Coronado native Drew launched his real estate career in 2010 flipping houses after realizing his landscaping job wasn’t his calling. He partnered with Chris, a second-generation renovation investor with a finance degree from the University of Missouri–St. Louis, who previously built a successful mortgage career before shifting full-time into real estate. Together, they’ve renovated over 400 homes, built strong relationships with homeowners, realtors, investors, and contractors throughout San Diego, and joined Rod’s Warrior Group in November 2024. When not working, Drew enjoys golfing, cheering on the Chargers, and spending time with his wife and their French bulldogs, Chloe and Wrigley, while Chris can often be found at his son’s football games or with his family.
Here’s some of the topics we covered:
- From Flipping Houses to Finding Freedom
- How Hunting Foreclosures Turned Into a 400-Home Fix & Flip Empire
- Beating the “Red Tape Monster” of California Real Estate
- The Costly Mistakes of Raising Capital the Wrong Way
- Why Investing in California Isn’t for the Faint of Heart
- The Hidden Red Flags That Make Drew & Chris Walk Away From a Deal
- The Truth About “Extend and Pretend” Lenders Nobody’s Talking About
- How to Pivot Your Strategy When the Market Shifts Against You
- Conquering Analysis Paralysis and Taking Massive Action
If you’d like to apply to the warrior program and do deals with other rockstars in this business: Text crush to 72345 and we’ll be speaking soon.
Full Transcript Below
00:00:00:03 – 00:00:19:17
Rod
Welcome back to Multifamily Rockstars. So as you guys know, this is where we do deep dives on our guest deals. And we show you really kind of how you can actually even get started in this business. And today’s episode will be really great along those lines. So a little different than than our typical episodes where we’ve got somebody on that’s got, you know, larger multifamily deals.
00:00:19:19 – 00:00:36:19
Rod
We’ve got Chris McCann and Andrew Chance on today and, they’re warriors that have been in the business for quite a long time and a lot of fix and flip, small multifamily, things like that. They own about 44 doors right now in very expensive markets like San Diego and Palm Springs and, and, you know, they’ve been doing it a long time.
00:00:36:19 – 00:00:51:09
Rod
And so we’re going to have a lot of fun talking about that, you know, and, and drilling down on things like how to get started in this business and, and just why they even join the program with the experience level that they have. So, without any further ado, welcome, guys.
00:00:51:11 – 00:00:53:12
Drew
And thank you for having us.
00:00:53:14 – 00:01:09:06
Rod
Absolutely. So why don’t you guys take a minute and just talk about your story, talk about, you know, give us a little background when you got started, maybe where you came from and, you know, I know you’ve been working together a long time. So just. Yeah. Bring us give us some background.
00:01:09:07 – 00:01:32:18
Chris
I’ll. I’ll make it really quick. I tend to be long winded. Right. So I’ll. I’ll make it quick. I’m originally from the Midwest. And I’ve been in a real estate family my whole life. My father was a speculator flipper way before it was, quote unquote, the thing to do in the 70s. And, I actually started in the mortgage business, built up a large mortgage company.
00:01:32:20 – 00:01:35:10
Chris
We were going to go public, dot com.
00:01:35:15 – 00:01:37:16
Rod
When was that? When was that?
00:01:37:18 – 00:01:41:11
Chris
That was early 1990s.
00:01:41:13 – 00:01:44:01
Rod
And I had one, then two. That’s why. Yes. That’s funny.
00:01:44:01 – 00:02:05:22
Chris
I have your story, rod. That’s that’s the other side of mine because I, I, embraced your story because I went through it in 2008. But so started a mortgage company. We were going to go public. We had a $50 million commitment to go public. And literally next Monday, Black Monday happened. We get the phone call from Prudential.
00:02:05:22 – 00:02:26:20
Chris
Hey, guys. Sorry. All the money’s gone. Everybody lost everything. We had venture capitalists at the time. The VCs are like, we’re selling so that we can get most of our money back. So sold the mortgage company got in a real estate business, buying fix and flips, in the Midwest. Wow. 2000. So I’ve been doing it full time since 2000.
00:02:26:22 – 00:02:33:08
Chris
Drew and I joined together in 2009, and, I let him take it from.
00:02:33:08 – 00:02:45:04
Drew
Oh, you left on the ferry. Built up, like, 140 single family rentals and some strip malls and stuff. And then he lost all that in 2008. And so this is all in Saint Louis, you know? So.
00:02:45:06 – 00:03:04:03
Rod
Wow, wow. That’s where my access from from Bellville, you know. Oh, really? Oh, yeah. Yeah, yeah. And but, you know, just as an aside, just to derail for a second, I had a huge mortgage company back when you did, I had 80 loan officers, eight zero. We were mailing 500,000 postcards a week. I was a $250,000 seminar.
