Lincoln Edwards, co-creator of the popular YouTube channel Austin Flipsters alongside Lauren Ahrens, leads viewers on thrilling house flipping adventures in Austin, Texas. With hundreds of flips under their belt, they pioneered the genre, offering unparalleled behind-the-scenes access and engaging subscribers in design decisions. In 2023, Lincoln co-founded Homemade, a groundbreaking Flipping-As-A-Service platform, revolutionizing real estate investment with end-to-end services powered by proprietary technology.
Here’s some of the topics we covered:
- The Idea Behind Porting the HGTV Model To Youtube
- The Biggest Win In The Flipping Space
- A Partnership Horror Story
- What Happens When Contractors Fall Through
- Partnership Failures & Ho To Find Great Ones
- Lincoln’s Flipping Service
- The Impact Of Interest Rates
- The Submarkets Around Dallas & Austin
- How To Take Your First Step In Real Estate
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
Full Transcript Below
00:00:37:14 – 00:00:55:28
Rod
Welcome back to Life Time Cash Flow Through Real Estate Investing. I’m Rod Cliff and I am thrilled that you’re here. And we’ve got a unique guest today. His name is Lincoln Edwards and Lincoln hosts Austin Flip stories. And so they they flip houses right now in Austin and Dallas. And you’re in Dallas now, right? That’s right. All right.
00:00:56:01 – 00:00:57:08
Rod
So awesome. Welcome to show, brother.
00:00:57:08 – 00:00:58:08
Lincoln
Yeah, thanks for having me on.
00:00:58:08 – 00:01:11:23
Rod
Yeah. So we started talking before we started recording. And you got an MBA at Harvard. Cool as hell. You know, very fancy schmancy stuff from a guy that didn’t even go to college. But actually, my dad used to teach there, so.
00:01:12:00 – 00:01:13:23
Lincoln
is that right? Yeah. Yeah. At the business school or.
00:01:13:24 – 00:01:32:29
Rod
Yeah. No, no, no. Sociology. Okay. Yeah, But anyway. Yeah. So you have a YouTube channel, a pretty significant YouTube channel. You show people how to flip and you’ve got a pretty cool business model as well. We’re going to dig in too. So why don’t you give us a little of your backstory? I stole a little bit of it there, but no.
00:01:32:29 – 00:01:57:16
Lincoln
Yeah, all good. As you mentioned it. Yeah, I stumbled into real estate, sort of backwards coming out of business school. I really want to get into private equity and found a job at real estate private equity shop. And I thought, well, how much difference is there really? You know, quite a bit, as it turns out. But, you know, community kind of learning commercial real estate and then eventually went out on my own and started doing I started with multifamily.
00:01:57:16 – 00:02:23:17
Lincoln
I thought I would sort of work in that space, bought a little 12 unit building and then kind of got the bug for fixing flip on a whim, did a project just to sort of see if I could. Went well, did another one and Austin. Yeah, all in Austin and then, you know, about 2018 partnered up with an old college friend of mine named Moore Nan’s and created this sort of social media brand around house flipping.
00:02:23:20 – 00:02:50:10
Lincoln
I was really getting into sort of the YouTube rabbit hole and realized nobody was sort of porting over this concept of HGTV on to YouTube and really HD, you know, YouTube was basically becoming de facto TV, you know, at for, for a newer generation. And people were taking concepts like ESPN, putting them over there and HGTV was like the second biggest cable network at the time, and nobody was doing it on YouTube.
00:02:50:10 – 00:03:04:29
Lincoln
So I thought, well, why not us? And there’s there’s a lot to building that out, as it turns out. But but basically talk her into creating our brand you know awesome posters on YouTube and yeah started building that in in 2018 and wow.
00:03:05:01 – 00:03:05:23
Rod
Yeah I’ve been doing it.
00:03:05:23 – 00:03:08:21
Lincoln
While I’ve been working on it. Yeah. For, for a few years now.
00:03:08:27 – 00:03:24:00
Rod
So so you, you I mean just let’s talk about the show for a minute just so people can an idea I mean is it like the flipping stuff you see on HGTV where, you know, you go in and you look at the house, it’s all crappy and you fix it up and then flip it?
00:03:24:00 – 00:03:45:29
Lincoln
Yeah, it’s basically that, yeah, we take our projects that we’re already going to do. Obviously we, we come, we critique and we tour and we kind of put together a plan for what we’re going to do and then take you along for that journey. And the twist, you know, really is in the age of social media, we can be doing this stuff real time and let audiences interact or vote on material choices, you know, on our Instagram channel in real time.
00:03:45:29 – 00:03:50:21
Lincoln
So you don’t have to wait for the episode to come out and try to make it interactive in that way. that’s smart.
00:03:50:21 – 00:03:54:19
Rod
Yeah, exactly. They can pick the colors. They can pick all the the.
00:03:54:21 – 00:03:58:24
Lincoln
Yeah, yeah, yeah. To some extent, you know, it’s always some choices we’re okay with, you know, either.
00:03:58:24 – 00:04:00:20
Rod
Way, purple is not going to work there. I’m sorry.
00:04:00:20 – 00:04:07:07
Lincoln
Right. Yeah, it was funny. Yeah. That’s awesome. Yeah. And then you get the big payoff at the end. You know, you get to kind of see the thing fully made over.
00:04:07:11 – 00:04:27:18
Rod
that’s cool. You’ve been flipping houses and you created this channel around flipping to show people how it’s done. Called Austin Flip stories on YouTube and tell talk about your your biggest win in the flipping and the flip flipping space and then I’m you know, I’m going to go to the flip side the biggest seminar, you know com seminar.
