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If you are a real estate investor in the Cleveland area, you have probably heard about InvestCLE. And if you haven't, you NEED to be a part of this community. 🤝

Meet David Barnett and Paul Smetola: The powerhouse partners and founders of the InvestCLE real estate network. After meeting serendipitously and sparking up a professional relationship, they have scaled their businesses to new heights with their complimentary yin and yang style skill sets. With 60+ projects between them and hosting their regular InvestCLE meetups where they connect REI professionals all over the Cleveland area, these guys are a great example of how sometimes two is better than one!🧍🧍

Learn more about this dynamic duo and InvestCLE in this week's Real Estate Investing Unscripted episode!

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Brendan: What's going on everybody? my name is Brendan Bennett here with my co-host David Duggan at Real Estate Investing Unscripted: The podcast for real estate investors, by real estate investors. Duggan, what's going on?

David D: we are very excited today to have two of my favorite people on the planet, and I'm not, I'm not bullshitting that. These are two of my favorite people in the world, to have on the show today. So we have Paul Smith and David Barnett We're gonna chat about, of course all things real estate, but specifically some of the things that they're doing and that we are doing with them, that being ftf, as well as, uh, and Paul's company.

So, uh, I will let you two go ahead and take the introductions from here. Paul, David, you guys know you and your business better than we do, so why don't you go ahead and, uh, take the reins here and tell us about yourselves.

David B: Well, I'm gonna, I'm gonna introduce Paul. My name is David Barnett and, uh, Paul and I have been partners now for almost two years. And the relationship began, we met each other out very casually, so. 

Paul: Town Hall. 

David B: Town hall. We met at Town Hall, which is a great spot in Cleveland, Ohio. and then about a year later we connected on a professional level.

So Paul's background, electrical engineer by trade, so. And decided that he wanted to become a real estate investor. fast forward a couple years, he's got 50 projects, maybe more under his, uh, under his belt. He's done everything from, rehabbing bathrooms, kitchens, uh, wiring, electric. I mean, Paul really can do it all. Very sharp guys. So, uh, without further ado, Paul Smith. 

Paul: Thank you. Thank you. Uh, man, I will introduce, my stunning stud of a partner over here, Mr. David Barnett. David's got a background in sales, background in basketball as well, and he, he learned a lot. I would say a lot, a lot of our relationship works and that, like, I, like I may be focused more on the kind of, Let's say like planning and kind of thinking and that kind of side.

And he is, he is the, the captain, the, the action guy that just makes stuff happen. So, you know, he's, he's been, he's been buying for a similar amount of time as I have. We've both been in the game for four to five years. Um, we both kind of were on very parallel paths. You know, we were bought, we're, we're house hacking, we're buying small single families and small multis and that kind of stuff, and, and updating them, doing a lot of work ourselves.

And we, we really started working together about a year ago. since then, you know, our business have exploded. I mean, we've gone from, when we first started working together, a combined probably 30 units to something like maybe 60 plus a bunch of flips and a bunch of other things, and a lot of that really, there's kind of been rocket fuel.

So, so, you know, da David is a very shrewd investor and, and it just an action machine. He, he, he makes stuff happen. He doesn't tolerate, I'll do it later. He's gotta get down now. And, and I, I love taking his kind of his, his first pass at stuff and refining it and that, that's kind of allowed the two of us to.

To really just accelerate and, and we're building some pretty cool things. And, um, again, it really wouldn't, I don't think it would've happened for either of us if we didn't kind of 

serendipitously cross past the town hall a couple years ago. 

David B: We are definitely yin and yang, and it, it works very well. very, very well.

Brendan: Man, you guys about to make me tear up with these intros. This is, uh, quite, quite, quite the partnership going on. I, I'd be curious to just kick it off with, with each of you guys, if you guys can walk us through who, what was your, like introduction into real estate? What was like that founding story for you, David? And for you Paul? So what were you in before and what was that like pivot moment that got you into real estate? 

David B: I'll, I'll kick it off. So I, I was at, I was at a gym surprisingly enough, and there was a guy there that was talking about real estate maybe six years ago. And I. He said he had just bought a property. And I said, you, you know, I'm gonna, I'm gonna buy a property too. And he challenged me, he said, do it today.

So I felt challenged and I went to the bank that day and got pre-approved for an FHA mortgage. And within a week I was under contract on a duplex. So Paul said, I take action, I do, I take action. When I say I'm gonna do something, I, I'm gonna try my very best to do it. So bought that first property over eight months, I renovated both units, got it rented out.

And after a year and a half I decided, hey, this thing's worth substantially more money than what I paid for it. And I flipped it. And then I went and did another house hack. It was a three unit in Lakewood, Ohio. And that three unit, similar story, bought it for two 60, put money into it, and in fact just sold it two weeks ago for, considerably more.

