MILLIONAIRE Shares The SECRET To Building WEALTH In Real Estate! | Mike Simmons

I don't like to pretend that pain isn't a strong motivator. It really, really can be. Right. Some people lose someone in their life and it motivates them to do more, be more, be better.

It's nice to meet someone who's sincere about helping people level up, especially as it relates to, you know, wealth creation, retirement creation, things of that nature. Yeah, I know that wasn't always necessarily your story. So let's, let's dig in a little bit of kind of where your heart kind of got, got forged, if you will, to kind of make this happen.

Yeah, I will do that real quick. Level jumping. People talk about leveling up and that implies going from one level to another. Level jumping. I really feel like I cracked a code a little bit on how to skip levels. Right. But going back to your question, how did I get started? How did I kind of forge myself in this? I'll tell you what I avoided talking about. When people would ask me to go back to like how this got, all this got started, I would tend to go back to the point where I started taking action. Right. Because I figured that was the beginning. And what I realized over the last couple of years is what had disservice I'm doing to a large group of people who haven't even gotten off the couch yet. And so for me, believe it or not, my, my real estate journey or my entrepreneurial journey. And by the way, I was born into a mid Midwest family union mentality. It was you go to work, you work seven days a week, you work for 30, 40 years, you retire and you die. Like that was really the plan. That's what my parents wanted for me. So I had this, this gravitational pull to keep me in that space. And it took me about 20 years of corporate life to sort of break free of that and become an entrepreneur. But the reality is I decided in 2003 that I wanted to be a real estate investor. I bought my first property in 2008. So what did I do for five years? I did what vast majority of people do who think they want something more in life. They did nothing. Or worse, they told themselves they were doing something, but they read a couple of books, they listened to a couple of podcasts, it was all good information. And they did nothing with it. I did nothing with it. Frankly, I was afraid of what my parents would say. I was in my 30s and I was still thinking, I don't wanna look stupid to my parents. I knew my dad was gonna be totally against it. I had a really Good paying job in corporate. Right. And the longer you stay in that environment, the more it becomes difficult to get out of it because you rely on that income. So I was afraid of what my parents think. I was afraid of what my coworkers would say. I was afraid that their jokes and MOC and even if it's just good natured ribbing was gonna knock me off the rails. And I was afraid of just looking stupid in general. Right. Losing money was always a concern, but I was really more afraid of, like, how I would look and how I would feel if I failed. And I sat with that failure for a long time, and I didn't do anything about it. I would go to meetups, you know, I would kind of put myself in that world without really putting myself in the world. And I never, never took action. And I was raised. My dad was a marine.

Mine too.

He was in the war. He was in Vietnam. And you know, for me growing up, it was all boys in my family or no, no sisters. And so fear.

You know, all those things associated with fear really weren't tolerated. You know, if you were afraid of something, you'd get thrown into it, you know, metaphorically or literally thrown into it. Right. You're afraid of swimming. Guess what, you're going in the pool. Figure it. And so I had to confront fears a lot growing up. But as I got to be an adult, I let fears get a hold of me. And in this sense, when I wanted out of corporate, I knew I was miserable. I wasn't built to be in a cubicle or in an office environment. I'm not a good employee because I always think that I know how to do it better. But I just stayed in that environment because I was afraid. And it took me five years to really get to the lowest point where. And I wasn't low. My family was great. My wife and I were great. I was making good money. But inside of me, I was at a low point. And I think sometimes you have to hit that before you'll do something a little risky, because the risk no longer feels worse than the pain you're putting yourself through because you're not taking action. And I would hear my dad's voice in my head, like, you know what I mean? Like, we just don't sit around and be afraid of things. We go and attack them. So I finally took that step and went and attacked it. And that's sort of where I usually start my journey or start my story. But really the story started five years earlier when I just sat there Gripped in fear, like a lot of people do. It's like, I don't know what to do. I'm afraid to do it. I don't know what I'm doing. Like, maybe I shouldn't do this. And you just get to a point where the pain overcomes it. And I'm a big fan. I know there's two things that motivate people, pleasure and pain. And I don't like to pretend that pain isn't a strong motivator. It really, really can be, right? Some people lose in their life and it motivates them to do more, be more, be better, right? They're like, life is short. I don't want to live like this anymore. I'm going to do something about it. That's pain, guys. To say, hey, I want more money, I want a bigger house, I want nicer cars. It just doesn't fill the gas tank in the morning when you're feeling like you just can't do it again. That won't probably sustain you. But the fear of, like, not providing for your family, the fear of getting to an age where you look back and you regret not doing that thing. Right. I've always heard, and I. And I believe that regret at an elderly advanced age is like the worst thing in the world. That's the worst feeling in the world, is to live with regret when it's too late. And so I think about those kind of things when I get up in the morning, it's like, what do I want my story to be when I'm 80 or when I'm 90? Do I want it to be, I played it safe. I never really took a chance, But I was never happy in my career or in my life? No, of course not. Do I want my kids to see me living a life that I don't really like? And they. And that just perpetuates? And now they think that's just what you do. No, my kids have seen me not be happy. They've seen me go out and put in that effort and work nights, weekends, whatever I had to do. And now they see where I'm at and they realize that they can do these things right. I have a daughter, it's super entrepreneurial. She told me, couple of years ago, dad, I want to start flipping houses. What do I do? And I said, here's what, here's what I would do, honey. Here's exactly what I would do if I were you. And she went out three houses, first month, flipped them like she just went for it. And I'm passionate about helping people in that position now. Scaling up a business, building a team, man, that's all important. To go from that lemonade stand at the end of the driveway to actually a business, that. That stuff. I'm passionate about that, too. But I know there's so many people that could get to that point if someone could just help them get off the couch, someone could help them get that work through those fears that everyone kind of has and get to the point where they're actually taking action. So for me, it took five years. I bought my first property, man, it was like a drug. You gave me a drug and said, here you go. Like, do you like that? And I was hooked. I just started making offers like crazy and went from there.