00:03:04:03 – 00:03:21:14
Rod
I didn’t know what the hell I was doing, and I lost about a quarter million bucks, but, I could have lost a lot more, but. But it was fun, you know? It was fun. Back then, we had T-1 lines into our salespeople. Anyway, I digress, but, but yeah, that was way before the oh eight debacle, so I’m sure you didn’t even know that I had a mortgage company, because that was I.
00:03:21:16 – 00:03:26:01
Rod
You. I don’t usually talk about that, but, but, so, Dru, what’s your story, brother?
00:03:26:01 – 00:03:44:20
Drew
So Chris had, you know, his his stuff going on and lost, you know, everything he wanted to resell. So he moved to San Diego, and he he actually started working with, my two of my good buddies are twin boys. And their mom, was flipping houses in San Diego. She brought him out to San Diego, and I asked her, I said, hey, I want to I was working for my dad at the time.
00:03:44:20 – 00:03:57:17
Drew
He had a landscaping business. And I was like, yeah, this manual labor sucks, so I want to get out of this. So I said, can I come in all interned for free? I just want to learn the business. And so I went in 8 a.m. on Monday morning, you know, to meet with her. She wasn’t there, but Chris was there.
00:03:57:17 – 00:04:19:05
Drew
He’s like, well, come in, I’ll show you the ropes. And so we started working together. That was 2010. And, we’ve been together, you know, ever since. We’ve done about 400 lips together. We started off as bird dogs looking for, you know, foreclosures at the time where, you know, we’re going to the courthouse steps. So we’re gonna try to buy the houses figured out they’re a vacant lot, you know, how much work they needed.
00:04:19:05 – 00:04:20:19
Drew
We were just guesstimating.
00:04:20:21 – 00:04:24:04
Rod
And, and this is all in San Diego.
00:04:24:06 – 00:04:44:14
Drew
This is all in San Diego. Yeah. Nice. And then we started slipping in Phoenix because we didn’t have the capital to do in San Diego. The price points were still high in San Diego, but we were buying houses for like 60 to $80,000 that were built after 2000, in 2010, in Phoenix, you know, and flipping them for, you know, 30, $40,000 more, they just need to paint carpet.
00:04:44:16 – 00:04:51:10
Rod
So what do you want to do? You want it? You want some pain. You want some pain. What do you think you’d have if you kept those houses? Well.
00:04:51:12 – 00:04:52:21
Drew
At least we.
00:04:52:21 – 00:04:54:13
Chris
Say that about all of our houses, right?
00:04:54:16 – 00:04:56:10
Mark
Oh, I tired, you know.
00:04:56:10 – 00:05:10:05
Rod
I have 500 houses in Denver. Yeah. You know, I know you got to sell to keep going. You didn’t know how to raise money or you didn’t. You didn’t want to raise money or didn’t do it. But but yeah, I mean, I had 500 houses in Denver. If I still had those, I would be netting $1 million a month net.
00:05:10:05 – 00:05:16:01
Rod
Bottom line net anyway. And what it could have showed. Okay. So so so you flipped a bunch of houses.
00:05:16:03 – 00:05:31:21
Drew
Yeah. So that’s the way we got together. And so from 2010 till 2017, it was just all single family fix and flip. You know I’m only as good as your last deal paying a lot on taxes. And then we started to make a little bit better money. We’re like, you know, we need to start holding some stuff. So we bought a duplex.
00:05:31:23 – 00:05:47:06
Drew
It was supposed to be a flip. And we’re like, you know, this is not going to work as a flip. So we ended up turning that one into a rental. And with the market, you know, went up and we ended up selling that one. Bought a six unit. And it was kind of, you know, in a rougher area, but we got the taste of being a landlord from that.
00:05:47:08 – 00:06:09:18
Drew
And we 1030 went out of that into some better dirt. And then 2019, Chris really wanted to build, you know, so we built a ten unit multifamily, in University Heights area in San Diego. So it’s a pretty good, pretty good area. And then we built a 14 unit and we have, you know, some other multifamily.
00:06:09:18 – 00:06:11:01
Drew
So we’ve accumulated you.
00:06:11:01 – 00:06:13:13
Rod
Still own those. You still own those out.
00:06:13:16 – 00:06:14:21
Chris
So nice.
00:06:14:23 – 00:06:22:01
Drew
Nice. So yeah, we have a kind of experience in the flipping, developing. We’ve done a lot of stuff with ADUs in San Diego.