So that was two home runs. That was my intro into real estate. 

Paul: in typical David fashion, you know, he, he saw a challenge and immediately responded to the challenge and just kind of did a ready fire aim, which is, which is which gets the deal done. and did a good job of it for me.

It was typically, um, started with like a. Let's call it maybe a philosophical or maybe existential crisis that landed, landed me in real estate. So I had been in engineering for a time, a little over five years, and I always thought I wanted to do it, but the more I did it, the more like unmotivated I became.

Cause I realized like I could show up to work and not do anything, and. It was exactly the same as if I showed up to work at six and work 14 hours. And that was really unmotivating to me. I was like, I can work so hard, I can get so much done and I don't get a dime for it. And I'm just like, okay, well what's the point?

And the more I thought about it, the more I realized that like, you know, like I don't want to do this for another 40 years, like, I have no problem working for another 40 years, but like, I don't want to be on this. Like, I guess I gotta work. And it was fine. It was a good job, but so I realized I needed something else and I really thought through, it was a couple year process of thinking through like, what do I want to do?

Like what's the way out of this? Can I start some like internet business? Can I sell a subscription? If I could sell something for 10 bucks a month and get a couple hundred people to do it, like I could live off of that. But, you know, everything I thought about, what I kind of came back to was like, let's say I do start like some, you know, whatever business maybe I'm doing.

Drop shipping or something like that. The problem is like, if I use that and then I say, now I have passive income and I can go and live in, you know, freaking Europe for three for a year and just chill, it doesn't really work because all it takes is somebody to just do a slightly better job at what you're doing and your business while you're out there hanging out and having fun In Europe, it goes to zero and, and, and you're selling me, you know, broke.

So I didn't like that in most businesses. I came across, I couldn't find something that was passive. That's really what I wanted. And one day I had a good friend of mine who, uh, had been helping his parents with some flips and those kind of things, and some rentals. And I'm like, what are these renting for?

And he kind of gave me the numbers and I was like, wow, that's, that's something that's good. I'm, what drew me to real estate was that if I buy a house and I put a tenant in there and I put a 30 year mortgage on it and my tenant's paying the mortgage plus a little bit extra for me, How can someone take that away from me?

You know? I mean, yeah, the tenant could leave, but I'll get another tenant, make sure there's margin. And that's kind of, once I saw that, I immediately knew like, this is gonna be my business. I'm gonna do this because this has that stability that I'm looking for. And then the more I started reading about it and thinking about it, I was like, oh my gosh, you've got debt pay down and you've got appreciation, but you also have cash flow and depreciation.

I like, this is too good to be true. I'm gonna do it. So I, I had, I had, um, I had a lot of student loans after college. And I had gotten accustomed to living like super cheap cause I was paying 'em off and I got him paid off in a few years and I was like, what do I do with this extra cash? And that all kind of was happening at the same time.

So I bought my first house for $22,000 with a partner. We each put down $11,000 cash. It was rented for $800 a month to a, uh, to four unrelated adults. A little four bedroom house with one bathroom. I think within three weeks. We had one of the tenants die in the house. Um, it was, it was, it was a brutal introduction, but you know, even that, didn't stop us.

And, and it was cash flowing. Great. About two weeks after we bought it, I went and took out a home equity line of credit. They gave us like just a desktop appraisal of like 40 something thousand, gave us 28 grand. And I was like, I've owned this house for three weeks. I've got an extra six grand on my account and 800 a month coming in and, and my debt service was 160 bucks a month.

I was like, damn, like this is good. So we immediately bought another one, another one, I think within three months we had about 10 units and they all needed rehabs and we had to do 'em all. So then we spent about two years getting all those rehabs done. that's roughly when, when I met Dugan and, and from there things have kind of really exploded as we learned to kind of think about it more like a business as opposed to just blind

houses. 

David D: Yeah, the, the way you guys have scaled is, uh, astonishing and awesome. So I, I chuckle and you guys mentioned you're, you're kind of yin, yin and yang. I was thinking back to, Even, even just a month ago, David and I were talking about like, okay, I'm looking at some properties. You know, me personally, I'm looking at properties and I'm asking David, Hey, how do you look at cashflow?

I'm factoring in all these holding costs and I'm picking his brain on stuff. And he's like, yeah, I, I, I mean, if they make money, they make money. And I was like, yeah, but what about x Y? And he's like, you gotta talk to Paul about that. Those are numbers. Like that's, that's a Paul conversation. and when I met David, uh, I think I walked through your, your triplex and.

You were showing me some of the, the work you were, you were lifting the hammer personally in there. You were like, yeah, I did this thing. It's, you know, the craftsman shift's not perfect, but, you know, it's functional and the, the tenants like it. And, you know, I made this little nook and this little cranny and, and whatever.