Well, it's interesting, you know, there's a couple different things I want to kind of break down there for a second. First of all, yeah, I think there is an essence of everybody's fearful of not even necessarily getting off the couch or more like I don't know what to do. And because I don't know what to do, I guess I'm not going to do anything. Rather than simply just learning about the first step in creating momentum. And I found it. Business, real estate, life, all of it has one thing in common. The first step is key to the second step, and the second step was key to the third step. And next thing you know, you got a snowball going. You got some momentum going. Yeah, you know. You know, one of the things I also heard that you were speaking on another show not too long ago was, you know, this. This semblance of understanding how to get buy in. Right. So when you start on an entrepreneurial journey, obviously you just mentioned your parents and, you know, you know, not wanting to disappoint them. You know, by the time you're 30s, I'm assuming you were probably already married by that time. And if you're like me, you probably married a super conservative bride. And I'm pretty much. Pretty much right. Yeah.

That's so funny, man. I did. I did.

Well, it's because we need balance in the force. I think I'm a person of faith. I think God kind of puts it out that way. But as a result, you know, talk a little bit about, you know, that in that first step of getting started, how to overcome, or maybe the conversations to have around getting a spouse on board, especially when there's a lot of risk if I'm not. Because I want to say you started flipping in 2008, which is pretty Much like the roller. The height of the roller coaster. We both know the best time to buy is when stuff's on sale.

Yep.

2008. We were never really sure where the bottom was.

Yeah, it's so true. And I'm glad you brought this up because I think one of the most under.

Underappreciated or undervalued part of this journey is getting your spouse on board, getting your significant other on board, getting your family on board. People overlook it. I've heard so many people say, ah, you know, I want to do that. I want to real. I want to do real estate or whatever. I want to start my own business and my wife's not on board. And it's like, well, what are you going to do? I might do it anyway. Bad idea. Like you can. But it's not going to be very probably successful. Right. So that conversation, how did I do it? I'll tell you what I like I said I spent five years educating myself and kind of treading water and. And kind of being afraid, but I really was gathering information during that time. And so that was 2003. I bought my first house in 2008. About 2007. During 2007, I realized I've got to get my wife on board with this because I've been sort of. And by the way, I was so afraid of like, rejection or looking stupid or people telling me is a bad idea. I really didn't even tell her much about it. I just sort of was gathering intel on my own. And so I thought the last thing I know I can do here with a conservative wife is just sort of like, thrust her and expect her to be up as far as I am in the process, immediately. So I had to take a step back and start the conversation from a very ground level. Right. And so I did that. I started the conversation from a ground level, told her why I was excited about real estate, shared some of the information that I had gathered. And at this point, when you. When you get into any endeavor and real estate's no different, there's shiny object syndrome, Right? There's a lot of things you can do. And so I had already narrowed it down to what I felt like was going to be the best fit. And so instead of exposing her to 30 things that we could do, I exposed her to the one thing that I wanted to do. And so I kind of distilled it a little bit that way. And then I did. I don't know about you, but I did something for me and for my situation that Was like the best thing I could have ever done is there was a local guru, you know, local. Whatever you want to call him, somebody, a mentor in. In town. My local town. And he was offering what he called a fly on the wall boot camp weekend. Boot camp. Okay. It's not uncommon. It happens all over the place. It was $2900 now. I said I had a good paying job. We were fine. Yeah, $2900. Still a lot of money, right?

That's definitely an amount you should check with the bride about.

Definitely amount I should check with her about. But they were offering you could bring your spouse or business partner for free.

Okay.

And so I convinced her because I had been talking to her for six months about what I wanted to do and trying to get her excited about it. And I said, we have this opportunity. This guy will help jumpstart a little bit. We'll get a lot of answers right away. What do you think? And it was a. It was a tougher discussion and decision for her, but she ultimately said, let's do it. So we go. We go through the bootcamp. Predictably, the information wasn't worth $3,000. But the motivation and the belief, not just in me, because I kind of already believed I could do it at this point, but in my wife, to believe it was possible and we could do it, we was invaluable. So the motivation alone and the belief, because sometimes that's all you need is a little bit of belief in yourself. But even more importantly than that, when you take a very conservative wife and you pay $3,000 to learn something, guess how tolerant she is of you sitting on the couch and not applying it, right?

About zero.

Zero. We spent three grand on this information. What are you doing? Let's get out there and use it. Right? And that was good for me because I was still fighting with this fear a little bit. But we did that. We went out there, we bought our first property, which is a whole adventure. It's probably a whole episode in itself. But at the end of the day, we made a lot of mistakes. We made money. Okay. This was Michigan, 2008. House prices were basically tanked at that point. So we bought this nice three bedroom brick ranch in a middle income location, safe, nice family location for $40,000. Right. Depending on where you're listening to this podcast from, you're probably saying, are you kidding me? Right? Yeah. $40,000. Very nice house. We flipped it. We profited $15,000. Okay? Not. Not a home run. You're not going to retire but. But 15 grand. Come on. So we made $15,000. My wife saw that, and from that point, she was hooked. She's like, whoa, whoa, whoa, hold on. She grew up very poor. She's like, we just made $15,000 in, like, three months. We should do this again. Like, let's go do this again. And so that.

By the way, don't you have something to do, like go buy another piece of property?

Exactly. Why are you eating? Why are you sleeping? We should be out there doing this. So she was a great motivator for me because I listen. I'm like a lot of people. I get. I procrastinate. I get divert, you know, whatever. I get tired. And it's like, she is the motor, and she was the motor back then behind what we were doing. I had no problem negotiating, talking to contractors, you know, buying properties and all that is good with me. She was the mo. She was the motor. Like, let's go. Let's get organized, right? As. As an entrepreneur, a lot of times we end up being not real detailed. She's very detailed. And so she helped me kind of organize myself and allow me to go out and do what I was best at while she did what she's great at, which is making sure we're on the tracks. Now, the other thing she's great at is making sure we don't get too far out of control. There's not too much risk being taken. And so in those early days of doing this, I was. I was learning by doing. I was flipping houses. I was getting that education that's really the best education in the world is doing it. And I was. We were. We were kind of conservatives, like, hey, we got a house. And I'd be like, let's go get more. And she'd go, hold on. We got this one. Let's. Let's finish this one. And so I did. I would finish that one. Going to the next one. At some point. The roller coaster, the entrepreneurial roller coaster, emotional roller coaster, was just more than she wanted to deal with day in and day out. And she's like, after a couple of years, she's like, you know what? You got this. We've done several of them now. Like, I just kind of want to get off the roller coaster and go, she's a teacher. She wanted to go back to just being a teacher. And. And she said, you. You got it. Like, I trust you. I'm.

