The Real Truth About Wholesaling Real Estate

so we made the mistake and certainly 2019 2020 when Co hit and [ __ ] got weird you know letting people see that stress and that's a great way to lose not just your partner but your business being a business owner is hard I you guys know that anyone with an internet connection and a clipboard can wholesale a house if you're going to wholesale real estate or operate or quasi represent someone or do something that could be imagined or interpreted in court that you're representing someone probably better to be licensed all right welcome back to the roots podcast today we're here with Evan manship Evan manship is the owner of Midwest cash offer and Mainstay Property Group they have expanded now into four markets they're in Indianapolis of course where we are Louisville Cincinnati and Lexington and they are a wholesale operation so they they send cash offers to people and then flip those homes and sell them to investors so Evan thanks for coming on man gentlemen thanks for having me happy to be here and uh yeah happy to get talking about real estate and dive into what little information I have in my brain so I think I think there's a lot of information up there that we'll get into yeah we'll try to pick through it all happy to have you on the show Tyler thanks for kicking us off um I want to throw you a little softball question what's the first deal you ever closed tell me the story behind it well that's a good question because it kind of uh there two two answers the first house we ever I bought let me back up I'm a wholesaler right I I I feel like I need to disclose that before we talk find that too for people sure same page I tried to but you explain with me my my group is what we call wholesale operator we are um essentially a glorified pawn shop for Real Estate uh that's the best way I've found to describe it to my father-in-law who I think still uh believes I'm a I'm a realtor or something um but we buy for a we sell for a plus b we make a spread for doing so so we buy houses we do nothing to them we sell them to people who are looking for investment opportunities so um there are folks who are in uh need to sell properties quickly they're a handful of different situations but our group identifies those folks and gives them a liquidity option that they don't have in another instance um meaning they can sell their house quickly and they can get out of a a problem that they have very quickly so anyway wholesale operator is someone who procures inventory for other investors whether they're Buy and Hold folks new developers or Flippers and we serve inventory to them on a silver platter where they wouldn't be able to find it otherwise so um we closed our first wholesale deal in 2014 on accident um Kay and I were buying a duplex on 2300 block of Guilford on the near north side of Indianapolis and uh we had our contract for like $40,000 or something it beautiful rented on both sides and uh I remember writing the earnest money check that we were delivering to the listing broker is 500 bucks that I didn't have you know had to move some funds around to get that 500 bucks into the account and uh my mom and dad had no idea what the hell we were doing couldn't spell real estate so couldn't ask him for money couldn't really go far and really dig deep through what we had going on but didn't have the money to clear that check he please give me a couple days and figure it out and uh said on the offer we had we were going to write cash on we trying to raise this private Capital right there's an article that someone wrote that you raise private money and buy houses with it so whatever sure you know we were so dumb this is before Bigger Pockets and we were trying to do the Burr method before the Burr method was the bur method um you know by rehab rent refinance repeat is BR rrr bur um so we read an article about that Kay and I are both in commercial real estate gigs is 23-year-old punks clay my business partner at the time and said screw it let's just and your brother right yes my I'm sorry my brother my business partner my best friend uh clay uh we were doing this together still are but our first deal 2300 block of Guilford I think 23 23 um had under contract offer got accepted $40,000 cash needed $500 in earnest money delivered it to the listing broker said give this puppy a couple days and figure something out and said how the hell if we're trying to find $500 how the hell are we ever going to find 40,000 to buy this thing there's no way like like that would take so much effort and so much it's like God we need to find someone to buy this thing and it was on the MLS so my first deal I wholesaled was I wholesal it off the MLS like a lot of the winners we love um but found someo so you did do the first strategy you're just resell this thing no well we didn't have an option it was either find someone else to buy it or lose $500 I I didn't have um and I didn't feel like going to court with my first uh deal so we ended up selling to some guy some TurnKey provider here in Indie and um made I think it was like 12 or 13,000 and you have thought that you know we discovered electricity for the first time it was like ah you know Boom the first yeah really struck a core and it was addicting you know was like hitting zero on Roulette or something it was like God you know more of this this is what I want to do so uh one turned to five turned to 100 we're doing a little over a deal a day between our handful of markets interesting I I love the story you stumble straight into exactly what like the purpose is supposed to to be how do you you defined wholesaling I want to go a layer deeper walk me through the process right how I I want to know from your perspective each person that's involved you have a seller you have yourself being the middleman and the buyer um how are you guys able to provide for all so that everybody gets a win there's just so much misconception right it's an industry that can quickly just be polarizing I agree any any sales driven organization is going to have its its you know question marks if you want to call it that next to it um and again that's why I say it I think it's it's I don't think a pawn shop is a dirty thing it has a dirty reputation for some reason um but a necessary service necessary service people need it right and uh people necessitates both sides people like going to pawn shops to buy people like going to pawn shops to sell it's just a necessary middleman that exists and there's no difference in wholesaling it's it's what we do um so to answer your question Max you know we have our a party which is our seller which is who we're trying to identify we have a division in our organization that exclusively identifies sellers that's our marketing division um we send postcards emails you know the little signs you see on the side of the road we buy houses cash wrapped cars wrapped cars uh favorite so I I I joke with people I say you know any any jerk can play baseball um not anyone can play for the New York Yankees same Sport