Ep #153 – Meghan McCallum – From Firefighter to Real Estate Investor – owns 40+ units

Here’s some of what you will learn:
  • Spent 14 years working as a firefighter and then went into real estate.
  • Why a great way to get started in this business is by buying a plex and living in it.
  • How to rent a property out on Airbnb if the city has a law against it.
  • When investing in multifamily, it could be less work than single family because you will have a team.
  • Don’t be afraid of larger properties. If the numbers are right, be confident that you can make it happen and make an offer.
  • Why mom and pop apartment buildings (5-30 units) is the sweet spot to invest in.
  • Be careful of what bankers suggest, they want you to settle while the investor wants you to get a deal.
  • If you trust your realtor, you can sign a bunch of earnest money checks and leave the “To” portion blank to help speed up the process.
  • How broker relationships will make you wealthy.
  • Why you should ask anyone you know for appraisals on their properties.
  • Going to REA’s will help you learn from other people and find others that will help you.
  • Starting up your own REA meeting will add value to your business because you will be looked at as an influencer.
  • Where to find deals in this current market.
  • Why you should always do walkthroughs right before you close on a deal.
  • How to make your undesirable units, desirable.
  • The quickest way to get started in investing in this business is to partner with someone who has experience and is making moves.
  • Why you should join a group where everybody is willing to share their ideas/experiences/data.

contact Meghan at –>  Meghan@McCallumholdings.com

Watch on YouTube

Do you want to learn more about Multifamily Real Estate Investing? Work with Rod in the Lifetime CashFlow Academy's Multifamily Course & Coaching Program

Full Transcript Below:

Ep #153 – Meghan McCallum – From Firefighter to Real Estate Investor – owns 40+ units

Welcome. This is the Lifetime Cash Flow Through Real Estate Investing Podcast. This is where you’ll learn strategies to help you achieve lifetime financial freedom through real estate investment. Your host, Rod Khleif, has owned over 2,000 homes and apartments. And he brings experts in all aspects of real estate investment and management on to the show. Now, here’s your host, Rod Khleif.

Rod Khleif: A couple of quick things I want to let you guys know that I felt it was my responsibility to create an online space where multi-family investors could go and connect, and share ideas and ask questions. Get encouragement, peer mentor each other, and find accountability partners. Even join venture together and just learn and grow in this exciting business.

So I’ve created it. And I’m gonna have a lot of my podcast guests there who are experts in multi-family investing, my private coaching students… Just basically, an incredible peer group of investors who are already taking action on their dreams of building lifetime cash flow through multi- family properties.

All you have to do is go to multifamilycommunity.com and it’ll take you directly to the Facebook group to join. Now, I’m gonna be moderating the group so I’m gonna be there a lot. We’re gonna try to answer every question that comes up there. But if you wanna ask me questions personally, just go to my personal page and ask me there, ‘cause I try to answer every question there as well.

Also, I’ve been going live as well on Facebook. Typically, I try to do a real estate piece and then I try to do a psychology of success piece. I hope you’ll come check it out. I’ve already done several: How to Buy a Multi-family Property While You’ve got a Full-time Job. I did another one on Building Courage and Confidence. I did another one on doing a vision board. I did one today on Getting Negativity Out of Your Life. So come check it out.

You can do it while I’m live. Come say, “Hi”, and even if it’s after I’m live, say hello or ask a question if you’ve got it, because we answer every question, or I answer every question that shows up there.

Last but not least, if you’ve been listening to this podcast, hopefully, you’ve come to realize that I really love this. I really love what I’m doing and I love adding value to you guys. And so I’ve created an incredible course and coaching program where I personally coach you.

My goal is to help you crush it in your lives and in this business, and build your own lifetime cash flow quickly and safely. If you wanna get more information on my course or coaching then text the word CRUSH to 41411, and we’ll hook you up. Okay, let’s get to it.

Rod Khleif: Welcome to another edition of How to Build Lifetime Cash Flow Through Real Estate Investing. I’m Rod Khleif and I am thrilled you’re here. I know you’re gonna get a ton of value from the lady we’re interviewing today.

She’s a real ball of fire, and her name is Meghan McCallum. She’s an investor. She’s got 40 plus units, and I think has a great outlook in life from the very little I know of her. And I’m excited to have her on the show. Welcome, Meghan.

Meghan McCallum: Thanks Rod. Thanks so much for having me.

Rod Khleif: Absolutely my pleasure… We don’t usually have a lot of women on the show, I need to fix that, so I’m really glad you’re on the show. You’re an investor and you’re kicking butt.

Meghan McCallum: Yes.

Rod Khleif: Tell us a little about Meghan. How you started in this business, and how you got to where you’re at? Let’s go there.

Meghan McCallum: Sure. I’ll give you the 10,000 foot view. My career, I’ve spent 14 years working as a firefighter, paramedic.

Rod Khleif: Wow.

Meghan McCallum: Yeah. And I finally got to Chief, and spent all my time digging in to that. Got my masters degree from University of Chicago in Threat Response and Management. Then once I made it to Chief, it really didn’t… I wasn’t really excited about it and I ended up getting fired.

Rod Khleif: Wow.

Meghan McCallum: Which was like a blessing in disguise. I was in New Mexico, and it had taken me away from my family, and I thought it’s what I wanted. Luckily, it didn’t work, and I came home with a smile on my face, driving three days, knowing I was gonna get into real estate.

Rod Khleif: Wow.

Meghan McCallum: So I started in real estate in 2012, when I bought my first duplex. I lived in one unit [overlap talk]

Rod Khleif: Where at?

Meghan McCallum: At Evanston, Illinois.

Rod Khleif: Okay.

Meghan McCallum: I’m originally from Chicago, but my firefighting career, I worked for the Department of Defense and the Department of Energy, so I moved around quite a bit.

We started investing in the Chicagoland area in 2012, which is a great time to buy.

Rod Khleif: Perfect time.

Meghan McCallum: I can’t tell you that I was brilliant, but I waited for three and a half years to buy so even without knowing, I kinda had a little feeling that good things were gonna come to those who waited.

We did that and I had two rental units plus the unit I was living in and everything… It just… It was easy. It was easy, not knowing what I was doing wrong.

Rod Khleif: It was easy ‘cause you love… Did you love it at that point or did you… I mean, were you building your love for it?