I'm.

I support you. Well, you gave me just enough training to. To stay out of trouble. And then you took the governor off of the race car. I was all gas, man. I mean, if you look at the trajectory of my business, it kind of went steady. And then at some point it went. You go, well, what happened right here? It's like, well, no one was telling me no anymore. I was just going out buying properties. Yeah, but if, but if she had not been around in those early days, I probably would have made catastrophic mistakes. I would have made tons of mistakes, probably lost a ton of money. So I kind of cut my teeth in a very conservative way and then took off from there. So that's kind of how it went in the early days.

Yeah, I know. I wanted to hit there too, because I think that any aspiring entrepreneur, whether they're doing real estate or whether they're doing a different kind of business, and they are either hardcore in a relationship, meaning their likelihood of marriage, or they're married. I know one of the biggest mistakes that I made early on in my career was just doing it kind of what you just mentioned. I was very blessed and fortunate enough to not make catastrophic mistakes, but I came pretty close a few times. And, you know, nowadays I'm kind of like you.

I kind of check in with my wife who prefers not to be involved in the day to day operations of any of the companies that I own. But she's still there to kind of saying, I don't think you should do that. I have a bad feeling about this. And I think it was Ramsey one time that said every time Sharon has a bad feeling, it cost him $50,000.

Totally. Yeah. To make sure you know what those conversations with your significant other, whatever your spouse, whatever it is, those are important because they're the ones who are going to be very honest with you in most cases. Right. And so if your plan is crappy or you don't have one, or you can't even articulate it to your wife or husband, you probably have a little more work to do to figure out what exactly you're going to do. I'm all about ready, you know, what is it, Ready, shoot, aim, or whatever. I'm okay to an extent with just kind of like going out and taking a little bit of action, even if you're not totally prepared. But the fact of the matter is at some point you're going to have to bring people on board. And whether that's an investor or a business partner or a bank or whatever it is, you have to be able to articulate your plan, your business plan, your plan of action, why you, why you can Be successful at what you're trying to do. And if for no other reason, you need that argument to be in place or that plan to be in place so that you believe it. Because I think what stops people is they don't really believe it because they haven't taken the time to figure out what their first step is. And I'm with you. You don't know how. You don't have to know how to get from A to Z. You really only need to know how to get from A to B. But be clear on how you're going to get from A to B. And then when you get to B, you can figure out C. Yeah, B will.

B will equal C. C equal B. Kind of a strange version of algebra.

But don't make this math because I'll lose. You'll lose me fast.

Me too. Well, look, you know, you know what, I was kind of surprised. So, you know, I learned about you through a mutual friend, began digging into your content, began digging into your theologies of how and why you've managed to be very successful, why you're so passionate about helping other people become successful. And so, you know, so I went ahead and I. And I got the book. Right, Right. Level jumping. I went ahead and grabbed it. Right.

Appreciate it.

And as a result, I was kind of surprised. And I'll tell you why.

Okay.

You know, I was like, okay, this is a very successful real estate investor. I obviously, obviously have quite a bit of my own resources tied up in real estate myself. I'm a passive income kind of person.

And I was expecting a playbook on real estate.

Okay.

I mean, straight up, right?

Yeah, yeah.

But yet the first several chapters deals with culture and team and building people around you to come on the journey. That kind of surprised me. And I mean surprised me in a good way. I'm all about culture and team and family and all that kind of stuff. Why did you feel like it was so important to start there? Because it's not, you know, it's not necessarily counterintuitive to a degree. Yeah. You know, but with the background that you have, it seems, you know, you would, you would expect, okay, this is how you go get a no interest note or, you know, interest only loan or something like that. It's kind of what I was expecting. And then there comes out culture and team.

And I'm like, okay, I'll tell you why. So I really had three phases to my entrepreneurial journey. Right. Phase one, sit around and be afraid and do nothing. Phase two, go out there and take Action, make tons of mistakes, don't be efficient, don't know how to scale, don't know how to build a team. And then phase three was building an actual business, something that runs like clockwork, something that has a team behind it so I don't have to do all the heavy lifting. And so what I found was there are a certain amount of people that can never get started. They're stuck and they stay stuck. And then there's a certain amount of people that will go out there and work at it. But you know, what do they say? Like three out of five businesses fail in the first couple of years? Like people fail. And the reason why people fail, it's not because they can't always get started. You know how to find those interest only loans, how to buy houses with nothing down, how to find distressed sellers and properties. That's all tactical information that's kind of readily available, right? No one has the secret bullet on any of that stuff. So you can find that stuff with Google and bigger pockets, whatever, you can find that stuff. But what very few people talk about, because I think very few people understand it, especially in real estate. Real estate is sort of like this area where people feel like they're just cowboys and they go out there and they can just tackle the world themselves. But what I realized was I got to a point, I told you my business has this trajectory and then it kind of. Well, at the same time it went up. My wife got out of the business, I started taking on more risk. And part of that risk was joining a mastermind and surrounding myself with people who were achieving what I wanted to achieve at a much higher level, much more sophisticated business owners. And when I had a chance to sit down with them and said, okay, you were where I am a few years back, right? You were running around doing everything, kind of handling everything yourself. How did you get from there to where you are now, several millions of dollars later and a few years later? And everything they told me had nothing to do with specific real estate tactics. It was all business tactics, right? Track your numbers, you have to know your numbers. There are so many business people that go out of business simply because they don't know if they're profitable or not. They don't know where their marketing dollars are going, what's working, what's not working. So I wasn't tracking numbers. I tell a story. It's like one of the most embarrassing stories that I have about my business life. And that was when my business started ramping up a little bit. It was at the end of the year, my CPA calls me and he asks me a super reasonable question. Because I do wholesaling, I do flipping, I do buy and holds. Okay. I do all three. He said, how many properties last year did you take possession of? Even if it was for an hour or for a day or for a month, I don't care. How many did you actually close and take possession for any length of time? I didn't know, I didn't know where to find it. I had no clue. Next thing you know, the day I'm, I'm calling title companies like, hey, like, can you tell me how many properties I bought? Like, it's insane. Right? I didn't even know. So I started learning how to track my numbers. Like how much money am I spending on marketing? How much, how much, how many people are calling or responding to my marketing efforts? How many responses do I have to get to get an appointment set? How many appointments does it take to get a contract? How many contracts do I get in a month? What's my average contract value? Like basic numbers? Yeah, I was, I started to track those. That's huge. The second thing was building a team. I had this weird limiting belief when I was growing my company that only big companies could afford employees.