and without same with Realtors and and without become sounding too arrogant we are the New York Yankees of the industry so we don't throw signs in the yard we have very in-depth intricate marketing strategies that find the right person at the right time and spend tremendous amounts of money to get there so I think it's if you look at it on paper yeah they bought it for 100 they sold it for $120 they made $20,000 sure yeah but just like any other industry you know if you look at the gross margins on an Apple iPhone I'm sure they're insane but what all went into that to get it so uh we buy from our a party we are the B party and we sell to the C party so there're two transactions A to B B to C and we pocket the Delta between what we buy it for and what we sell it for and how often are you closing on those properties or are you always assigning it um it's anymore uh this is going down a rabbit hole but compliance in our world is starting to become more and more uh uh complex and rightfully so um but we double close meaning we have two separate transactions on what we do so if you want to go back and you want to look at how much we make On Any Given deal or the deal that I sell to you guys I mean it's all public record go have fun um but we double close everything we do meaning we buy and then subsequently resell we don't assign anything at all could you talk a little bit about why wholesaling has come under Fire how that affects you guys and your honest thoughts on all the spotlight on wholesaling right now I think there's a reason you don't assign right well it I think it's a shady thing uh you know and there's a lot of shadiness that happens in this industry yeah wholesalers are always trying to cover up the fact they're signing it and and I think that's the the difference is my my group has never shot away from the fact that this is not a charity it's not UNICEF we make money yeah okay so you sell it to us it's in our it's in our contract you know you're selling you're not an NGO no h no we uh you acknowledge that you're selling us at a discount that we're going to sell this at a profit that is in our contract we could not disclose that in more black and white terms we tried right um and that's what I think what a lot of people do is they think that's such a nasty thing such a dirty thing to talk about instead of just saying you want the money or not you know sign this you want the money or not here's what here's what we're doing here's what we're doing with it right a seller shows up you know closing day and they're like What's this fee on other miscellaneous 93,000 right what does that go to so we've we again we've clay and I have made that mistake among the many years we've been doing this with trying to kind of tiptoe around everyone does it you everyone's spooked about commission and what they're going to disclose and who's this and it's like man like the more transparent you can be about all these things the easier life becomes yeah and then it's you know at Le at least you know the objection that you need to overcome with this so what are the new rules and regulations if any because I've heard discussions of this I'm not an attorney uh talk to your people get your advisers um that being said uh it's always better to be licensed I think in every possible regard I think there are arguments to be made on who needs to be licensed and why they need to be licensed but if you're going to wholesale real estate or operate or quasi represent someone or do something that could be imagined or interpreted in court that you're representing someone probably better to be licensed so everyone that we every every every state that we're in we're licensed in so we're licensed in Ohio we're licensed in Kentucky we're licensed in Indiana We're licensed in Tennessee we don't operate there but that's one of our prerequisites to going into that market is getting our license um for Indiana specifically um you're supposed to have a license right um and they're going to be people that chirp about this and say you're not necessarily right and they sure you can twist any you know Bill around is whatever you want it to be but it's not been challenged in court yet there's no you know case law to really point to but if you're going to get into this and you're going to do it full-time and make this a not a side Hustle but a business you're an idiot if you don't get licensed in my opinion yeah I think there's like competency that that needs to be a prere prerequisite of being licensed like my favorite is when the wholesaler says I don't need to be license and then they send over a pa uh written under somebody else's name yeah I'm like wait you don't need to be licensed but you're using whoever to you know covering behind your your leader of whatever group it's it's an odd thing because I think to answer your question a little bit more thoroughly uh anyone with an internet connection and a clipboard can wholesale a house right I mean they're still trying to the equation is is not a difficult one to follow sell for more than you than than you make right any jerk can go knock on doors and do it uh which is good but it's also bad for a lot of the the good actors in This Side of Things and I I felt it like when I got started which was 21 and 22 my phone was being blown up and I had to ask like are you actually the one that has the money to buy this property are you actually the investor or are you just trying to wholesale it in every other call was a wholesaler wholesaling on the market in Indie was like the thing that California startup Bros wanted to do like they were all from California univers nasty yeah right but now like I rarely get those calls anymore so I think something has shifted where it's starting to become like you're either doing this the right way with a license above board well yeah what shifted is uh we had the lowest transactions nationally the past decade right so like maybe they'll come back there's less buyers where what you're referring to 21 yeah you you could pick up anything for 90 and sell it for 1 appreciated by one month in like, money fell from the sky we joke about 21 and 22 to this day in our office but uh again we we've we've been rooting on regulation in well literally did fall from the sky there was like 29 trillion injected into the economy I don't care where it comes from man money shows up everyone now we're pay consequences of that but with inflation and we all feel it um but there are a handful of the good guys who do this you know uh professionally who are rooting on regulation in a big way so uh we're not protesting any part of hey wholesalers need to be licensed wholesalers should be held accountable to x y and z um compliance is a big deal in this industry because you don't want people to get cheated out of their biggest asset um you want to make sure you're providing a fair assessment of what you're capable of and being compensated adequately so um we're confident we're doing that and we're we're paying a lot of attention to compliance as it continues to