Meghan McCallum: I was building my love for being an entrepreneur and business.

Rod Khleif: Okay.

Meghan McCallum: I didn’t know what I was doing like most people jump into it and think it’s gonna be this easy thing. And I didn’t have a great lease agreement. I didn’t have great ways for… I didn’t have a system. I wasn’t systematized. I was doing something that I was like… I did love real estate. I’ve always lover real estate.

So being able to finally start investing and seeing the cash flow come in and learning about the tax laws, it was just for a brand new thing to get excited about, and educate myself in.

I started investing full time in 2015 and just started buying. My whole plan was doing buy-and-holds. I was doing that through a method of purchasing with cash or equity, and renovating a property and then refinancing it out of it. And basically, getting it…

Rod Khleif: Sure, tried and true business model

Meghan McCallum: Sure.

Rod Khleif: Okay. On that first duplex, you lived in one side. I just love it when people publicly say that on the show because I’ve got so many people that haven’t taken action, and it’s such a great way to start.

Meghan McCallum: It’s easy.

Rod Khleif: Right.

Meghan McCallum: Just move in.

Rod Khleif: Right. And you get great financing, typically. I don’t know if yours was a fix up or if you went ahead and got FHA, or good easy financing on it.

Meghan McCallum: Uh-hmm.

Rod Khleif: Okay. Please continue.

Meghan McCallum: It was a foreclosed property, and I had it recently appraised, and the appraiser himself goes, “I’ve heard about this deal and what a good…” He’s like, “People have talked about how well you bought this property. And I was like, “Oh, who knew?”

Rod Khleif: Nice.

Meghan McCallum: Who knew? I didn’t know I had these skills back then.

Rod Khleif: Yeah. You could just pretend you planned it that way. And know in your first deal, right.

Meghan McCallum: Yeah. Yeah. Sure. I nailed it, my first deal, right.

Rod Khleif: [chuckles]

Meghan McCallum: It was pure luck, so yeah. It needed some work, and we eventually put about $40,000 into it but that was to take it to the next level and like we put in really high-end bathrooms in, high-end appliances. Renovated the basement to make it usable space.

Rod Khleif: Oh, great.

Meghan McCallum: We did some value-add stuff to it but nothing… It didn’t need a ton of work. And in living in it, you don’t feel so bad when you have to put in a $15,000 bathroom.

Rod Khleif: Sure. Let me ask you this, from a numbers stand point, I mean, was it a cost effective way to get started? Did you have much of a payment once you got the other side rented? How’d that work out?

Meghan McCallum: We lived in them on the main floor, and that’s the one, right now, that’s renting for a total of $3,360 a month.

Rod Khleif: Wow. Wow.

Meghan McCallum: And when we moved in, yeah, we could have had that money. I knew we should’ve lived upstairs. But when we moved in, the upstairs unit was renting for 1400 a month and it should be rent… Right now, it’s vacant, so we’re looking for tenants. It’ll be rented for about 2400 a month. So we were…

Rod Khleif:In Indiana…

Meghan McCallum: No, no, no. Thing is Evanston, Illinois.

Rod Khleif: Oh, Illinois. Illinois… Is Evanston in Chicagoland or where is Evanston?

Meghan McCallum: It’s the suburb just north of Chicago, along the lake.

Rod Khleif: Okay. Okay. Well there you go. There you go. That’s why it’s… Those rents are like astronomical.

Meghan McCallum: Yeah.

Rod Khleif: Fantastic. Wow.

Meghan McCallum: It wouldn’t make much sense on too many places in Indiana. Yeah.

Rod Khleif: Okay. Alright. Alright. So continue with your career in the business.

Meghan McCallum: Sure. So our mortgage on that property itself was about 2300 a month, ‘cause the taxes are crazy.

Rod Khleif: Hmm.

Meghan McCallum: So the upstairs unit really paid the taxes and then a portion of the mortgage but still… Well then of course, we started putting Airbnb in.

Rod Khleif: Oh, you did.

Meghan McCallum: We did. And if you Google my name, one of the top things would be me fighting the City of Evanston.

Rod Khleif: [chuckles]

Meghan McCallum: So they didn’t like Airbnb, the neighborhood didn’t, the aldermen didn’t, the mayor didn’t…

Rod Khleif: And you know what they can all go do, right? Yes. Okay.

Meghan McCallum: Yeah. They can go write a new law that I can work around.

Rod Khleif: [laughter]

Meghan McCallum: I ended up coming out of that. We were renting rooms to like now… Northwestern University’s right there. We had like visiting faculty member. We had doctors. We had med students. We had people looking who moved to the city. We had a foreign exchange student. We had a couple from Texas who would come and visit their daughter lived in town, and he was a preacher.

I mean, these are people who I invited to my wedding. So these people who would come weren’t just random. We were very picky but the neighbors just didn’t… They still didn’t like that. And the city ended up making a law against the utilization of Airbnb. So you have to have 30-day agreement.

Rod Khleif: Yeah, that’s how they do it. 

Meghan McCallum: Contract.

Rod Khleif: That’s how they do it. It’s got to be a 30-day lease. I think they’ve done that here in Sarasota, as well. The big hotel lobby, as well as, of course. They’re against it…

Meghan McCallum: Of course.

Rod: Okay, so what was after that? What did you do to the duplex?

Meghan McCallum: Rod, I just wanted to say that this one thing though. One person from the city was like, “So you’re going to stop doing this, right?” And I said, “I will comply with the laws as they are written ‘cause that’s… I’m a great citizen.”

Rod Khleif:       Right.

Meghan McCallum: But they never told me that I couldn’t have a 24 hour cancellation on my 30 day contract.

Rod Khleif: [laughter] That is freaking brilliant. Oh, my god! I love that so much.

Meghan McCallum: So if you want to do your Airbnb, have a 30 day contract with a 24 hour cancellation policy and you are too being a good citizen.

Rod Khleif: Oh, that is so freaking awesome. I love that hack. That is so beautiful.

Meghan McCallum: Yeah. They haven’t given me any trouble yet, but I also haven’t been doing it. But I’m thinking of doing it shortly. I have a house… I’ve got a single-family that I’ll be renovating and doing short-term rentals in.

[00:10:03]

Rod Khleif: Alright. I am so impressed already, Meghan. Alright.

Meghan McCallum: Little tidbit. Right there. Okay.