Yeah.

But I couldn't become a big company until I hired employees to help me because my bandwidth was just not. I couldn't do everything. And so when I start learning how to assemble a team the way that a small company does it, not the way Apple does it or IBM, they do it differently. But how do you do it when you have a small team without tons and tons of cash flow, how do you start assembling that team early? And when you do assemble the team, how do you keep them? How do you keep good people on your team? And guess what I did early on, I burned through people because I was driven. I was hair on fire, I was working a lot of hours and I was super type A driven. Well, I would hire people and say I was doing it, they can do it.

Yeah.

And I would just start dumping things on people. And I burned out really, really good people. And what I realized was when it comes to company culture, some people look at that and go, that's a very soft concept. That doesn't, that's just, who cares? Like company culture. Stupid. Right? Company culture. Think of it this way. If company culture sounds too touchy feely, think in terms of your company's personality. Right. If you don't pay attention to your own personality personally, probably you have a bad one. Like if you're not, if you don't care at all how you talk to people or how you come off at all, probably you don't come off real well. And if you don't think about your company's personality, the people that you hire are probably not loving the company's personality or the company culture. And at this point in the game, I hire people for their values. I hire people for the kind of person they are.

They wouldn't even get into my funnel of hiring if they weren't somewhat qualified. But I would take someone who's slightly less qualified or even way less qualified, but they're the right culture fit, and I'll, I'll help them become that a player rather than grab the a player, put him on my team and have him ruin the culture of my team. I've done that. I've done that many times. And we've seen it in sports, if you want to use that analogy. Right. Some football team or baseball team has tons of cat money and they go out, grab superstars from other teams, throw them in their locker room. They don't want a Super Bowl. It's. They, they, they're not a good fit for that environment. They're just not right. It works the same way in business. So I learned that.

And, you know, and then I learned processes. Like, I, I was not a process person. I would flip houses and I would go out and buy tile. Like it was the first time I'd ever bought tile on the 50th house. And I would just go out and research paint, what color paint do I want to use and what kind of flooring. It's like, are you kidding me? How do you scale a business with no processes and no systems? And the worst part about not having processes and systems is that when you hire people, you have nothing to give. They can't read your mind.

Yeah. There's no tools.

No tools. So they have to have those tools. So why go back to your original question. Why isn't it chock full of, like, the playbook on real estate investing? Because the tactics, the apps, the software, all the tools, that's, that's easy to get. This stuff is what people don't talk about enough. And this is what make or break makes or breaks your business. It isn't the tactics. It isn't how to fight, because frankly, how to find houses that are in distress or for 40 cents on the dollar, what's effective can change over time, right? Like, sometimes it's direct mail Sometimes this, right. That can change. And you can find those in 15 minutes. But how do you build a winning team? Yeah, that takes a little longer. And that's the secret sauce. That's how I went from doing a deal or two a month to doing 10, 12, 15 deals a month. It's exactly. That book is exactly how I did it. But you're right, I talk sometimes, I give presentations and I always tell people everyone wants me to give them a fish. Nobody wants to be taught how to fish. But if you tell them the tactic of how to find a house for zero money down, that's giving them a fish. But if you teach them how to run a business and how to find these things for themselves and implement them in their business, you're teaching them to fish. So I think that's the more important way to go.

Well, that's one of the reasons why I wanted to ask that question, because I am in total agreement with you. Of the businesses that I own, all of them have kind of a culture first mentality. How did I learn that? The same way you did doing it wrong the first time. And then how did it cost me a bunch of money. It cost me a bunch of great people. And I was inspired and encouraged that someone in the real estate field took the time to talk about culture and people and working with one another. And actually, you know, it's because at the end of the day, you can either have a one man operation or a quote unquote business, which is basically a job that you technically own.

Yep, right, Yep.

Or you can build an entire organization, AKA scale. So much of scaling well is actually becoming someone who is able to disciple and teach other people how to scale. Well, you know, I'd say my, my one superpower with my businesses is I recognize talent. I can see potential in people. Now I've also realized that they don't. They're not always ready for their potential yet. So I had to kind of, kind of fight through that. But let's take the culture concept because I think there's another direction we can go with it, especially in there as it relates to real estate and investing and things of that nature. Okay. And that is this.

At some point in time, you mentioned it a minute ago, you have to either begin to take banknotes or you begin to have to have partnerships and things of that nature. Do you use the same culture approach that you do to building teams, to also discovering these potential partnerships that can make or break a business?