00:06:22:02 – 00:06:38:01
Rod
Oh, have you talk about that for a minute? Talk about that for a minute. That’s like I had that. I had that come up. I had that come up. I had, this lady named Russia Diva. She’s, she’s on Instagram a lot. And she came, she flew out from California to come on the show, and she was talking about Adas briefly, but she she was just getting rolling in it.
00:06:38:01 – 00:06:39:06
Rod
So how do they work?
00:06:39:10 – 00:06:58:23
Drew
Talk about that good and bad experiences with ideas. So I would say some of the bad experiences are appraisers don’t know how to appraise them. It’s still single family zone. At the end of the day, you know, and you’re putting on one, two, eight years turning a single family home into a duplex triplex. So from the good experiences, we had one that was just a really rundown two bedroom, one bath house.
00:06:58:23 – 00:07:26:16
Drew
We added square footage on to that house made and built a ground up adu in the in the backyard of that property. So I think we paid 400,000 for that rundown single family home, and we end up selling ours for 1.5 million and, so that one was a home run and we were able to get, you know, the financing for the buyer was wasn’t tricky at all, but we just had one recently that had, main house had a detached Adu in the backyard and garage converted to a junior Adu.
00:07:26:18 – 00:07:44:20
Drew
And no banks want to touch them now. So I guess Fannie and Freddie have a new guideline that they’re not going to, you know, land on something that has more than one Adu. So that’s a newer thing, you know, within like the last year. And so all the buyers, we I think we had to go to, you know, three different buyers to sell this property, finally had to go cash a guy in a 1031 the gun to his head.
00:07:44:22 – 00:07:55:24
Drew
So wow, they can be tricky. But it’s the thing in California, there’s just not enough space. And, and and that’s what’s, you know, selling some of these deals and some guys are doing really well with them. But for us.
00:07:56:04 – 00:08:16:08
Chris
I think we’re it makes sense. Rod is the guys that want to do the buy and hold on, hold on to him because you get a lot more density. And as you know, California, the dirt is very expensive. So in order to make it make sense and make it pencil, as you build more units on that same lot, and then you hold onto those and those guys are those guys are doing really well.
00:08:16:11 – 00:08:43:11
Chris
The problem in California is all the red tape to get your permits. You’re looking at 18 to 24 month process from start to finish. So I try to flip it and make money. It’s just very difficult. But yeah, but to buy them and hold on to it, it definitely makes sense. And California passed a law, has a trickle down to San Diego yet, but where you can separate those off and sell those off as single family properties.
00:08:43:13 – 00:08:48:21
Chris
So I think there’s going to be some opportunity there. But, that hasn’t come to fruition in San Diego yet.
00:08:49:02 – 00:09:07:21
Rod
I know that, you know, Chris, we talked about this before we started recording, but but why the warrior program? You guys have a lot of experience in the business. You have a lot of experience in single family and and building and all these other things that you’ve done. You know, why’d you join?
00:09:07:23 – 00:09:41:04
Chris
For me? Like I said, I, I went to a few year boot camps, and it took me a while to join. But I listen to your story, and I related so well to it because I got it handed to me in 2008, and, and then also, I understand that you’re better to align yourself with people that are in the business and doing the business, and you’re learning curve is so much quicker when you’re around people that are in it that are doing it, than trying to go do it all on your own.
00:09:41:06 – 00:10:05:12
Chris
And this business is a team business. And, the warrior program, I think, provides that we’re, we’re we’re short and we understand our shortcomings. There’s other guys that can pick it up and, so we knew we could fast forward our learning curve, getting into the multifamily space. Also, raising capital, which drew can talk about it. We were able to finally get our fund started, which was awesome.
00:10:05:14 – 00:10:23:02
Chris
And, and then figure out what operators, because we figured out one thing. We don’t want to be the operators anymore. We want to invest in good. Operator. So another reason to join the program is align yourself with good operators. So that was one of my reasoning behind joining the program.
00:10:23:04 – 00:10:43:08
Drew
I think real estate is super vast, you know, and we know a ton about fixing and flipping and in our niche, you know, but we may be no, like 2 to 5% of all there is to know about real estate. So you have to continually be educating yourself in the warrior program gave us, you know, so much education from, you know, especially in multifamily.
00:10:43:08 – 00:11:00:23
Drew
But it also gives you that coach and the coach kind of like going to the gym and like being held accountable. So Powell was our coach and he would, you know, hop on these calls every two weeks or what did you get done? Like we didn’t know anything about a master and creating a fund, you know. And like we had been raising capital and kind of doing it the wrong way for the last 15 years, mostly friends and family.