00:04:27:18 – 00:04:28:26
Lincoln
Yeah, yeah, yeah, yeah, yeah.
00:04:28:27 – 00:04:30:16
Rod
Talk about your biggest win.
00:04:30:18 – 00:04:36:08
Lincoln
Well, in the for the actual real estate, you know, the biggest win in real estate, the biggest win on the media are complete opposite.
00:04:36:08 – 00:04:38:03
Rod
Okay. Right. Well real estate’s what I was.
00:04:38:03 – 00:04:55:10
Lincoln
Yeah, exactly. So, so on the real estate side, you know, our biggest win was a historic house that was built in 1938 in Austin, sort of just south of downtown in Travis Heights, which was like a primo real estate area. And it was actually condemn the property.
00:04:55:14 – 00:04:58:20
Rod
So I think you had to deal with a lot of stuff there then.
00:04:58:20 – 00:05:15:12
Lincoln
Yeah, exactly. Exactly. And, you know, we were a bit crazy to think we could bring it back. But the reason I did it is it sat on a corner lot and their main house is up front, but it had this sort of carriage house. Yeah, exactly. And they turned this into a little duplex in the back and hadn’t been properly permit and all this.
00:05:15:12 – 00:05:31:11
Lincoln
But the idea was, you know, if we could split that lot or actually condo ize it, we could sell off that back unit once it was sort of, you know, brought up to snuff and then make over the front unit to be, you know, the full transformation back to.
00:05:31:11 – 00:05:32:08
Rod
The way it was.
00:05:32:11 – 00:05:54:15
Lincoln
Exactly. So really, the value in that deal, you know, I think we bought it for $750,000 both. And then we put in, gosh, maybe 500,000 into the thing and sold it for, well, I must have been a little bit less than that. We made about half a million dollars on it. And so so we sold it for one and a half, 1.6, something like that.
00:05:54:21 – 00:06:12:14
Lincoln
And really the the what I loved about that play is that really it was all the real value that we drove was just a condo regime and the insight to say, hey, we can separate out this back unit. And basically we ended up selling the back unit for about 500. So we really broke even on that front house.
00:06:12:14 – 00:06:16:12
Lincoln
And it was you know, it was a gorgeous transformation, sure. But all the money was made on the back shore.
00:06:16:13 – 00:06:38:09
Rod
You know, some of my most successful warriors, my coaching students, are the ones that can take a look at something and see what it could be and or, you know, really think outside the box. Like, you know, I’ve got a lot of a lot of them doing, you know, land projects where they’ll buy a little self-storage piece that’s got more land and then they expand the self-storage or they build a retail component or they, you know, mixed use things of that nature.
00:06:38:09 – 00:06:57:28
Rod
It’s really cool to see some of the creativity that they’re coming up with. So you looked at this and you saw you saw possibility. I love you know, it’s funny, in Denver, I had 500 houses in Denver at one time, and I probably had 30 or 40 antebellum houses that were pre, what is it, A to 1900 And I built in 1900 are right around there.
00:06:57:28 – 00:07:06:05
Rod
And they were they’re challenging, you know the windows with the ropes and the weights and all that. Did you have all that in that place. Yeah.
00:07:06:07 – 00:07:16:22
Lincoln
Yeah, it was you know, it was crazy too, because it was half peer and beam Foundation and half Slab. It had been cobbled together over the years and. Wow. Yeah. You know, of course you, you’ve.
00:07:16:22 – 00:07:27:19
Rod
Probably enhanced actually because it probably slipped a little bit the, the you know, typically they’ll put the pier and beam in when things start to look shaky. I mean, those old foundations were brick, you know, they just have bricks stacked up.
00:07:27:19 – 00:07:46:28
Lincoln
Exactly. Yeah. Yeah. And honestly it is know Yes. For the biggest it was the biggest financial win but is definitely not what I would say needs to be your bread and butter of fixing flint because it was so much work it was so unlike sort of yeah. The singles and doubles that you know a lot of people make money on fixing flips but it’s just one of these projects that calls to you.
00:07:46:28 – 00:07:47:25
Lincoln
You see that vision?
00:07:47:28 – 00:08:13:02
Rod
Was that what it was? Yeah, that’s cool. That’s cool. Yeah. Those, those, those that’s like a passion project. But, you know, I remember some of those old clawfoot tubs and, and fireplaces that were just gorgeous with, you know, the mantles, with the pillars and stuff and just beautiful, beautiful stuff that and now that, you know, it’s funny, I could just and I’ll stop talking here in a minute, but, but I could buy whole blocks in downtown Denver for $20,000 a house.
00:08:13:02 – 00:08:38:24
Rod
And they’re now, well in the millions. These are big giant three, you know, three story homes that they’ve complete. Completely. Yeah. Woulda, coulda, shoulda. You know, if you can get in front of an area that’s gentrifying boom. But but it takes cojones because, you know you’re going to deal with drugs and crime and everything until things shift. But you start seeing the you know, the the coffee shops come in, you start seeing some of that stuff, the arts, the art, see art studios and stuff.
00:08:38:27 – 00:08:45:26
Rod
So talk about a seminar, talk about a setback in your flipping business. Talk about, you know, a lesson. Yeah.
00:08:45:29 – 00:08:46:19
Lincoln
Yeah, totally.
00:08:46:22 – 00:08:48:16
Rod
Everybody’s got lots of them. But because they.
00:08:48:16 – 00:09:19:02
Lincoln
Can do that, you know, I think in this business, one of the biggest lessons I learned was with who you work with, right? So definitely biggest sort of setback in learning that I have had is with basically a business partner. There was a contractor that I, you know, trusted with several projects and basically was playing a shell game with with funds and trying to try and basically keep his business alive by taking on more and more projects until that his house of cards sort of collapsed.