Yeah, I do think that people attract people that are like them. And I think if you're, if you're serious about your company's culture in the way that you conduct business right, you will attract other businesses that, that kind of align with those goals. But to your point, if I was considering partnering with someone, partnering with a business, taking on some sort of a business partnership with someone who I knew didn't align with my goals, I would never do it. I just wouldn't do it. Because ultimately we're not going to work, we're not going to fit, right. They're going to want to do things, they're going to have ideas that aren't going to mesh with what I want to do. And ultimately I can't go back to my team and try to pitch something to them that is counterculture for us or something that's against our values as a company. And so your company values have to be protected whether you're partnering or considering taking your business in a certain direction or when you're bringing people into your business. Like I said, I brought in a player one time that wasn't a culture fit. And I tried to keep her there anyway. And it almost dismantled my company to a person. I almost lost everybody because of this one. And by the way, they were good at what they did. That's why as an owner, it was very difficult for me at the time to move on because she was really, really good. And so a business opportunity that looks good on paper and has a high potential roi, but also takes us in a direction that's counter to what we do as a company and what we believe in. You can't do it. You just can't. You can't do it. I think culture is everything, even in the people you deal with. I don't deal with people that I know have bad values or no values. And they're out there. You know, every business has them. Real estate's certainly no exception. Maybe it's worse, I don't know. But there's a lot of people who would do the wrong thing knowingly to make a dollar. Very transactional mindset in real estate at times. And not relationship enough or long term thinking. I know a lot of people that will. And a transaction will screw you over.

Oh, for sure. That's why I wanted to bring it up because, you know, especially for the aspiring real estate investor, maybe they're flipping their first deal. Maybe they've, maybe they got 10 under their belt in the course of a year. Maybe, you know, they're you five, ten years ago kind of thing.

I want them to hear that, because.

As someone who invests in real estate or in business in general, okay, you are going to have opportunities for. To have the shortcut, meaning someone's throwing capital at you or is going to give you an opportunity you can't refuse provided you just do it their way or whatever that scenario is. And I think being an entrepreneur for well over 20 plus years myself, I can tell you that every time that I've taken that road, every single time has created more pain and suffering.

That took me, in many cases, years to come back from. You know, because I like you having those situations where people aren't necessarily all they're cracked up to be and they have their kind of ulterior motives and stuff like that. And I wanted the audience to hear that from, you know, two people who love business, who love people, who love growing things, who love scaling, and to stay away from that. Right, because it's easy to take the quick money.

Yeah, it's super easy. And guys, if you're. I realize there could be someone out there saying, easy for you two to say. You have money, you're making money, you have this business that's successful. And I don't want to speak for you, but I'm pretty sure you feel the same way. Trust me, if I could go back and change some of the decisions I made, I would absolutely do it. Because those decisions did not get me closer to success. In fact, they took me in a different direction for a while and I had to backtrack and get back on the road to success. So we're telling you not to go down this shadowy, you know, scary path, because it's not even the path you're on. Like, don't. Don't get diverted by a quick buck and do something that's questionable. You just. It just doesn't make sense.

Well, that's why I wanted to kind of just spend a little more time on culture. Just because I want people to understand that. I want them to fully grasp it. I mean, I had a deal one time where I was doing. I was doing a deal with somebody, working with them. I didn't heed the warning we're trying to give people. And sure enough, I show up to closing table. I've got six liens on the table. He was supposed to handle all the closing, you know, all the closing. You get ready for closing, get on the lien, waiver, signed, all that kind of stuff. I show up and here's like $60,000 in invoices. And I'm like, that. I Wasn't even thinking about because I'm looking at a P and L statement. Right. So this is $60,000 on the bottom line that I wasn't anticipating. And it just go. And it goes back to making sure that you're aligned with the right people and do your due diligence to do so.

Totally. And by the way, for that matter, you know, this was something that. This is super important. When you're building a team and you have a culture, it's one thing to have a presentation where you put up on the. On the, you know, on the board, the screen, whatever. Like integrity, like honesty, like put up. That's great. But where the rubber hits the road is when you have a deal. And we've had these happen over the course of years, right. Where you get to the closing table and the seller says, whoa, whoa, hold on. You. Your guy told me you guys were going to cover this cost or whatever it is you were going to cover, whatever the closing cost, for example. And it's not in our notes. Nothing says that. Right. And I go, if that's what we told you, that's what we're going to do. We write a check. Right. Or I'll have somebody come out of that closing and say, hey, we told them we would give them this thing, whatever it was. Right. What do I do? And I'd go, well, did we? Well, we might have. I don't know. Well, then do it. Right. Like if you say, well, don't. You're. You're giving them the signal that what we say and what we do are different.

Yeah.

And it can never be. And so that's sort of a mantra in my company, like, do the right thing.

You.

You need to be able to get up in the morning and look at yourself in the mirror and not be kind of. Not cringe and not be kind of ashamed of what you see in the mirror. Like, you need to be proud that we do the right thing, even if it means we don't profit as much or maybe we don't profit at all because we just. We missed it. We screwed up. Right. Like in your instance, $60 that you. Or $60,000 you weren't expecting. Like, you have to do the right thing by the sellers, by the buyers, by your investors. They all have to be taken care of. And your employees. Right. The way it is.

I mean, one of the things that one thing, one thing will always outpace your business and your cash is reputation. And the moment your reputation is tarnished because some weird situation happened, you didn't take care of invoice like you're talking about where, you know, hey, did we, did we make, did we make an honorary promise? Yes. No. All right, well, yeah, let's do that. Let's take care of it. Because that reputation, because that person, Steve Meyrick, my first mentor, you know, I've talked about on the show before several times, but taught me a long time ago, he said, look, if you make 10, if you make one person happy, they're going to tell 10 people.

Yeah.

You make one person mad, they're gonna tell 100.

Yeah.

The law of averages says always operate with character integrity.

Yes, yes, 100% true. And that reputation, it does go back into your company like you have inside of your company as an owner, you have a reputation and they either know you as the person who says integrity and then screws people or someone who says integrity and actually has integrity. And it matters. It matters because what you put in the handbook or what you put up on the screen really doesn't matter as much as the example that you set and the rules that you put in place for people. So again, just can't overemphasize it. There's no way to, faster way to wealth, in my opinion, by being a bad person long term. Long term. There's no better way of getting there.

Absolutely. Well, in reality is reputation is your personal brand. Right. So I mean if, when, and I was told that your brand is what someone thinks, is what someone thinks of you when they think of you.

