Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and your investing with The Accelerated Investor Podcast.
Josh: So, hey, welcome back to Accelerated Investor. I’m so excited that you could join me again today for yet another episode. We are now at episode 100 and something, where are we at Ramey? Ramey: We are on episode number 99.
Josh: Oh, we’re at number 99. Fantastic. And we’ve got another 150 episodes roughly before that with our old podcast, right. So we’re having fun with that. And today I’m excited to interview a local investor from Cleveland. He’s somebody that we joint ventured with. We funded a lot of deals for on the debt side and he has a really amazing journey from his journey into real estate, jumping in as an agent, jumping in as a leasing agent and now owning over 700 units of Airbnbs and commercial real estate. His name is Steve Morris. He’s the CEO of Red Door Renovations and Bulletproof Sales. He has a huge portfolio and amazing lifestyle and an awesome story to tell us today. Steve, thanks so much for jumping on Accelerated Investor.
Steve: Hey you’re going to make me blush, man, that was quite the introduction. So hopefully I can hold up.
Josh: Absolutely. Just be yourself, man. You know, I like to do these, Steve, my audience knows really for a personal selfish reasons to get to know some new affiliates, some joint venture partners, new guys we can do deals with and then also provide a ton of value for our listeners and students and stuff like that. Man, I know you got a busy schedule, so thanks for hopping on. Steve, why don’t you just start real quick with where you’re at today? I love to talk about what’s going on right now in today’s market. And then we’ll go backwards and talk a little bit more about your journey. So tell us what are you working on today? What are you most excited about? What are you working on as far as raising capital, doing deals? What’s your niche? What’s your money making strategy?
Steve: Yeah. And is ground level as it can get, we’re jetting out to here to go to a couple of events in Tampa in the next week. And, you know yeah, you asked me that question. I got the white boards in front of me, so it’s very clear what we’re doing right now. 65 units in West Virginia, raising some capital for that. We got 34 35 lakefront condos in Cleveland and then like, so that’s the acquiring board right here. And then we got the project management board and stuff we already own and we got like 200 units over there that we’re trying to turn. And then on the acquiring board, I won’t list them all, but we’ve got five, six, seven Airbnbs that were probably pop in the next, I don’t know, 14 days as far as closing. We’ll take them down value add them and we refi them out, so.
Josh: Nice. By the way, I have an Airbnb that I’ve got a luxury one in Rocky River that actually just sold. So I’ve got about $15,000, $17,000 worth of furniture. If you’re looking for good furniture then you can buy off me. Ramey: We will buy it for sure. The Amex card is getting a little abused on some of these furniture sites. I think some projections, actually it’s kind of funny that you brought that up. We’re looking at warehouses. I was going to reach out to you guys for a loan or whatnot on some warehouses over on the Detroit Shoreway area.
Josh: Got it. Okay.
Steve: So for the people that aren’t from Cleveland, that’s what like 10 minutes from downtown. But we’re looking at some warehouses there actually, solely because we’re spending so much buying and shipping the furniture to the Airbnb. We’d rather buy it on pallets and then ship it into the warehouse and get a discount. So it’s weird how the business involves. I think we’ll spend like half a million bucks on a furniture alone this year.
Josh: That’s fantastic. Half a million bucks in furniture. Yeah, you should be buying that stuff in bulk for sure. And just like you, man, we’re focused on a lot of debt and equity stuff and funding apartments and buying apartments. And so these couple of last Airbnbs that I have and rentals, we’ve got a lot of furniture to get rid of. So Steve, your passion today is all Airbnbs. It’s all commercial real estate, mostly multi-family and apartments. Just talk for a second to our audience about how your journey has evolved to the point where today that’s your focus. Why is that your focus? You’ve obviously learned a lot, the things you’ve done well, the things that have didn’t go well and now you’re at scale, you have over 700 units. So maybe for our newer investors or newer listeners that don’t know a ton about Airbnbs and commercial apartments, what are some of the major benefits that you feel they provide for you and for your lifestyle?
Steve: Yeah, so you know, it’s great if the synergies there and it’s actually very similar model. We’re getting everything ready. Be it a one bedroom apartment building. Yeah, we’ve got stuff in Sheffield Lake or you know, what we would consider B areas you got stuff in C areas around Cleveland. So a lot of, we’re fixing all of them to the same capacity. You know, we’re kind of almost borderline gutting them and throwing, you know, granite remnants and new counters in there and that works for apartments and Airbnbs. You know, when people stay in Airbnbs, they’re going to compare it to a hotel. So you want to be, it’s not high end like, right there, right. Because if they’re not staying with you, they’re going to stay in a nice hotel and they’re going to get great service. So what we’re doing in our apartment buildings and Airbnbs is great.
