Real Estate Investing For College Students (Twin Menials Double Down on Real Estate)
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Real Estate Investing For College Students (Twin Menials Double Down on Real Estate)


– Hey guys. Welcome to the Anderson
Business Advisor Podcast. This is Toby Mathis and I’m joined by Clay and Evan Manship
from Indianapolis. Welcome guys. – Appreciate it, thanks for having us. – Yeah we’re gonna have a
little bit of fun today. What I always love is talking to people that have had success in real estate, or any business for that matter. I just like talking to
people who have success. – Right. But these guys come from Indianapolis and I’m not gonna steal your thunder. What do you guys do? – No, our group, Mainstay Property Group, essentially serves as a
financial advisor, of sorts. We are much like a Raymond
James, or Edward Jones, or a Northwestern Mutual,
however we don’t sell securities, bonds, and life insurance, you know. We are exclusive to selling
Indianapolis real estate and consulting, coaching,
advising to the process, so that folks can achieve
sexy returns in the Midwest. – Do you guys stick
with just Indianapolis, or do you guys go outside
and do anything else? – For the time being, yeah, and you know, we’re strictly Indianapolis
because we’re born and bred in Indianapolis. We went off to school in Cincinnati, about two hours east of
Indy, and we ran right back. So we’re Indy born and
raised, that’s what we know, that’s what we’re good at. – So you know the market, kind of? – Mildly, yes.
(laughing) – How many property transactions
have you been involved in? I just wanna give these folks for later. – Yeah, so we’ve been
in business since 2014, and last we looked it
was just north of 1200. – 1200 homes that you’ve been
involved in the purchase– – Purchase, or sale, correct. – And do you buy them yourselves and then you guys fix
them up and sell them off, or what do you do? – By definition what we do,
we’re wholesale transactions. We’re buying for A and
we’re selling for B. However, our mantra is to make sure that we’re providing value via equity that we put into the deal, to make sure that people
can utilize our services, from a construction standpoint,
a procurement standpoint, essentially have that
product banked all over, 65, 70 cents on the dollar. Take the money back out, and do it again. – All right so this is
the question everybody always wants to know is… You probably didn’t
just one day wake up say I’m gonna be in real estate. (laughing) What brought you into real estate? – Yeah, so what brought
us into real estate is kind of funny. I wanted to be an investment
banker when I grew up. I always remember wanting
to wear the suspenders, and drive the Ferrari, and make the millions of dollars a year. – [Toby] Who doesn’t? – Yeah right, it’s still a
good goal to have I suppose. But we read a book called
“Rich Dad, Poor Dad”, and it’s almost cliche
to say at this point. – [Toby] Mm Hmm. – Just reading “Rich Dad,
Poor Dad” it’s a must. In actual what we do is we… For anyone who hasn’t
read it, I’d offer it to the members of this podcast. We’ve purchased 255 copies of that book for people who haven’t read it. I’ll buy a copy… – [Toby] A copy– We buy it and give it out to people. – 255– – Five for our staff and a box of 250. – To fast forward the story,
we got into real estate because I read “Rich Dad,
Poor Dad” when I was 17 in high school. And so we read it in high
school “Rich Dad, Poor Dad”, which kind of transformed the
way that we looked at life. I didn’t want to go work 100 hours a week being an investment
banker when I could own these series of houses, so
again went off to school, graduated with six figures
in student loan debt– – [Toby] Oh that’s a big one. So you went to school on
the good old fashioned student loans which– – My mother’s a teacher
and my father works for me. I don’t come from money and
I made the astute decision to attend a private university,
which just racked up my student loans to no end. – [Toby] Catholic? – Catholic, oh yeah. That’s exactly right. – Expensive. – So, $103,914 student loan debt later, I had to figure out my life. And so kinda what we
decided to do was look at this real estate thing. And so I was a 22 year
old kid with $10,000 to my checking account,
and that was in 2013 when we bought our first house,
and bought a $24,000 house in Indianapolis which,
you heard that correctly. You can still buy a house
for the price of a VCR in some Midwestern cities
right, and a used car. So I bought this house and put $8,000 down on my traditional mortgage
and that was our first deal. That house was leased for $650 a month. We closed on it, I’ll never forget it. The day before Halloween on 2013. – [Toby] You still have it? – And we still do today. In fact we’re in the process
of selling it for $120,000. – How many times has it paid for itself? – Six or seven. I couldn’t tell you. A lot. – Plenty. – You can make the luck