00:11:00:23 – 00:11:18:20
Drew
So it’s probably not going to come back to bite you. But it could, you know. And so now we we have a legit fund, with the proper private placement memorandum and, documentation to protect us. You know, again, something like in 2008 happening again. So, you don’t know what you don’t know because you have on there yet.
00:11:18:20 – 00:11:24:13
Drew
And that’s why we continue to educate ourselves and try to get a little better every day. And the warrior program helps with that.
00:11:24:17 – 00:11:45:07
Mark
Thank you. Before we get to the funds, tell us a little bit about what your guys’s challenges have been here in California. Obviously, you’re in my backyard in San Diego. Powells in California. I know you got a boot camp coming up here in Los Angeles, so we’ll probably have a lot of California attendees. You guys have 44 units, which on paper, that’s probably millions, if not tens of millions of dollars in property.
00:11:45:07 – 00:11:57:08
Mark
People would be looking at that saying, you guys are doing awesome. What have been some of the challenges in that? You know, red tape you guys mentioned to scale and get to where you want to go. Being here in San Diego.
00:11:57:10 – 00:12:18:23
Drew
So it’s been years to get to 44 doors. And I would say that’s the thing is the time if you have the time, like if you have a skill set that you can build something that’s like your little superpower. And in Southern California there’s high, high barriers to entry. So we were able to pick up the ten unit that we built ground up for $800,000 for the lot, the single family zoned lot.
00:12:18:23 – 00:12:34:18
Drew
It wasn’t, you know, I was on a small multi-family zone lot and we were able to put ten units on it, because of low income incentives and things. So I would say the timing is the biggest challenge. I took three years from the day we bought it to the day we got our, you know, first tenant, you know, sleeping in there.
00:12:34:20 – 00:12:36:04
Drew
So it’s just a very, very.
00:12:36:04 – 00:12:45:12
Rod
Long I feel for all those people whose houses burned down. My God, it’s take it’s going to take them forever to get permitted and rebuilt. If they ever do it’s system less. It’s a travesty. Candidly.
00:12:45:14 – 00:13:02:20
Drew
Yeah. So that’s like the one of the biggest challenges. But that creates opportunity to, you know, because a lot of us want to stay out, you know, and if if they start building good for rents, right, they’re going to rise, you know, faster. And that’s usually the reason why people want to invest in California. So yeah, dealing with the cities and then dealing with SDG.
00:13:02:20 – 00:13:08:11
Drew
And I would say they’re they’re a match, you know, so it just takes a very, very long time to upgrade.
00:13:08:13 – 00:13:10:00
Rod
Can you help me with that acronym?
00:13:10:06 – 00:13:13:11
Chris
But that’s a utility company, right.
00:13:13:13 – 00:13:16:04
Drew
Oh, gotcha. Yeah. So it’s in the okay. Here.
00:13:16:08 – 00:13:22:07
Mark
Okay. Have you guys had any issues with evictions or anything like that? I heard a lot of nightmare stories. Hopefully you haven’t had.
00:13:22:07 – 00:13:39:24
Drew
That single family flips. We bought properties with tenants, you know, that were in there and we knew going in there were going to be challenging. Usually it’s a cash for keys and sometimes we’ve gone up as high as $50,000 to pay. Holy crap. Wow. We even offered 50,001 time. Like I didn’t want to move out. And it took us three years to get him out.
00:13:39:24 – 00:13:58:14
Drew
And I think our strategy wasn’t right. You know, kind of along the way, we learned a lot of what not to do. But, in our rentals, knock on wood, like, they’re pretty, pretty decent, like demographics in them. And they usually pay their bills. And we haven’t had big issues, but it certainly would be an issue if somebody didn’t want to pay.
00:13:58:15 – 00:14:02:02
Drew
They wanted to mess you up. They could stay in your property for a very long time.
00:14:02:04 – 00:14:08:04
Rod
That’s ridiculous. Yeah, I hate that. So. So let’s, did you have another follow up? Because I was going to ask.
00:14:08:07 – 00:14:24:00
Mark
Well, what do you guys want to do? Moving forward? Now, having that experience, that background, do you want to buy a multifamily and maybe you want to do like what, pal the self-storage and not work with tenants. Maybe you want to do multifamily in other states. What do you guys want to do moving forward to expanding this?
00:14:24:05 – 00:14:47:11
Chris
That’s a great question. So, I think what our future is, is we’re going to we’re going to sell in and exchange out of state, for us because as drew said, those 44 units, we can parlay that into probably several hundred units and again, let somebody else do the operations. But we have a lot of equity built up in those properties because Southern California is great for appreciation.
