Start Your Real Estate Investing Business

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.
This is episode number 345 and today’s guest is Nathan Brooks. Today we talk about getting started in real estate investing as so many get stuck before they ever get started. We discuss why many of us choose real estate as a vehicle to achieve financial freedom and really why we do it, and how to stay focused in an industry that’s filled with shiny objects, for those of you that have Shiny Object Syndrome. We also talk about a lot of tips to how to successfully get started. So I think it’s going to be a great episode. If you’re looking to either get started or if you’re looking to kind of scale your business up, if you’re doing a deal here and there, this will be a great show for you.
By the way, if you enjoy listening to or watching our shows on FlipNerd, as I mentioned, this is episode number 345. I’d really appreciate your help at giving us a review on iTunes or Stitcher or wherever you watch or listen to our shows at. These ratings are really important to us as they help us find more people and help more people find us. So we’d really appreciate that, if you could help us out, that would be awesome. So let’s get started with today’s show. Please welcome Nathan Brooks to the show. Nathan, welcome to the show, my friend.
Nathan: Thanks, Mike, appreciate it. Thanks for having me.
Mike: Yeah, I mean, I’m excited to talk to you today and I know you’ve got a lot of great information to share with those that kind of follow us along on FlipNerd. Before we get started talking about the topic, which again is how to get started and a lot of people get stuck when they’re trying to get started, and so, we’re going to share some great insights there, maybe you can give us your . . . tell us a little bit about you, your background, kind of how you got started, and a little bit on what you’re doing today.
Nathan: Awesome, yeah. So I actually started accidentally and I was sitting with my wife, enjoying dinner, whatever it might have been, and overheard somebody talking about doing flips and construction and things like that. And I had been thinking about it for some time but I hadn’t really acted on it. And so, in the midst of that conversation, I looked over at the other table, I asked some questions, and lo and behold, you know two or three weeks later, I was in business with this person, and we were off to the races on our first two houses. So the first day I bought a house, I bought two.
Mike: Okay. So that person that you overheard the conversation at dinner, you actually ended up working with that person.
Nathan: Yes, and working with might be used maybe not quite the accurate depiction. But, so it was kind of a trial by fire. I jumped in and it was not a good partnership at all. But it was certainly the introduction to real estate and got me into my first couple deals.
Mike: Yeah. And so, I know you’re in Kansas City now. Is everything you’ve done from the very beginning, were you always KC based?
Nathan: I lived in South Florida for seven years, so I have done quite a few deals down there as well.
Mike: Okay, okay. Awesome, awesome. And so, tell us about kind of how you started with exit strategies and stuff. So you know, a lot of what we’re going to be talking about today is how to get started. A lot of real estate investors start with wholesaling for some obvious reasons, that’s usually faster to cash and less capital to get started and all that. Is that kind of how you started as well or did you kind of go right into some other exit strategies?
Nathan: Yeah. I actually have not done a whole lot of wholesaling in my business, and even up to this point. So we have done some and we still do some deals in that way. But really the thing that got me fired up about real estate was the buy and hold, having the passive income, and building wealth through that kind of avenue.
Mike: Yeah, yeah. That’s awesome. And even wholesalers, when I talk to people that are getting started, they want a wholesale, which I think is great. But as you know, because you started this way, even if you make a bunch of money on a wholesale deal or rehabs, that money stops the instant you sell it and you have no kind of assets. And therefore, in many ways, you have a job because you can never stop doing what you’re doing, unless you built up some way to kind of feed your family and put money in your pocket on an ongoing basis, right?
Nathan: Exactly. And I think it’s important for people when they’re thinking about that is the today money and then the tomorrow money and there’s two different objectives, which is put the food on the table now and also, what does that actual long-term goal look like and how do I achieve it.
Mike: Yeah, yeah. Yeah, it’s awesome. So you need to use hindsight as a lesson, right. So I’ve bought and sold hundreds of houses, we have about 40 rental properties, and right now, I’m looking back and I’m like, thinking of like, “Man, I wish I’d kept like 100 more. Like, the market is so hot right now.” And it’s just on fire and I’m like, “Man, if I had just kept 100 more of those right now, I’ll be in a different . . . ” Not that I’m not comfortable now, but it’d be a very different game right now if I had 150 versus 40.