00:09:19:02 – 00:09:41:17
Lincoln
And, you know, I was unfortunately the bag holder on several of those projects where I had to come in and pay for some renovations twice, basically. And yeah, there was a it was a huge lesson learned for me. And this was a person that, like I said, you know, I trusted and, and had done several deals with. And sometimes you just you never know what’s going on behind the scenes.
00:09:41:17 – 00:09:44:21
Lincoln
And, you know, everybody unfortunately, no, not everybody.
00:09:44:21 – 00:10:02:20
Rod
But if you’re I’m dealing with the exact same thing right now. So, you know, I feel, you know, the lesson there is, you know, I think because I’ve had the same thing happen where I just, you know, you get you start to trust someone and you you can’t just trust you have to trust but verify as well. That’s the piece.
00:10:02:20 – 00:10:06:05
Rod
That’s the missing piece. Was that the missing piece in your case? It wasn’t mine for sure.
00:10:06:07 – 00:10:33:18
Lincoln
100%. Yeah. And I’m just like you, you know, somebody you know, gives me there were their word is their bond. I believe them. Yeah, but you know, what I’ve shifted to now is not. I don’t think you can do business if your M.O. is. I don’t trust anybody or I have to make deals so onerous and complicated. But, you know, I think there are some very simple deal mechanics that sort of are, you know, a stopgap from from things like that happening.
00:10:33:18 – 00:10:57:25
Lincoln
And it’s simple stuff about, you know, structuring, let’s say, you know, more payment milestones and a deal more draws, more payment milestones rather than less. I mean, you know, people get annoyed with that. Well, why do I you know, I want to be cutting checks all the time or it’s more of a hassle. I’d like to just write one big check at the end when it’s done, you know, And then the reality is that that just increases that exposure, right?
00:10:57:29 – 00:11:09:02
Lincoln
So you can dial that back, you know, and I’ve had this happen on on stuff that was sort of like less nefarious. But, you know, I’ve had contractors that have literally died in the middle of a project.
00:11:09:08 – 00:11:09:26
Rod
Wow.
00:11:09:28 – 00:11:18:12
Lincoln
Yeah. And it’s like, whoa, wow, How much money do I have out to that person? Because, you know, that’s that money is never coming back on.
00:11:18:12 – 00:11:34:09
Rod
Yeah. No. You know, one thing that I try to teach my students is, is is try not to get ahead of people very far. Just just, you know, pay as the work is done. Now, sometimes some of these operators need a little money for material and whatnot. I’ve even gone and bought the material sometimes. Here’s the material instead of giving them the cash.
00:11:34:12 – 00:12:00:01
Rod
You know, back in the day when I really couldn’t afford to have a loss. But interesting. So in the flipping business, you contractors is probably one of the biggest shakey areas that you really got to button down. Do you, by the way, when you do a contract besides now that you’re doing multiple drawers just to protect how much money you put out, do you also put time limits on on the work?
00:12:00:01 – 00:12:04:11
Rod
And do you do you penalize them if the work’s not done in a time limit? Just curious.
00:12:04:14 – 00:12:26:27
Lincoln
Yeah, you know, I’ve tried that and a lot of people will swear by it. But, you know, I find it simpler to just cut that contractor loose, right? Yeah. Because there are, you know, there are things that happen that are within somebody’s control versus not. So, you know, we’re redoing a foundation. We’ve got we’ve had a ton of rain that’s going to push back everybody’s timelines.
00:12:27:00 – 00:12:55:29
Lincoln
Fair enough. So so what I find the easier is, hey, look, a reasonable deposit payment milestones hold back something at the end so that you’ve got to pass your permitting pass inspections so that you’ve got some incentive to come back. And then if I get to fire you mid project, I don’t have too much exposure. And if you’re the bottleneck to this whole thing, well, it was a pleasure doing business with you on one and never again And with, you know, residential is not one huge project where you know Right.
00:12:56:04 – 00:13:03:17
Lincoln
You can get away with giving somebody, you know, a project. And if it doesn’t work out and you don’t have too much exposure on that one, yeah, you can cut him loose and fine.
00:13:03:17 – 00:13:20:24
Rod
Sure, sure, sure. Well, you saw the mess out in my compound here. I’m dealing with that right now with a contractor. And I even think to put a time limit on the thing. But, you know, they’re they’re. I sent him a scathing text this this morning. Like the you know, we’ll we will start your job and we won’t leave till it’s done.
00:13:20:24 – 00:13:22:29
Rod
Well, your house hasn’t been here in four days.
00:13:23:02 – 00:13:35:04
Lincoln
Yeah, that’s I find the, the having, having the incentives set up right where, you know, they want to be here because they’ve got a whole lot of money that they’re waiting on. It’s just it’s a better use of care than the stick. And yeah.
00:13:35:07 – 00:13:52:14
Rod
I don’t disagree. The problem is they already got the carrot. They’ve eaten the carrot. That’s the problem. They got their second draw when they delivered the pavers. Exactly. So so talk about a homemade homemade SEO. So that’s that’s you’re done for you flipping. Yes. Yeah. Yeah. I want to hear about it.
00:13:52:17 – 00:14:20:08
Lincoln
Yeah. So, you know, the idea is I don’t know if you’ve ever saw anything online. There’s there’s sort of Amazon go buy on Amazon and then there’s Shopify that basically empowers individual sellers to sell online. So the idea behind Homemade is really to empower individual fixing flippers, individual investors to get into the, you know, the home renovation space, to do fixing flips for themselves, to compete with the £800 gorillas in the room.