00:14:47:13 – 00:15:15:04
Chris
We have, you know, got some appreciation. So I think our goal is to eventually sell. But right now we have some good debt on some of those properties. So it’s probably going to be a few years. But at some point we will sell on an exchange, and get out of California. But as drew mentioned before, I think we’d be open to look at maybe another development opportunity in San Diego, because you are able to make a cash flow if you can develop it, as long as you have the right team in place.
00:15:15:06 – 00:15:23:07
Rod
And you’ve got the experience now, so you’ve got a team put together. Is that what you’re raising money for? Is to do a development or what’s the what’s the fund for?
00:15:23:09 – 00:15:42:08
Drew
So the funds for, we want to have about $10 million, as a line of credit to do our fix and flip. So that’s probably plenty of capital with leverage on it to do 20, $30 million in flips at any given time. And then we’d like to raise at least 10 to 20 million more to do multifamily syndications due to.
00:15:42:09 – 00:16:02:06
Drew
So we would participate in other really good operators projects. That’s the gotcha. We’re going to underwrite the markets and we’re going to underwrite, you know, the jockeys and then once we have the right people in the right markets, then we can, you know, take a million, $2 million in invested into that deal. So the fund would be the LP, you know, gotcha.
00:16:02:08 – 00:16:03:06
Drew
Syndicators deal.
00:16:03:08 – 00:16:05:14
Rod
No. Great, great, great strategy.
00:16:05:16 – 00:16:29:14
Chris
We’re pretty fortunate, right, that, you mentioned earlier, we’re in Coronado, which it’s a very affluent area in San Diego. And so we have a really good network of, friends, family, others that live here, that we could definitely tap into, as investors. And what’s awesome about that investor fund is, as drew mentioned, for our fixed and flips, it’s purely debt.
00:16:29:20 – 00:16:54:16
Chris
So the guys get 12% up to 500,000, over 500,000. They get 16%. They get a check every month. So the passive guys love it. But they also everybody always wants to participate in deals. Like that’s the sexy thing to do. So this fund allows us to also do those equity deals where we can work with either those same investors are different investors and go participate as a GP in some of these equity.
00:16:54:18 – 00:16:57:13
Rod
Fantastic. So you can do debt or equity in the fund that.
00:16:57:15 – 00:16:58:00
Drew
00:16:58:05 – 00:17:16:17
Rod
Oh that’s that’s awesome. So let’s talk about this because you mentioned this when we asked you for some, some framework for this, for this interview, you know, you mentioned you could add some insights as to how to get started as a new investor or new to real estate. I’d love you to elaborate. One of you, I don’t know which one of you was going to talk about this, but, can you give us.
00:17:16:17 – 00:17:19:12
Drew
Some feedback on to be good?
00:17:19:14 – 00:17:37:12
Chris
So you got to have one of few things when you, when you do real estate, right, you either have to have a deal, you have to have money, or you have to have knowledge. So I go to a lot of networking events, and I think the most common question is I want to do something in real estate.
00:17:37:14 – 00:18:01:00
Chris
I don’t know what I’m doing. What will you do? What would you do if you were me to get started? And I think that’s probably the number one question. I get it from everybody that I run into that’s new, into the space. And my recommendation is always, you go help somebody else. And and what that looks like. Maybe you get started as like we did as bird dogs.
00:18:01:00 – 00:18:21:09
Chris
And you go find opportunities for other investors and you bring those to those investors, then you’re going to get a very small fee for doing that when you’re new. But the most important part of that is you’re learning and you’re dealing with operators. And that’s what I love about the warrior program is you got experience guys already. If you can align yourself with people like that, that’s invaluable.
00:18:21:11 – 00:18:52:15
Chris
So go get yourself aligned with people that are doing it and do whatever you that you can do to add value. And if it’s working for free in the beginning, you’re you’re working for free so that you obtain that knowledge. So if you’re able, to get involved with the warrior group, whether it’s your aunt or somebody else’s, and figure out what space you want to be in, in that in real estate and whatever that space is, go find a group that’s like that and go do whatever you have to do to get in there so that you can be aligned with those people.
00:18:52:17 – 00:19:13:22
Mark
And real quick, what have you guys kind of gravitated towards as flippers. I’m sure we have a lot of flippers that listen to this podcast. What has kind of been that value add that you’ve gravitated towards to sort of work your way into these multifamily deals and start building teams. What have you guys done? That’s probably the most common question that.