Steve: Like you said, we’re able to kind of like scale it and then the synergies there. So we’re able to get some discounts as far as materials and stuff like that too. So the process from apartments to Airbnbs is almost identical and then you furnish it, which we already kind of touched on that, it’s more of that. So you know, you’re getting it rent ready slash safe, functional, improved. Maybe you’re slapping some debt on it, on the back end, and then the only other step, instead of signing a lease, you’re furnishing it and then you’re going to go get short-term leases or you know, day to day renters, you know.
Josh: Right. You bet. So how has that helped you achieve your financial goals? You know, if you look back 5, 10 years ago and you thought, you know, I wanted to get into real estate, I want to get going with this thing and where you’re at today, you know, as far as your entrepreneurial journey goes, a lot of people would love to say, Oh my God, you know, 700 units, let’s just say he’s turning, you know, $200, $300 a unit. You know, it’s an amazing amount of net income, net profit when all that stuff is stabilized and cash flowing.
Steve: Stable and cashflowing is the key part.
Josh: Yeah, no doubt, right? Stabilize and cashflowing. So, and that’s a process, right? Cause you’re buying, fixing, renting, stabilize and then refinance and a permanent financing. But when you think about where you were versus where you’re at today, right. Help me understand. Make the comparison, right. When you first got out of, you know, business school, you went to B-School, you jumped in, you’re basically a leasing agent or realtor. Did you think then like where you’re at today is it was really the end goal or was it where you’re at today somewhere totally different than you thought when you started?
Steve: Unbelievably different. I mean, I don’t even know if you can really fathom that. I got some good stories about that that we might be able to dive into too. But you know, I had goals, I was always money driven. I remember like being that kid that, you know, when you were growing up you get a couple of bucks or whatever and kids would go buy games or toys or whatever. I would stash it in a shoe box. And in high school, actually a couple of my friends called me shoebox because they’d be like, I get the shoe box out and I had all these crumpled up twenties and stuff. I’m just remembering being really monetarily focused. I think a lot of people think that like if you’re that kind of a human that you can’t be necessarily a good person, right? Like, so my dad’s probably one of the smartest people I’ve ever met and he always tells me that he didn’t make money because he couldn’t step on someone to get to where he was gone.
Steve: And I feel like it’s the opposite. I feel like if I can make enough money or save up enough or produce enough that I can help a lot of people. So that’s kind of my goal. And coming out of college, I had some goals. Like I said, when I was a little kid, I just had numbers and obviously things happen and life and falls, but I couldn’t have seen 700 units and put it in my best light is, I was some of these out of towners are going to be like appalled by the story as an East Cleveland when I was like 24, probably on a street that I shouldn’t have been on as far as crime goes and whatnot. I probably could’ve got robbed in the front yard, but I had no money. You know, I was borrowing money to drink beer. I was borrowing money to pay rent.
Steve: I was doing some deals as far as leasing and, or selling some real estate. And I was trying to get some of my first rentals. And you know, there’s some cheap good value rentals in Cleveland.
Josh: Especially East Cleveland.
Steve: So this guy was trying to sell me a duplex, swear to God in his front yard for $7,000. And I tried to, I think, no, I think he wanted to sell it to me for $11,000 and I offered $7,000 it was fully rented and almost turnkey. This is about five years ago. Sorry if I swear I’m going to do my best. I always do on a podcast, you know me. This is, you know, I’m trying to beat him up over an $11,000 fully rented duplex. He was nice. And I remember he was kind of on his way out. He’s retiring and he told me, he goes, yeah, this is my last one of 60 units. And I remember thinking, oh my God, if I could just ever get the 60 units, like I’ll be forever rich. I’ll be, you know, that was my ceiling. You know, that was the most successful person I heard in my life at 24 he had 60 rentals. So, you know, getting to 700 I’m not saying it happened on accident, but I could’ve never seen it coming ever, ever, ever. It’s pretty cool to watch it just kind of come to, you know, fruition and stuff like that.