00:14:20:10 – 00:14:22:02
Lincoln
It’s basically flipping as a service.
00:14:22:02 – 00:14:24:04
Rod
Are they’re £800 gorilla in the room.
00:14:24:07 – 00:14:25:11
Lincoln
Yeah. Yeah. Really? Yeah.
00:14:25:16 – 00:14:26:11
Rod
yeah. Business.
00:14:26:13 – 00:14:42:14
Lincoln
Yeah, yeah. You know, there’s the Amherst SFR threes of the world. You know, people that are built that have, you know, put together a huge pile of capital and that are doing it on in and you know, for the, for 60% of fixing flips, they’re done by first or second timers.
00:14:42:14 – 00:14:45:15
Rod
Right. That’s why I asked Yeah. Exact assumed it was even more than that. Okay.
00:14:45:17 – 00:15:06:19
Lincoln
Yeah. Well it may well be, but you know, it’s and there just aren’t tons of sort of institutional grade tools, platforms for those folks to use. And a lot of it is basically repeating the exact same errors that the last guy did when he did it and his didn’t work out well. You know, maybe this time will be different, but it’s flipping as a service.
00:15:06:19 – 00:15:33:20
Lincoln
So we’re basically, you know, we’re identifying projects for for people to take down. We’re scoping them. We’ve we’ve got sort of think of like a fast food menu of material selection. So do you want the number one? The number two swear you’re not picking the fifth facet in the last bathroom or whatever, so that we can also then kind of copy and paste that to our flips and then we execute that as the general contractor for, for our clients at homemade.
00:15:33:20 – 00:16:01:27
Lincoln
And then we work on an exit plan for them. So that might be as a sale, that might be as a long term rental or even as a short term rental or, you know, whatever they want to do with that basically. But yeah, we do it sort of turnkey that way. You’re not, you know, a lot of the fixing and flipping world has a sort of disjointed feel where you work with your buyer’s agent to find the property, but then you know, they’re not there with you on the construction of it or, you know, does the renovation of it really make sense there?
00:16:02:00 – 00:16:24:02
Lincoln
They’ve they’ve got their check in, they’re gone versus we sort of make money along that value chain by helping at each step. But it makes the overall project a lot more cohesive. It really eliminates or reduces the execution risk of of, you know, the fixed foot space, which is basically what most people get tripped up on. It’s not running the numbers or, you know, looking at comps.
00:16:24:02 – 00:16:32:20
Lincoln
It’s it’s the the blocking and tackling of actually getting the thing an appropriate scope for an appropriate price to where you can hit those back in comps. Right.
00:16:32:22 – 00:16:48:04
Rod
Well, I’m going to I’m going to ask you some detailed questions on this, if that’s okay. So so are you looking for clients that are just in a lot of cash or are they going to secure financing as well?
00:16:48:06 – 00:17:15:15
Lincoln
So we do both. So if you want to do it all cash, obviously you can. Right. And I should say it’s not an investment vehicle. So we take no economics in the property itself and our clients buy them directly. So so they can do whatever they want with them. But we have preferred financing partners that that underwrite and put terms attached to the deal and the scope that we propose that we put out to to the to the clients to say, here’s a project, here’s the house, plus the renovation, plus what a lender will lend on it.
00:17:15:16 – 00:17:18:26
Lincoln
So you could take those lending terms, sort of take it or leave it.
00:17:18:29 – 00:17:21:08
Rod
Got it. So is that hard money typically?
00:17:21:11 – 00:17:22:00
Lincoln
Typically, yes.
00:17:22:01 – 00:17:27:25
Rod
Yes. It’s going to be higher interest with some points and stuff. No prepayment penalties. But, you know, sometimes maybe prepayment.
00:17:27:25 – 00:17:47:11
Lincoln
But the nice thing about the reason we have preferred financing partners is because they tier their pricing based on experience. Right? So if you’re a first timer, you’re going to get a much higher rate than you would if you’ve done five, ten, 20 of these. So we basically work a deal with them that says, hey, give give our new folks the same rate that you’re going to give your experienced folks because you’re leveraging ours.
00:17:47:14 – 00:17:51:28
Lincoln
So it winds up being cheaper on the financing, particularly if it’s, you know, your first or second deal.
00:17:52:00 – 00:18:05:19
Rod
Okay. Okay. And so so you’re looking for someone that’s that’s got some money to invest that wants to do a flip. Do you have any historical return numbers?
00:18:05:24 – 00:18:15:08
Lincoln
Yeah. So we’re we’re targeting a 25% ROIC figure and I can obviously very if the target.
00:18:15:08 – 00:18:17:02
Rod
Is 25% return on your money.
00:18:17:07 – 00:18:18:03
Lincoln
Exactly.
00:18:18:09 – 00:18:19:09
Rod
Cash out of pocket.
00:18:19:11 – 00:18:19:20
Lincoln
Yeah.
00:18:19:23 – 00:18:21:04
Rod
So cash on cash return.
00:18:21:06 – 00:18:24:01
Lincoln
Exactly. Assuming you’re using leverage. Right.
00:18:24:01 – 00:18:24:29
Rod
Okay.
00:18:25:01 – 00:18:49:08
Lincoln
So in that that varies obviously up and down. So we just have I think our episode coming out this week was a great, great one to the upside where guy hit like a 60% cash on cash because we got multiple offers, got bid up. That’s a huge win, right? You know, and then we’ve we’ve have others where it’s like, you know, for our clients, it’s like a break even.