build over the the national landscape and I think that is where the misconception comes from right because YouTube University anybody could watch you know I could ask you a question that's basic level of how can I get started in wholesaling well you told me you you wrote earnest money you went and did the thing fell into it that's how most get started um but the the reality is people go uh Evan you're buying for you know I'm going to sell this to you for 100 and you're telling me that that's like the best I can get right but I'm pressed in a scenario that I Need My Equity to unlock to go to xire or Z and then you turn around and sell for 120 and I'm like oh man screw that guy I could have got 120 no uh you couldn't have because you would have had to wait the same amount of time that we did you would have had to go through the process you know we closed in 7 days and you were gone um in speed just like you said the pawn Shop's necessary for everybody so uh um I'm all for it it just does piss me off when I'm trying to buy deep and you guys make your but I have to go find my own deals right CU you got Scrappy that's why I'm going to you and just like every other industry that's what I've said for a long time is this this this is not a unique thing yeah wholesaling is not unique there's a wholesale industry that exists for every industry in the world down to where you find your milk yeah and I have bought a deal from you guys I worked with Devon he's no longer with you um but he was very transparent with me like I walked and I did my own inspection before I wrote it and I was like hey man there's knob and tube everywhere can we come down 5,000 or 10,000 I can't remember what it was and he was like yeah man we're just trying to make maybe this was not what he was supposed to do in your company I'm learning I'm learning a lot here he was like yeah man we like he did I don't know if he said this later after the fact it could have been but they he did like lower the price 5,000 or whatever for the nomed tube and then I found out later like we made he's like yeah we made what our Target is which is 15 ,000 mhm and that gave me knowledge of like okay obviously you're they're going to try to make like 30 40 whatever they can uh whatever the market dictates but there's a minimum that covers their cost of doing business and making a profit which in that case was 50 maybe I should not say this on air maybe you'll want me to take this out but I noticed there was some wiar room but you could have said screw off we're already at 15 and I would have had to suck it up but like there was a discussion there and I appreciated that transparency well there's a true negotiation is what you're articulating right which is what free market should be and that's really what I said there's no right answer to the equation the market is the right answer and the Market's undefeated and always will be so you know the fact that you were there and you made a good impression on Devon and Deon was willing to nego this was a this property I thought Asis was worth 120 you push you guys pushed it out at like 115 110 maybe I got it for 105 110 I can't remember but I had immediate Equity upon buying that that's great it would have been worth it would have been multiple offers in the Market I wouldn't have even got it I would have lost to some cash buyer from out of state so like I had a really good experience but that was my fourth property I bought maybe or including my own homes like my sixth property I bought so I knew what to look for and I had the balls basically to go buy from a wholesaler off Market what would your advice be to like a firsttime investor maybe they're out of state maybe locally would you say like yeah come and buy a Mainstay off Market deal or not no hell no think it's uh I think you know it's um that was was kind of aggressive no don't I we do not we do not want your business stay away um it wasn't a leading question I was curious that's a good question and I and I think it's worth saying out loud that first time folks are better suited to not get as good of a deal and in my opinion that's what that's what the difference between off market and onm Market if it's on Market everyone sees it you're going to get a worse deal I I think that's just yeah inherent in our discussion in our industry so if you shop on the market if you go on zillow.com talk to your realtor go through the thing get an inspection have negotiation get a loan you're going to get a worst deal like there's too many other things happening to where where you could even potentially go off Market to get to get a better deal but if you can do that in your first round kind of see how the thing works I think that's important yeah um we've had a handful of folks just step in a bear trap where you know they go and they sign the agreement $5,000 in earnest money and inspection comes back KN and Tube everywhere and they actually got an inspection even after the fact sure sure and it really depends you know some folks want to have it ahead of time and then they lose the deal and they're pissed off they spent 600 bucks on an inspection and like these are rapid transactions where it's like side on often times side unseen like you don't know much about it like you're just taking that risk for that 20K uh margin um so I think that just has to be understood some folks will yeah some if and I think it's best understood that process is best understood with your first sare being an onm Market transaction someone to handhold someone to show you this you you have 21 days to make a decision about an inspection response instead of you're closing in four days sight unseen right it's just different it's it's different speeds y so learn how it works on the on an on Market deal number one and then once you figured out like you know you're going to be coming to us regardless because there just objectively better better deals there right and you're going to figure out where you stumbled where you spent too much money but you're also going to have a deal that doesn't have knob and tube because you know you came and chopped with the with roots reality who that's what we specialize in and then you come and and go to main stay likely still led by us to find the the off-market deal that that works out send main State deals out all the time I don't know if they use me or not I don't even care if or six deal like they'll come to me in the back end or something you know I'm flip I'm shocked by how many Realtors don't utilize good wholesale relationships because a lot of these wholesalers they're scared I think our group it blows my mind our group if I quick sales pitch our group is paying 3% to any broker that brings a buyer just like I didn't even know that until like two months ago and and that's a lot of people's eyes lit up like yours just did and it's like yeah like we're paying 3% bring your [ __ ] buyers like this shouldn't be some mystery it shouldn't be any different than on the market we want to utilize our broker relationships to funnel to keep the