Rod Khleif: And that was your first property too. Alright. Let’s keep going.

Meghan McCallum: Nothing like fighting the man. Yeah. FoxNews showed up my front door and I was like, “I’m gonna do what’s legal.” And that was it. And still do.

Rod Khleif: Oh, that’s awesome. That’s awesome.

Meghan McCallum: Alright.

Rod Khleif: So what was the next one? What was the next decent deal you did? Talk about that… And where?

Meghan McCallum: Your listeners are mostly here for multi-family but as I moved, I pick up single-families. I always take up interesting ones that we could either take, and get on the National Registry of Landmarks and [overlap talk].

Rod Khleif: So you bought older ones.

Meghan McCallum: Yes.

Rod Khleif: Okay, like antebellum stuff.

Meghan McCallum: I only buy older. Yeah.

Rod Khleif: Okay. Okay.

Meghan McCallum: We’ve got mid-century modern out in Maryland that’s still under renovation, but the tenants want to live there nonetheless.

Rod Khleif: Wow.

Meghan McCallum: Then I started investing.

Rod Khleif: So you like gentrifying areas? Is that how you target this, or you just go for the older properties and look for value-add opportunities? Are they already gentrified? I guess the areas that you’re primarily in.

Meghan McCallum: Yeah. They’re pretty much already gentrified. I typically like to buy properties in nicer areas; A and B areas.

Rod Khleif: Okay.

Meghan McCallum: But now, we’re getting into some C areas that we’re trying to bring the building up to an A area; kind of like the 20-unit building. We’ve got a 20-unit building we’re renovating…

Rod Khleif: Well, let’s talk about that. Let’s go right in that 20 unit.

Meghan McCallum: Okay.

Rod Khleif: Tell us about that. How you found it? Give us some detail. Where it is? What you’re paying? Can you… if you mind divulging.

Meghan McCallum: Absolutely. I’ve been looking into getting into apartments because investing is a slippery slope. If I can have one roof in two doors, that’s great. One roof and three doors is even better, even four, five, six, seven. I found that time is the hardest part. So once you find the deal, you’re gonna put just as much time in stressing out in fixing it up, as you would, whether it’s a single-family home or if it’s a 20-unit apartment building, or it’s a 100-unit building.

Rod Khleif: It’s the same amount of work. Sometimes, it’s even less work. Believe it or not.

Meghan McCallum: ‘Cause you have people.

Rod Khleif: Right.

Meghan McCallum: You get a team.

Rod Khleif: Right.

Meghan McCallum: With a bigger place.

Rod Khleif: Right.

Meghan McCallum: So I love teams. I like partnering. I like other people ‘cause I don’t think I’m all that intelligent. I am just a collection of all the people I meet, and that’s what’s made me, what I think, successful in this business.

Rod Khleif: I love that. I love the way you just described that.

Meghan McCallum: Even the first year I started in investing, I put an offer on a 144-unit building, and I’m the biggest… The largest property I had at that point was three units. I didn’t get it, but I figured, if I could buy it right, it didn’t matter if I had no experience. I’d figure it out because with enough time and money, we can solve all of our problems.

Rod Khleif: Wow. Okay. I have to stop you right there. I don’t want you to push past that. I really just want that to sink in for everybody listening. So your first year, you wrote an offer on a 144-unit, with the mindset that if you got it at that price, you would make it work.

Meghan McCallum: Yep.

Rod Khleif: Guys, I love that. I hope you’re taking notes. That’s ballsy and I love it. So, alright.

Meghan McCallum: You’ll never gonna succeed on the risks you don’t take. And is it really a risk? No, it’s housing. It’s housing for a lot of people. So it’s not really that risky. Again, most of the risk comes in improper purchases. I poured over the numbers, I shared it with a number of people, I knew I could come up with the down payment. I knew I could get the loan.

I was like, “ I don’t know how we’ll do it but that’s what books are for.” If you want a mentor, pick up a book. I mean, that’s all you really need to do.

Rod Khleif: Sure. Sure. Sure.

Meghan McCallum: So I aimed high for a couple of properties there. Those larger units, if you’re just trying to get into this business, you’re gonna lose out to the guys with bigger pockets, and the guys who are figuring it all out. So I started focusing more on the smaller mom-and-pop apartment building.

Rod Khleif: Yeah, mom-and-pop, that’s a sweep spot guys, and you’ve heard me say it before. Anything five to 30 units is mom-and-pops. There’s so many advantages to dealing in that space. You’re not competing against Grant Cardone or people that have institutional investors. You’re competing with people like mom-and-pops, that’s what you’re competing with. You’re not buying from institutional investors, much easier to go direct to seller with your marketing, than if you’re going after a 100 unit complexes.

In fact it’s almost impossible to go direct seller with 100 unit complexes. You’re gonna deal with brokers but you can set up a campaign to go right after these mom-and-pops. And so love it.

Okay. So you started focusing on that space

Meghan McCallum: Mm-hmm. And this was in the Quad City. At this point, I was focusing on the Quad Cities area. I was living not to far out out of that because that’s where we had some in-laws.

Rod Khleif: Okay.

Meghan McCallum: I get a print out basically, everything that was for sale with more than five units or more, and I just watched it for a year. I’d watched the ones that sat, and I’d watched the ones that would sell. I did as much as data-mining as I could, figuring out what the cost per units were going for. The other day, someone told me that, “Oh, my banker told me that for apartments around here, cap rates of eight and a half is good.” And I was like, “Don’t settle for anything less than 10.”

The banker wants you to settle. He just wants you to get a loan and buy a property. The investor wants you to get a deal. I would throw out a bunch of lowball offers. I have a really great system of work with the MLS with my realtor. He actually… Guys, go ahead and steal this one, but if you get to a point where you really trust you’re realtor, you can do what I’ve done.

What I’ve done is I wrote a $500 earnest money check or no, a $1000 earnest money check. ‘Cause most of the properties where we’re at are about a $150,000 would be the maximum where we’re gonna invest. [overlap talk]

Rod Khleif: Sure, so that’s a reasonable earnest money.

Meghan McCallum: Right. So he had that and the two was blank. What he would do was he would, depending on the property I was offering on, just take the check and Xerox it then write on who it was to, so I didn’t have to go in and write earnest checks every single time I made an offer. So we make a verbal offer…

Rod Khleif: Did he sign your name or did you just have a bunch of signed copies of the back page? That’s it.