00:18:49:10 – 00:18:51:07
Lincoln
You win some, you lose some.
00:18:51:10 – 00:18:52:16
Rod
Well, thank you for that honesty.
00:18:52:16 – 00:19:14:04
Lincoln
Of course. Of course. You know, and that’s the main thing is that, like I said, we’re trying to disaggregate the execution risk from the market risk and make very clear, look, you’re a market investor, so the market’s going to do and we we submit sort of our comps and we say, hey, this is what we think you can get on the back end, verify that, and we use our own set of comps.
00:19:14:04 – 00:19:37:17
Lincoln
We also use a third party report that just as a sanity check. And then we encourage obviously our investors to look at that. But but that’s sort of the job that you’re doing as an investors to say, hey, do we think this is believable? And we’ve basically for for all of our projects, we’ve we’ve nailed the execution in the middle, i.e. the renovation and cost and and where the numbers have not worked as well for folks.
00:19:37:20 – 00:19:56:18
Lincoln
It’s because it’s back in values. You know, we didn’t get an offer what we thought we got one less or we priced a little too high and you know had to draw that back. And that’s completely at the discretion of of our investors. So on the exit strategy, we let you sort of decide we’ll work with you and say, hey, this is what we think you should list out.
00:19:56:18 – 00:20:16:28
Lincoln
But if you want to go aggressive, you’re welcome to or obviously if you’re listing it for rent, you can. And the name of the game in the house flipping world really is is about the the cycling of the same cash right. So I was sort of when when I lost my own properties I put them on there and I take sort of the first reasonable offer that comes along.
00:20:17:06 – 00:20:37:28
Lincoln
I don’t try and price them too high because if I can cycle that same cash over twice in a year and I can make, you know, let’s call it on average 25% on a on a project, if I can do that twice a year. And suddenly that’s a fabulous return. If I’ve got to wait several months more to hold out, then it doesn’t really work.
00:20:38:03 – 00:20:47:29
Rod
No. Well, it works, but it doesn’t. Doesn’t It’s not as it’s not as lucrative. Sure. Okay. And you said you’ve done about 30 of these so far, is that right? Yeah.
00:20:47:29 – 00:20:50:27
Lincoln
We launched January of last year. We’ve done about 30 of them or so.
00:20:50:27 – 00:20:51:23
Rod
It’s quite a few.
00:20:51:26 – 00:20:52:17
Lincoln
Yeah.
00:20:52:19 – 00:20:58:04
Rod
You’ve got a decent team going. So do you, you own the construction company or do you sub it all out.
00:20:58:06 – 00:21:07:11
Lincoln
Yeah. So we saw the direct general contractor got so they signed a they sign a contract for us directly with us and then obviously you know, we sub out.
00:21:07:13 – 00:21:14:09
Rod
And so, so, so obviously you don’t do this because you’re kind altruistic guy, but how do you get paid.
00:21:14:11 – 00:21:21:27
Lincoln
Yeah. So, so we basically make money in the same traditional ways other folks would along that whole value chain.
00:21:21:28 – 00:21:23:05
Rod
Okay. So we make.
00:21:23:07 – 00:21:25:18
Lincoln
So we make it like a buyer’s agent slash.
00:21:25:20 – 00:21:26:13
Rod
Real estate commission.
00:21:26:13 – 00:21:45:13
Lincoln
Okay. Exactly. So we’ll make about 3% on the on the front side of these things. And then we take a markup on the on the construction. Okay. It’s usually we average about 8% markup on that construction, which is pretty standard from cost. Exactly. Cost plus about 18%. That’s not bad. And then we make money on the back end.
00:21:45:13 – 00:22:09:01
Lincoln
So we’ll list and we list four for a 4% total fee for folks. So we take 1% of that and give three to the buyer’s agent commission. So we’ll all make money there as well. So, you know, you aggregate those three things together. We can do pretty well on the project, but we don’t like I said, we don’t take any upside or downside on those projects and let the investors be the investors.
00:22:09:01 – 00:22:12:03
Lincoln
And we’re really empowering them.
00:22:12:05 – 00:22:30:08
Rod
Interesting. Made my comment. Is it my my my thought is, man, that’s a lot of work for just those pieces. I I’m but you know, if you’ve if you’ve systemized it yeah that then okay and 30 you know I guess 30 some decent decent change.
00:22:30:08 – 00:22:58:19
Lincoln
Yeah well you know like I said I think, you know, this is our business models a day and the reason I take inspiration from Shopify if you’ve ever read up on them, but they started as a snowboard shop right. So they were there selling snowboards and really, I mean, they were just not the back end e-commerce tools that they needed to be able to fulfill that sort of profitably at scale and had to build those out and then realized, Hey, I did hear them.
00:22:58:19 – 00:23:03:28
Rod
It was on Tim Ferriss. He interviewed the CEO. Okay. Yeah. And he’s in Austin, by the way. Anyway, I’m sorry to interrupt.
00:23:03:28 – 00:23:24:05
Lincoln
No good. I’ve not listened to that. But, you know, I’ve read their story. And so there’s some in the picks and shovels and really that’s that’s what we want to do, because that ultimately that market is so much bigger and it’s than what we could ever fulfill. And and we want to empower it that way. So right now we’re fulfilling sort of manually that that full value chain.
00:23:24:08 – 00:23:48:12
Lincoln
But, you know, our dream is to scale that up such that we’re disaggregating it and fulfilling a lot of that virtually. So maybe that middle piece, instead of actually handling the construction, you know, we’ve got vetted contractors and more of a platform in each space where we’re we’re referring you out to contractors in your market, where we’ve got a master services agreement to where they we know they’ll do these scope items for this price.