buyer funnel full um but a lot of folks just don't understand how it works when we ask them get inside the agreement close in 5 days I think they think it's a competition if main stay wins lose because I lost my buyer they don't understand there is win-wins if you're providing value which is a good deal we've had a handful of folks in Fort Wayne bring us deals or bring us buyers get paid 3% on the buy turn around and sell the flip and make another three on the on the back end when they sell it's like they're just making so much all we have to do is to keep funneling deals yeah so Fort Wayne for some reason's been a hot bed for that but a lot of folks in Indie I agree we'll just see it as competition and if I lose they win so what is the uh majority of your deals what are are they flip driven bird driven what is the like majority I would argue uh more just Market cycle now I think flips are kind of becoming the the the norm yeah maybe 7030 in that regard but it's been it's been different um you know there was a time where folks would buy 20 22 21 where folks would buy a house make it rent ready or whatever something throw a sign in the yard and what do you know I get a $30,000 you know profit offer so um we we don't do any type of like construction or investing you know advice type deal but um there are folks that swing it a handful of different ways play the market cycle and go from there I you mentioned something earlier which was you mentioned something saying like we're the good guys I thought that was interesting not necessarily because I disagreed but I think a lot of people whether or not it's just like people saying random crap on Facebook or wherever it is that have a different impression of main stay there's a lot of noise there's a lot of noise and there's a lot of misunderstanding and fear and all that but what would your what are your thoughts on like main stay's reputation and like a lot of think people I think think there's some dodginess or shadiness happened like is that reputation earned or is that just totally misund Mis misunderstanding uh dodginess is the first time I've heard something like that uh no I think people people protest what they they don't know I think it's human nature um I I made the mistake in my younger years of uh I got my brokerage license in 2014 and uh worked with a lot of folks man were just flat out incompetent I feel like I've been saying that since before it was cool to say agents agents I'm sorry yes agents well everyone really but but C in this industry everyone's got some bad actor but man just buying the properties I bought when I was buying them the market was just like man how are we why is this so difficult buying a house should not be this difficult there must be a better way um and I I I got loud quickly about like man Realtors aren't worth you know the the paper they're written on you know what's the point what you know and uh I think I I stuck my foot in my mouth when I was young and stupid about um you know kind of protesting that and that that reputation stuck with us a little bit and not that I'm really running away from it um I think that there are a lot of folks that are more interested in how a house should be bought than how a house is bought and they're not wanting to adapt to learn so uh I'm not doubling down on my you know Realtors are idiots and never use one and they're unnecessary but I think there should be a shakeup in the industry and I think that's something I've been good at my whole life is disruption and people don't like a disruptor so uh we we came in and shook things up pretty quickly we were 24 25 when we were really really doing heavy volume and um Contin well you had a post recently which was like if you buy a house with a realtor and an FHA loan and you sell it in like 3 years you're going to have negative equity you're going to lose money because you're going to sell it with like a 6% or 5% realtor fee closing costs and all the comments were agents of course saying like no no no appreciation which I saw I see both sides I almost commented but I was like I think I'd rather just like sit in the sidelines and watch the monkeys do their dance oh something and go ahead I'm sorry I I love the discussion honestly I thought it was a really relevant discussion because I think a lot of people are surprised when they go to sell three years down the line and they're like oh shoot like there's fees associated with selling with a realtor that's not to say they're better off going for sale by owner it's just you need to understand if you're putting a little bit of money down and you're using a costly loan which is an FHA loan that has mortgage insurance and then you're selling with a realtor like there's service providers that are going to get paid before you and so i' I'd love to hear your thoughts on that discussion on that post and you know what what your thoughts are on the reactions there happily and I I I I have to say uh I don't know what post your referencing I I maybe it was Clay it I think it was it was Clay I think Clay is doing most of the talking now I just associate it with you I took myself off of social media um Facebook specifically about a year ago okay um just cuz stuff like this was just it would it would literally mess with me if I had someone shirt back you idiot so I don't know what you're talking about like I don't need to prove anything to you Sally Susie realtor yeah like have fun with your cookies on Sunday uh not my you know it would bother me like they genuinely bother me and my wife was like you're driving yourself insane for some jerk you don't know like like it I'd stay up at night like typing up some shitty message and it's like that is you want talk about the definition of unhealthy right so I mean you're clean feels good um but I mean that's something we've always been good at is kind of uh if you want to call it good is just stir in the pot getting the conversation started right because you can't I think it's a good marketing tactic it it's worked it's worked handsomely for what we want it to do and but we opening up conversation is the name of the game mhm my sister-in-law is a anesthesiologist in Salt Lake City uh brilliant woman has the world you know by the balls if you will and I'm going to buy a house cuz I want I don't want to throw money away and rent okay let's let's take a look at it you know $1.7 million house some beautiful beautiful house in Park City Utah right on a mountain and uh you start diving through it just going to hang on to it for put 100,000 down and hang on to it for seven years and mortgage payments you know nine grand a month $8,300 of it of which is interest and it's like have we actually ever busted open the book and like looked into the mechanics of what this really is MH so to this day I can send it to you I've got a calculator I built for her I call it the Annie model and the Annie model spits out exactly what you stand to make and or lose based on the hold period the interest rate all these different assumptions you B into what a