Meghan McCallum: For the checks I gave him I signed the check.

Rod Khleif: No, the contracts. The actual contracts…

Meghan McCallum: The contract… I would go in if… First he would make a verbal offer and then he would say… So he would shoot a verbal offer out to the other real estate agents. See if we’re in the ballpark, if they were ready to play and they started negotiating, we would write a formal contract. I would then go in and sign that.

Rod Khleif: Okay. So this was just so that he didn’t wanna write or he didn’t wanna do a verbal offer unless he had a check in hand. I got you. Okay, that…

Meghan McCallum: A lot of times, even with the verbal offer they were asking for the earnest check. [overlap talk]

Rod Khleif: I got you. So that’s a great way is to move quickly and to save yourself time. It’s all about time. Awesome. All right.

Meghan McCallum: And my real estate agent also knows I’m looking to close on deals and I trust him.

Rod: Right.

Meghan McCallum: I’ve gotten off market deals from him ‘cause he’s found people who their houses were like they weren’t going to sell to an FHA buyer. Or they were…

Rod Khleif:  Coz they needed too much work.

Meghan McCallum: Need too much work so he would introduce me to all those people who had non-marketable properties, and I’ve had some really great deals that way.

Rod Khleif: Fantastic. You’ve heard me say it until ad nauseam. These broker relationships will make you wealthy. You value them, you nurture them. You be the person that sends them the handwritten thank-you card after your first conversation that sets you apart. If they send you a deal, you always respond. Don’t be the black hole. You always tell them why you’re not interested, if you’re not. You set yourself apart and you develop a lifelong relationship. This whole business is nothing but relationships.

Meghan McCallum: Networking. Partners.

Rod Khleif: Yep.

Meghan McCallum: Partnerships. Loyalties.

Rod Khleif: Yep.

Meghan McCallum: Our job is take kicks the teeth every day. Everybody wants your money. Everyone thinks you have a ton of it. Everyone just wants their life easier. Contractors, tenants, even your own family half the time.

Rod Khleif: Yeah. Yeah. Yeah.

Meghan McCallum: You have to get good at taking kicks in the teeth. If you’ll take them for other people then you’ve got real team members so… [overlap talk]

Rod Khleif: Yeah. I think that it’s all about team. This is a team sport, if you’re going to buy anything five units or plus, it’s absolutely a team sport. If you get the scale that you’ve gotten to Meghan, where you’ve got multiple plexes and then this 20-unit it’s a team sport.

What’s so great about this team sport is you can supplement any deficiencies that you have. So if you haven’t got the credit, you haven’t got the income, you haven’t got the net worth. Maybe you don’t have the experience, you bring other people on the team, that supplement those deficiencies and you’re off to the races.

So this 20-unit, you got the deal on it because you were studying and you…

Meghan McCallum: I got a great deal on it. Again, it’s part of that sharing. I’ve been to a lot of networking things in the area and I started asking people, especially if they had multi-families. Guys, if you do this it’ll help you a ton. Ask for anyone you knows appraisals on their properties once they purchase them. Because now in your hand you hold comps for proper-…

Like, let’s say, this is what happened. A guy bought a six-unit building around the corner from this 20-unit building. I said, “Can I get your appraisals”, and he kinda looked at me funny. “Look, I just wanna see the data. I wanna know that what they’re saying about the property; what the price per square foot is? I wanna see what comps they’re pulling up.

I took that, looked at it, looked at a property that was available, made an offer that day. We ended… That’s the 20 that we ended up getting. They just… I only had the faith in myself to do it because I had the data. I had the information.

Rod Khleif: Sure. No, it’s a great way to get the data. If you guys… Again, another ad nauseum comment. You got to be going to your local REIA meetings because for this very reason. You were able to connect with somebody that owned the property right around the corner. That’s a great reason.

Another great reason, obviously, is there are a lot of people that go to those meetings that have money. They will never take action on a property but if you’ve got a relationship with them, they’ll loan you the money, they’ll partner with you on a deal. They’ll let’s you do the heavy lifting. So you must go. You go to your local REIA and then obviously…

Meghan McCallum: No.

Rod Khleif: You don’t?

Meghan McCallum: I started my own.

Rod Khleif: Oh, [chuckles]. That’s right. That’s right.

Meghan McCallum: I started my own group, my own club…

[00:20:00]

Meghan McCallum: REIAs are a good place to start meeting other people because… There’s a number of different sites, websites too. You can find that Meet-ups has a real estate investing meet up. Go look that up if you don’t know groups that are meeting.

The BiggerPockets website, they have a whole events page of meetings going around, going on around you. But start with yourself because that’s going to give you what… First of all it’s gonna add value to you and your business because now you’re being looked at as an influencer.

Rod Khleif: That’s right. You’re an influencer. You’ve got credibility, instant credibility. Yeah.

Meghan McCallum: And then people also just gravitate to you because people are generally nervous or fear-based. Most people won’t do it on their own but once you start up like a club or of a meeting of people together… The REIAs are very general and broad. A lot of times, there are things being sold. I’m not a big fan of paying a guru to do what you can do on your own.

Rod Khleif: Oh yeah, a lot of the big REIA’s, it’s very profit-based. They’ll bring in a speaker. Speaker splits that the sales with the house, and it’s very profit-based. You’re absolutely right.

Meghan McCallum: Yeah.

Rod Khleif: You have to be very, very careful of that. But setting up your own is absolutely brilliant. Now you are also talking about doing some sort of network. You want to talk about that for a second?

Meghan McCallum: Sure, we can go right to that.

Rod Khleif: Well, actually, you know what, let’s save that.

Meghan McCallum: The end?

Rod: Yeah, save that but I do wanna talk about more about this 20-unit.

Meghan McCallum: Yeah.

Rod Khleif: Can you give us some numbers? What you paid for it? What are you anticipating? What are you doing to it? What condition was it in when you found it? All of that.

Meghan McCallum: It was a bank foreclosure. It had been in the market for almost a year I…

Rod Khleif: When did you close on this?

Meghan McCallum: April.

Rod Khleif: Wow.

Meghan McCallum: End of April.

Rod Khleif: So you found a bank foreclosure that had been on the market a year in this market. Guys, I hope you’re taking notes. Okay? They’re out there. The deals are still out there if you’re willing to hunt. Okay.