00:23:48:12 – 00:23:53:00
Lincoln
And now we’re taking maybe a smaller referral fee, but we’re not fulfilling interest.
00:23:53:00 – 00:23:56:18
Rod
And interesting, So that’s where you see this potentially going.
00:23:56:21 – 00:24:17:04
Lincoln
Yeah, exactly. So so we want to scale or you know, the other analogy I use for it is sort of like trying to build a self-driving car. And right now we’re building a taxi fleet, you know what I mean? So we’re driving those cars ourselves and over time, you know, it can go from, you know, taxi and we own the car to, hey, maybe it’s Uber and we’re working with local fulfillment.
00:24:17:07 – 00:24:35:03
Lincoln
And then ultimately you get to that self-driving where it’s, it’s more turnkey and digital. But the key to that is really the data, right? And that’s what we’re doing right now. We’re controlling that full experience to get the data on top of houses. Fulfilling ourselves with that is the vision. But in the short term, there’s economics for us.
00:24:35:05 – 00:24:35:17
Lincoln
All right.
00:24:35:19 – 00:24:47:08
Rod
You’re making money. Well, that’s good. And obviously they’re not all wins. They can’t be, you know, because now, now, what’s the impact of interest rates right now on your business model?
00:24:47:12 – 00:25:00:26
Lincoln
2023 was in challenging year because it was in sort of actively declining residential market. So that’s really the hardest thing and why the projects that didn’t work out didn’t work out because we you know, we penciled an exit here. If the market declines in the interim.
00:25:01:03 – 00:25:03:10
Rod
Yeah, you can’t you can’t forestall that.
00:25:03:12 – 00:25:13:26
Lincoln
That’s that’s hard. But we underwrite every deal saying basically assuming a flat market and y flat because I’m not smart I don’t have a crystal ball here that’s conservative.
00:25:13:26 – 00:25:14:10
Rod
Good.
00:25:14:12 – 00:25:15:03
Lincoln
Exactly.
00:25:15:03 – 00:25:15:25
Rod
Okay.
00:25:15:27 – 00:25:31:11
Lincoln
So so if it pencils that way, we’ll do it. And the impact of the interest rates has really been not made to the individual economics of the deal work. But it’s really like what deals are available a lot, Mark A lot of sellers are just not entering the market.
00:25:31:17 – 00:25:34:27
Rod
They’re not selling they because they can’t get a decent interest rate on their new house.
00:25:34:27 – 00:25:37:13
Lincoln
Exactly. Yeah, that’s exactly it. So I think a.
00:25:37:13 – 00:25:38:14
Rod
Pent up demand.
00:25:38:15 – 00:25:39:18
Lincoln
Exactly. That’s what.
00:25:39:18 – 00:25:43:20
Rod
I was. I was just wondering the impact of all that on on the business model.
00:25:43:20 – 00:26:04:16
Lincoln
Right. And there was enough of a run up preceding that that folks have enough equity. They can sit on a on a house. Now, I think you will start to see that change. And you know, people that bought sort of peak of the market in 2021 as they need to move on, you know, that that could get rough if you don’t have a lot of built in equity.
00:26:04:19 – 00:26:22:25
Lincoln
But that’s been the biggest challenge is just finding the deals that where the economics pencil. So we’ve shifted to work with folks to do sort of a hybrid of what I, what I describe to you where, hey, we’re finding the deal and scoping it to where, hey, now we’ll work with somebody if they’ve got a deal because that’s that solves that problem for us.
00:26:22:25 – 00:26:23:24
Rod
So that’s a good idea.
00:26:23:25 – 00:26:37:24
Lincoln
If you’ve got if your client, you found a property wherever, well, hey, we’ll just run the rest of that play for the value chain. We’ll scope it supplier materials package to it, run the project for you. And that sort of solves that problem for us interest as well.
00:26:37:24 – 00:26:42:29
Rod
Interesting. You’re geographically bound with that second model.
00:26:43:01 – 00:26:59:08
Lincoln
Yeah, as of today. As of today. But we’ll expand that. And you know, I think kind of all the major metros that make sense for flipping, you know, we’ll expand into that. And that’s one of the ways that we’re excited to do that is is for other folks that are bringing in the deal.
00:26:59:08 – 00:27:16:04
Rod
Yeah, no, it’s great idea actually kind of a done for you for a wannabe flipper that’s found a place. So let me ask you this. In your core business, what are you doing to find deals? You know, obviously you’ve got realtor relationships, but are you doing any direct to seller marketing, anything like that?
00:27:16:07 – 00:27:25:05
Lincoln
Yeah, we do. You know, we do all the sort of traditional stuff. If you have ever gone down the rabbit hole of deal sourcing on, on residential real estate.
00:27:25:07 – 00:27:27:11
Rod
And it signs postcards.
00:27:27:16 – 00:27:28:18
Lincoln
Yeah, exactly.
00:27:28:18 – 00:27:32:08
Rod
Chunky mail or what they call it turnkey and all this.
00:27:32:08 – 00:27:52:22
Lincoln
Yeah. And varying returns You know I’d say the highest ROI things, you know, the direct mail seems like for us seems like it doesn’t work until it really works i.e. interesting, you know, hard to get by. It’s and then, you know, a couple times a year we’ll get one that’s just got 100 K of just instant equity on the thing.
00:27:52:25 – 00:27:59:04
Lincoln
But I’d say the stuff that’s really, you know, profitable, consistent is relationships. You know, just nothing beats.
00:27:59:04 – 00:28:00:05
Rod
Relationships with.