mortgage is Realtors are not going to send you that they're going to send you what on Zillow and walk away with their little commission check and yeah yeah yeah and then tell you to buy and not rent it's worth [ __ ] and it looks bad to your point about you know the reputation we got it's like just raising a red flag it's not right to just blindly say it there's no difference in right lack of fiduciary responsibility in that that's wrong and to gently push back on that we do own a real estate company uh we are realtors I think if you're going to own it for a short period of time often times you're better scre that use theing calculator um no no no I think if you're going to own something for if you're going to it's time in the market right not timing the market so time in the market over decades you're you're guaranteed to have more net worth over the end of that you know I think for hers it was and again this is obviously it's a $ 1.7 million thing the stats change as the numbers go up but like I think it would open your eyes I'd love to just send it to you guys and let you play with it for a second because well I have I look at my mortgage statements and I see how much interest I paid it's insane it's insane and uh I'm not telling people not to take a mortgage everyone needs most folks need to take out a mortgage but it's I think that that argument built out built out built out well and that's that's theity in the the property we had Jeremy tomman on uh yeah and he was talking about you know he said Tyler you're sharp you're going to end up recasting your mortgages into a 15 year you're going to get them down to 1050 and that's where you'll be at your rentals and that's where your your actual wealth is unlocked and that's what you're referencing is 3.5% down is simply not enough and 3% % of that's going to you know your agent and on the back end 6% however it shakes up um plus title fees and everything else that's involved so I like it it makes a lot of sense and that's where you have to go buy with a deal like my first home completely different story right put uh three and a half% down but also walked away with 100,000 and that's buying Smart in the correct way and a lot of our clients that's that's what we're doing we're sending them numbers of how is this an investment after how long do you have to live here to you know uh not pay cap gains tax on it to be able to have it be a primary or 1031 whatever and doing that education I think the top you know 1% are taking that step but they're you're correct a lot of people are like go by the house walk away dance with the commission money told bottle service down time right yeah right we've all we've all been there but uh we I I've told a handful of my guys at the the building too you know we have these kpis for what here's what we want to hit here's how much booked Revenue we want to do here's how much we want to close here's how many talk time here's how many buyers we want add all these things but more than the numbers itself and hitting them like understand where they come from like what why is this recipe even made like talk to me about the dive deeper into where this even came from and that's really the only I I've said i' made the mistake or not and saying that in a non-polite way on social media for a long time and getting that reputation of being just abrasive um but that's really all that stems from it's like let's investigate that I'm curious though because the alternative is what is renting and that's just kind of like floating with the market you're going to continue to pay more as inflation goes up so you have less liability right you don't have to make those repairs um you're you're not on the hook when you have to sell and you have G right you just hited the $4,500 furnace to only $20 a month going to principle like do the it it's about life right where you at today comparative and that's like I put out a social media post recently where I said uh I have a budget to help you buy a home like my goal this year is to help 10 first-time home buyers unlock home ownership but this budget is actually to get you into the door where it makes sense and it's not going to screw you if it is then come rent one of my properties it could be a tenant right you know facilitate there and we we'll build it up to where you can actually buy and it's heading on the objection is what you're doing you're making that that statement getting the conversation starting not running from it saying hey yeah that that is what I I believe and I'll double down here's my personal example I think that's what we do as like investor agents often we're like oh we're kind of ostracized from the market but it's like yeah it's because we're investor agents and we look at it through that wealth building lens and that's why our first-time home buyers are coming to closing with zero dos but also having a tenant on the other side paying 1,400 a month on a 1,100 mortgage I think your guys' house hack focus is brilliant yeah a previous house hacker um love the thought process love what you guys do and there's no and I think that's where the the Venom comes from the thought Venom from my group comes from is like it's not a blanket statement on all folks I just think that 99 of 100 Realtors don't approach things that way correct and it's I love my father-in-law love Dr Bob but Dr Bob and you're throwing money away just go buy a place and pay $8,300 in interest maybe not the 1.7 house on Hill it's also that market right but I I love my father-in-law he would be ecstatic if Annie bought that house instead of pay three grand a month to rent her townhouse in downtown Salt Lake what why like you're saing five grand a month what's what's a big deal because it made sense for him at that time right yeah he bought his house for the price for Jack exactly that has farmed for 100 grand you know it's not yeah that's probably paid 19% interest on like a 30k loan 100% but it still made sense principal wise because that house is now worth 400 and and that's the root of the cause is it's it's the time right well I think it's also interesting to look at it's one thing to chop it up and talk about hypothetical views it's another thing to look at your actual portfolio and my understanding is you have paid off or you've bought all your properties in cash now right do you have any mortgage no well no we have lines of credit that that are on available so we're liquid so I think that was the biggest misconception with a lot of folks is when you pay your mortgages down we did a lot of recasting that was something I learned about right away and that's something I can't speak highly enough into existence is the reason you hear about recasting is because your mortgage guy doesn't make any money on a recast he makes a refinance but you recast it makes no money cost 70 bucks to go to your bank Pay It Down Easy um recasting for those that are listening and don't truly understand it let's say you have a a mortgage outstanding you owe you know $200,000 on your house um grandpa dies and