And, and to see you guys to where you've come now, where you've built such a, robust operation, um, out of that and, you know, have, have sets of contractors that do your work for you. Can you guys talk about that kind of where you were three years ago to kind of where you scaled to now and, and how you've gotten 

there. 

Paul: that's a really good question. Honestly, I, I almost have to think back cuz it, it happened so seamlessly and naturally, but when you put it that way and I think back, I'm like, it is ridiculous how quickly that transition happened because it was only like six months ago I was still hanging cabinets.

And since then, I mean David, you and I bought between what we've purchased and under contract, probably 30 units. In that six months and, you know, it took us three, four years to get our first dozen and change. it's kind of wild, but I, I think for me, to be honest with you, I always knew that I wanted to do this.

I always knew that, like I love the construction side of it, but I was gonna have to step away cuz there's only so many houses you can fix in a year. And my appetite for growth was a lot more than that. and I think what really started to change it for me was like, I sort of knew I wanted to go there, but I didn't know how and was really when I ran it at day because.

He was the kind of guy, he would say, Paul, what are you trying to do? And I'd say, I'm trying to step out of this and, and, and make it happen and scale. And he would say, well, why aren't you doing it? And I would be like, well, I don't know. I guess I'm just doing rehab still. And he'd be like, well, what are you gonna do about it?

And that's where he was like, let's just take them, take one down. I got a crew. We'll put 'em on there. And so we really pushed each other and, and that's, that's why I say seriously, like we knew there of us would be here without the other one because, you know, I'm really good at coming up with like, Hey, this is where we need to go.

Like, what's our hourly rate right now? If I'm swinging a hammer, I'm saving myself 30, 40, 50 bucks an hour. There's someone I can pay 30 or 40 or $50 an hour for that and I can go do a test that's a hundred dollars an hour. And once I've gotten good at that, how do I outsource that? So I've tried to become a really good quitter.

The more, the more I do stuff, the more I try not to do it again, get it outsourced to someone else, focus on putting the right people in the right places, and the person that's really, so I come up with this strategy and the person that's really pushed me to enact it and enforce it as David. So I think that's kind of my view on it, is really what's happened is just a confidence thing.

It's actually not hard to do. It's way easier to scale this way and to build a business than it was before. I mean, I was working so hard, you know, I had a day job at the time and then I was working, you know, five till 11 or midnight every night working on the houses on Saturday, Sundays, and, um, This is so much easier.

You just, you find a contractor, you find a whatever, but it requires, it requires you to kind of think at a little bit of a higher level, sort of like think in a couple more zeros. And it requires you to solve different problems that sometimes are more uncomfortable. And that's, I think, what kept me away from it was like it was the uncomfortability of saying like, I'm gonna entrust my baby to someone else and I'm gonna let them fix it knowing that they might charge me and rip me off and I'm gonna go buy three or four properties.

I don't know how I'm gonna get 'em done, but I'm just gonna take that leap and figure it out as we go. And that's where David sort of pushed me. He's like, you'll figure it out, you do it. And then he's been really good with the, um, kind of operational side of things. So I'll hand it off to you, David. I mean, I think, you know, that's sort of been my focus has been on like strategy and vision.

And David's really been big on just like action personnel. Like, kind of just like crushing the day-to-day operations to make sure that we don't get crushed under the. Um, under all the stuff that we're taking on.

David B: it's still a challenge. I mean, even, even for myself, I'm, I'm still a W2 guy. Um, I know a lot of folks that might be listening. To this, maintain a W2 while they, expand their real estate portfolio. I'm a pharmaceutical rep and I have to dedicate quite a bit of time to that, so my outside time gets dedicated to real estate.

going back to what Paul said about how much money are we making per hour, Paul started that conversation and challenged me with it. And I said, Hey, if you're gonna challenge me with this, I'm, I'm, I don't wanna lift, I don't wanna lift cameras anymore. I've done 10, 10 bathrooms myself, 10 kitchens. I painted, you know, entire exteriors of homes.

And it was Paul's thinking that said, we, we need to challenge ourself to be better. So I did it. I stopped the hammer, and then I challenged Paul and said, Hey Paul, it's your turn. We, we, we gotta stop picking up that hammer in that paintbrush. So that was, you know, and, and, and then I go back to our first flip, and Paul, I'm gonna share this with everybody.

This is when I knew I, I have to work with Pauls Smith. We bought this property at the peak of the market last year. I think Paul, when did we close 

Paul: July. July. 

David B: I mean, just the worst time in the last 20 years to buy a property fund. That flip, you guys graciously funded it for us too. Thank you. so we took it down.

We, we, it was a five bed, two bath property, maybe one bath, but it was pretty nice and we thought, you know, it appraised for like 1 75. We got it for 1 25. We said, Hey, we'll put 10 to 15 into it. We'll list it. So some time goes by. There were some issues with the property. We had a couple break-ins and we ended up losing.