debate and you know we certainly got a good stroke
of that on the first one, but we got that first rent
check on November 1st. From there I was addicted. And, it’s not just some phraseology or some black wizardry that goes on. It’s fundamental wealth. We saw it happen once
and we had to replicate and recreate that process
over and over and over again. – So we got you know, we
started with the first deal, save, save and conventionally
financed a $24,000 house. Yes, that’s possible. – [Toby] How do you
finance a $24,000 house? (laughing) – It’s goofy. – Looking back on it, it’s
amazing that it worked out. – It’s the goofiest thing. The mortgage payment was
$94 or something, or is $94. It’s leasing for $650, so it’s easy right? It’s like fish in a barrel,
it’s the easiest thing. It was 2013, nobody was buying. It was easy. But I realized really quickly
how much we’d have to work to save up to start buying
and conventionally financing these other homes. So at the time we were still
living at mom and dad’s house. We were landlords living
at our parent’s house. – We owned real estate. – [Toby] That’s okay. – We’re millennials so
we can get away with it. So we lived with mom and
dad, bought the first house. We actually bought another
house we conventionally financed and we were– – [Toby] Do you still
live with them? (laughing) – I have to say we graduated from that. (group chatter) – Bought house number one. Bought house number two, and
then we were out of money. We were living with mom and dad. Didn’t have two pennies to rub together. Started knocking down doors
looking for private capital. After 270… I know this exact number
too just like the books, 270 people told us no. They didn’t want nothing to do with us. Capital markets were still scarce. 23 year old kids didn’t
know what we were doing. – We was a negative net worth,
mind you. We were grads. – [Toby] Hey, and some
good old student debt– – Good old consumer debt. So we had our 271st guy,
I’ll never forget his name cause it was Jeb. Jeb will likely watch this
podcast at some point, so I hope he gets this. – [Toby] Hey Jeb.
– Shout out to Jeb here. But Jeb, really was some dude I met online on “biggerpockets.com”. Said yeah you seem like
you know what you’re doing, I’ll lend you 30 grand. So we took that 30 grand, bought a house. I racked up four or five
grand on my credit card buying materials, doing the work myself, and refinanced the thing
out for like $85,000 the next month, or it
appraised for $85,000. So we learned very quickly
that while there are people, once we had a track record it’s like okay, this guy doesn’t want to
lend us money anymore. He wanted to build a portfolio
like we were building. So we identified essentially
a niche for that service to identify and procure
investment opportunity, and help build people’s portfolios. So one Jeb turned to 10, turned
to 20, and now we service everywhere from investors from
Stockholm to Sidney to Miami and Seattle. – Yeah, so you’re finding them the houses? – Yeah. – Do you guys do all the
rehab and everything else? You can do it for them?
– Everything’s a house. What I joke about it with Ev
is that I’m in real estate because I’m a control
freak, and so I want to know every single process of what’s going on. So you can, we’re kind of what I call us a cafeteria service, right? So you can go in and use
this for what you want, and leave what you don’t right? So for what we do is we
come in and our secret sauce is procuring properties. And so we start there, and
if you want us to rehab it for you if you want to kick
your feet up on the beach. – And you do, like when
you’re doing wholesale, cause I know your group,
it’s a fantastic group of wholesalers working and all that. – [Clay] Thank you. – You guys are knocking on
doors, throwing out tons of advertising looking
for people that might want to be selling their houses right? You’re not waiting for
deals, but you’re going out and finding them? – And that’s kind of how, again going back to that first deal we
had to raise money for, but we’re in a transition
period in the market at least in Indianapolis,
where you know we couldn’t just log on Zillow and press
yes and buy houses anymore. It was getting competitive. And so we had to develop,
if we’re gonna keep our business model moving,
we had to, we were forced to start that process. So what started off as
is Evan and I kinda of walking by houses and knocking
on doors ourselves into– – Which worked in 2014 by the way. – To today where we’re
spending well in excess of 50, sometimes $60,000 a month to
procure the inventory we need to make our machine move. – You know let’s make sure that people actually heard that right. 50 to $60,000 a month
just in the advertising? – Just in advertising, correct. That’s marketing overhead for our company. – Yeah, yeah. – And that’s what you use wholesalers? – Yeah absolutely. – Wholesalers go out and do all that stuff so you don’t have to. – Yeah, we’re value guys. That’s kind of where it starts and stops. You know, buy the property