Nathan: Yeah. We think about that a lot, too. And I think one of the great lessons right now and whether you’re a newbie or you’re in the middle of it, or you’ve done hundreds and hundreds of deals, to make sure that you aren’t just looking at the today problems and that you’re taking a step back and looked at what the actual bigger picture is and why you’re doing all that, so 40 rentals might be perfect for some people, 150 rentals. But you can quantify that by saying, “Well, what does it actually produce? What’s the lifestyle I want with it?”
Mike: Yeah. Yeah, I think a lot of real estate investors . . . I was talking to somebody about this in the past couple days, I can’t put my finger on who it was, but they were talking about how sometimes, a lot of people that are getting started in real estate investing, they see this a vehicle for financial freedom, right, or they see this a vehicle to quit their job or kind of stop working for somebody else. But people tend to do a horrible job of quantifying, “How much money do I need to kind of feel financially free?”
You know, there’s a lot of the guru guys that are like rolling up in Rolls-Royces and flying on private jets and stuff. “Hey, that’s great, if that’s what you want.” But if your goal is to like be able to leave your crappy $60,000 a year job, like you don’t really need to think about private jets and stuff yet, right?
Nathan: It’s not even . . . I think, when I think about that kind of specific conversation, I think in the 4-hour work week. You know, Timothy Ferriss talk about that where it’s like, you know, “Did you actually do the math on what you wanted? And wait, did you even ask what you wanted?” So going and living in Malaysia or whatever it is for a couple years, you might already have that money sitting in your bank account but you just didn’t do the homework to figure out what you wanted.
Mike: Yeah. Yeah, I think the important thing is like, a lot of times real estate investors are talking about deals. “How many deals are you doing? How many units are you doing?” But units doesn’t mean dollars, right? And so a lot of times people forget, like they almost don’t really calculate like what their freedom number is. Like, “Hey, if I can make $100,000 a year, then that might be a deal a month or less.” It really might not be that much at all. But I think we kind of get caught up.
And I’m guilty of this, too. I teach people how to build systems and put processes in place and all that. And I really have people focus on their goals upfront. But sometimes, we just focus on all this automation and stuff like that, the goal of being bigger without really saying, “Well, what does that . . . Do I need to be bigger? What does that mean to me personally, or you know, kind of this whole discussion, when is enough, enough?” Which I very rarely get a well-thought-out answer to from anybody that I know.
Nathan: Exactly. Well, I love that. And my business partner and I just got finished reading the E-Myth book. And one of the points when they talked through the process of thinking about that is actually, “What does that endgame look like? What do you want this business to actually do?” And I think one of the things you nailed on was at the end of the day, you’re not trying to have a job, you’re trying to build a business that produces the end result that you want. So you got to think about the endgame first instead of trying to just put yourself in another job.
Mike: Yeah, yeah. Well, let’s talk about, you know, you can add some of your context in here for what you did. But on this goal of freedom and getting started in real estate investing, maybe talk a little bit about why a lot of us choose real estate investing for that path and maybe why you chose it as well.
Nathan: Absolutely. So I think there’s a couple parts to that. So for me personally, I love the creativity. I love the opportunity to grow my own thing. I’ve always loved houses from even when I was a kid, I’d go collect, you know, wood on job sites and go build stuff in my backyard. And so, once I started to understand the opportunity within real estate and what it could produce for me, that’s where I all of a sudden, “I like building stuff. I like solving problems.” And it was just a perfect fit. So that was kind of the first part.
And then, I think for other people, when they think about real estate, I have turnkey clients all over the country and internationally. And one of the things I talk about when they ask me, “Why should we buy real estate,” it’s like, well, when you think about the hierarchy of needs, you know, food, shelter, water, well, shelter is . . . well, we’re in the shelter business, right. And we help people have a safe place to stay. And we produce a high-quality product and do it for people, in our case. And so, real estate, you can go look at it, you can see it, it’s tangible, and it’s necessary. And so, it’s something that you can actually put your hands on.