Quite a bit of money in this property, 30,000, maybe more Paul. And not once did Paul and I fight with each other, not once. And we were frustrated. We both were. and our third partner, Jack, he was the same way. We, we all worked together very great. And it was that moment in time that I said, these are the guys I need to partner up with. Cuz they're great. They're, they're awesome, they're easy to work with and I had a lot of respect for him. 

Paul: Yeah, I think, I think final comment on the, on the, how do you switch from buying one house to scaling? I think in one sentence it's solving the problems that are obvious and in front of you, but uncomfortable to solve. You lift a hammer a hundred days in a row, it's really easy to go to work the a hundred first day and lift a hammer.

You don't have to think about it. You know what you're gonna do. It's not any harder to pick up the phone and call. A contractor and say, Hey, can you come quote this out? And then call a second one and say, quote this out and compare 'em and see who shows up on time. Whose truck is clean? Who's is jacked up?

Like, look at that stuff. Make a decision, hire them. If they suck, fire them. Get another one. Like it's not hard, it really isn't, but it's uncomfortable cuz you're used to just going to work and swimming that hammer every day. And that's what the whole scaling thing comes down to. It's not hard, it's just uncomfortable because you're doing something different every day if you keep doing the same thing over and over again.

You're gonna have a stagnant business. You're gonna be working as a job in your own business. If you want to scale something and grow, it requires you, when you've got 10 units, you have a different job than when you have 20 and when you have 50. And so that, that's the hard thing that I think keeps people away from it, is that it's uncomfortable to go in every day and say, Hey, yesterday I did X, Y, Z.

Today I gotta do abc and tomorrow I'm not sure what I'm gonna do, but I'm gonna have to make that call when I get there. And that means I'm gonna have to try something new. I'm gonna have to learn something. I'm have to pick up the phone and call someone that I've never talked to before and kind of sounds silly cuz I don't know what I'm asking.

You have to do that and, and it's, again, it's not hard, it's just, you just have to kind of embrace the weirdness and the uncomfortableness of it. And that's, I think the difference between being stuck where I was, I could have done this much earlier. I didn't need to spend three or four years doing kitchens and bathrooms, but, and it was again, it was kind of David pushing me to be like, Don't be weak, like go make that call and, and, and that's kind of what's gotten us to where we are.

Brendan: I think it's very well said, and I think from what I do know about your guys' business, David and Paul is another element of what's allowed you guys to scale is you guys become very focused on what you will do and what you won't do. So I invited you guys both over to a property that I was looking at that you guys were.

Super great. She gave me some advice on and, and kind of steer me in the right direction. Part of that discussion, I said, David and Paul, if you're in my shoes, would you do this deal? And you guys looked in the eye and you said, no, like I would not do this deal. It's not because it's a bad deal, it's because it's a deal that doesn't fit our criteria.

Can you guys talk about what that criteria is right now? Cause I think that helps propel that scale and that, uh, exponential growth you guys are talking about. Cuz saying no is just as important as saying yes.

David B: I'm, I'm gonna kick this one off and I'm gonna hand it over to Paul here shortly, because Paul is the guy that developed our criteria. And, and Brennan, I, I, I think back to that property A big part of scaling up is being able to say no when it doesn't make sense. If it's a good deal, I mean, quite frankly, almost any deal makes sense at the right price.

And if it's a great deal at the right price, move forward with it. But, our criteria we're we, we wanna make sure that our buy box is pretty open. We wanna make sure that any property that comes our way, we can do something with it. Whether it's working with our wholesalers, whether it's working with our investors, that we might, you know, be able to get the property to, whether we take it down ourselves using maybe like a, from that flip, we go through most of our properties with you guys.

We wanna make sure that we have a spot for almost every property that comes our way. And with that 

said, Paul, I'm gonna kick it off to you to kind of get into the 

Paul: Yeah, I, I think that's, that's generally right. Um, but even with us kind of exp trying to get our box as big as we can so we can take advantage of as many opportunities as possible. We sort of have a couple different buy boxes. So we've got one that's like, Hey, this is a property we're gonna take down for ourselves.

And if we're taking it down for ourselves, there's two options. We're either gonna flip it or we're gonna fix it up and hold it. And generally those properties, what they look like is we're buying it at a point where we can pretty much do the rehab, refinancing, get almost all of our money back. We have a limited $10,000 of property for a single family home, so we're not gonna leave more than 10 K, including financing costs and closing costs and all that kind of stuff.

And our goal is zero. So if we're gonna keep it, our goal is to not have any money left in. So it means we need to find a really good deal and be very careful with what we do in the rehab to make those numbers work. Um, so, so that's the first thing. Now, we may still flip that property, but I don't like to take on a flip if I don't have an ulterior or an alternate back, um, exit strategy.