right and you’re… No matter what you’re buying,
you gotta buy the thing right. (laughing) So we’re identifying the value. We’re trying to take the
heavy lifting out of it, service folks whether
you live 20 miles away or 2000 miles away in San
Jose, that’s really where our group comes in. – That’s really cool. Now I have to ask you cause
everybody’s had their share of face plants when you
do the scorpion your legs go above your head– (laughing) What’s your worst? – I’m gonna look at you. – I know I can tell a story. – Yeah, no this is fine. This is a good one and
a really important one. I think it really had us. I guess we earned our stripes early. The first house I ever
flipped, I lost $36,000. Didn’t help with that hundred
sum odd thousand dollars in student debt that we were still in. But I’ll never forget the address. Look it up, 1145 Linden Street, Indianapolis, Indiana 46203. (laughing)
– You sure know your numbers. – Not to be particular, no not at all. – I bought the thing for 125 when we were putting 125 into it, and we made the newbie
mistake of completely being over-leveraged of hard money. Had a couple contractors
walk and so on and so forth, but we realized that while
you’re working a 9 to 5 job and you’re trying to do
a full on redevelopment of historically protected
property, there’s a million things that can go wrong. – If I can interject, it was
just textbook mismanagement. And I think you can look
at any investment you make, and if you’re mismanaging it– – Everybody’s done what
you guys just described. Everybody that’s been in
real estate for a while, has done it. – Sometimes I get, and I think
as investors we get, you know guilty of this, at least we
do, it’s not the first time, and I’m sure it won’t be the last. – I would say like I better
want to have that house in case I have to keep
it cause we’ve done that, even in Vegas in 2008 when you
had this great market place, we did it. We had a roof cave in and
destroy everything we just did on the house and nobody
could have predicted it. It was just a torrential
down, boom the rain hits, that it never hits in Vegas right? And it end up caving in the
roof and destroying all the hardwoods we just put in and
everything else you know. – [Clay] Love that, oops. – Yeah, it’s like oooh,
it’s not as bad, you know, it’s one of those things
where I still have the house to this day., and I’m glad I have it. – Yeah, it’s tuition. You know, again we knew
this was something. It wasn’t a hobby. It wasn’t a short term thing, and we know it’s an investment. You inherit risks with every investment, we just understood that, so
we went out for a margarita after we lost 30 sum
odd thousand dollars– – You’ve probably had
one that offset that too? – Oh, 10 times over, and that’s
really the name of the game. – But you dumped the
property. You didn’t just want to keep it? – No I mean I think tuition’s
a great word, you know. I always relate stuff back
to the student loan thing taught me a lot. I paid a lot of money for
that degree and this degree took me one year to flip
that property, and cost me only $36,000. – [Toby] It took you a year to flip it– – It was a year to get done
with it. I had contractors walk. I had hard money guys up and down my back. It was an interesting situation, but it was textbook mismanagement. – Where was your hard money at? – 12%, two points. I can give
you the numbers like always. 12%, ten points. We borrowed 160 grand, so you
know it was a 360 day note, then we closed on day 354,
or something like that. – So you had an after
repair value that was, were you just estimating high or was it– – No, no, if you take it
on paper, you just add 125, 125 and I think we sold
it for three and a quarter? – Yeah. – We would have made plenty of money, but we had budgets swell up. 360 days at 12% interest
is a lot of money, and it kind of just got out of control. But going back to it now,
what we’ve been able to do is take that tuition,
if you don’t apply it, it’s meaningless, alright,
so you gotta find a way to fix that for us. So the way we kind of
took that we say okay, if we’re flipping houses
now, or managing construction projects for other people,
how do we fix that? So we have a full on
staff now who’s managing, day to day, within a CRM, daily operation for the construction site. – It goes exclusively to
the point where we have our project manager on
staff, and his job is to drive the company
truck around and make sure that when someone says
cabinets are going in on Monday morning at 8
am, cabinets will be there Monday morning at 8 am. So applying that tuition
was clutch because granted, we were in the city, but we were working on 9 to 5 jobs, and the
amount of clients we service that live thousands of
miles away or a flight away, it’s a whole lot different. Makes them feel infinitely
better about he ability to invest in us. – What’s your communication
like with somebody who buys a property from you guys? Are you guys keeping them