00:19:14:02 – 00:19:33:09
Drew
This is the natural progression. You know, like you do the fix and flips and you make money and then you’re like, okay, that was cool. But like so we have right now six multifamily projects, you know, and we have 5 or 6 flips going on at any given time. We make the money from the flips to put over to the left side of the board, which is the holds, you know, for the retirement.
00:19:33:09 – 00:19:48:11
Drew
Right? So you got to create passive income in life and everyone thing. So when you buy real estate it’s passive. It’s not very passive from our experience. It’s a lot of work a lot of headaches. But you know, that’s how we moved into that space. But the underwriting, you know, you still have to underwrite a fix and flip.
00:19:48:11 – 00:20:01:05
Drew
You have to underwrite a multifamily deal. You’re looking at, you know, what do you think the property is going to be worth on a fixed amount? How much is it going to cost to renovate? What are your holding cost going to be? Is the same thing with the multifamily. So the skill sets are similar. They’re a lot different.
00:20:01:05 – 00:20:16:17
Drew
The languages different. You have to learn that. But going back to like how to how to start, I think you have to take an assessment of yourself and see what your strengths are and what your weaknesses are, and then go surround yourself with people who are strong where you’re weak. I was very risk averse when I first started with Chris.
00:20:16:17 – 00:20:31:02
Drew
I was 23 years old then, you know, I didn’t have any money, but if I had any money, I didn’t want to lose it. And Chris is like, you know, the gunslinger. Like he wants to do every deal, like, let’s figure it out. Let’s go do it. And so I think we balanced each other out really nicely because he puts up a deal in front of me.
00:20:31:02 – 00:20:44:01
Drew
I’m like, well, what about this? And what about that? And well, you know, all these things that could go wrong and create anything. And then, you know, I got to listen to him sometimes, like, let’s take the results by the deal. And then we do. Well, you know, but usually I shoot a bunch of holes in a deal.
00:20:44:01 – 00:20:47:00
Drew
And if it’s still standing, we do it, you know, like, that’s that’s what you need.
00:20:47:02 – 00:21:01:21
Rod
That’s a great match. That’s a great that’s a fantastic way to do it. And that’s how we do it. In my acquisitions team as well. We look for reasons not to do the deal. Somebody is usually pushing the deal and yeah. No that’s that’s fantastic. That’s that’s how you know, that’s how you don’t make any mistakes. That’s right.
00:21:01:23 – 00:21:07:12
Rod
Well, that’s I mean, you can still make mistakes, but you minimize the mistakes when you do that. Now, I love the stakes.
00:21:07:12 – 00:21:13:07
Drew
Of every deal, but you just want to make not catastrophic mistakes, you know, like there’s mistakes I never do, you know.
00:21:13:09 – 00:21:30:18
Rod
Yeah. No business threatening mistakes. Yeah. Well, you mentioned you mentioned, checking out the warrior program. Let me just throw this out there. If you have an interest in applying to our warrior program, you text the word crush to seven, two, three, 4 or 5. That’s how you apply, or get your butt to my next boot camp.
00:21:30:18 – 00:21:45:07
Rod
I’ve got one coming up in LA, January 23rd, 24th and 25th. And, you know, there’s no excuse because the price is ridiculously reasonable. There’ll be upwards of a thousand people there. But but yeah. So text crush to 72345 or do that.
00:21:45:07 – 00:22:06:09
Mark
You mentioned poking holes in deals. And I know this is one thing we talked about. And you wrote on your bio here of just, deals that you’ve been avoiding lately, right? Lack of cash flow over the past couple of years. Cap rates are still tough. What have been some of the reasons that you have been avoiding deals and not doing deals lately?
00:22:06:09 – 00:22:13:03
Mark
And are you seeing that change at all lately with interest rates, you know, slowly coming down here over the past couple of months.
00:22:13:05 – 00:22:32:07
Drew
So Chris and I have probably done 400 deals to fix some flips. We probably lost money on ten out of 400. You know, this year we’re going to lose money on five. So five and one year and ten over 15 years. And the market has changed. You know that it’s very, very challenging for us to buy our deals.
00:22:32:09 – 00:22:47:23
Drew
It’s very, very expensive to renovates. Our contractors are always pushing us up. And then the retail, you know, side of that, when we’d list a house they would sell like within the first week, multiple offers. Now it’s one offer after a month and it’s less than asking, or we’re cutting our prices to even get that offer in the door.
00:22:48:00 – 00:23:07:11
Drew
So we’ve been really reluctant just even do our fix and flips on the development side. You know, we got our butt handed to us on the last project that we built with 14 units, a national city. We were $1 million over budget on construction. We underwrote the deal back in 2021 with getting a 4.5% interest rate on our loan.