So I look to make sure that a, we can flip it. B, we can hold it. If it checks both of those boxes, it's likely that we're gonna keep that one ourselves. Um, now we do have some criteria in terms of what does it mean to, can you flip it? So for example, you know, we'll do a flip to make 10 grand. A lot of people will say, my minimum is 30.

But I think like, that's really low resolution thinking. It doesn't make sense for me if I can buy a house. Like let's say I find a house that's 75,000 and it's really clean and it needs absolutely nothing and I know it's worth 95. It's like I can take that down with you guys. I can literally own it for.

One day, list it on the market and sell it for 95. I gotta pay fees, I gotta pay you guys your fees. I gotta pay, uh, realtor fees to the buyer and all that kind of stuff. But I can make $10,000 in a day and I don't have to do any work. Like, it takes me no effort. I can get, you guys will get the funding going.

It can take me 15 minutes next day, you know, once we're closed, it's like a day to list it and, and we're up and running. I'll take that deal all day long. Now, if you tell me that I'm gonna have to go gut three kitchens and five bathrooms and rip out a wall to make 10 k, no freaking way. So at the end of the day, What we've kind of established is number one, no matter how much money we put into the house, we need to make that much again a profit.

So if I do a $20,000 rehab, I gotta make 20 grand. Number two is we gotta make a minimum of $10,000 a month. If we have a 90 day rehab, it better make us 30 k because that means for three months that's on our plate. If it's a 25 or 30 day rehab and it's almost no work, like I might do that for 10 k. So that's sort of how we set our criteria, properties that don't fall into the ones that we're gonna hold.

We've got different strategies. So there's a lot of properties where it's like, Hey, this is a good deal. It's not for us. You can't quite get all your money out on a refi. Those we might kick out to partners. We might just say, Hey, here's a deal, you might wanna buy it. Or sometimes we'll take those down with partnerships.

So we've got partnerships where, um, investors will bring in capital where they may say, Hey, you're gonna get this back in a couple years, but it's not gonna be like immediate. But for a lot of people, that's still a way better return than what they're gonna find. If they just go there, buy their average rental on the market.

So we'll partner with people they bring in cash. We'll take, we'll form a joint joint L L C, we'll take it down, we'll hold it, we'll manage it. So we've got options like that. and there are a few other things that I won't go into in terms of how we can make deals work, but in a nutshell, it's those kind of criteria.

So, back to your property, Brandon. The reason it was no is because I don't think there's any way, you know, if I'm gonna do a hundred thousand dollars rehab in this, there's no way I'm making a hundred K. So for me, that that's an out, that doesn't mean you're not gonna make money on it. It's not, doesn't mean it's not a good deal, but it means that I'm gonna put, that my energy is better off spent in a place where I can hit that criteria, where I can get the one for one return.

Um, that's why we both looked at you and said, Hey, probably a good deal, not for us.

Brendan: Sure. 

David D: And that makes a ton of sense, right? Because what I hear there is, you created a buy box. In a, in a deal box that works for the two of you that the two of you have discussed. And it probably took quite a bit of trial and error to get there. It wasn't like you sat down day one with a, a, a napkin and a pen and said, okay, this is our buy box.

Just spitballing. Like you had to do some deals. You figure out what worked, what didn't, what made sense, what doesn't. I would imagine that was  probably a work in progress, right? 

Paul: still is. You asked me again in six months. I'll probably give you a slightly different answer. Again. I'm really happy with where we're at. What we have is, is massively reduced our workload and our mental workload. Cause we can just look at properties and say yes or no, we don't have to think about it.

but we're continuing to refine it and as our, our organization changes and as we've got more people helping us, like maybe, maybe it expands the number of deals we can take down, but. Yeah, a hundred percent agree. This is something we found by, I've done a lot of 12 month, six figure rehabs. I mean, I'm still doing 'em.

You guys are funding the one for me right now. I'm on 16th in Detroit. Like that's $155,000 rehab. But it's a different strategy. Like I'm gonna hold that one as an Airbnb. It's, I'm gonna get all my money out. I bought the thing for, what did I buy for 83,000 and Apprais? A 3 54 We're putting 155 in. You know, it's a good deal.

It's gonna be an amazing Airbnb. It's gonna do super well. So like for something like that, sure. But like that's a side project when it comes to the business that we're trying to scale. We're a hundred percent focused on that buy box and we'll continue to, to, and, and it's again, by doing these big projects that I've learned, like David, if you and I wanna have a big thriving business in six months and it's taking us 12 months to rehab a house and that's how long it takes us to, to cycle through money, it's never gonna happen.