Meghan McCallum: Got to look small. You’ve got to be… That’s what you’re gonna find that small mom-and-pops. So bank, I offered, I think I offered 265,000 for it and I got it for 315, and my goal was get it for 325.

Rod: Holy cow.

Meghan McCallum: As you could tell by that number there’s some renovation that needed to be done at this property. So…

Rod Khleif: Okay.

Meghan McCallum: We got ready and we rolled up our sleeves but I’ll tell you a little story about right before we close. Make sure you always do a walk through like seconds before you close in your deal or assign someone. So I’m lucky enough to have the most amazing employee in the world. And I sent him to go do the walk through. His name is Joey Allen and I had to drop his name there because of without him I wouldn’t be where I am today.

Rod Khleif: All right. Good job, Joey, for whatever you’re about to tell us

[chuckles]

Meghan McCallum: So Joey when did the walk through and gave me a call as I’m sitting in the parking lot to close. And he’s like, “We can’t close.” He calls and “We can’t close, Meghan.” And I’m like, “What?” I’m like, “What’s wrong?” He’s like, “The whole basement’s filled with poop.”

[laughter]

Rod Khleif: The sewer backed up. Oh, that’s a joy.

Meghan McCallum: Yes. The sewer backed up.

Rod Khleif: Oh, that’s a joy.

Meghan McCallum: And it was deep, and it was bad. So…

Rod Khleif: Wow.

Meghan McCallum: We were supposed to close on it, I believe in March or maybe we were supposed to close in April, and closed in May, that’s what it was. We we’re supposed to close in April, we ended up closing months later.

So, we had to go, then it actually backed up when we did our inspection that day too. So, we had the guy out and he routed everything through. This was our second time having the poop in the basement knowledge. Yes.

Rod Khleif: Nice… Nice.

Meghan McCallum: So it’s a later closing and then we tried messing with the negotiation.

Rod Khleif: Yeah. Sure. Beat them up a little bit.

Rod Khleif: Yeah, that’s a great opportunity to beat them up a little bit. Yeah. It’s a great opportunity to beat them up a little bit.

Meghan McCallum: Just a little. And they weren’t giving us much.

Rod Khleif: Yeah.

Meghan McCallum: But it was a great deal, I didn’t care. At the same time, I wanted to practice the negotiation of… [overlap talk]

Rod Khleif: Absolutely. That’s how you learn. You practice it.

Meghan McCallum: Yeah. So I didn’t wanna lose it.

Rod Khleif: You get everything you never asked for so, yeah.

Meghan McCallum: Yeah.

Rod Khleif: If you don’t ask, you don’t get, so good.

Meghan McCallum: Right. So we beat each other up for a little while but finally I was like, “Okay, I’ll take $3000 as a credit to get it cleaned up properly and I want to do it, ‘cause I don’t want the property management or the bank “doing it”.

Rod Khleif: Yeah, schlepping it.

Meghan McCallum: Yeah.

Rod Khleif: Right, Right, Okay.

Meghan McCallum: Because they didn’t clean up very thoroughly after the first one…

Rod Khleif: Let’s not get into the details of all that. [chuckles]

Meghan McCallum: Yeah.

Rod Khleif: But, so you closed on it. What sort of renovations you have to do, just out of curiosity? Maybe there’s some value we can add there.

Meghan McCallum: Sure. We just put a whole new in the parking lot in.

Rod Khleif: Okay.

Meghan McCallum: We have eight units currently being renovated, four of which, and that we’re in the basement were unattended for years because they had a water pipe burst from the tenants leaving in the front door open. So water pipes coming that were exposed froze and…

Rod Khleif: Wow.

Meghan McCallum: The whole basement was unusable.

Rod Khleif: So you’ve got a lot of drywall work.

Meghan McCallum: Yup. Drywall work, kitchens had to be replaced…

Rod Khleif: Kitchens. Baths.

Meghan McCallum: Yeah.

Rod Khleif: Okay. So, they’re complete remodels. Okay.

Meghan McCallum: Yep. We’ve got those being renovated. We’ll renovate all the common space.

Rod Khleif: Are there actual basement units?

Meghan McCallum: Yeah. We have four basement units that we are going to turn into pet friendly units.

Rod Khleif: I love it. Love it. Guys, that’s another brilliant move. Put a spin on it for, people have trouble sometimes renting properties with pets, so you take your undesirable units. Love it. Absolutely, love it. Brilliant.

Meghan McCallum: And they have concrete floors already so we’re just gonna stain. Stain them and…

[overlap talk]

Rod Khleif: Perfect, perfect.

Meghan McCallum: You know, how cool it is but really, your dog’s not gonna damage it.

Rod Khleif: Right, right. We’ve got this retro, earthy feel for you with these stained floors. Love it.

Meghan McCallum: Right. Right. So maybe always find a way to make your weakness your strength.

Rod Khleif: Right.

Meghan McCallum: Then we’re doing the common spaces like the hallways. We put a new security system in with new security doors with RFID key fob so greater security.

[overlap talk]

Rod Khleif: Cool. Yeah. Absolutely.

Meghan McCallum: We’ve put security cameras in both entrances and all the common spaces.

Rod Khleif: Is this a C area? I think you said it was a C area.

Meghan McCallum: Yeah, it’s a C-area but it feels like a C-plus ‘cause it’s two blocks down from a local university who is having a hard time finding new ways to add residences.

Rod Khleif: Okay.

Meghan McCallum: Secure, again, this is my exit strategy here; sell to the university.

Rod Khleif: Perfect. Oh, actually sell it to… Wow. Okay.

Meghan McCallum: Yeah. The 20-unit building is all efficiency, and one-bedroom apartment. So…

Rod Khleif: Okay. Okay.

Meghan McCallum: Within the common areas we’re adding a gym. We’re adding amenities. We’re really going for the person who is eco-conscious, so we’re making all the eco-conscious choices using eco-conscious materials. We’re putting a green roof up on top of, on the building where we’re hoping to have… I got some friends who do some really cool things in Chicago where one… Chicago’s one of the greenest cities, but they’re farming rooftops.

Rod Khleif: So you’re thinking about doing that, actually putting some plots up there.

Meghan McCallum: Oh, yeah.

Rod Khleif: All right. Cool, very cool.