Mike: Yeah. Yeah. And I think also, to add to that, it’s like it’s a big ticket item. So as a business person, it’s easy to move a needle quickly relative to selling, you know, tacos or something, right. And I think also, is the fact that you can leverage it. I mean, I’m like any other kind of investment class or anything, you can use leverage. And because the Federal Reserve is constantly monkeying with our monetary system, there’s always inflation, which probably in many ways outpaces at least a big chunk of the interest rate that you pay to kind of lever it up. So there’s just opportunities like nothing else really, right?
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There’s just opportunities like nothing else really, right?
Nathan: There is. And not only are there opportunities in the way that you’re saying, but also just when you think about real estate as a whole, whether you are wholesaling or you’re buying and selling notes or you’re, you know, buying and holding, or you’re flipping, or you’re . . . so there’s just property management, so be on our own property management business as well. So there’s so many places to get into it from.
Mike: Yeah. Yeah, so let’s talk about that a little bit, because that’s one thing that trips. So as you kind of get started, and I don’t think we’ve, I don’t know if we could mention this, yeah, but you’re in the turnkey business, so you help others buy rental properties in the Kansas City market and then you figured out how to like say, “Well, I can provide better support and it can be a business for me if I property manage them.” And you start to bolt things on that it kind of makes sense for your business.
But early on, a lot of real estate investors get hung up on, they have Shiny Object Syndrome. So you could make money buying land, you could do single family, you could do multifamily, there’s a lot of ways, you could do notes. There’s so many different ways to make money in real estate, which is cool but that confuses a lot of people up front. So what are your thoughts on in terms of people getting started, how to hone in on kind of one thing and stay focused?
Nathan: I love that question and it’s something that I’m passionate about personally, too. And so, to me I think, when they start thinking about real estate, and maybe they just read, you know, “Rich Dad Poor Dad” or “Millionaire Real Estate Investor” or something, or they listen to your podcast, or whatever that brought them to that moment, what are they thinking about? They do the actual mental exercise of letting yourself dream a little bit and think about it and put yourself in the midst of that experience looking at yourself.
And for me, it was definitely the rentals and I was definitely thinking about that passive income and building that wealth within my family. And to this day, I still think about it and I write out, what are those things I’m actually doing all this for? Now, that list has changed a little bit because now I have a staff and I’ve more kids and I have other opportunities, too. But I think, when you’re a new investor, it is so easy to get into that Shiny Object Syndrome and you want to do everything, which is cool. But don’t do that. Really focus on one and learn it.
Mike: Yeah, which I think, a little bit of a shameless plug here, I told you we just started a coaching program, The Investor Machine. But I found, in my experience, I’ve mentored lots of people, and I have mentors as well. So I’ve kind of found that having that mentor or somebody that you can ask questions to, it kind of forces you to stay a little more true to stay in focus because they’re going to like slap you back and “No, don’t do that. Stop looking at that,” right? So any kind of thoughts on having kind of mentors and surrounding yourself with people that can kind of help you stay focused?
Nathan: Yeah, absolutely. So I think there’s a couple things to that question and I totally agree with you and there’s multiple mentors in my life. So I’ve written about the two Robs in my life and now I have guys like you, Mike, and other friends of ours. We have colleagues in lots of different places who do lots of cool things, right? But when you look at . . . when I first started, I remember sitting with Rob in Cape Coral, Florida and I’d asked him two dozen times to take him to lunch and I could never understand why he didn’t have time to do that. And I do now. But I finally got him there to lunch and he bought some meal that was probably more than I . . . I was like, “Oh gosh. I hope, you know, I hope I can pay for this lunch.”