It's gonna take 10 years. So we need to be quick if we're, if we're gonna make this going. And that's sort of that sort of discussion combined with our, both of our joint experience is, is really what kind of got us to the point where  we kind of knew what we wanted 

David B: A and, and Paul, I wanna just kind of expand too, like we get these awesome deals. I mean, you bought that for 83 on West one 16 and what one of the reasons that property is so special is, and we know this living in Cleveland, it's on the Cleveland side of Lakewood. Lakewood is the first suburb out of Cleveland, and it's really expensive.

Taxes are higher. And you're on one. You're on one 16th west, one 17th 

is it's Lakewood. So that was a great deal and the reason that we've been able to get those great deals is. We're really loyal to the people that are good to us, and we're good to those people too. And Paul got that deal through a title agent that we use often in, uh, innovative title.

And we have a lot of partners that we're just loyal to. And we've built these great relationships and it it we, what we give to them, it comes back to

us too. So,

Brendan: if if I can build on that a little bit. You guys are heavily involved in the Cleveland real estate scene in the form of networking. You guys, co-host an event with, our local rep, Jake Barnes and in Cleveland. Can you guys talk a little about that, about how that. Came about and what motivated you guys to, you guys were always up on stage, you know, bringing up keynote speakers and I think, people view you guys as kinda like the center of the hub of that Cleveland investor network.

And uh, you guys do it cuz you love it. But David, I think it kind of feeds in what you were just saying, right? You guys probably find deals that way. You make great connections, real estate's, very, you know, handshake and who do you know kind of business. So walk me through that, how that came about and the motivation.

David B: About three years ago, I was, uh, connected with a professional organization in Cleveland. That wasn't just real estate investors, it was bankers, it was insurance guys, it was business owners. And, um, a good friend of mine, Nolan James, who's also a real estate investor, and an attorney in Cleveland, who is the co-founder of this group, said to me, Hey, you should start something that's dedicated for real estate investors.

You love it. And I, I said, yeah, I, I'm gonna do that. So within a few weeks I set up a, a, an outing at Topgolf, and I invited, I invited all of my real estate friends, all 20 of them, and maybe 15 of 'em showed up. I didn't really know Paul too well at this time. So Paul wasn't there. David Dugan, I think you showed up to

that 

David D: I was there. Yeah. 

David B: you were there.

My, my man. I appreciate that. So that, that was a cool little event. Um, and then two and a half months later, we did the same thing. We found a speaker for the next event, and it was our guy, Adam Craig, who's a commercial real estate guy in Cleveland. He's awesome. He's, he's a mentor to myself and Paul. We love Adam.

Adam was our speaker. We brought in maybe 20 or 30 folks to kind of listen to Adam speak and tell his story, and Paul was at that event and at after that event I said, Hey Paul, you know, you seem like a great guy and you're doing so much in real estate. Would you want to be part of this with me and Paul graciously accepted?

And, um, you know, Paul, I'm gonna kick it over to you to kind of fill in the blanks of from that point until where we are 

Paul: Yeah, it's, it's really, it's, it's funny cuz this comes full circle. So you invited, at that point you're like, Hey, invited me to help you with it. And I was like, absolutely. I'd love to be more involved. And there's a guy that, that actually Duggan had introduced me to. So David Duggan had introduced me to TL Tamir maybe six months or a year earlier.

And I gotten know him a little bit. We, we met for coffee, had a conversation. He was a little further ahead of me, but on a similar path. And, um, just super good guy. Like one of those guys, he talked to him and like, wow, you're just a great dude, but also like kind of an inspiration. Um, you know, he went from driving for FedEx and, and Uber Eats or something like that.

Uh, four years later had a couple, or not even, I think three years later, had a couple hundred units. He, uh, started a team with Russell. He was, I think the, the highest grossing team. Was it Nationwide, David, or was it Ohio? 

David B: It was nationwide and, and Paul, I'm just, I'm gonna make sure I throw Lauren in there too. She's done such a great job with Tall, his 

wife. Um, she's done a great job to, you know, to help him 

Paul: Right. So I, so we brought him in and he was gracious enough to come speak and, and it was just, it was awesome. Cause this story's so good. And I think at this point we had probably gotten close to 40 or 50 people there. Dugan was showing up. We had a couple other fun that flipped guys, and from there it just kind of snowballed, you know?

It was, it's a really good group and every time we go there, we just leave being like, wow, like I had fun tonight. Like, we met a lot of cool people. We got to talk with a lot of other people who are like young and full of energy and, and doing the same things that we're doing. and it's just become something, you know, now it's gotten to the point where you guys are obviously heavily involved in and, and kind of co-branding that with us has, has been a lot of fun.

You guys are helping out with a lot of legwork and also we're being able to tap into your network, which is growing it even further. But still at its core, it's just a bunch of people who love real estate getting together once every other month to, to hang out and talk. And it's just a perfect place to share.

Cause we've got contractors who show up. We've got. Investors who show up. We've got lenders who are there, we've got insurance people, a title company. I mean it, and it's everyone just coming to kinda learn, hang out. It's mostly just getting together and, and it's a group where if there's something you need, you just ask for it and someone will find it for you.