00:23:07:11 – 00:23:25:12
Drew
We locked in with a Freddie loan in May for 6.07 that we had a buy down 50 basis points. So you know we’re still okay. We’re going to be okay on that deal. After all that crap that happened to us, we’re still we still have equity and we’re still cash flowing right now. Had to bring in a lot more capital.
00:23:25:14 – 00:23:50:08
Drew
But, you know, that was, a $4 million deal. So imagine doing a $40 million deal and being up 10% on the cash calls, you know? So, we’re we’re just slowing down. We’re trying to go back to the basics. We’re wholesaling a lot of deals right now, which to us, there’s not a lot of risk in it’s still the same underwriting process, putting the deal in contract and then just partnering up the right investor who wants to take the deal down.
00:23:50:10 – 00:24:04:24
Drew
That’s been great for us. Just trying to cherry pick good deals, you know, so there’s not a lot of really good deals, but sometimes, you know, you find a good one that you’re just like, do we can’t lose on this deal? So we’re going to try to be patient and do those. And then we will go back to developing.
00:24:04:24 – 00:24:18:19
Drew
We just need the market to to show us some stability. You know, rents haven’t really risen. So like the we finished the one project in 2022. The ten units, we’re still running the ten units out for the exact same price in 2025, though we lease it up in 2022.
00:24:18:24 – 00:24:20:01
Chris
But we’re not down.
00:24:20:03 – 00:24:22:03
Drew
Where does it down?
00:24:22:05 – 00:24:39:18
Rod
You know, I mean we’re seeing rents below. We’re seeing rents below 2020 again, again, get excited because there are a lot of deals in trouble right now. And I mean, we’re seeing tons of deals trying to be sold for the debt, plus the fee to sell that you know, the commissions to sell it. So debt plus fees, it’s called in and they still don’t pencil out.
00:24:39:18 – 00:24:57:05
Rod
They don’t make sense. So you know, get excited because there are a lot of deals coming. You know the lenders have been the catch phrase with lenders is extend and pretend they’ve just been extending these loans, doing deferrals, doing loan modifications, anything to keep the property off their balance sheets. But the proverbial shit’s about to hit the fan.
00:24:57:05 – 00:25:15:08
Rod
I mean, some over the next couple of years, we’re going to see some extraordinary deals, auctions, stuff being sold for cents on the dollar. You know, and, we’re already seeing it being offered for cents on the dollar. I’ve got a property in San Antonio next to the one we own, that sold for 43,000,022, being offered to a 28 now.
00:25:15:10 – 00:25:33:09
Rod
And it doesn’t even make sense to us that it comes down to 24. So, you know, there’s just a lot of those. And so, you know, I’m getting excited and I think, you know, if you pull that fun together, start raising some money, I think you’re going to see some incredible opportunities. And, and and being able to use that money.
00:25:33:09 – 00:25:46:04
Rod
And we’re doing the same thing. I’ve got a fund as well. And, I’m not just doing multifamily, so doing some senior housing, which I’m excited about because, that’s an awesome demographic too. But or asset class rather but,
00:25:46:06 – 00:26:01:24
Drew
That’s what we’ve been doing the last year is focusing on the fund. So we’re in a position to capitalize on the opportunities. But the other good thing about being a warrior is we get to go to your events and just ask questions to guys who are really doing deals in, are they distributing money to their LPs or what are they seeing, like having your finger on the ball?
00:26:01:24 – 00:26:04:03
Drew
So I think that’s another valuable thing about.
00:26:04:03 – 00:26:35:10
Rod
Being did you guys go to Phoenix when you guys were there? Oh, you were okay. Forgive me. There’s, you know, hundreds, hundreds of people. My eyes, my eyes crossed. So we had a warrior event, a couple weeks ago in Phoenix. That’s what I’m talking about. We do warrior events only for networking. And, you know, we we did, you know, did some, training on other asset classes, like senior housing, like, construction and development, like, industrial flex space, you know, and, it was it was a lot of fun, but, I’ve got to do one on the West Coast from time to time.
00:26:35:10 – 00:26:42:18
Rod
And that was, that was the one next to Sarasota. Yeah, I’m sure, I’m sure, yeah, I’m sure, but,
00:26:42:20 – 00:27:02:12
Chris
But if I could piggyback off that real quick ride. So I think what’s important to point out is you’re you’re constantly changing your model is it’s still real estate. It may still be multifamily, it may still be fix and flip. But you got to change with the market and you got to you got to you got to play with what the market gives you.