leaves you 50 Grand you can take that 50 Grand after you pay tax of course and apply that 50 Grand let's call it toward the principal balance of the mortgage and imagine reeling in your fishing line and recasting to where the payment changes based on your pay down of that principal so now you ow 150 and you're paying your monthly payment changes based on the new principal amount of the mortgage so um a lot of fancy Finance terms being thrown around but recasting a mortgage goes a long way that's what we did for our personal residences that's what we did for our house hack that's what we did with a lot of the rentals was keep shove shoving money at wholesale a deal pay the staff how long did it take you to pay off your proper how many rentals do you own 22 doors 20 no 22 doors 18 roofs so we have two duplexes okay if that makes sense and a couple commercial deals so uh and so now you're just pure obviously you have to pay insurance and taxes but pure cash flow obviously you're you're making a lot more cash flow and you're using lines of credit to acquire more which I think is genius obviously a lot of people envious of that and it's not easy to get there initially but once you're there it's great the lines of credit are how you actually unlock wealth though and be able to go and and leverage from that point there's a we've had Rex Fisher on who has 350 plus doors he's 60% L across his portfolio and like that also has value too but I always like the 22 property analogy fully paid off and looking at both net worse right and and I think we can both point at each other and laugh at kind of the inefficiencies with either side of what we what we do but uh there's no wrong way to do it I think or right way to do it really I know what he would tell you you could own 180 doors more than that that's but again for me I sleep like a king at night I'm I'm I'm that's my argument it's kind a little bit Dave Ramy flare to it but it'd be a shame to go this as far as we have in this industry and done the deals we've done and know what we know and not be able to buy groceries and that's what the lack of liquidity does when you take every penny you have and paid on your principal balance so having those lines of credit I think is a neat thing to have that banking relationship if and when you need to pull the trigger so we're liquid and we have the properties paid off which is a nice place to be and I think that's what a lot of the listeners have a hard time doing it's like man to get that first rental I had to like kill for right but it's the it is that natural snowball that just starts you know you get one two 3 4 and you start doing like when you recap uh what I like to do is shove the equity in recast it for you know 5 years less than the original mortgagees sure so if it's 30 you know knock it down to 25 20 whatever is available whatever the lender will let me do the payment usually is the same the payment doesn't change yes you did a little bit differently you you you worked on terms as opposed to payment right so it's like okay I've just knocked off five years immediately and my payment Remains the Same and and everything's great from that perspective because principal is still going into that little principal piggy bank that's how I look at it you have 22 piggy banks yeah and now you're able to unlock that that Equity through a line of credit or you just go and you know fix up you buy a bunch of properties from Main State you fix them up refinance and you know 60% lever there's so many ways to do it um but it's it's a challenge and at at the end of the day it it isn't just like buying in the the stock market but well I think Rex's perspective to kind of clarify is if he leverages and he has 300 properties and Indie appreciates by even 5% he's made hundred of thousands in equity in the appreciation Rex has said to us he all of it's an appreciation play he's like I operate in the black meaning like pretty much neutral cash flow on his portfolio and that's where you say you can't buy groceries with Equity is the standpoint right he's not he has other ways to make a wealth building plan like an equity play with the uh development of Indianapolis he's making a ton of people a ton of money and he's doing a lot of things right and I think both have have good purpose I would prefer atically and lifestyle wise your plan that's actually my plan which is to acquire properties that are in the line of development add value to them sell off the crappy ones pay down the good ones and keep the class A Properties cash flowing and have lines of credit exactly I believe what you've done it it sounds sexier than it is but again like there's there's no there's no wrong way to do it I think that's where it gets kind of Mison sometimes I feel like it's easy to sit there and talk about my experience but frankly I'm just a risk adverse guy that's really what it boils down to I don't want I'm not going to operate in negative cash flow or neutral cash flow for 10 years and cross my fingers I don't God bless Indy I don't have faith in New York or Miami that much to even to even well yeah having leveraged properties feels like constantly bleeding like it really does like every time I have a repair I'm like oh there goes my cash flow that month I'm in the red so this conversation is like wildly different than I envisioned it how do we put the pieces together though right how do you go from you have one wild extreme of 350 doors one wild extreme of 22 paid off right how do you find the the middle ground to actually uh tangibly get to 22 doors is it having one that you're focused on while adding three at the same time maybe I should have specified this I I can speak to the way that Mr fiser and I respect the hell out of Rex he's an awesome he's an awesome person first and foremost but he's a brilliant business Guy and um I respect his his knowledge infinitely so he's not some schmuck that just happens to have a bunch of doors that he bought a tax sale 40 years ago there plenty of those guys out there too if Jeremy's listening he did do that but um but uh Rex Rex is a smart guy um I did that um to begin with and chose to Pivot out of it so I think at one point Cay and I had like 87 or 88 doors while working our full-time jobs um which was a disaster like self-managed like boss man's right here in the middle of meeting you're sitting here talking to somebody about you know some toilet issue that's going on this was tough for about 6 months and we decided you know we ramped up that way we we bur a bunch of these things and said [ __ ] this like why would I own 88 when I can sell 3/4 of them and own 22 free and clear it's essentially what we did and Rex's whole thing is it's predicated on scale so he has the realy company that literally does all the deals for him and then he has the management company that he owns who does all that stuff without that scale he would have gotten out of this business a long time ago and he said his life was kind of in disarray I hope I'm not stretching by saying that when he was doing he