3] side. So just again, with the market changes and the market opportunities, Airbnb hasn’t been around that long, and it’s just becoming . . . I mean, the vacation rentals have been around forever. But Airbnb [Inaudible 00:40:52] . . .
Mike: This approach is unique. Yeah.
Iris: . . . is a very strong platform, and the opportunity is so terrific. Now, I do kind of say this with caution because Airbnb in a lot of cities are trying to ban it right now. Again, maybe for your listeners, I would definitely check into maybe your current portfolio and see what you can do, if there is something you can vacation rental, and see what the possibilities are because I wouldn’t rule it out.
Number two, if you’re going to, let’s say buy properties or even master lease properties so you can vacation rental them, I wouldn’t do it just solely based on what you can make on Airbnb. It’s got to make sense too if you’re just going to hold it as a regular rental. [Inaudible 00:41:33] This whole, again . . . Sorry. This is kind of cycle. This whole Airbnb thing is just something to be reckoned with right now. I think it’s . . .
Mike: Yeah. I think I mentioned to you when we were talking earlier about Kimberly Smith, who does corporate rentals that I had on the show before. It got me thinking. It was like, “Well, which of my rental could I turn into corporate rentals?” Because she said the same thing, you’re making double, triple the rents for more of a corporate rental so that companies that have their employees that are traveling . . . Especially in Dallas, we have like Toyota is moving here. There are a ton of corporate headquarters moving here. This huge influx of people that might be staying here temporarily, like maybe six months, but nobody loves living in a hotel usually. But yeah, it’s just kind of look at what you have and how can you make more with it. Right?
Iris: Sure. I mean, again, to me it’s such an exciting opportunity. I’m trying to turn all of my rentals into that. But it does take some work, and some time and setup, and obviously the better your systems are, the more you’re going to flourish. So it’s a whole business in and of itself. I mean, I’ve already been advised by my tax advisor that I need to create another entity just for this because of all the extra income it’s pulling in.
Mike: Yeah. I can advise you to send checks to me as well, too. I’m willing to accept those.
Iris: Well, tell you what. When you’re out here, Mike, you can come stay at any of my vacation rentals. How about that?
Mike: You better be careful what you say there, literally. I’ve got a [Inaudible 00:43:04] flexibility in my life now.
Iris: [Inaudible 00:43:04] to have you.
Mike: I’m a virtual nomad right now. Well, hopefully, the lesson that you just taught there is like, hey, I think a lot of people when they’re new or newer, they are afraid of getting started, or they kind of defeat themselves because they have some goal. It’s like, I’ve had people that . . . I’ll just kind of give a hypothetical example. This is not all that hypothetical, but people that are used to making $100,000 a year, $80,000 a year and they want to get started in real estate investing, [Inaudible 00:43:34], “Well, what are your goals?” They’re like, “I want to make $1 million a year.” It’s like, “Well, how about you just get above your income now?”
I’m not saying that that’s a bad thing. It’s great to have big goals. Don’t get me wrong. But if the fear of like, “I can’t get to $1 million,” if that puts a lot of pressure on you to perform and it might prevent you from taking action, it’s like, “Hey, let’s do some baby steps here to kind of get you going.”
One thing I wanted to talk about a little bit with lifestyle design is maybe the importance of a partner because sometimes people just end up creating another big job for themselves. Partnerships could go south. There’s a lot of ways that you have to be careful who you’re partnering with, which I hope we talk about for a few minutes here.
This is a little bit longer than usual, but it’s good information. So I want to keep going. If you’ve got time, we’ll keep going. But it is how a partner . . . The positive side of a partner is helping take some stuff off of your plate that gives you back more of your time, and lets you focus on the things that you enjoy more. Right?
Iris: Absolutely. When I first started out, I definitely had partners and I think it’s critical to choose the right partners. The biggest mistake that I see beginners do when choosing partners is they find someone or they meet someone at a seminar, or they’re in the same coaching program, or maybe even the same real estate community, and they like each other, which is great, which is important, but they do exactly the same thing. So I find it’s absolutely critical that you find partners that complement your skill set. An example would be you have two people that are really outgoing and are good at relationships, but neither of them can analyze a deal worth a crap.
How do you move forward like that? So you’ve got to find people that complement your skill set. So if you’re really good with networking, talking to the private money or getting together with the sellers, that’s awesome. You need to find someone who’s good at analyzing the numbers and maybe doing the marketing on all the computer stuff, and all that.
