In this episode, I interview Jesse Boyd and Mike Dundon. Jesse and Mike formed their company a few years ago, and have since purchased 37 buy-and-hold rental properties! Although their company is not very old, their success has been nothing short of awesome!
Jesse’s prior business experience consisted mostly of owning his own lawn maintenance company. After 13 years, Jesse felt trapped in his own business and started to look elsewhere for opportunities that would lead to something he would enjoy more, and that would give him the lifestyle he desired.
Michael spent his earlier days in a rock ‘n roll band. But as that experience came to an end in 2008 he ended up working at what he describes as a dead-end job making $14 an hour. His father had been in real estate for over 30 years, so Michael decided to give real estate a try and got his real estate license. After attending the same seminar given by their local buy-and-hold expert, Jesse and Mike decided to form their company.
Their first property together was actually supposed to be a fix-and-flip, but after a bad appraisal the house simply wasn’t worth what it needed to be worth for them to sell it and make money. That house became a rental, and they struggled for the next year to pay their private investor (Michael’s parents).
Approximately a year after purchasing their first house, Michael was able to identify a local private investor. The interesting thing to be learned from this is that he simply started telling everyone what they were up to and what they were looking to do: buy rental houses in their market. One of the people that Michael told about their plans indicated that he would be interested in financing a couple of rental houses. Initially, he was only interested in financing two to three houses; 37 houses later, they are still working with that investor! That is the power of networking and putting yourself out there.
According to Jesse, the number one mistake he sees new real estate investors make is trying to do everything on their own. They do not reach out to their local real estate investing community and ask for help.
Because Jesse and Mike buy in one specific target market, they do not have to analyze each deal as closely as they would if they were buying in several different markets. The basic idea that they explained is that, if the first five houses are cash flowing and performing, and the next five houses are just like the first five, then all 10 houses should perform relatively equally. This saves them a lot of time in trying to calculate their returns. It’s a repeatable process that they can rely on.
Their buy-and-hold properties are extremely profitable by anyone’s standards. Jesse and Mike shared that their average cash flow is around $400 per unit. That is a great number! The best part is, because they’re buying in the Midwest, the buy-in price for these houses is only around $40,000 or $50,000 each! They also put in no money out of pocket because all of their properties are financed by a private investor, who they pay a rate of return.
However, one of the regrets the guys had is that they didn’t place more emphasis on education earlier in their business. There are systems and procedures they now have in place that they implemented based on things they learned while trying to educate themselves about the industry. They feel like they would be better off had they implemented those earlier, and they maybe could’ve avoided headaches along the way.
PaySimple.com– rent collection software
Google Drive – document storage and sharing
Contact info for Jesse: email@example.com
Contact info for Mike: firstname.lastname@example.org