You need a property manager, you'll find it. You need a contractor, you'll find it. You're an investor, you're looking for an agent. You'll find it other way around, you'll find that too. So it's something that, you know, we've, we've continued to do and, and we're looking forward to continuing on with you guys.

we, for us, there's a lot of value. We found deals from it. We found contractors from it. We found all kinds of stuff. And I think for a lot of the people there, it's given them the kind of push they needed to maybe buy their first or their second property. And, and, hopefully for you guys, it's been, it's been helpful too, where you're able to connect with people and, you know, find where your, your interests are aligned and you can help people and they help you in the process. So, 

David D: Yeah, and I, I, I'll get on my soapbox a little bit about the happy hour, the organization that, that you guys and, and Jake have worked on, created, uh, or creating because, um, not only has it helped me, but I'll give you an example. So a few weeks ago we had, the co-founder of Invest her on the podcast, and she was excellent and she talked a lot about the importance of having a community.

And, and I agree with that a ton. and, and I think what you guys have created is a community where, where you're not asking anybody for anything. It's not. solely for personal benefit. You are not trying to sell anything there. You are truly trying to get like-minded people together to share information to benefit one another.

and I can, you know, from personal experience, it has helped me, right? The two of you helped me, Not only fine, but, but acquire my first investment property. And as much as I think that I know about investment properties, I realize throughout that process that like you don't really know anything until you go through it.

And it's nice to be able to pick up the phone and call a Paul or a David or a tall, or any of the number of different people that are, are in that group and, you know, pick their brain on how. How you can go about certain situations and, and just having that sense of community, like I, I don't think I'd be able to do that without that community.

And I think there's a lot of other people that would agree. And it helps you live outside of that comfort zone that you guys were talking about earlier, right? It helps relieve some of that anxiety that you would get by living outside of that comfort zone and, and become, More of a doer, right. Taking action on it.

So I'll get off my soapbox, but uh, it's, it's, uh, it's a very cool thing that's been created there and I think, uh, it's picking up steam and, and it's helped a ton of people here in the Cleveland area and, um, 

yeah, it's cool. 

Brendan: So David and Paul, I'm gonna, I'm gonna fire up a question you guys to kind of round us out here. So, um, I want you to imagine that it's 2025. So two years from now, we have you guys back on the podcast. real estate investing in scripted is number one. On, on, uh, Spotify and YouTube. Uh, we have you guys back on what is your business look like?

What are you telling us about your business? What did you develop in a two year period? Uh, what did you go towards? What did you go against? Put yourself in two years from now, shoes.

Paul: You know, this is actually something we think about a lot and, and it, and it's been challenging. Challenging because for me, a lot of the things that I put a couple years out six months ago have already passed. So it's almost a challenge to think big enough.

But, but I think what's what's happening for sure is, you know, we've I've built a single family and small multifamily acquisition business. Dave has done the same. We've jointly built a much better single family and small multifamily flipping and. Acquisition business, which is scaling quickly.

We're gonna continue to push really hard on that. You know, right now we're buying approximately a unit a week. Um, we wanna double that, maybe triple that by the end of this year. and we also wanna step away from that. So, you know, we, we've sort of built a blueprint for how this runs. We have the systems.

We say these are the criteria. This is how you find your deals, this is how you finance your deals, this is how you run the numbers. And at this point, it's just an operational game. So, the same way that I said earlier, you know, we gotta challenge ourselves to be uncomfortable and do the next thing. We have to step away.

We'll keep an eye on it, but we're looking to kind of put other people in place to keep, to keep that running for us. Um, and as that allows us, frees up our time to go to the next level, we're gonna try to do the same thing on, kind of like a small to mid-size multifamily. So we're looking at 10 and 20 and 30 units.

We're gonna be taking those down, we're gonna be flipping them, we're gonna be holding them, and we're gonna build that business. And two or three years from now, I hope that we've already built that business and we've moved on and we're buying a hundred unit buildings. Additionally, I think, you know, we're both active agents in the area and we, we both really love that side of it too.

So we'll likely build an agent business as well. We've got a lot of really good young talent, you know, people that, people that are looking to get involved, that, that we love to work with. So we, we'll probably have an agent team of around at some point, um, or, or at least work together on someone else's team and be, and be able to sort of mentor some of these guys.

So I think likely they'll be at least three businesses. They'll be the single family flip or small kind of flip, flip slash hold or maybe flip two thirds of 'em, keep a third of 'em. That's gonna continue and that's gonna grow. We're gonna have a multifamily flipping business and um, I think we'll likely have an agent business as well.

Brendan: Can't wait to check in on that. Excited for you 

Paul: too, 

David B: I'll add, actually, I'll add to that. I'll, I'll, 

Paul: He always, always, does. He never lets me off easy, you  know? 