Josh: Yeah. Well I think for a lot of people that get started in this business, even owning their first rental is like, Oh my God, I would love to have one and make an extra $200 bucks. And then it’s like, what if I could get 10 Oh my God, I’ll get an extra $200 bucks. What if I had 50 an extra $200 bucks? I’m like, got to make it an extra $10,000 dollars a month. It’s amazing. And then it’s about, what I love about real estate is the fact that you can essentially stamp out the same process again and again and again. The house is a little bit different. The square foot is a little bit different. The bed and bath mix up a little bit different, but if you have a system for apartments or Airbnbs or rentals and you’re doing the same luxury vinyl plank flooring, you’re doing the same color schemes, you’re doing the same kind of kit cabinets, granite, stamp it out, stamp it out, stamp it out, stamp, and then it’s just like, okay, now residential is kind of boring. Like let’s just buy a big apartment building. It just gets kind of gross. I think you’re kind of nuts. People that are like, you know, 24 even 50 years old and they get started saying, I want to own a thousand units. Like you can get your arms around that, right? This is like, do a deal, figure that shit out. Then do 10 figure that shit out, then do 50 then a hundred it just kind of grows organically, right?
Steve: Yeah, absolutely. And you just learn as you go. I mean there’s, I’m a big reader and listen to a lot of podcasts and or you know, even if I’m at the gym, I’m probably not listening to music or maybe Gary V podcasts or whatever, the Wolf stand, whatever that looks like. And that’s great, right? You can learn some stuff from business, lifestyle mindset from those guys. Absolutely. But there’s no comparison to buying your first rental, like you said, one, two, three, four doors and scaling that to whatever, a $1,000 or $20,000, right? Because you get in these books and you read about real estate, but nothing teaches you like camera to the nail or managing the project, you know, so it’s a big deal to do your first one. I don’t think you’ve got to get it perfect, but you got to get it started, right?
Josh: Yeah, no doubt. I like it often too. I played sports all my life and I still coach club volleyball. There’s a big difference between being in the classroom and going through the playbook. Like let’s just say you play football and you learn the plays and you do it on a whiteboard or you do it on a chalkboard and you’re learning the place from your coach and then you’ve got to go outside, in the field on the grass or on the turf and actually do it. There’s a massive difference between being in the classroom and do an X’s and O’s versus actually being on the field. That is to me the closest comparison being an athlete that I could make, you know, when you’re actually slamming into somebody with your pads on or you’re playing hoops or you’re playing lacrosse or a volleyball is much different than the X’s and O’s on a whiteboard.
Josh: You just got to get in, do it, figure it out. Even if you don’t make any money on your first deal or your, you know, I’ve had several deals this past year, we actually lost money on, but I learned a shit load of stuff from those deals because things I did with contractors that didn’t work out or things I did with financing that I did wrong. It’s amazing. You never learn what you can learn actually doing it from compared to what’s in a book or a course or a podcast or great training programs are great, but you’ve got to go do it. I’m Steven, let’s talk about your current business. So when you have 700 units, a lot of people might look at that and say, holy smokes, that’s a massive portfolio. What is the team look like that helps you manage that type of thing? Leasing agents, contractors, maybe an operating officer that helps you out. Tell me a little bit more about the team that kind of pulls all the strings for you.
Steve: You know, what’s beautiful about real estate is I feel like if you own some sort of a factory or any other business where like, man hours are super important or in house man hours, I should say, in house man hours are super important, you’ve got to carry that overhead. What I pride myself about, you know, maybe what helps create a little bit of my lifestyle is that I don’t think we’re the biggest business in town and or nationwide obviously for, you know, man hours per door or you know, whatever that looks like dollars per door with support. But what I pride myself in is creating like really good joint ventures and I’m able to rely on people outside of my business to supplement what a lot of times would be in house paid salaries. So we do a lot of that. You know, we’re bringing deals, they’re bringing deals, we’re bringing money.
Steve: They’re bringing project management, we’re bringing property management, vice versa, we can kind of refer to it as like an Al a carte menu. If they bring X we’re going to bring Y and then we chop up the equity as we see fair or you know, both sides see fair. So we got those joint ventures, which is great. So we rely on a lot of stuff that maybe they have, you know, executive admins, them obviously, their contractors, their money, whatever that looks like as we chop it up. As far as in house for red door sales manager, acquisition guy basically. And we do, so if, you know, some of the like, so Paul Vincent is our lawyer. Again, all these people that we probably could have in house, lawyer, CPA, you know, COO, stuff like that. We have some of those positions but we rely on bringing them in.