But I remember on a piece of paper him drawing out his business and he was a private money lender and he had a flipping business. And he [inaudible 00:16:00] amount of his IRA and he had a property management business. And he had all these things. And I remember he was a broker as well and kind of writing out all those things on this piece of paper and here’s all of the details of, not like bullet points of how to run it, but this is why. “Because I have these multiple streams of income and I have opportunities here, but I had to do this first. And then I had to put this on to it.” And so, having that, I’ve never forgotten it in more than a decade to still see that napkin in the middle of a restaurant.
Mike: Yeah. Yeah, it’s funny how there’s a lot of wisdom that comes with experience, right? So you, that’s one of the great things about having a mentor. But I think with some people that are getting started, they get paralyzed by not knowing everything. And truthfully some of the education folks in this industry have done a good job of educating people and then making them feel like they’re not ready because they’re not going to sell you more education, right?
So you know, I think we’re on the same page in that we believe that people need to . . . you need to have enough education to be a little bit beyond probably dangerous, but you just have to kind of learn by doing. You just have to kind of take actions. So in your experience, I mean, what do you talk to people about when they say . . . sometimes you just got to be like, “Man, just go start doing it, and you’re going to fail. Like, but that’s okay because that’s part of the learning process.”
Nathan: Exactly. And I’ve heard you said, you’ve done hundreds of flips and I have as well. And I’ll say this right now, we still learn on every flip we do. We still learn every single day, every single time. So it’s not like you’re going to get to a place where you’re like, “Oh gosh, I know everything,” right?
Mike: Never, yeah.
Nathan: It’s not happening. So instead, it’s like, “Okay, well, let’s figure out what escrow means and how to get this thing closed.” “Cool.” “All right. So let’s figure out what the demo process looks like if we’re flipping this house.” “Okay, cool.” “You know, let’s get a contractor in here who actually has a great pedigree and that was a great referral and it wasn’t a Craigslist add that you wondered if this guy could do a job or not.”
And you start to build and interact with a couple other people who, you know, I always talk to my team about this. I’m like, “Who’s behind you? Who’s ahead of you? And where are you in both in the hierarchy of doing stuff today and also training?” So how are you helping each other?
Mike: Yeah. Yeah, that’s great. You know in my experience, people come to me all the time and like, “What did you do when this happened?” I’m like, “Well, that’s never happened to me. But here’s what I would do.” I think what experience gives you more than anything is the confidence to figure it out. One is something just hits you at some point to say, “Man, I don’t know. There’s a whole bunch of stuff that I don’t know, but I’m cool with that.”
Because you just have to get to a place to where you’re like, you’re never going to be . . . I’ve actually said this yesterday, I had a coaching call with my members of The Investor Machine. And they were asking some questions and I said, you know, I feel like I always have to say this to newer people, like, “I am not all-knowing. I’m going to learn from you guys like every day.”
But you just have to get comfortable knowing that you’re part of a group of people that kind of can know, either they know it or they can help figure it out. And I learn stuff all the time. And you’re just like, “I’m never going to do that again,” right. You just, you haven’t experienced it before in hundreds of deals but it happens all the time, like, “Don’t do that again.”
Nathan: Yeah, exactly. Well, I think to that point, at the end of the E-Myth book, they were talking about kind of comparing it to martial arts, and I just started doing jiu-jitsu about six, seven months and I’m a white belt, you know, this first entry level. And they were talking about in the Dojo, you’re working on your skills. And when you think about jiu-jitsu and you might see martial arts or something on TV and you’re like, “Oh man, why isn’t he getting out of there?” Well, go put yourself in class sometime and ask that same question.
And so, all of a sudden, you have some context to the problem. So then now you learn a little defense, now you understand what they’re trying to do. And it’s like in real estate too, you have to understand the basics before you can make the more advanced moves.
Mike: Yeah. Yeah, there’s, I mean, I wish I could remember this quote. There’s this, I think it’s like maybe Mike Tyson or somebody. There’s some quote that’s like something to the effect of, you can have the best plan in the world but as soon as you get punched in the face, like everything changes. So you just have to kind of get out there and get punched in the face a couple times. Unfortunately, that’s just, that’s what you have to do.