appraised every step of the way? Or you’re just giving them
once a month. What do you guys kind of do? – Really what we don’t, I
think the better way to answer this is what we don’t do. The amount of times that
we’ve sold a property and kind of washed our hands,
I can count on one hand the amount of times we’ve done that. Really, Aaron is our project
manager, is a tremendous, tremendous resource for
our group, and particularly for our investors, but every other day. Certainly weekly updates. Kind of how we like to
focus things, we don’t have a buyers list. We don’t have listings online. We have deep, intimate
conversations in a setting just like this with our investor. What are you looking for? How can we hand tailor a
solution to achieve both goals? Whether it’s a new construction
home, apartment building, you name it. So a lot of what we do is
residential, but it’s a constant element to be kept– – You find other things no matter what? Once you’re known as a
buyer, everybody’s gonna come looking for you when it comes time? – We like investors that
let the deal speak to us. You know, we don’t buy a
rental and shove rental down somebody’s throat. We find value, we procure
value, and then we add value, and really let the deal
speak to what we’re doing. – What we tell people, Toby, is.. We tell people we want
people to be as hands on or as hands off as you want. If you want to come in and
pick the color of the grout in the guest shower, by
all means, we’ll do it. Do not do that. (laughing) But after we earn your
business and your trust, and you want us to just handle it for you, and you wanna flip houses
while sitting on the beach, that’s our goal to be able
to provide that for you. – [Toby] The worst thing I’ve ever done is visited the houses. (laughs) – Just don’t do it. Let somebody else pick it for you that’s actually like hey
don’t put that in there. – And that goes with what we
tell people is whether it’s us, or a different market,
or whatever it may be, build yourself a team
that you can rely on. And I think that speaks to that. If you can’t trust your team
to pick out the tile color, and you’re trusting them
with $200,000 of your money, then we’re on different
wavelengths already. So that’d be my two cents. – What’s the market
like in Indy right now? It seems like a lot of folks
are going there to try to buy, and you hear good stories, bad stories You have bad areas of
town, good areas of town. What’s your, what’s kind
of your favorite thing? – I like to eliminate the
stereotypes of many of our, I guess what Indy gets. It’s super hot investment
wise, there’s no way around it. It’s a traditionally cheap market. You can do a lot of damage
with $75,000, $100,000. You’d be stunned what $100,000 would get you in Indianapolis. For the most part, population
is continuing to grow. Jobs are continuing to come in, but the market’s super
attractive, certainly for folks that have IRA money or idle
funds sitting in securities or something, it’s– – Are you getting
appreciations, or is it mostly just cash flow? – Yeah it’s steady, yeah. You know, what I always tell
people is if you go back historically and look at
the crash when it occurred, the worst month in Indianapolis
was in zip code 46220. And the dip on the down
turn equity wise was 17%. – [Toby] That just crack me
up you throwing numbers– – I’m a numbers guy. I’m a big data guy. Check me right. (laughing) – I like these guys. – So it’s funny to me but
historically the worst month in Indianapolis history maybe
since the great depression went down 17% in value, so
we’re never gonna be a Vegas. We’re never gonna be a Phoenix, right? We’re trying to, slow predictable growth. We call it the boring method. We want to be boring and
that’s what Indianapolis is. – We’re both recovering
Cincinnati Reds fans, and we tell everybody that
we use a baseball analogy for everything. We’re not trying to hit
home runs, not in Indy. We’ll get a stand up double or something every now and again, but we
don’t care if we get clunked by a pitch, flare one to right field, or hit a sharp line drive up
the gut, we’re just trying to get everybody on base. So try to get to first base. That’s what we’re constantly pushing. – Alright since you guys
throw baseball out there, over across the street we have
the Aviators having their– – [Evan] I saw that, yeah. Is it opening night tonight? – [Toby] This is opening night. – [Evan] Alright. – I think tomorrow’s the
second game so that means tonight’s the first night. – [Evan] There you go. They just built that thing like a year– – [Evan] No kidding. – It’s completed size. If you were gonna talk to
somebody who is just getting into baseball, so if they were
just getting into real estate what would you tell them? – I think it’s important to know the game. You know I think it’s
important to, much like when you’re getting into real
estate, I think it’s important to turn on the TV, watch the Reds. Well don’t watch the Reds. Watch the Aviators.