Mike: Bookkeeping and all those things that . . . Yeah. There’s kind of like front office and back office stuff. Right? There’s the salesperson . . . If you have two salespeople and they’re both completely unorganized, then that’s not the best fit.
Iris: That’s a great example. Then, the other thing too is, I tell people, “When you start a partnership, please don’t go opening entities.” In California, for example, to open an entity, there’s a financial responsibility once you open an entity, whether you’re a corporation or an LLC, or whatnot. You’ve got to pay the state of California $800 a year.
Mike: Yeah. It’s not cheap there.
Iris: So this is a big mistake that I see a lot of people that partner up is, “Oh, we’ve got to have a structure, and blah, blah, blah, and LLC. Let’s open this.” Then, it turns out six months later they don’t even like each other, and now it’s a lot harder to break up. So I tell people you can partner maybe in finding deals. But you can do joint ventures and you can do it per deal basis.
Don’t get in bed with someone that maybe you didn’t date for awhile, or something. But if your business is taking off, then great. Start something that’s a little more established. But if you’re just starting out, find people you can work with and just do it on a per deal basis. It just keeps things cleaner. Then, again, if you ever get to the point where you’re so successful and it’s time to open offices, and stuff like that, then maybe that’s the time you can consider getting into a more formal thing. But JVs work out just fine when you’re [Inaudible 00:47:19] the beginning.
Mike: Yeah. Back to the kind of mentoring piece, I know some people’s structure is that, “I’ll help mentor you and we are partners on deals.” So that’s another problem that a lot of partners get into is they’re two brand newbies. It’s like, “Well, none of you know anything. So how far can you get?” That fear of . . . I don’t really advocate this, but I don’t think it’s a bad thing, of partnering with somebody that is experienced that you can do a deal share on. Because ultimately, if you’re paying for education, why not pay for it in a way to where you have a chance to make a profit on the education as well? Instead of just, “I’m just paying somebody, but actually, I’m not making money from that.”
Iris: Absolutely. Then, the biggest thing is, again, the best education is being out there [Inaudible 00:48:09].
Mike: Yeah, doing it.
Iris: I mean, just being out in the field, seeing the real problems that happen. Not just the, “Hey, what if this happens?” or something. It’s seeing the things that actually happen. I mean, that’s so exciting and that’s the best way to learn. So get out there and, yes, participate and profit share, and what not. [Inaudible 00:48:31].
Mike: Yep. The thing is if you do that . . . I mean, I’m thinking out loud here. When you do that, you’re opening yourself up to somebody with a lot more experience and very few . . . It depends on what you’re bringing to the table. Right? But you could do more deals. I mean, things move faster if you have somebody involved that can help finance or can help educate or other things. Yeah.
Iris: Well, that’s another great example of a good partnership. Let’s say you’re the flipper and you have a money partner. [Inaudible 00:49:03] relationship. So there are different kinds of partnerships that can be created in getting new deals, plus it leads to many, many more.
Mike: Absolutely. Well, Iris, thanks for sticking with us here for one of our longer episodes. But I think this is the best one ever. I think this is the best one ever.
Iris: Seriously? No way. Thank you. Well, it was really fun. Thanks.
Mike: Great information. Really, I appreciate you sharing.
Iris: You’re a great interviewer.
Mike: So if folks want to learn more about you or want to visit your club in Southern California, or anything like that, kind of tell us where they should go.
Iris: Oh, yes. If any of your listeners are out here in the Southern California area, please, definitely visit us. Our website is investclubforwomen.com. The F-O-R is spelled out, investclubforwomen.com. Again, everyone is welcome. We meet on the third Tuesdays and the third Wednesdays of every month in Irvine and in Glendale if you guys know where that is. If it’s okay, Mike, I mean, if anyone comes that’s from a different area or maybe even from the same area, if they let us know that they heard about us from FlipNerd, we’ll let them in at $10 [Inaudible 00:50:11].
Iris: Because usually, we charge [Inaudible 00:50:12].
Mike: The FlipNerd discount. [Inaudible 00:50:12]. Are you going to teach them the secret handshake?
Iris: Oh, yeah. I have to make one up.
Mike: You have to make that up. Awesome. Awesome. Well, Iris, thanks for joining us today. I really appreciate your time and your information. For all you that are listening, thanks for joining us for another episode. This is episode #315 and we have a lot of great content and more coming. So keep on listening and thanks for spending your time with us today.
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