Right.

It's essentially there. So yeah, I definitely wanted to kind of park there for just a minute. I've seen, because I see a lot of people who are, who are eager, they're hungry, they want to do it, they want to do it. Right. But because they're in a rush because they think they want to get rich fast and all this kind of stuff, rather than putting in the reps and taking the process, doing the steps, they can get themselves off track. I've been guilty of that in my past. I've learned a lot of lessons the hard way.

And ambition is a double edged sword. You know, it can push us to great heights. And it can also sometimes make us think that short, what appears to be a shorter path, the right way to go when it isn't.

So yeah, it's literally like taking the, taking the wrong exit and having to work your way back to the exit. Right?

Yeah.

I want to pivot one more time and here I want to talk about the types of real estate investing. I know that you're coming at a brand new program coming out later in the year to help people kind of, you know, get from in your, in your, in your industry go from stock to unstoppable in real estate.

That's right, that's right.

So let's, let's, let's break down some of the types of real estate investing that people can consider. Obviously we've got residential and there's a, there's a, there's a few micro segments in residential. We've got commercial and then we've got light industrial. Those are the three areas that I typically have a little bit of my own portfolio.

Yeah.

What are your thoughts on each of those segments? Pros and cons.

So I'll be totally upfront. I'm a residential guy, been that way for a long time. What scares me right now about industrial or commercial is what's happening in the world currently. Right. There are small businesses that are going out of business that are struggling. Maybe they're being propped up a little bit with some of the government assistance that's going on. But that's not going to last forever. I see just in my own market, driving around just like anecdotal evidence is, I see a lot of strip malls and buildings that were once busy and had cars in them empty with for sale or for rent signs on them. So for me that, that scares me a little bit. I like residential real estate personally for me, because I realize sometimes people go from residential to like commercial or multifamily. I get that as like a stage stepping stone. I totally get that. But for me, residential real estate is great because first of all, I know it and there's this arguments of like hey man, multifamily is like everyone's under one roof. There's one mechanical system. I get that, I understand that and we could get into that debate for sure. But I'm more a fan of residential real estate because it's, it's just always going to be needed. Whether it's because you take this house, right? Individual house and you say, well I can buy and flip that house. That's true. I can buy and rent that house. Like that house has multi use capabilities, right. Whereas a commercial building maybe not so much, you know, maybe, maybe there's a little bit more of a vacancy factor there. But I can take a house if I buy it, right? I can do a multitude of things with it. It can be a long term investment for me, kind of a passive long term. It could be a very short term. So at the very Shortest term, it's a wholesale deal. I find it, I get under contract, I sell that contract to a house flipper or landlord and I move on. Right. That's part of my business. That's what I do. I do a lot of that, actually.

Yeah.

It can also be flipping it right in the market where things are kind of volatile. Right now we're at the top of the market for real estate, residential real estate. Like, I don't know, a market that's not at the peak, or what appears to be the peak, maybe it's still going up. But the fact of the matter is it always. It's cyclical. It always goes down. Right. I know it will go down. So I buy when it's at the lowest. Like right now, I'm selling my real estate, I'm selling my rentals. Like I have equity in those things that's going to disappear. Whether it be this year or next year, the year after, it's going to disappear. So I'm getting rid of all my residential real estate now. People might be listening to saying, oh, he's crazy. That's not, you know, you should do. It's a matter of opinion. I get it. But for me, if I bought a house at 40 and it's worth 120, yeah, good chance it won't be worth 120 in a year or two. So I'm selling it now, holding on to the money. When, when it goes low, I'm going to buy houses again. I'll be in buy mode. Right. I'm in sell mode right now. That's just how I choose to do it. There will always be a market for people buying and selling houses. There just will be. I started in eight. You mentioned it earlier. What was. What was the media, the tv, the radio. Everyone was screaming, get out. Real estate's terrible. Dropping, right?

More fear is just fear.

So imagine the people who found out when I was doing real estate. They're like, what? You're crazy. Real estate's back. It was like this whole, like, tribe mentality, like real estate bad. No, real estate is bad if you were trying to get the most value for your house, I suppose. But if as an investor, a recession or a market correction or however you want to look at it, that's sort of kid in a candy store situation. I actually started a really great time, so I was buying like crazy. I'll buy like crazy when that happens again. I didn't know enough back then that I should have been buying even more and figuring out how to get More money. But so I did the best I could at the time, but that's kind of where I'm at. And I've also, I've also transitioned into the lending space. So now I'm doing a lot of lending to people too. Because as I look back over the last 12, 13 years, one thing that has not changed at all was the need for funding. People need money to buy flips, they need money to buy rentals, they need money. And that hasn't changed at all. So I've gotten into the lending space and that's, that's something I'll be probably that part of my, of my business will be growing quite a bit in the next few years.

Yeah, I mean the reality is, is, I mean just as a rule of thumb, it doesn't. Again, it's not, it's not real estate specific. You know, we had Obviously Covid wrecked 2020 for a lot of folks. We just got to be talking about that. People that are, I mean, I know people that had businesses 50, 60, 70 years old that are no longer in existence because of COVID I was fortunate that many of my, well, several of my companies are in the construction space. We were able to work and keep going. But I'll never forget this. I came in, they made the announcement that I got a 48 hour window notice ahead of time before they shut their state down because I've got some friends in some good places. They said, hey look, you know, this is going to be coming down the pipeline. Next 48 hours, make sure you go hit the grocery stores, whatever. So I came in, I gave every one of my team members 300 bucks, said look, go hit the grocery stores, leave work right now, go get the grocery stores. You know, that way you're taken care of. And then two, you know, 48 hours later, the co, you know, the COVID announcement happened. We're shutting everything down. And I was able to sit down with my team and say in that moment, so guys, we're not gonna operate in fear. We don't have to. We're a debt free business. I've been intentionally putting capital away here, putting capital away there. We can operate this larger, you know, it's a good sized company. You know, I can, I can, we can operate for several months before I have to start making any kind of difficult decisions. By that time, we'll have a lot more clarity on what's going on in the market and all this kind of stuff.