Steve: So Paul typically would send as a lawyer, whoever, CPA, they would send you an invoice and say, please pay this. What we do a lot of is when we structured the deal, instead of paying $20,000 bucks for lawyer fees and a PPM, for an apartment building, we just, we’ll throw Paul 5%, you know, so I think what we do a lot of is strategic partnerships instead of employees. But like I said, I’ll run through Red Door real quick. We’ve got the sales manager, a leasing agent, a project manager, and basically a social media person. So that’s in house.
Josh: Got it. Nice. Very good. Yeah. I love the idea of, that’s one of the things about commercial real estate and apartments, large deals, right? I mean, it’s just the opportunity to split the deal up. And there’s still a lot of action. There’s a lot profit, there’s a lot of equity for everyone as opposed to like a single-family home. You do one joint venture, you have one partner. It’s like, okay, you’re getting a $100 bucks. We’re going to $100 bucks. Like who gives a shit? You talk about an apartment deal, it’s 200 units and now you’re multiplying it. You have $300,000, $400,000, maybe a year of net operating income, you know that now you’re talking about some significant money to be able to carve that up and it makes a difference for everybody’s balance sheet.
Josh: So Steve talk for a little bit about the, let’s go back to the entrepreneurial journey and then we’ll kind of wrap up here and talk a little bit more about some tactical stuff about finding deals and finding money. So let’s go back to, you went to business school, you went to Bowling green, local university in Northeast Ohio. And when you graduated from B-School, like what did you, what did you think about, what did you want to become? What did you want to do? And then obviously you jumped into real estate as a real estate agent and a leasing agent. But what was that like when you graduated and thought, hey man, I’m going to become this. And then real estate became that. So what was that like for you?
Steve: Yeah. You know the MBA was in finance. And like I said, growing up, I had knack just to try to find money and I, you know, it doesn’t take a lot of money to live in Cleveland, Ohio. You know, we’re not LA, we’re not New York. So, you know, growing up, appreciating the finance side and the money side of stuff. You know, I quickly realized in adult world and living in Bowling Green, I think this is a true story too. I went to Tipton first, my $180 rent there, right? Because it’s in the middle of a corn field. And then Bowling Green, Ohio three I like basically it’s a loft and I think it was $320 bucks all in for a month. So if you’re a money guy in Cleveland, Ohio or Ohio, you know, you can get by pretty easy. So I think one of the things that motivates me is to try to you know, make the money and give it back as far as, you know, helping other people get to maybe where I’ve been or I know we’ll talk about this, but you said the first deal, you know, focus on that.
Steve: But as soon as you do one the second one’s easier, right? So maybe just helping people jump that gap was what motivated me. I didn’t know coming out of business school or really even growing up what I wanted to do. I think it just materializes. Like I said, I knew that I wanted to help people and I read a bunch of stuff and you know, all the statistics about 9 out of 10 millionaires, you know, formed in real estate. So I don’t know, I just gravitated to that thinking if I could make a little more money or help people learn how to get more time with their family or give back to whatever charity they prefer, then that’d be a cool thing, so. And that’s kind of, you know, I’m sure we’ll go down that path a little bit, but from leasing agents to 700 units, it was just like you would see someone kind of doing something a little cooler than you or a little bigger than you and you just gravitated towards that bigger deal. I think the more you do, the more you can help people and teach people, which is ultimately what I want to do.
Josh: Yeah. Do you remember Steve on your journey the time when maybe it was a specific deal that you did? Maybe it was your first apartment deal you bought when you thought like, dude, this is it. Like I’m confident now I’ve owned so many doors or I bought this building and it’s actually freaking working where I can see a path to not only becoming a millionaire in real estate, but truly living like that freedom lifestyle. Like your, I mean I could do this, I can be totally independent, right? Because most people are like fortune 500 job or sales job. Maybe they’re making a couple hundred thousand dollars a year or $300,000, $400,000 but they’re always like, man, I got to keep working. I got to keep working till I’m 59 and a half so I can retire with my 401k and my pension for us. I mean I remember the moment where I was like, oh my God, this is actually freaking working.
Josh: I can see a clear path where if I do X number of more doors or X, in my case, more equity, more debt, more loans, I’m going to be totally financially independent here and I don’t have to wait until I’m 60 years old. I can do it in the next couple of years. Do you remember that deal? Do you remember that moment? Tell me about that.