David B: Well, you guys pause, you know, you, you guys gave me a chance to talk and I love to talk. So Paul loves analogies, he loves sayings, and they're, they're, they're really funny sometimes, and this was a really good one. So one of our capital partners, Dr.

Will Andrews, one of the best dentists out there. He's an Avon, lake Ohio. Shout out to Will. Um, he and his wife bought in with us and we bought a property with them. And, and, and, and during that time period we went out there and we checked out Will's, Dr. Will's practice. Paul and I did, and he explained to us the way that it works with dental offices.

Teeth cleanings are a huge part of the business and maybe you do 40 teeth cleanings, uh, a day. I don't know what it is. And that kind of, that kind of pays the bills. And then the doctor is kind of in charge of the higher level stuff the surgery is in. And, and the, and the wisdom teeth and things like that. Paul likens our business to our flipping business, to our teeth clinics. We wanna have a lot of those going at all times. And we want to have a partner who's not on the show today, but he's wonderful. kind of working on those teeth clinics and making sure that we have that capital coming through.

Whereas Paul and I can then level up and start working on buildings like Paul said, that have a couple more zeros. And that's how Paul and I think over time, that's how we're gonna win. So that's in five years, that's where we wanna be. We wanna. Be scaling up and look, look looking at bigger properties.

David D: I love it. 

Paul: I think a final challenge too is, I mean, I'm, I'm hoping that fun, that flip scales up as well. I mean, you guys have a great shop, you know, shameless plug, you got, you guys are a big part of why we're scaling. You know, I, that's one been, one of the things that's held me back is the lending process. Just too much work, too much effort, too much overhead to where like, you know, if it takes me.

It's 40, 30 hours, which was not uncommon to get through underwriting for a fix and flip blown with some of the people I'd used in the past. It A, I didn't wanna do it. I hate that kind of work. And B, it was just, it was such, it was such a, like, who's gonna do that? Like you need. A whole week's worth of work to get to get one $70,000.

House finance is crazy. So with you guys, I think it's helped us a lot where it's probably takes me roughly 15 minutes start to finish to have something financed. Now it's maybe 10 minutes up front, five minutes later, a couple texts, a couple calls, a couple weeks go by and we're done. Um, but that's been huge and I would love to see a situation in that two years when you come by and I'm showing you the a hundred unit and the 500 unit, and the 300 unit building that we've done, I would love to see a situation where you guys have funded some of those.

I think it's an opportunity for you guys, and, and I would say, I hope you come back in, into your, and you, and you smack me if I have, if I haven't bought those buildings, and I'm gonna do the same for you if you haven't financed one for me, because there's a need for that. And I think, I think there's a business model, like, you know, in my, in my rental business, mine's very different from David's, our separate businesses.

David's is like, let's get this bench built here. And it's not that great, but it's structurally sound. Someone will use it. Mine is like, I, I'm an, I'm kind of ocd, I'm a perfectionist and my, you know, my construction is very different. Like we go way over the top. Super nice rehabs. But we get very premium rents.

And I think, I think the same could be true for you guys like, like you don't need to be the cheapest lender. You don't need to be fighting for half a percent, like make it to where you've got a good margin, but should provide a superior product. I'll use it all day long, and that's why I use you guys in the short term.

Like, I don't care if I can go fi, you know, try to hunt for an extra half a percent off or something like that. I need the person that gets the deal done and lets me do 10 in a month instead of two. I don't care if I save 200 bucks in each of those two when I lost out on the a hundred grand I was gonna make on the other eight.

So, I would love to challenge you guys as well and say, hey, like, you know, I know, I know you've talked about grown into other products and, and you know, other types of stuff. I think you should do that. I would love to see you guys step into the long-term game. I would love to see you guys step into stuff bigger than four or six or eight units and uh, it would be great for us if we could grow with you and not have to go find another partner when we get there, cuz that's definitely where we're going.

David D: I like the sounds of that. That's Brendan's world. Put it on the docket, Brendan. 

Brendan: Cool. Dugan, if you wanna sign us out, this is, uh, this has been awesome. Let's round it up. 

David D: Awesome episode. Awesome having you guys on. I look forward to, uh, where you guys are headed and of course, I, I have fun every couple of months when we get together for Invest cle so I'm looking forward to the next one of those and, you know, every conversation we have in between.

Um, so thank you so much. It was great chatting with the both of you and, and really appreciate you guys coming on. Make sure to leave us a five star review on Apple Podcast. If you have any questions or suggestions for us to talk about on the show, make sure you send them over to us at podcast@fundthatflip.com. That's podcast@fundthatflip.com. We also have sponsorship opportunities, so be sure to hit us up if you wanna support a show that keeps it real for real estate investors.

 

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