literally would go and furnaces he told me he' go into the property cuz like he was trying to make the cash flow work and he had investors to pay like he didn't he couldn't afford paying the HVAC guy but that lifestyle you can't sustain for when you're in your 40s and 50s well what you articulated is you had the the 80 some doors and and he doubled down on Main stay right and was able to get to a place where call back you could sleep at night right and I think it's one word that comes back uh which I feel often it's like it's the anxiety of of the properties out there right get a call Brick throwing a window it's like [ __ ] there's another 1900 buck that does do you have has it I mean literally every single property I've had has had a brick thrown through the window I don't know what somebody's fing around man it's one those on wholesalers it is it probably is main stay is like hey we got a broken we got to love the east side right main stay is like hey saw a broken window you want to sell for right they're marketing like crazy get my marketing lady on the horn for that but it is I mean yeah I think I think there's so many schools at thought and the reality is it's it is a challenge to go to YouTube University start wholesaling start building all this portfolio I don't know how people do it from distance I couldn't could you imagine not uh being in a different state and being able to do what you've done in Indie dude it's tough I mean uh even being in like Lexington is three hours away two and half three hours away is is extremely difficult compared to just being in Indie all of our folks are based we have 27 folks in our building and uh none of which are or we facilitate deals in lexon everyone's located in indie so to do deals you know 200 mil away is hard yeah and uh for a handful of different reasons but yeah I mean so it's it's a geographic and logistical uh operational nightmare trying to do things from afar unless you're at scale where you can make it make sense so we're sure we're there it's just bessent growth nonsense that sucks sometimes yeah we talked about like the the first time investment where you know you guys I you said you're not the shop for that right there should be a handhold I think people from distance just have to bet on the horse they have to like you you have to do priv Capital if you have that much money that you need to to mobilize you can't bet on the equity from distance because a Brick's going to get thrown through the window you in that brick man yeah it's it keeps me up at night um dude loved having you on the episode we we wrap these things up with three rapid fire questions uh you want to kick it off Tyler absolutely what is your favorite we'll go brunch what's your favorite brunch spot in Indie listeners about um I don't know if you're a breakfast guy no I I I I am uh I've got a three-year-old and a five-month-old so brunch is a funny thing anymore uh what do Brun that's right what is Brun fine um if I if I had to pick it's probably I'm a Broad Ripple guy or office is in Broad Ripple obviously so uh I like chelita um and then good morning m is the coolest place ever it's like a Stones Throw from my office so uh good morning mamas is the place kind of like a 50s diner Vibe just with like the cool broad with whiskey yeah I didn't know they had Al there oh yeah oh yeah you guys can throw down a good party we throw that's one thing we're good at uh we real estate C+ Pary A+ so uh but yeah good morning m is cool and good morning M that's anything in Broad Ripple man I'm a sucker from Midtown oh yeah same I live there yeah you get it you could you done craw there um question number two what's one habit that change your life one habit that changed my life where are you going to make I'm going to drive home in silence after this podcast [Music] um I don't know about changed my life but the last nine month I had my first drink in 10 months just over just just under 10 months uh on New Year's Eve and um man that was weird because for 20 whatever almost up until I I didn't drink it all till I was 21 and then I was making up for lost time from 21 until whatever 10 months ago was and uh Tyler's right man like we we we are a a cold culture organization which is sometimes a fancy word for fun and Buddy Buddy um but man we got we let that get away from us in our organization in a weird way where it's you know hardly a company more of like a frat house a profitable frat house um so I told myself look I'm going to take this a little bit seriously I'm going to stop the drinking side of things and so I went from like social media back and forthing with realtors for fun and over a pint of whiskey every night to I'm I'm cutting out social media I'm not drink for a little while and just kind of get you know get back on the horse for what really important so I don't know if that's the right answer but certainly over the last 300 days it was like okay like like I can really see some fruits huge achievement yeah thank you thank you it was tough but um yeah so had some champagne and some Zombie Dust on uh on New Year's Eve and uh we're good now but yeah that was that was a cool 10 months really learn more about what I wanted to do long term um this bleeds into the next question so I'll kind of reframe it how is that going to continue is that going to continue so I'm as far as sobriety or lack just curious not necessarily um you know there I mean there was a time where it was like uh everyone's got their Vice and everyone you know uh has their their faults with a business owner mine was you know let's go Network let's go get a beer let's go yeah let's go uh let's go do dinner and drinks you know in real estate that's everything everyone's asking me to go get drinks I'm like I could drink every night if I wanted and it'd be business you could and especially before kids for me it was like why the hell not no one I mean my wife is in medical sales and she's traveling the world nine times N9 out of 10 days and I'm not going to go home and watch prices right and go to sleep no like I'm going to go make fruits from what we have going on and that was a long time coming that was probably 2015 through 2019 of just nonstop networking which often a companies that type of thing so um it's not necessarily that it's just understanding kind of where life is and what trajectory you want it to go and I saw mine going in a way I didn't want it to so made a course correction it's really commendable that's than yeah that's the first one I've ever made I think so here we are keep keep on that trajectory I know your partner is your brother Clay um you've expressed to me you have different strengths and I love when you talk about it it reminds me of me and Max a little bit uh walk us through like keys to success with a partnership like how you think about that um it's I I don't know I think I'm still kind of rolling with this I I've been an identical twin my my whole life so we I've always had to kind of share everything um so when it came time to kind of really do all right let's