Nathan: Yeah, well, actually to that end, so I have a personal trainer a couple times a week for jiu-jitsu as well as going to class. And actually, the day before or two days before, I traveled to Haiti for a little mission trip kind of thing. I gotten kneed directly in the face in training, bloody, and my trainer’s like, who happens to be a pro fighter by the way, but he’s like, “All right, let’s get you cleaned up. Let’s go get back after it.” It’s going to happen. You’re buying real estate, you’re going to have problems. You’re doing jiu-jitsu, you’re going to have problems. So just get back in.
Mike: Yeah, and those things, it’s hard to see that upfront, but those things, they make you stronger, they make you wiser, they make you a better business person. And I know, I’m not saying, go lose a bunch of money, but there’s ways you can protect yourself from downside, a lot of ways to do that in this business. But you have to have . . . so you have to have some war wounds in this business. Otherwise, you’re not going to have the confidence to move as fast as you could.
Nathan: Yeah. And I think also in the wounds you have different problems as you have more experience, too. So the problems that I might have had in my business today are just not problems from a year ago because I wasn’t in that place to have them. And so, whether it’s scaling or staffing or running construction management on multiple projects, there’s a lot of things that you wouldn’t even know until you know because you’re just not there, that’s not the today problem.
Mike: Right, right. Yeah, yeah. A lot of people start off . . . you’re kind of, a lot of people are one-man band or a one-woman band or they’re kind of doing it all themselves. And then some early problems are you can’t figure out how to get leads, right, and then you kind of, hopefully if you crack the code on that . . . if you don’t crack the code on that, then you’re gone. But you crack the code on that, then you’ve got issues with money, right? You got to raise money, you never find enough money.
And then you hit this point where it’s probably you could raise more money than you’d ever need and that actually becomes another problem. It’s like, “I have this investor that has like a million dollars but I only need $80,000 right now.” So kind of utilizing that money, right? And then when you start to layer in your team, then that’s where you start to have . . . you open up to a whole other area of issues of just dealing with being able to motivate people and manage people and inspire people and keep them employed, doing what you need them to do, and things like that. So that opens up a whole other ball game.
Nathan: That, I mean, that is precisely where we’ve been at, too. So in over the course of not quite two years, we went from one person on staff to 16. And so, how do you scale a business like that? And going from just a couple deals, then you’re, like you said, the one-man band, doing everything yourself to teaching somebody what you actually want to happen, what is the end result that we’re looking for, and then giving all the tools for them and the autonomy to go do their job.
Mike: Yeah, yeah. And then I think that all kind of comes back full circle about what we talked about is what is it that you want to happen, right? So I’ve known some people that they rehabbed one house a month, they did their own acquisitions, they did kind of everything themselves because they weren’t doing a lot of volume, and they might be making $300,000 or $400,000 a year, and that’s all they want. They’re cool with that and there’s nothing wrong with that.
I think sometimes when we’re in the real estate circles, we tend to . . . mostly guys, right, I mean this industry is male-dominant, and there’s a lot of chest-thumping going on over who’s perceived to be the biggest, right? And it’s like, at the end of the day, it doesn’t matter. You probably know some people, I know some people that are rock stars and nobody knows them. And they’re cool with that.
Nathan: Yeah.
Mike: So there’s nothing wrong with that.
Nathan: Yeah. It’s kind of that millionaire-next-door kind of situation and all of a sudden you get to meet them through mutual friends or whatever it is and you’re like, “Wow, this is incredible.” And you don’t have to go chest thumping to do it. And they have their priorities straight. They went and built their business and now they get to do what they want.
Mike: Yeah. So in the context of getting started, let’s talk a little bit about exit strategies. So you started . . . I started by wholesaling and rehabbing. In fact, I primarily wanted to rehab. I didn’t actually even know what wholesaling was when I started. And I quickly realized this is an important part of my business for like cash flow reasons. But until I had kind of done quite a few deals, then I started saying, “Okay, now I can keep one as a rental” because we were doing enough volume for that. And you started a little bit differently.