00:28:00:08 – 00:28:09:06
Lincoln
With with agents that have mark the come across properties that you know aren’t a great fit they wouldn’t finance traditionally because they’ve got.
00:28:09:12 – 00:28:14:13
Rod
Their beat up and you’re not going to get a wife to accept it because. Exactly.
00:28:14:13 – 00:28:41:07
Lincoln
Yeah. Yeah. And then in a lot of times a lender literally won’t lend on it because it has major structural damage to the foundation or roof or something like that that has to be fixed. So, so working with those folks and then we do a ton of MLS as well. So we’ve, we’ve, we’ve set up software that scrapes the MLS every day and assigned sort of a, a lead score to each property and then feeds it to our inbox to offer on a daily basis and, you know, updates us.
00:28:41:07 – 00:28:43:14
Rod
And so we do a lot of offers. You throw a lot of stuff.
00:28:43:15 – 00:28:52:02
Lincoln
Yeah, it’s a lot of kissing frogs, basically. Yeah. Yeah. And that’s part of the, the value to it for, for this is an asset class. You got to kiss a ton of frogs to find that ideal, you know.
00:28:52:02 – 00:29:14:06
Rod
Yeah. Most same in our business, same in the multifamily, you know. Gotcha. But we looked at 200 properties to, to find the one we’re under contract on right now. By the way, if you’re accredited, you need to check out this deal 200 units in San Antonio right down the road from you, a mile away from another 296 unit that we have, we’re assuming 4% debt or for foreign change.
00:29:14:06 – 00:29:36:28
Rod
And seven years left on it. And it’s it’s a screamer deal. We’re paying 200,000 a unit. The one next door sold for 237 and a unit 237,000. It’s on a lake. It’s and it just it’s amazing that it’s not completely subscribed yet. If you’re interested, text the word partner. 27234, five or go to c r e capital dot com.
00:29:37:01 – 00:29:45:09
Rod
I’m super excited about this thing. Every unit’s got washer, dryer and fireplaces. Anyway, I digress, but right down the road from you, right?
00:29:45:09 – 00:29:48:01
Lincoln
Yeah. That’s my partner Lauren lives in San Antonio.
00:29:48:03 – 00:30:05:13
Rod
So it’s it’s one of the hottest markets in the country. It’s it’s crazy how well it’s doing. I just got another commercial real estate. You know, I get I get the emails from all the different big outfits, big brokerages and media outlets and and they just talking about how great San Antonio is.
00:30:05:13 – 00:30:12:17
Lincoln
Yeah, Texas demographics of Texas continue to rise and boom. And not enough housing stock. No right to family it’s it’s been a.
00:30:12:19 – 00:30:14:26
Rod
So you went into Dallas to write your in Dallas we.
00:30:14:26 – 00:30:22:08
Lincoln
Just launched in Dallas the Q1 of 2024. Yeah. So we’re just, we’re just getting our first couple of deals.
00:30:22:15 – 00:30:23:01
Rod
Okay.
00:30:23:04 – 00:30:31:23
Lincoln
Under contract. But I’m really excited because there’s a lot more inventory in Dallas, you know, more housing stock and a lot more sort of flippable housing stock. I don’t know if you know much about Austin, but.
00:30:31:23 – 00:30:43:20
Rod
Well, Austin’s hot. I mean, Austin’s been so insane that I mean, I can see how you’d have trouble finding deals exactly on Dallas. You’ve got so many different submarkets that you have a lot more, you know, lower hanging fruit.
00:30:43:20 – 00:30:45:26
Lincoln
Exactly. Yeah, exactly.
00:30:45:29 – 00:30:57:12
Rod
Yeah. Awesome. You know, Austin’s cool, though. I’ve been there once, got a great music scene, and I listen to Joe Rogan, who’s in Austin, so I hear a lot of stuff him talking about, you know, a lot of comedy clubs and stuff there.
00:30:57:12 – 00:31:10:23
Lincoln
But yeah, it’s got different vibes in the rest of Texas. But yeah, it’s great quality life, great outdoor scene. Yeah, sports festivals, music. It’s a great place to live, but the real estate is price completely different than the rest, right?
00:31:10:26 – 00:31:28:06
Rod
Right, right, right. No, I think you kill it in Dallas. That’s that’s where we that’s where the most assets in Dallas as well. We get quite a few different complexes in Dallas. So so what you see next is, is taking this thing and going to other geographic markets and, and you know, very cool.
00:31:28:06 – 00:31:47:00
Lincoln
So I’d like, I’d like to expand in other geographies. I think it also makes sense to probably on on smaller multifamily deals, you know, 4 to 12 kind of unit type stuff where we can run a similar play. Yeah, because it’s really about the that, that execution of, you know, what’s appropriate scope, what are the materials and let’s go go knock that out.
00:31:47:03 – 00:32:12:00
Rod
Yeah. Now I mean you know, if you can help an operator that, that bought a four unit or a 12 unit or whatever, as long as, as long as you know, you’re not price too far out versus you know, another. GC I could see that as a real value add for sure, no question. So do you have any mentors, if any mentors in this path of yours?
00:32:12:03 – 00:32:31:13
Lincoln
no, no, not really, no. You know, I unfortunately, you know, figured out a lot of stuff sort of trial and error on my own. You know, I’ve been sort of an entrepreneur for for, gosh, ten plus years now, which is probably not what I would recommend. Really?
00:32:31:15 – 00:32:38:26
Rod
Well, I’ve done it. I’ve done it. I’ve done it for 45 years. So, you know, I can I feel, you know.
00:32:38:28 – 00:32:48:27
Lincoln
Yeah. I mean, it it can be sort of a, you know, a lonely road and, you know, other people’s mistakes are a lot cheaper than your own, you know? Not that I haven’t learned from other people.