Steve: Yeah, absolutely. I mean clear as day to me and there’s kind of two points, right? Cause I know we talked about this a little bit off camera and obviously in the same market. So you know a little bit about me and vice versa. I was a wholesaler first, right? So I remember that moment in wholesaling, right? I had a house, again close to downtown, we won’t go on the streets for the people out of town, but close to downtown. And I got it for $25,000 grand and was able to sell it like the same day or a day later for like $50,000 grand. And you know, for me, coming out of school and you know, I didn’t grow up in a ton of money or have a ton of headstarts, but you know, $20,000, $30,000 grand in a day felt like that was it. I was unbeatable.
Steve: And I think, you know, you said hindsight, I probably wasn’t, but that was a wholesale moment where I just felt like I can do this, I can outplay anyone in this market and we got some great wholesalers in Cleveland, but I just felt like, you know, at that point, like, you belong, right? I’ve done some smaller deals or whatever. But that was the one where I thought a lot of people would be happy to make that maybe over six months, you know?
Steve: And that made me felt like, you know, feel like I was a player in this market. And then we talked about earlier, you know, you go from doing this and you see someone else doing Y and maybe it’s got better payouts or tax benefits. And I just kind of started progressing through wholesaling all the way to the multi-family buy and hold. And I remember that moment too. And the multifamily, I sent out a Mail Chimp blast, you know, I think I was paying all of $29 bucks a month for Mail chimp. And a lady hit me back and was like, I got this off market, 48 unit building and Sheffield Lake, which is a suburb of Cleveland and it was $1.4 million. And it’s funny because I didn’t own any commercial real estate and I was like, but you know, a little savvy, right?
Steve: So I looked at the email and I think, shit, this looks like it makes sense. And I had no idea if it did, but I just forwarded it to Nick Burton and Tim Brautz obviously and said, Hey man, can I get paid on this? And, you know, we were able to take down that building for $1.4 million, 48 units. They’re mostly two bedrooms that obviously a great deal. I think we’re going to look into a refi that out of like $3.6 million all in for $1.9 million refi out of $3.6 A smoking hot deal. But I remember thinking, yeah, exactly that when the replies, it’s a great story actually. So she started replying and she didn’t really know what she was doing. I had never bought commercial real estate. I didn’t know what I was doing. We’ve got an in between with Tim’s team.
Steve: And I ended up buying her a phone because she didn’t even have a phone. She’s a bird dog and she’s like, I think this is what you’re looking for. And I ended up buying her a burner phone at Wal-Mart because she would have to go to the library to email me back about this deal. And exactly that it was, you know, I’m reading the emails and I’m thinking, this is my brain, right? This is where I get, you know, 50 doors in a day. And she would, she would leave the library when she was emailing me because she didn’t have a phone or computer, you know, we’re going to offer cash, we’re going to do this, let’s go, let’s lock it up. And then 24 hours would go by and she’d come back to the library and email me back and was like, alright let’s do this, I’m going to buy you a burner phone. We’re going to get this across the line. Because it’s like you said, it was this moment in my head where I felt like, you know, if you can get 50 doors a day, like you’re starting to be a legit player, you know, I do remember both those days where I felt like I kind of broke through whatever market I was in or felt established.
Josh: Yeah. I’ll never forget the day when I quit my job as a financial advisor. I was actually standing on Madison Avenue in Lakewood. This is all the way back in 2005. And I was meeting with the local home investor franchisee. His name was Ted Cowan. We just met. I walked out of that meeting, I walked out of Madison Avenue and I just told myself I’m going to quit this job. And I did, called my manager at that time and said, dude, this financial planning has been great for me. I was very young and had…
Steve: It’s a great industry. It’s a hard one to walk away from.
Josh: It is we built, you know, we built, I was managing $30 million at 26 years old and had a great recurring income and big six figure income, almost all commission-based. But I realized, man, I tell the story all the time, most of my most successful clients did not have all their money in the market, they had their money in real estate. They owned apartments, they owned buildings, they leased them out to restaurants, they had single family homes. I remember quitting. That was a watershed moment for me, similar to the two stories that you told as well, which is awesome. So Steve, where do you think you’re going to take this thing? At this point is it just, you know, selecting the right deals, building the portfolio? Is that the main goal here? Do you have a number in mind as far as of units that you would like to get to?