(laughing) You gotta know the game
you’re playing before you can effectively be good at
it, so crunching numbers, understanding deals,
understanding markets, you know. The amount of investors who
have had success with us are often times folks
who, that maybe faltered with their first deal. You know people now they really
know what they’re getting themselves into and understand
this is an appropriate measure to take to be
effective, so turn on the TV. I guess that’s best. – Yeah, and maybe continuing
down that metaphor is don’t be afraid to swing the bat. So many people come up and
they’ve got their money, and they’ve done all the research– – [Toby] And they’re like uuhhhh. – Right, and then they see the pitch come and they just kind of freeze. At some point you have to swing
and just kinda of go for it. Our successful investors are exactly that. People who are intelligent
and they’re looking for the right team to
build themselves around, and we provide the rest. – You know would you guys
be considered millennials? – Yes. – Absolutely. – Alright, so the
millennials, here’s the rub on the millennials is
they’re not buying houses anymore right? – [Clay and Evan] Yep. – They’re not buying their
houses. They’re renting. Rents have been going up. The home ownership’s
been kind of declining. What would you tell somebody
who’s in high school? We’ll take it into high
school, so let’s say you’re in high school and you’re going up and you’re talking about their future, and my personal belief that the
millennials can’t buy houses cause they have so much student debt. – [Clay and Evan] Right. – It’s more than credit card debt now. It’s 1.5 trillion.
– [Evan] It’s crazy. – [Clay] Oh yeah it’s just your belief. Don’t think we’re all in the same place. – Well alright. What would you tell
that high schooler now? – You know, it’s tough. We’re in a society, I’m guilty of it. We both have finance
and economics degrees, by all definitions, we’re overpriced. I wouldn’t take my time
back in college forever, but it’s an overpriced four
years of partying you know. I would tell people to
understand the society you’re in and ask questions you know. Our corporate motto, we got
a big wall in our office, just ask why. We encourage every investor,
every client, every employee to always have that kind of
question mark in the back of your head. Not just to be rebellious,
but to better understand what that’s going to look like. So my advice to an 18
year old or 17 year old getting ready to head in that direction is why do you need a degree? Why do you need that if
you’re gonna take it on, what’s the return? You know, things like that. Very, very rudimentary
ways of looking at it, but don’t just blindly follow. – Economics degree’s not bad guys. (laughter) The English degree, I get
like I majored in Spanish. – Finance or interpretive dance? I went with finance. – Yeah, I always look at it
as thank God for those degrees cause they subsidized all the engineers. (laughing) – And talking about something
else on a more tangible level. Something that we’re
really passionate about, we actually have a nonprofit
that we’re working for right now that is all about
implementing financial education in high schools. – [Toby] Really?
– Yeah, the fact that we… It’s we’re passionate about it. It’s what I wake up thinking
about, and quite frankly go to bed thinking about,
but you know the fact that we can graduate high
school now and not know what a credit score is,
but we know darn well what chlorophyll is, why? It’s always troubled me. – What’s chlorophyll? – I don’t know. – I think I failed that class. (laughter) – But anyway, that’ what
we’re passionate about. So I guess on a more tangible
level, even if you are graduating with debt, or you are planning on going to college, understand that there are several methodologies in
this fine place that we occupy called earth that can lead
you down the path of either financial independence or
just wealth generation. – So you guys set up a
nonprofit that you do education for high schoolers? – [Clay] Correct. – You’re speaking like
talking to the choir here, plus the people out here too. We always say it’s like
rich folks always end up with a nonprofit. If you follow some of
my, I got my vlogs feed, I think of Andrew Carnegie when he wrote The Gospel of Wealth and like your job is to give back, yeah. – That’s really what it is. We just go done speaking at
the University of Indianapolis, ironically last week, these
potential college students and essentially we went up
there and just like you know. How many folks in here can
tell me what this element on the periodic table is? Everybody’s hands up and
then, how many people here can effectively balance a checkbook? Bunch of blank stares.
– Its just shocking. – We don’t use checkbooks anymore. – Yeah right. – Apple pay. (group laughs) – Well yeah, that’s
startling and really again my advice to a 16 year old
kid would be exactly that. Just ask why. – Ask why. That’s actually a good
one, and you guys have had super success– – Yeah.
– We’re trying. – And you’re giving back. – Yeah. – Kudos to you both. – Appreciate it. – Thank you very much. – If you guys couldn’t
tell, they’re twins. – [Evan] Identical as they come baby. (laughter) – Alright, thanks for your time. And for joining us.
– [Twins] Appreciate it. – I’m gonna put your information
up on the site if you guys are okay with that. – [Twins] Please do. – Alright, fantastic. Thanks guys. – [Evan] Thanks. (upbeat music)

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