try real estate you know was just kind of a no-brainer all right let's do it together you know it makes every decision easier so if you have a ride or die like that I think that's that's a neat thing and some should be cherished first and foremost um but it's lot like being married like you're going to butt heads a lot or you least you should because you should be challenging each other in healthy ways but um clay and I have figured out you know where our our swim lanes are that's really one of our bigger strengths is Klay knows exactly what he's good at I know exactly what I'm good at it's very rare that we kind of uh swim in each other's Lanes so that's number one uh number two knowing how and when to resolve conflict um we made the mistake a handful of times back when we moved into our building on uh 52nd Street of kind of uh showing the cabin that there's turbulence and that we feel it um if you catch my drift I think it's uh every Airline what they call flight attendant stewards whatever um you know the plan's about feels like it's about to fall out of the sky you can always catch a smile on the steart steuart's face you know CU they just they got to put it on else everyone panics right right um so we made the mistake and certainly 2019 2020 when Co hit and it [ __ ] got weird um of you know letting people see that stress and uh that's a great way to lose not just your partner but your business so um we rectified that pretty quickly and that's maybe a secret that I'd give to everyone like it's rare that you have a partner and not people that you're also working with whether it's vendors or employees or whatever else but never let them see you sweat um either one of you because it will lead to Future chaos it's really difficult to to to fix so we're we're fortunate enough to to do that and I think having known clay for 24 years before we decided to go into business together was super helpful but um if you can know how each other works what makes them tick and uh know when and how to resolve conflict I know it's like a marital counseling type answer but uh there's a lot of Meritage uh parallels that exist in a partnership in my opinion so clay and I are the old married couple that can't get rid of each other um we know what pisses each other off we know what makes each other happy and we uh go in the ground together at some point hopefully yeah I think that's so important being aligned I heard like a Jim Collins quote which was business's um 90% alignment and 10% strategy and that really hit me hard because like oh man you have to have those behind the scenes co-founder syns where you're sinking up and aligned to have a singular front otherwise things will quickly crumble I think so and in align with your partner also bleeds down into alignment with your your subordinates I think that just again if you guys if it shows that you guys are kind of you know cont tanker and not in fully understanding on where you want to be you know your people are going to feel the same way too right employees are like so what the hell do I do right yeah play said this and everyone Max wants you know it's it's it's difficult no we had an employee uh that I know will listen to all this because her job is to Tim stamp all these episodes that literally came to me and said I don't know who my boss is like I have no idea who my boss is Tyler is it Max cuz you're he's told me one thing you're tell me one thing and and neither of which is the same thing um and that was like a good call out to us to go oh we both go to a coach in independently we need to go sit down with a coach together so we've literally been to marriage counseling Amen brother yeah counselings look good for the soul it is yeah but no that that's super super insightful the the alignment yeah absolutely last question for you uh another deep one is which is uh what is an area of your life you're currently working on growing I really am going to drive home in silence yeah um an area of my life I'm working on growing um there's a a Netflix documentary I'm a huge EDM guy so I'm not I'm not like a go to a festival and you know do some funny drug and that type of deal but I love EDM music it Hypes me up it gets me ready for the day and I've been an aichi fan for years and years and years and years and years and years and years still listen to him all the time and there's a documentary on Netflix called I'm Tim which is a a story about his life and kind of how he went through the struggles of anxiety and what you know people were super super uh he had all these expectations he was supposed to achieve he V he was a Mozart of EDM right and uh he ended up a really tragic suicide situation um back in 2019 or 2018 and uh anyway there was a part in the documentary where uh vichi said I'm just looking for a way to be content you know I've got all the fame and all the money and all this cool stuff but I just I have these expectations and I'm not a ENT person you know I'm super anxious I feel like I'm letting someone down and uh being a business owner is hard I mean you guys know that um having grown adults with kids to feed and making sure that it's done the right way is a difficult thing to sleep I say I sleep like a king of night that's a lie uh with my mortgage with my lack thereof that's that's fine you're not thinking about real estate maybe no uh maybe you are I don't know but uh it's but you know my my something I'm working on especially after I saw that documentary come out the first of the year was uh I want to be content with being content and finding a way to to to you know I don't need to set the world on fire we don't need to be in 20 different markets you know I don't need to another wrapped vehicle or another employee or another thing I don't need to go piss somebody off on Facebook there are things that you just don't need focus on what's important so I've got two little girls and a wife who I love very much and I'd love to have a couple more little girls if life were good to me so um trying to be consent with being consent and I'm in a place now where I finally can be I'll be 35 in July and I'm I'm good I feel like that's where the the wisdom unlocks I hear like uh time and time again it's like the the back half 35s 40s is where it it starts to I got five more years to be an idiot yeah right I mean like 30s 30s is like oh [ __ ] what are we doing right let's get on the rails like 35 I mean the average home owner is 32 years old first-time home buyer and there's I feel like a reason for that um so I love that that opening and and kind of Awakening and you'll enjoy your your quiet R home thanks for coming on hey appreciate guys I got a lot to think about on there Qui right now I love this conversation thanks inpection City I appreciate it guys thanks how can people find you uh find Us online again I'm I'm not a social media guy but the company is to a massive degree so mainstate Property Group uh Midwest Cash offer or come swing by for a beer coffee tea water uh 2001 East 52nd Street can't miss us awesome cheers [Music] [Music]