Meghan McCallum: And we’re going to have it rentable. So, if you live in our building, and you want to do or your own organic farming you can rent like a 4 foot by 4 foot space to grow your own vegetables or something like that.

Rod Khleif: Wow. I love it. Yeah. And that square gardening thing. We’re doing that in my house where you do a… Anyway, we’re gonna sidetrack here.

Meghan McCallum: Yeah. Yeah. It’s okay.

Rod Khleif: 4 foot square, you could put a lot. You could put a lot more in like a 4 foot square if you do it right, than you can over a big garden. Well, that’s awesome. What you have to do up… I don’t wanna get too detailed, but what did you have to do on the roof to handle gardening at the top. I mean did you have to…

Meghan McCallum: You can’t use conventional soil. We haven’t begun that phase of our renovation.

Rod Khleif: Okay, okay. Fair enough.

Meghan McCallum: But the soil we’ll be using is actually one that’s been created like a man-made soil and it’s, I believe, it’s like a quarter of the weight. So a cubic foot of soil outside is about a 100 pounds. This stuff is more along the lines with the vegetation, it’s somewhere between 18 and 25 pounds per cubic foot.

Rod Khleif: Very cool. So, you’ve started to evalue-… with this… Alright, well we got off the track here but that’s very cool. So, what’s next?

Meghan McCallum: Well, hopefully getting that apartment building rented. [chuckles]

Rod Khleif: Well obviously getting it renovated, getting it rented and you know…

Meghan McCallum: Right.

Rod Khleif: Are you gonna sell it right away or are you going to try to rent it out and in cash flow for a while.

Meghan McCallum: I think I want to hold it for a couple of years. I’ll probably refinance and take the equity out to go buy another property. What’s most important to me is that we’re working towards systematizing doing this again. And finding what failed us or…

Rod Khleif: Yeah, my experience with one bedrooms and efficiencies is there’s a lot more turnover, and there’s they’re a lot more management intensive. Not to say you can’t make a lot of money with them. But people have heard me say this on the podcast a million times. I’m a real estate buyer not a seller and so I look at a property my exit strategy’s cash flow, period.

Meghan McCallum: Okay.

Rod Khleif: A legacy cash flow but in this case with one bedrooms and efficiencies, I think your exit plan’s brilliant because it’s… Especially the fact that you’re setting it up, you’re adding this eclectic green component to it and you’re putting the gym in. It’s got school written all over it. Perfect.

Meghan McCallum: Yeah. We’re really going work… The first couple of years while we’re holding it, we’re really looking for work-live kind of people, so either creatives, or people who don’t have to go to work and can work from home. We’re gonna have another thing, we’re putting in the basements. We’re putting this gym and we’re also gonna put in like a conference room slash party room that they could use.

Rod Khleif: Very cool.

Meghan McCallum: If they wanna have a meeting, they could have it right there in the basement so they can run their business from there. That’s such a millennial movement.

Rod Khleif: So you’ll have internet access, plenty of outlets…

Meghan McCallum: Yeah, internet access everywhere.

Rod Khleif: A couple of beanbag chairs and let them go to town.

Meghan McCallum: Yeah. Yep.

Rod Khleif: Conference table… I love it. Love it. So what advice would you have for aspiring multifamily investors? A lot of my listeners haven’t taken action on their first deal. If you were sitting in front of one of them, what would you tell them?

Meghan McCallum: I would first tell them or any investor, your investments are gonna be successful. You will be as successful in life when you find what you love doing and what you’re good at. So maybe you’re a doctor and you’ve got those golden handcuffs and you have that money. Don’t go and try to learn all of this on your own. You’ll pull your hair out and you’ll give up

[00:30:01]

Meghan McCallum: Find a partner. Partner up you can be as educated as… Excuse me. You can be educated as I’ll get up. Education without application is useless. It’s nothing. Doesn’t matter how much you know, it’s how much you’re capable of doing with what you know.

So, if you’re sitting there, and you don’t know why you haven’t made a move yet or put out an offer, figure out what you need, find out what your weakness is. Then find a way to make them either your own personal strengths so that you can step forward or partner with somebody who’s not afraid. Who especially, it’s a bonus, if they have experience.

Rod Khleif: Right. Well of course. Now, if you’re gonna partner with somebody ideally… Well I shouldn’t say that. And there’s a lot of young guys that I’ve had on the show and that talked to me regularly that are just getting started. They’ve partnered up and they’re making things happen. They’re enthusiastic but in your example of a doctor, if you’re a doctor that doesn’t have the bandwidth to learn this business, don’t dabble, by all means.

My caveat to you, my rebuttal to your comment is could a doctor learn this business and master it? Yes, I’ve interviewed guys on the show that are worth tens of millions of dollars that are doctors. But they took the time out of their practice to learn the business or they had the bandwidth to learn the business, so they didn’t dabble. That’s the caveat to that. But if you don’t have the bandwidth, absolutely, a great way is to partner. No, absolutely. No question.

Meghan McCallum: I mean…

Rod Khleif: You bring the money, you bring the financial prowess to a young hungry, not even, doesn’t have to be young but a hungry entrepreneur that’s gonna be the operator. That’s a match-made heaven. I mean, that’s how I did it in my 20s. I bought tens of millions worth of real estate 50-50. You put up the money. I do all the work we split the deal, that’s it. It’s a beautiful way to do business, so…

Meghan McCallum: It’s easy. Honestly, like if you broke your leg could you fix your own leg? Sure, you could go to med school. You could take all the time to go to med school and you could learn to be a doctor and you could fix your own leg. But your leg’s not gonna be broken by then.

So it’s the same thing the opposite. Like you’re a doctor you don’t wanna take all the time to learn to figure out how to be that real estate agent or the real estate investor. ‘Cause by the time it happens, whatever deal you were looking at is gone, and if you don’t have any gift for it anyway so…

Rod Khleif: Okay. Well, I’m gonna respectfully disagree with you on that last comment. Only because…

[chuckles]

Meghan McCallum: Not that everyone can be a doctor.

Rod Khleif: No, no. not a doctor. Not that part of it. Just the part that you can’t be a real estate investor ‘cause you absolutely can if you’re willing to roll up your sleeves and learn this business.

Meghan McCallum: Oh, no, no, no. You can. It’s just it’ll take you so much more time. You want to get a deal done you want to get moving today find someone who can do that and be ready for that next one.