Steve: It’s probably going to sound as dumb. Hopefully. You know, hindsight, it sounds as dumb as my 60 doors when I was standing in the front yard of East Cleveland. But I got a number, it’s 20,000. 20,000 units and don’t know how or why I got there. A lot of people reverse engineer stuff. I do, but that’s my number and I hope, like I said, hopefully one day I’m watching this podcast or replay this or clip of this and I got 100,000 units and it just sounds dumb. But I think big goals and goals is a big part of every successful person’s life. You know? And if you end up looking back and kind of giggling at those goals or thinking why did I think that would be the end, more power to you, but you got to some high and you know, try to get as close as possible.
Josh: So Steve, let’s pivot real quick into some tactical stuff about actually doing deals. What are your, some of your favorite techniques now for finding, you know, finding apartment deals? It’s obviously very competitive market. There’s a lot of money in the system. So finding the deals is very important.
Steve: So I’ve got a savvy one for single-family and I got a less savvy one for multi-family, there’s almost more barriers to entry to multifamily. And I know you know that, but for people listening it’s almost like a click, right? Like do some big ass players in multi-family and they get the deals first. So you just got to be super active and multi-family. So what we’ve been able to do, that helps a lot, we’ve touched on it in a different capacity earlier, is those joint ventures, right? So you’ve got a lawyer, you’ve got a CPA, you’ve got a broker, all these people that you’re doing deals with and you only have two ears and one mouth. So you can only listen to so many conversations and talk to so many people about trying to do deals. But if you’re bringing your partners in, do equity instead of people cutting them, you know, $1,000 fee or a $5,000, fee or $20,000 fee. If they get a smoking hot deal, like my broker, the people I use a lot, you guys, Pinnacle, all these other people that supplied that to me, I think they bring me deals because a lot of times I will give not the broker ownership of the people that are operating with me ownership.
Steve: So, right. I’ve got people that will say, Hey, my client’s going to sell this house. Or if it’s a lawyer or a mortgage broker or a commercial broker, whatever that looks like, they bring it to me first, I’m very happy to loop them back in for 20% ownership and they obviously bring some part of the deal, be it a capital or you know, sweat equity, property management, all that kind of stuff. So I believe that’s my unique ability in commercial. It’s more networking and making sure people feel fairly compensated, you know. We talked, we, you asked about the progression of real estate as far as a leasing agent all the way to commercial real estate. But if you think about it like the market and you can make a lot of money, like you said, as a financial advisor or a real estate agent, but there’s a cap, right.
Steve: The market says you should make 3% or as far as real estate and maybe as a financial buyers 1% residual and you got this big ass, you know, like you said, you’re managing a ton of money. That’s an awesome living. But I felt capped as far as what the industry thought I should make and I wanted to, wholesaling and owning real estate took away that cap, that ceiling. So when I try to get favorable situations, deals and partnerships in the, market, I just try to take that cap off whoever I’m working with, right. So there’s a lawyer, maybe they got a fee for PPM. There’s a commercial broker, there’s a lender and I’m happy to pay them their fees, but if I can roll them back in the ownership, all of a sudden the deal flow just falls on me. I actually spend probably less than $2,000 bucks a year on marketing.
Josh: Yeah, that’s fantastic.
Steve: It’s all relationship based. How can I make them feel like they don’t have a cap to their income and come back into deals? Which I think is unique. You know, you got a ton of big guys spending hundreds of thousands of dollars on ads and whatnot to raise capital and find deals. The complete opposite. You know, I don’t spend any money on marketing. I think I create a win win situation as far as my, you know, partners and people that typically are paid a fee, bring them back in and everyone brings us deals and that’s a beautiful thing.
Josh: Yeah. I’m thinking a lot of the guys that you’re talking about too, whether it’s a broker, lawyer, CPA, maybe even a contractor or you know, in your case you have an acquisitions manager that probably gets a piece of deals, but all a lot of those guys have like a business or they have a job if you will, like they’re a commercial contractor or they’re a CPA or they’re a broker. They don’t necessarily want to get out of that position or out of that job or out of that industry to all of a sudden become the main investor, the boots on the ground. And the guy who is coordinating everybody, they want to do their job and a lot of them already make enough income to pay the bills and take care of the family and go on vacation. So what do they want?