But maybe share your thoughts on, for people that are looking to get started, what advice you can give on the conversation they’re having with themselves on exit strategies, like, “What am I going to do with houses if I get it?” What are your thoughts on that?
Nathan: Yeah. So I think it comes back to the first question, which is, what’s my end result? So if you want to own 100 rentals and you’re really fired up about rentals, then it’s probably a great time to figure out how you’re going to start holding your first one or two or three or four or five. What is a Fannie Mae mortgage? What is the back-end financing? What’s portfolio lender? If you want to do wholesaling, what does my system look like? How do I generate leads? And then, when you think about the exit strategy, so if you pull the partner in who’s helping fund deals that gives you a different kind of element, so you have the mentor and you have some funding available.
But if your endgame is to hold rentals and you have no money, well obviously, you have to produce either . . . you have to rehab the house maybe yourself the first few times and you have a back-end refinance, or you can do and go flip a couple houses or do some wholesaling or get a second job and do it, or whatever. How bad do you actually want to go buy your first real estate deal? And I think you put the context of people will look at somebody, like any of the guys that you see on TV or otherwise, the big guys of the world and just like, “Man, I can go do that.” And you can.
But you have to settle the conditions to make that actually happen. And so I think when you look at the endgame and to say, “Okay, well, I want to have 100 rental houses, so let’s get one. And then let’s get two.” And let’s remind ourselves on a daily basis, or weekly basis, or monthly basis, what our actual goal is and we don’t get distracted on the other 7,200 options that you have in the game.
Mike: Right. Yeah. Yeah, and I think until you know, like I’ve known people before, like I said myself, I wish in hindsight I’d kept a lot more as rentals. And I know people that started buying rentals and with their goal of building rentals and they’re like, “I don’t ever want to own another rental as long as I live,” right? So back to that kind of experience, back to that experience thing, you have to kind of get some experiences and have a few war wounds and stuff like that. Because a lot of times, we look at the stuff academically, like, “This is what I want to do,” and then you do it. And you’re like, “No, that’s not what I want to do.” But at least now you know.
Nathan: Exactly. Well, and that’s the thing too. So like, in my turnkey business, we have clients all the time and most of our clients are not here in Kansas City. They’re out of town. And some them are like, “Hey, I love my job. I make great money. I have fun with it. I just want to build . . . I want to pay for my kid’s school. Or I want to retire when I’m 50” or whatever.
And so, when you back into it and you’re putting all the pieces together with what you’re actually looking for, back to that Tim Ferriss kind of question, you don’t need to have a Rolls-Royce to be happy. So what’s the endgame that you’re actually building? And then, if you don’t like wholesaling, cool. Go find somebody that loves to buy and hold, or flip, or whatever it is.
Mike: Yeah, yeah, absolutely. Awesome. Well, Nathan, if folks want to learn more about you, I know you have a turnkey business in Kansas City, where can they go to learn more about what you’re doing or about your company?
Nathan: Awesome, yeah. If they go to bridgeturnkey.com, they can check out the inventory that we have available. And we also have in-house property management. You can get a phone call or whatever from there. If you are interested in buying and not trying to learn how to swing the hammer and grow a property management business and all that stuff, then we make it simple for you.
Mike: Awesome, awesome. We’ll have the link down below the video. So hey, thanks for joining us today. Really appreciate you.
Nathan: Thank you, Mike. Thanks for having me.
Mike: Yeah, yeah. And just one more shameless plug for those of you . . . we launched The Investor Machine, which is my coaching program. The website is theinvestormachine.com and we actually are going to be closing it down pretty soon. We’ve had quite a few people come into it and we just want to digest for a while. So I’m not sure when we’re going to open that up again.
But if you check it out, it’s just an amazing program. I’m obviously a little bit biased but we’ve gotten great feedback from people that are in the group. So please go check it out, theinvestormachine.com. I’d love an opportunity to work with you if real estate investing is where you’re headed. So Nathan, thanks again for spending some time with us today.
Nathan: Yeah, thanks, Mike. Appreciate it.
Mike: All right, buddy. Take care.
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