00:27:02:14 – 00:27:22:03
Chris
And what I mean by that is drew mentioned wholesaling like before. We never wholesale do anything like I want to do every single deal. I don’t want to give it to somebody. Shot wholesaling created, a great opportunity for us to make those fees when the retail market’s down. So again, it’s just adjusting our business model and like we want to get in the multifamily space.
00:27:22:07 – 00:27:48:12
Chris
We wanted to be in California because it’s our own backyard. Well how do you do that. Well you got to go develop. So it’s different for everybody. It’s different for your market. But you have to constantly be evolving and constantly be changing. And you talked about senior living. That’s another area is my age is getting up there. I qualify that’s going to be a new a new market because there’s so many seniors that are going to be coming on board that need housing because of housing so expensive.
00:27:48:12 – 00:27:56:18
Chris
So you can’t I got to be looking at the market and you react and you, you, you work with what the market gives you be coming.
00:27:56:19 – 00:27:57:09
Rod
Up this.
00:27:57:12 – 00:28:02:04
Chris
You got to be able to change your you’re a dinosaur. You don’t change a year.
00:28:02:06 – 00:28:05:07
Rod
That’s the only only constant thing in life is change. That’s it.
00:28:05:12 – 00:28:21:08
Mark
That’s one thing we’ve talked about in California as well. And I know I mentioned self-storage because you don’t have to deal with tenants, but I don’t know if you guys have looked at this. Senior living is another thing that a lot of California warriors are doing right now because they’re older, they’re going to live there probably, it’s sad to say, until they die.
00:28:21:10 – 00:28:26:01
Mark
And so you’re probably not going to have to deal with evictions very much. And so that’s why a lot of them are doing so.
00:28:26:06 – 00:28:28:20
Rod
You know, what do you think holds most people back?
00:28:28:20 – 00:28:54:22
Chris
Guys, I think it’s fear. You know, definitely. And people just overanalyze. So you’ve heard the phrase analysis paralysis. And I know so many people and I hate to stereotype, but so many engineers are analysis paralysis. That’s how they do things, right. And they just never take action. But but then you see these guys that that don’t do that and they’re just jumping a deal.
00:28:54:22 – 00:29:16:16
Chris
And and sometimes you’re wrong. But if you align yourself with good people and a good team and before you go buy something, go call somebody that’s done it. I’ve had so many people that I’ve tried to help, and I always give it away for free just because I want to help people. That’s just the type of person I am, and they’ll call me after they buy something and they’ll say, hey, look what I just bought.
00:29:16:16 – 00:29:33:21
Chris
I’m like, well, why didn’t you call me beforehand? Because you shouldn’t have done it because of this, this and this. So, you know, don’t be afraid to reach out to somebody that’s already done and say, hey, this is what I’m thinking. What do you think? And let them, like drew said, let them shoot holes in it. And if it still stands at the end of the day, go to the dealer.
00:29:33:21 – 00:29:35:12
Chris
If it doesn’t, go, look for another one.
00:29:35:16 – 00:29:37:03
Drew
At least they tell.
00:29:37:05 – 00:29:37:16
Chris
They took.
00:29:37:16 – 00:29:50:07
Rod
It. Well, that’s true, that’s true. But on that note, do you guys are you guys okay with, maybe, if someone wants to reach out to you guys, do you, you know, do you have a website or something you could give us where they could actually reach out to you as well?
00:29:50:07 – 00:29:56:09
Drew
We did. So Islander Income fund Elle.com is the fund. And Island Island.
00:29:56:11 – 00:30:20:06
Rod
I Anscombe Islander investments.com okay. All right. Fantastic. Well guys I really appreciate you coming on the show today. This has been a lot of fun. A little different to conversation than we typically have, but definitely added a tremendous amount of value. It’s great to see you. And, forgive me for not remembering that you were in Phoenixville as little as two weeks ago, because, again, my, my eyes crossed the minute I walk in a room.
00:30:20:06 – 00:30:33:18
Rod
But, anyways, great to see you. All right. Awesome. Yeah, a little bit of a kick in the ass that’s going to be a lot of fun. I haven’t done one in over a year, a live event like that. So it’s going to be a lot of fun. Of course, I’m. I’m wiped out for about 7 to 10 days afterwards.
00:30:33:18 – 00:30:44:12
Rod
I’m in bed because it just kills me. But, that’s why I only do one a year. But anyway, great to see you guys. I appreciate you coming on. And, and we’ll, we’ll see you January 23rd.
00:30:44:14 – 00:30:47:15
Drew
Yeah. Thanks for all you do, Ron. Appreciate it. Appreciate it.
00:30:47:20 – 00:30:49:13
Chris
Thanks for all your guys. Help. Thank you.