Yeah.

And as a result, on some of the things that I've done Interview wise, I kind of mentioned it. Why everybody else is running with the bulls. Right. Smart people are preparing for the bear. Right. They're preparing for that bear market the bottom to fall out. Yeah, I learned that from Steve. To always buy when things are low, AKA on sale. And then do what you're describing right now, which is sell, take the cash, put the cash in some, some growth space. It's liquid.

Yep.

Right. And the moment something tanks.

Yeah.

Go ahead and knock it out and go ahead and redo the same thing. Warren Buffett did the same thing. You know, he does most, he's done most of his purchases during down times.

Yep.

Right. Buying on sale. So that's a great principle in the real estate field. At the same time, you know, we also know that going into what's going to be 2021 now, going into 2022, probably the first quarter, there's at least enough backlog inventory, meaning houses are going like this. There's more, there's more demand than inventory, which is always a good sign that, okay, there's, there's a little bit of time. If you see any constriction on that whatsoever, it's time to really look at it. I do like the fact that you're even getting one step ahead of that and saying, hey, look, we've been running with a bear with a bull for a long time. The economic environment is drastically changing, especially as it relates to small business owners and entrepreneurs. Things are going to continue to tighten and constrict as a result of that. So I wouldn't be surprised if we do see a fairly substantial correction in the next, probably year and a half to two years. Yep, that's kind of what I see on the horizon, 100%. And as a result, I've been working with people trying to say, okay, well look, what are you looking at? Are you looking at a long term hold or you, you know, what are you looking at? Are you able to buy something on sale? You know, there's a, there's a big push around here to buy foreclosures as they sit. You know, fortunately, the state that I live in, North Carolina, there's, you know, our real estate market for the most part does. It hasn't historically gotten hit nice hard.

Okay.

The other areas of the country which gives. There's a little extra buffer and caution. There's. I also know that in the commercial space specifically contraction always typically happens at commercial first and backs its way into residential, you know, because people are, you know, people that are, you know, true investors. As a whole, you know, that are. That are outlaying, you know, 10, 15 million, $100 million in capital on a commercial apartment building or something like that, tend to say, you know what, we're going to pause that deal right now. Right?

Yeah.

And I've been the guy in the middle of the deal that gets paused on and had to get creative to kind of fight my way out. And.

Yeah.

And so that's why I've always been pro. I only invest in commercial properties if it's owner occupied, meaning I'm in the building.

Okay.

I'm my own leaseholder.

Yeah, that's smart.

I pay myself rent kind of scenario. I do also love the residential space and I like the flexibility that it affords. I like the concept of that that you've kind of outlaid. If I'm going to get started investing in real estate after we just got through sharing all the reasons why, hey, you got to be smart in the next couple of years.

What should I be looking for? What should I be doing? I'm brand spanking new. I got $20,000 of capital tops, to either, you know, put down for a down payment to get funding or to renovate. What am I doing?

You know, it really depends on your goal. Right. And I'm not going to give you the it depends answer because I hate that. But it's so there's a. To a certain extent it does. So when I'm talking to folks who are getting into real estate, I really want to find out what their goal is. Right. Do they have no time and they need to be passive? It might be a slightly different answer, but in a more broad sense, I think for a lot of people, the, the brrrr method, if anyone's familiar with that, the buy, renovate, refinance or rent, refinance, repeat that, that whole situation. Because you can take that $20,000 and recycle it. So several times, right. You should be able to take 10, $20,000 and turn that into a pretty nice portfolio of real estate over time. You don't need hundreds of thousands of dollars to do that. Right. So especially if you have a W2 job or you and your wife, you and your husband have a W2 job, you can take advantage of the fact that the bank will lend you, depending on where you are, the situation. I don't do this right now, but like at one point is like 10 properties you can get between you and your wife, right. They'll finance 10.

Investment properties for you. I always tell people, take advantage of that. Right before you quit that. W2, try to take advantage of that. Because once you don't, once you leave your job, the banks look at you a lot differently. No matter how much money you're making, they look at you differently. So take advantage of that right away. I would say if rentals are what you're trying to do, that brrrr method is absolutely fantastic. If you're flipping houses, there's tons of ways that you can take that 20,000 and use it as bridge money or gap gap funding. Right? Because you go to like a hard money lender. A lot of times they'll lend to anybody with a heartbeat as long as the deal is right, as long as the numbers make sense. But they won't give you all the money. They might not give you 10 or 20% of what you need. And you can take that $20,000 and use it as gap funding. I think that's probably the best use of that. I do a lot of wholesaling. I'll tell you something that's counterintuitive to what everyone's going to see on the Internet. No matter where you go most, most places you go on the Internet, if you, if you even know what wholesaling is, it's basically get a property under contract, you sell the contract, you don't, you don't buy the property. A lot of places will tell you that's a great place to start. I disagree. I think it's a horrible place to start. I didn't start there and I would never. My own daughter came to me and said, I want to do real estate. What do you think? And I said, start flipping houses. Because the passive wasn't what she wanted. She wanted to make more money faster. I said, start flipping houses. Wholesalers are people, their business is selling to house flippers and landlords. And it's really difficult, if not impossible to do that effectively if you don't have the slightest clue what house flippers look at, what their numbers look like, how they evaluate a deal, and same thing with a landlord. If you don't know what's important to a landlord and how they look at a deal and whether or not they determine that to be a good deal or not. If you don't know how those two groups of people operate intimately, it's very difficult to position yourself as someone that they want to talk to and look at because you're going to end up buying properties too high. You're going to under or overestimate the rehab. It's a disaster. I've Seen it in my own market. People who call themselves wholesalers will call me and say, hey, I know you flipped houses for five or six years. How much should this cost to renovate? It's like you're asking me. This is your business, man. You should know this. So don't start wholesaling. I say start as a, as a house flipper, or if you need more of a passive approach, then, then landlord, I think is probably the best way to go. And you can burn it. You can use that Burr method. If you're a house flipper, go get hard money, and then eventually what you need to be in real estate, I don't care what your game is, whether it's multifamily, whether it's commercial, whatever it is, you need to get good at raising money. Raising money is fundamental to successful, long term, profitable real estate investing, period. Right. You know how to find and raise money money. So I would say passively on the side. You should be learning how to raise money going out. And part of that is just making it known what you're doing. Don't, don't operate in this secret little business of yours, like go out and talk to people, put it on the Internet, tell people what you're doing. Because I can tell you, the first deal I did, I financed it through a bank. My first flip I financed through a bank, and I just used credit cards and cash and kind of pushed all my chips on the table. Every deal after that that I've ever done, I've never used my own money because I, I told people what I was doing and I attracted people who liked what I had to say or they identify with me and my wife or whatever it was. And so I've always had private lenders and people who were willing to fund my deals from almost day one until now. Fast forward 12 years, I don't put my money into deals. Why, why would I do that when I can raise that money much cheaper?