00:32:48:27 – 00:33:04:17
Rod
So there’s peaks and valleys, you know, but. But it can be stressful, you know, That’s why my hair is completely gray at this point. But yeah, I built 27 different businesses and, you know, several worth tens of millions, many spectacular flaming seminars.
00:33:04:20 – 00:33:06:15
Lincoln
I love that word seminar.
00:33:06:15 – 00:33:22:23
Rod
Yeah, I got it from Tony Robbins. You know, it’s not a failure. It’s only a failure if you don’t get your ass back up or you don’t get the lessons. You know, there’s always lessons you learn from these these, quote unquote, failures. So, you know, I have a lot of people listen to my show that know they need to go do something.
00:33:22:26 – 00:33:36:08
Rod
They know they you know, they’re maybe in the rat race or maybe they’re comfortable, but they know they want more. Do you have any words of wisdom or any anything you might say to those people that just haven’t gone off the fence?
00:33:36:10 – 00:33:43:06
Lincoln
Yeah, I mean, I liked I liked what you said about your houses in Dallas, you know, being able to buy them for 20 K and that was.
00:33:43:06 – 00:33:43:23
Rod
Denver, actually.
00:33:43:23 – 00:34:05:10
Lincoln
I’m sorry. I’m sorry Denver is being able to buy them for for 20 K because, you know, I love that phrase that the best time to plant a tree is 20 years ago and the second best time is today. That’s what I’d say to folks. You know, you can’t plant a tree 20 years ago and congrats if you did, but you can plant one today.
00:34:05:10 – 00:34:24:06
Lincoln
You can’t plant one tomorrow. So you got to you got to take a concrete step. And and, you know, I make real estate content. Love your show. Thank you. But you got to at some point, you know, listening consuming is not enough. You got to take a concrete, physical step and get out there.
00:34:24:07 – 00:34:26:20
Rod
Yeah. Massive freakin action.
00:34:26:22 – 00:34:27:10
Lincoln
Exactly.
00:34:27:17 – 00:34:38:15
Rod
So are there any books that have helped you in your journey here? Obviously, Rich Dad, Poor dad, I’m sure. But anything other than that. Is there a gift book that you gift more than another?
00:34:38:18 – 00:34:43:22
Lincoln
yeah. You know, it’s not a great it’s not a great real estate.
00:34:43:23 – 00:34:45:06
Rod
Model, but.
00:34:45:08 – 00:35:18:24
Lincoln
The Black Swan by Nassim. I don’t know why I did more to sort of change my thinking about risk, uncertainty, unknown unknowns are made a lot of made a lot of money investing with sort of the principles that book, even though he, you know, didn’t directly intended to be sort of a estate book. I loved that game. And I, I didn’t start with Rich Dad, poor dad There’s a there’s a book and I’m author’s name is blinking on me, but it’s called The Real Estate Game.
00:35:18:26 – 00:35:30:29
Lincoln
I thought it was a fun, approachable way. It was the first sort of real estate book I ever picked up and, you know, filtered it through the lens of sort of a game, you know, Monopoly style. I thought that was I thought that was a great cool.
00:35:31:04 – 00:35:49:15
Rod
Absolutely. Yeah. Love it. Love it. I mean, a life is a game. You know, if you when you when you play life, that’s that’s that’s a freaking life. So obviously, you’re a very driven guy. I know your families. You went to Orlando with your kids, went to Disney. I we used to have annual passes. We’d go there, especially if a hurricane was coming.
00:35:49:15 – 00:35:57:29
Rod
Boy, the kids knew they were going to Disney if there was a hurricane coming. But, you know, you seem very driven and motivated. I’m guessing the whys, the kids and the family. Yes.
00:35:58:06 – 00:36:18:26
Lincoln
Yeah, yeah, yeah. That that’s a great driver for me. I you know, my, my, my, you know, I found there’s there’s so much to be gained from a mission, from a purpose. You know, I mentioned you mentioned I went to Harvard for four years. I feel like that when I was younger I made sort of that my mission.
00:36:18:26 – 00:36:42:01
Lincoln
I made getting there my mission. And that was great. And it helped me to do that. But I realized once I was there, that was the wrong mission because it wasn’t really there was not a next then. So sort of then the jobs or the my career sort of took a aimless turn for a minute. Right. And and so, you know, yes.
00:36:42:01 – 00:36:59:22
Lincoln
About advice. I think finding that sort of critical mission and vision, there’s there’s what’s driving you and it’s it’s family and support for them. But then really like a vision of what you can make your company or whatever your life. Your life. Yeah. hugely helpful hugely.
00:36:59:23 – 00:37:08:14
Rod
For home in, you know, when you can find your passion and you can find what you enjoy, I mean, you never work another day in your life. Are you enjoying what you’re doing?
00:37:08:15 – 00:37:09:15
Lincoln
Yeah, I’m loving it.
00:37:09:15 – 00:37:30:02
Rod
I’m. yeah. So, so, you know, you’re passionate about it. You’re able to influence people because you’re passionate, because you love it. So, you know, if you’re listening to this and you don’t love real estate yet, you know, you can associate pleasure with it and learn to love anything. Okay? But if you can’t learn to and I tell my warriors this, my students, if you can’t learn to love this, for God’s sakes, go do something else.
00:37:30:02 – 00:37:45:23
Rod
Life is too freakin short to not do what you love. And and and then when you can call it a mission or a purpose and it’s got that backbone behind it, success is inevitable. And so. Well, listen, brother, I really appreciate you Come.