Josh: They want a piece of equity, right? They want a way to build their balance sheet, their net worth without having to maybe invest like a $100,000, $200,000 into a private placement structure. So if they get a piece of ownership through, you know, giving up their fee, they’re okay with that because they’re getting enough fees from their other clients, right. So it’s really an awesome opportunity for them. And it’s, they look at you as maybe, I don’t know if this is right word, but kind of the gravy train if you will, to say this is something that’s going to pay me for the rest of my life as opposed to just taking a fee for doing this legal work or this, you know, accounting work. So love that. So how about on the single-family side?
Steve: Yeah, so that’s actually, so I got like a, it’s funny because the commercial thing, it’s so true. We both know that. But it almost sounds like some fugazy, right that you just network and the deal falls on you. The residential one, I got like a real, real, real trick that anyone can do in any market. So you can go Google Cuyahoga County trash map and it will show you where the trash in Cleveland’s collected daily. And what we do a lot of is driving for dollars. And I was talking to my little private consulting group on Facebook, Bulletproof Cartel yesterday, someone asks, what’s the best return on? I said, people are lazy. They want to buy the list, right? Because it’s provided to them. And then the yellow letters or whoever to send the shit and they don’t have to touch anything. You know, sometimes they don’t even make the calls after they get the leads. That’s how lazy the industry is.
Steve: So our little unique ability is like, we just outwork people, right? So we got that Cuyahoga County trash map. It tells you when people’s trash is going to be out. So like, um, you know, and you know, all the sectors of Cleveland, maybe it’s like, you know, West of the river, East of the river, you know Howelll City, Troy Troy, all these little pockets, they all have different days they sent their trash out. We sent a bunch of people around, you know, at 8:00 AM do you go up and down those streets with the trash cans should be out and you know, 8:00, 9:00 AM the trash usually gets there by like noon. So if 8:00, 9:00 AM they got these big full trash cans in front of their street or their house, then we assume some lives there, you know, whatever.
Steve: Any one out of 30 houses, there’s no trash cans in front of them. It’s probably vacant or order or an old person that’s maybe not moving a lot or producing alot or living by themselves, not producing a lot of waste. It’s kind of a gimmick. But we’ve made hundreds of thousands, if not millions bucks off it. You know, we’re grabbing places close to downtown for 40, 50 cents on the dollar that way because we’re just looking, if there’s no trash maybe it’s vacant, then we skip trace it. Maybe call them up or throw them a letter saying we’ll buy your vacant house or whatever that looks like. And they’ll say, well, it’s not making, but my mom’s 86 and she lives there and she’s probably not making, you know, a ton of trash or whatever that looks like. Well, you know, we’ll offer cash to move to a nursing home or if it’s vacant, you know, we’re offering cash. You know Italian investor owns it, it’s been vacant for two, three years. So it’s kind of a little gimmick one that we’ve got. So I don’t think anyone else is doing it.
Josh: That’s the first time I’ve ever heard of it in 13 years. It’s fantastic.
Steve: I think a differentiator die as far as marketing, right? So I remember going to a house and that’s kind of how it developed those Cleveland. Another one is the trashes. We get those, you know, when it snows, you get those tires, right? So if people are backing out in the morning and go to work and someone lives there, you’ll either plow their driveway, shovel their driveway, or they get those tire marks, we do that too. So trash and snow is a big one.
Steve: But I remember going to a when I wasn’t doing the unique or different marketing. I remember going to a house in Ohio City, like a hot area, right? And I was sending the yellow letters like everyone else and I sat with the owner. I could tell actually they liked me. I wasn’t at the other, whatever 15 appointments. I could tell they liked you the most, but it was, I wasn’t going to pay their price, but they really wanted to sell to me. And she held up like 20 postcards. They’re all identical, right? They’re all identical from two or three sites. And she said, you know, if you can get to, you know, so and so’s price, then we’ll sell it. You know, I can’t pay that. But I remember just seeing that visual, 25 people doing the same shit. I probably can named all their names.
Josh: Probably on friends of ours,
Steve: You know, I’m not going to say I was worried about them. I said if they’re going to pay more sell it to them, but I remember that day I thought I didn’t spend after that appointment, I didn’t spend another cent on yellow letters and or mailers because that’s what everyone was doing. I just thought how do we differentiate our marketing so we’re getting different leads and we’re not in a 15 offer situation. That’s kind of my, that’s how I tried to reverse engineer my marketing. If everyone’s doing it, I’m trying to stay out of the space and we’re going to kind of outwork and do all the nitty gritty that, you know, everyone loves that on ,bigger pockets drive for dollars, door knock door hangers and no one does it because you got to actually go door hanger, you know.