Yeah, yeah, good advice, good advice. Well, I got one more final question. With a little bit of time we got left, and it actually centers around if we're still looking at the residential segment, how important is it to have a thorough home inspection ahead of time before you actually buy a property?

As an investor, like a flip as an investor.

Yep.

All right, here's the deal. You may not like my answer, you may not agree with it, but here's, here's how I look at it. Okay. In this environment especially, you just said it or you just kind of alluded to it earlier, we're at the top of the market. If I find a deal that is really good. Right. Objectively, the numbers make sense. It's a great deal.

Yeah. Comps are there, et cetera.

Comps are there. In a lot of cases, even if it's off market, there are a number of people that want that property. Okay. And so like in, like in anything, you have to differentiate yourself. You have to separate yourself from the crowd. What I tell people is if you are truly terrified that something's gonna be wrong at that house that you didn't anticipate, put an inspection contingency in. Get an inspection. Right. I'm not asking anyone to fly too close to the sun if they're not comfortable. The reality is you will lose a lot of deals if you have an inspection contingency. What I suggest is whatever your fear is that could be wrong with that house, that you need to get inspected, build it into your numbers. Just, just assume it's going to be a problem and put it in your numbers and remove the inspection contingency. Because nine times out of 10, or maybe 19 times out of 20, whatever the numbers are, it's not going to be a problem.

Yeah.

And you're fine. But you built it into your numbers. You're conservative enough, you're great. If it doesn't have being a problem, you built it in, you're fine. Maybe your profits will be a little lower than you want to be, but you built it in, you're fine. If you start adding contingency layers over layers over layers, you're never going to get a deal. Right. So don't, don't, don't negotiate yourself right out of every deal because you're being overly conservative. That may be too aggressive. Aggressive for some people. But I have not put an inspection contingency in a deal in over five years. And that's about 500 properties later. I've never put it in. And guess how many times it's burned me? Once. Once it burned me and I, and I had the money built into where I still made money, but it only burned me once. Right.

Well, that's why I wanted to ask that question too, because I'm with you. In order to get a quick close, I mean, essentially, people that are going to give you the best discount, it's kind of like going into, gosh. Well, back in the day used to be big number. How much have I paid you? Cash.

Yeah.

Right. Well, cash is quick. Close cash means there's not a lot of contingencies. And you're Right. There are other people who are vying for that same deal on a consistent basis. You know, some of the successes that I've had personally have been off market deals.

Yep.

You know, people know that I'm willing to, you know, close quick and do things right and all that kind of stuff. So they'll say, hey, before this house goes on the market, you want to take a quick look at it. And maybe I get keys early, maybe I can't get into it, depending on if you know, who owns the property or whatever. But consistently I've, you know, I've thrown at least 10 grand in there, you know, in my area for termite damage. Because we have termites here specifically.

Yeah.

And then I might throw in another five or six grand in case there's mold remediation.

Yep.

It's kind of what I'm using for my bare bones numbers as a whole to kind of just say, okay, this is going to be as part of my rental cost.

Yeah.

You know, and then, then it's always good to get into the deal and go, hey, this is good. I made the 15 grand. Yeah. So.

Right. So how often are those things the case? Like probably less often than not. So if you build them in, you're fine. I think. Listen, it all goes back. A lot of it goes back to fear. People put some of the ice. I believe that some people put some of these things in place in their offers because they really don't want to take the chance anyway. Right. So it's like, hey, I made an offer and I didn't get accepted. Well, let me see your offer. Well, it's terrible. You wanted 15 day inspection and all these like different, like, did you even want this property? Because you're never going to. No one else is putting these things in. You have to sometimes be a little bit more aggressive, but build them into your numbers. I would never suggest that you ignore an inspection and assume the best. That's not smart. You have to be a little bit conservative there. But more often than not, you'll do better than you thought because that won't be the case.

Well, dude, I have loved hanging out with you. Everybody's got to pick up the book. It definitely will give them a long way to help out. How can people stay connected with you? Because I know with these new courses and stuff you got rolling out, people are going to need them for sure. Especially as we go in the next couple years.

Thank you for that. I appreciate it very much. I'll make it very simple. If you go to Mike Simmons.

You can see everything I have going on. You can get the book there, the podcast, you can find that there and get to it. It's called Just Start Real Estate. If you want to go straight there. But just go to mikesimmons.com and reach out if you need anything, or I can help you in any way. Please, please feel free, because I really. I really do want to help people. That's. I've dedicated this year to being helpful to people, so I want to make sure that I'm fulfilling that well.

And I know you will, because it definitely resonates. People can tell where they're being sold and when they're being encouraged and taught. I'm a big believer of that. So, Mike, you're definitely an encourager and a teacher, and I thank you for hanging out with us for a little bit.

Thanks for having me, man. I appreciate it. It's been fun.

All right, see you, buddy. Take care.

Thanks. Bye. Bye.

What can you say such a good episode about developing passive income through real estate. Guys, if you love that interview, I know you're gonna love this one right here, so make sure you check it out.

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