Rod Khleif: Oh, okay. Alright.

Meghan McCallum: The day you’re ready, you got that application.

Rod Khleif: Got it.

Meghan McCallum: Yeah.

Rod Khleif: Got it, yeah. And now I get it, now if you want to take action today a great way to start is with a partner.

Meghan McCallum: Right.

Rod Khleif: Totally agree. I mean I interviewed Grant Cardone. He took four years to study this business before he bought his first apartment complex you don’t have to do that. Now, he’s got a jet and 5000 units but I mean you don’t have to…

Meghan McCallum: Yeah. How crazy can he be if he jumped right in and just got started? Where would he be today? It’s like mind bend.

Rod Khleif: I totally agreed. We miscommunicated. I didn’t realize what you were saying. You were talking about taking action right now with a partner. Got it.

Meghan McCallum: Right. No worries.

Rod Khleif: Okay. All right, so talk about this cool thing you’re with REIAs or you’re starting to do. I don’t know if you’ve actually pulled the trigger on it or it’s just a thought, or where you at with it.

Meghan McCallum: Yeah. I wanted to share my experience with more and more people because I was getting more and more inquiries locally about, “Hey, how are you doing what you’re doing so fast?” Like I would go to these groups and people are like, “How are you moving so fast?”

I was like, “I don’t know that I’m doing anything special.” So then I started meeting with more people. And then I’d be at meetings, I’d feel like I was the only one talking so I was like I don’t wanna take over someone else’s group. I’m gonna go start my own. And so we started a club.

Rod Khleif: When?

Meghan McCallum: This year. I started it in… Probably the time that we purchased the apartment.

Rod Khleif: So May June. Fantastic.

Meghan McCallum: Yeah.

Rod Khleif: So you have just been at it a few months? Awesome. Good for you.

Meghan McCallum: We get this club going and the basis of it is we’re all about sharing, partnering, peer mentoring, data sharing, so I mean like we use Google Drive and people upload…

Rod Khleif: That’s how you share data.

Meghan McCallum: Yeah. Super easy.

Rod Khleif: It’s beautiful. That’s how we do it in my operation.

Meghan McCallum: Yep. We use the Google Drive. You tell us you wanna come to the meetings, you just come to a meeting and we’ll give you the access to that. Then we’re gonna ask, for you in return, to add value to everybody else in the group and upload.

So, it could be like recent contractor bids. It could be appraisals. It could be, “Hey, maybe you’ve just been really looking at this one property and you put your analysis.” People put up their sheets on how they do their analysis on deals. Everyone’s sharing, we’re all very sharing-based, and partner-based.

Rod Khleif: I love that concept. Absolutely love it. Brilliant. How’s you attendance? How big is the group so far?

Meghan McCallum: We have 40 people…

Rod Khleif: Wow!

Meghan McCallum: We have 40 people currently active in the Quad Cities Club. We expanded because I had someone reach out to me and say, “I want that in my area”, and I said, “Great. I’m gonna help you”. And so, then a woman reached out me from Madison, Wisconsin. I was like, “Set up a date. I’ll come. I’ll talk with you and whoever shows up and we’ll get it started.” So they’re probably about 30 to 40 people. I’ve been to almost…

Rod Khleif: You just gave them a little framework. I mean, really you gave them a framework. And how are you gonna align with these other groups?

Meghan McCallum: So when Madison gets… Each place will have their own website that will help drive traffic to more people coming to this club. There’s no fee, it’s all about sharing but it’s also when we’re gonna hold you accountable. You’re gonna get held accountable for not sharing. Which means you’re going to lose your privileges. So, if you wanna come back, you’re welcome. But you got to share.

We’re gonna unite them all by, again, we’re right now we’re using the Google Drive so everybody in Madison will have access to all of the data that they have in the Quad Cities.

In the Quad Cities, because we’ve been going longer, we’ve also been doing web streaming of our meetings. So, the Madison people sometimes will hop and see what we’re talking about the night before their meeting is. So I would go from the Quad Cities meeting to the Madison meeting the next night.

Now, Milwaukee’s got one. Chicago will have one next week. I’m currently in Grand Rapids, Michigan, and I met with some investors here last night and they’re kind of next. We’re working on… [overlap talk]

Rod Khleif: No kidding. Good for you. So what’s the framework? I don’t wanna digress too much but what’s the framework of a typical meeting? What do you… Give me the syntax.

Meghan McCallum: Sure, I’m all about, and you are too, networking. Right?

Rod Khleif: Right.

Meghan McCallum: The beginning of the meeting is it’s kind of like “Come on in. Let’s all sit down”. Each location has a little bit different spin and different flavor but that’s great because…

Rod Khleif: Sure.You got a restaurant or you got a meeting room somewhere or whatever…

Meghan McCallum: Yeah. Some places they meet at a coffee shop, some places in a restaurant. We are meeting in my 20-unit building for a while so people could see the changes that were going on, and everybody could ask some questions…

Rod Khleif: Love it. Cool.

Meghan McCallum: Trying to get people into doing the same thing I did.

Rod Khleif: Right.

Meghan McCallum: That way they can see like our hardships and whatnots. We get started, we kind of hangout, check in with everybody. Very friendly stuff not even necessarily real estate investor things. Then we go into a…

We talk about like, “Does anyone have any deals”, like, “Is anyone looking for a partner on something”. So they could be like, “I’m looking for an investment partner”, or “I’m looking for a partner to flip and actually do the work with me”. Or people could be like, “I found this deal. I don’t know what to do with it”. One guy would be like, “Hey, you should do this”, and another guy like would go, “You should do this.” We kinda like coach each other on specific things we’re working on.

Then sometimes we’ll have someone speak. We’ve been able to invite some speakers to come in and we’ve had some amazing, amazing investors come and talk at our meetings. They do it for free. We don’t pay them. That’s why we don’t make any money REIA.

Rod Khleif: Right.

Meghan McCallum: In fact, I have like one of the greatest CPAs that very few people have heard about flying in from Denver to go to all of our club meetings and she’s going to speak at all of them.

Rod Khleif: Very cool.

Meghan McCallum: Her name is Linda Wiggins, and she’s out of Denver, Colorado. I’ve talked a lot of CPAs and she just blows them all out of the water.