Josh: Because you just got to put the time and the effort in for sure.
Steve: Absolutely. So we just try to stay in those spaces that maybe other people don’t love to do.
Josh: Yeah I love it man. We tell our people, look, expand your market or expand your marketing. And a lot of times, you know everyone wants to automated way of marketing, which is great. Like there’s chatbots that are everywhere now. You know, Facebook and Manny Chat and there’s you know, Drift and all these different chat bot services, which are great and it works well for technology and for some businesses. But in this business, of real estate look, you’ve got to find an asset you can buy at a discount, fix it up, run it off for the rest of your life, and you’re going to be a multimillionaire. So put in the work at the front end, just like Steve’s talking about doing something a little bit different and it’s not the sexiest thing like trash and snow, right? But it freaking works like that. Just I wrote that down. Differentiate or die, trash and snow. Ramey, that’s the title of this podcast.
Josh: Got it. That’s fantastic, Steve. Awesome man. Well listen, Steve, I know some people are going to want to do deals with you, whether it’s bring you, bring you properties, maybe invest passively with you, joint venture with you to get to know you join your Bulletproof Cartel. Tell me, become to one of your events that you host. Where can people reach out to you? Where can they connect with you?
Steve: Yeah, the best way is just via social media (inaudible) actually, your assistant was email me and she’s like, alright what’s your website? I haven’t updated my website in like 2 years.
Josh: My Facebook is my website. That’s all I need.
Steve: So I operate, you know a couple multi-million dollar businesses off Instagram and Facebook. So Steve and Tom Morris on Facebook, I think I get the link to your assistant and then SMorris802 on Instagram we got all the business pages. I think you can find them from the personal pages. But I do feel, and I take a lot of pride in being responsive, you know, so I’m a very open book sometimes too open and on social media everyone reaches out to me but I try to give back and like, you know, so if they hit me, if they want to do deals, if they want to get involved passively or lend money, you know, I’ll try to message them back within an hour on social media. That’s the best way to get ahold of me. Actually my voicemail says basically don’t call my phone ever again.
Josh: My team told me Steve’s running in a few minutes late for the podcast. Don’t call him, he won’t answer. That was awesome. Well there you have it guys. Steve Morris with Red Door Renovations, over 700 units of apartments and Airbnb’s a ton of nuggets here. Steve, thanks so much for joining us on Accelerated Investor.
Steve: Thanks for having me, man.
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Young guys bring a whole new energy to the real estate game, and Steve Morris from Red Door Renovations is no exception. A local investor from here in Cleveland, he graduated from B-school and fell into his first deal, and that first deal really lit a fire in him for real estate. You are not going to believe some of his crazy stories about how he finds leads, or his first apartment deal with a client that didn’t even own a cell phone.
When Steve started out in real estate, he didn’t even know what he didn’t know. He thought that if he made it to 50 doors, he’d be living large. Today, he has over 700 Airbnbs and commercial real estate. He talks about how he approaches the Airbnb model, and why buying furniture on pallets helped him scale up that side of the business.
As a way of helping other people expand their earnings’ ceiling, Steve has started structuring deals around a percentage of profits. For example, instead of paying his lawyer $20,000, he’ll offer him a 20% cut of the deal they’re working on. He’s found that people work even harder on these kinds of joint ventures because they’re fee is directly tied to the deal’s success.
Knowing that they can earn even more with Red Door Renovations, brokers, lawyers, CPAs, and property managers are more than happy to bring deals to him. It’s built up his reputation, and it acts like a lead generation pipeline straight to him.
Steve hates working off of a list for his leads. Everyone has this list and everyone’s using it to send their direct mail. So he sends his people out into neighborhoods on trash day looking for homes with no activity. Or he sends them out on snowy days looking for homes with no fresh tire marks.
Instead of going around thinking about what’s not working for you, spend some time thinking about how you can work around your problems. Start looking for trash and snow!
- How Steve structures deals that inspires more work from his partners.
- Steve’s first apartment deal where he had to buy a burner phone to get the deal done.
- Steve uses trash removal and fresh snow to find leads.
- How he shifted from B-school to real estate.
- Why he prefers the “a la carte” approach to deal structures.