Rod Khleif: She’s gonna talk about cost segregation and ways to do…

Meghan McCallum: Yes.

Rod Khleif: Depreciation and accelerate the benefits on a property. Love it. Yeah, we’ve had some…

Meghan McCallum: Yeah. People don’t even know why they wanna get into these multi-families and they’re like, “Wait, there’s more benefits than just having a quad?”…

Rod Khleif: Right.

Meghan McCallum: Yeah. “That FHA loan on that 4 unit was great for you before. Wait till see you all the advantages, and the tax advantages.”

Rod Khleif: Right.

Meghan McCallum: And the ways you can… Multi-unit families are they’re kind of magical.

Rod Khleif: Yeah.

Meghan McCallum: Even in certain states, you set your corporation up that owns a specific building in certain states, if you do it as a co-op as opposed to an LLC you’ve significant tax savings. Most people don’t even know that.

Rod Khleif: I didn’t even know that. [chuckles]

Meghan McCallum: Yeah. You go out and look at… That’s why you wanna know your localities.

Rod Khleif: Sure.

Meghan McCallum: So this club thing that we’ve set up and linking people… People are giving us more knowledge in the nuances of the localities or the county, specifically…

Rod Khleif: It’s a cumulative brain. I love it.

Meghan McCallum: Yeah.

Rod Khleif: I love the concept. I love the fact that you’ve got a Google Drive that you’re sharing with. That is a brilliant idea.

Meghan McCallum: The sharing economy is taking off with everything right now.

Rod Khleif: Sure it is.

Meghan McCallum: I was like, “let’s just apply that to a real estate investing and networking”, and that’s what we’re doing and it’s great.

Rod Khleif: Is there a name of these groups? You didn’t like come up with a stock name or everybody calls it whatever they want.

Meghan McCallum: We just call it REI Club…

Rod Khleif: Okay.

Meghan McCallum: So it be like Quad Cities REI Club, Madison REI Club.

Rod Khleif: Got it.

Meghan McCallum: We probably should start branding it, and doing that. But again, it’s done. Madison’s only I think a month and a half old, and Milwaukee’s is just less than a month. We’ll get there.

Rod Khleif: Yeah. Okay. Guys those are you listening, we just gave you the framework for you to do this yourself, okay? Go out there set up a group if you have to start on meet-up, start on meet-up. Some great ideas, some great strategies, you can reach out to Meghan. How can people get a hold of you, Meghan?

Meghan McCallum: You can email me at  HYPERLINK “mailto:meghan@mccallumholdings.com” meghan@mccallumholdings.com

Rod: Can you spell that, please?

Meghan McCallum: Sure.  HYPERLINK “mailto:M-E-G-H-A-N-@-M-C-C-A-L-L-U-M-H-O-L-D-I-N-G-S-.-C-O-M” M-E-G-H-A-N-@-M-C-C-A-L-L-U-M, holdings, H-O-L-D-I-N-G-S .com.

Rod Khleif: Perfect. Will be in the show notes as well guys but I just thought for those of you driving you want to reach out to her if you’ve got a question about anything.

[00:40:00]

Meghan McCallum: If you wanna start a club, like, let’s say, you’re in Saint Louis, I don’t know anyone in Saint Louis. I’ve got… [overlap talk]

Rod Khleif: I do, that’s where the wife’s from… [chuckles]

Meghan McCallum: Oh, great. See, if you’re at somewhere in the Midwest Indianapolis, wherever you are, if you wanna start a group, I’m more than happy to help you. I’m more than happy to attend and talk to some of the people you get out. We can get you linked up with us, and start sharing with us.

Rod Khleif: Fantastic. And it’s such a great way to do everything you just described. You have instant credibility. I learn as much as I give in that podcast because whenever you’re a teacher you’re learning.

It’s just an incredible way to be in front of this and you’re gonna get investors interested in investing with you. You’re going to get private lenders interested in loaning you money for your deals. And it’s just, that’s the bonus of adding value.

Well, listen Meghan it’s been awesome. I really appreciate you being in the show. You’ve added a ton of value. Is there any question that you wish I’d asked you?

Meghan McCallum: I’m glad you didn’t ask me what’s next ‘cause I, unlike most people, I do not focus. I know my personality type, I know my strengths. I’m a big picture person and I’ve got like this eye for opportunities. I’m always looking and that I’m always looking for the person to get behind it because I’m not that detailed focused…

Yeah, invest in people. If you can figure out how to invest in people, you can be in real estate.

Rod Khleif: You know what, I can’t let that go by. I gotta add something to that. So you are the big picture person. You’re the idea person. You put the deals together. Have you got a partner that’s the detail person?

Meghan McCallum: Basically, my employee Joey is… He’s my guy.

Rod Khleif: Okay. Okay…He’s a detail guy. Okay.

Meghan McCallum: Yeah.

Rod Khleif: Because you are primed to have that sort of a person in your life, so you can take it to the next level. I’m really glad to hear you’ve got Joey, so good job, Joey. Alright.

Meghan McCallum: I have Joey and then I’m starting another company with a gentleman who’s a lease option specialist. And I know this is not really for your listeners ‘cause it’s based on a single-family investing but yeah, I’m a big picture on that and he’s the details guy who works at all it works out everything. I gain the trust of sellers and sometimes buyers and sometimes of city, just wondering what the heck we’re doing all the time so…

Rod Khleif: Awesome.

Meghan McCallum: Yeah.

Rod Khleif: Awesome. That’s a great match and whenever you’ve got somebody it’s the face of it and you’ve got somebody behind the scenes, dotting the I’s and crossing the T’s. That’s a fantastic way to do things.

Meghan McCallum: I would die without detail people. It’s not me.

Rod Khleif: Right. No, I get it. I get it. Same here. Same here. Well thanks for being on the show Meghan you added a ton of value and it was a lot of fun.

Meghan McCallum: Great.

Rod Khleif: I appreciate it.

Meghan McCallum: Thank you so much for having me.

Rod Khleif: Absolutely. Take care.

Meghan McCallum: All right.

[music]

Thank you for listening to the Lifetime Cash Flow Through Real Estate Investing Podcast. If you’ve enjoyed the show, please subscribe, and then take a moment to visit iTunes and leave a five star rating and review. For more resources to connect with us further, please visit our website at lifetimecashflowpodcast.com. Tune in next week for our next show.

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