Episode 142 of the Diary of an Apartment Investor Podcast with Paul Shannon, hosted by Brian Briscoe. Transcript by Otter.ai – please forgive any errors.
Brian Briscoe 0:00
What advice would you give an aspiring investor who's six to 12 months behind
Paul Shannon 0:04
you, number one is, is to look at where you want to be in 10 years and work backwards from there. I think a lot of people go at it kind of chaotically. And they don't really think they think, Oh, this will be fun to do. Let's try this. Let's do this. And they don't really connect the dots as to where that's gonna lead them. And the second piece of advice I would give is that don't speculate. You know, if you're trying to get into investing, focus on cash flow, you hear all the time, take action, take massive action, get out there and just do it. That's great. And I think that's good advice. But at the same time, don't get consumed with that idea that you just got to go out there and just take this big risk and hope it all works out. You got to educate yourself.
Brian Briscoe 0:50
Welcome to the diary of an apartment investor podcast with your host Brian Briscoe. In this podcast we bring some of the top professionals in the apartment investment field to discuss various aspects of the apartment investing journey, with the sole purpose of educating listeners to make wise investment decisions. The Diary of an apartment investor podcast is sponsored by four oaks capital, bringing you high yield returns through apartment complex investing. This is episode number 142. And part of our first deal series. Keep listening to learn how Paul Shin goes on a 40 unit property in Evansville, Indiana, all by himself. And now the show. Welcome to the diary of an apartment investor podcast. I'm your host, Brian Briscoe with foros capital. Another great show on the way today. It's one of our first deal series episodes. And we have Paul Shannon on the line with us. And he recently closed on a 40 unit apartment complex in Evansville, Indiana for a purchase price of 1,045,000. So that said, Paul, welcome to the show.
Paul Shannon 1:53
Thank you, Brian, very excited to be here. Thanks for having me.
Brian Briscoe 1:56
All right. Yeah. And if you want to learn more about Paul real quick, I'm obviously Listen, but I'll post his bio in the show notes. So head to the show notes, you know, if you want to do a little more deep dive on on him. But that said, Paul, why don't you just tell us a little bit about your background?
Paul Shannon 2:10
Sure. I'm originally from Boston, Massachusetts, my wife and I have three children, two girls, eight, and almost six, and a little boy, that's two. So we definitely have our hands full. We live out in Indianapolis, Indiana, we relocated after about seven years ago, my wife and I met in college where we were both business majors, I was specific to marketing. And like a lot of people that go into college, you don't really know what you want to do when you grow up. So business seemed like a good field to get into. And when I graduated with this marketing degree, I realized I really couldn't get into a marketing department because most businesses who hire for marketing want people that understand the product and the customers ready to college, I did not really relate to that. So the natural progression was to get into sales. So that's where I spent my 1617 years of my career on various roles. But the back half of that career was spent medical device capital equipment sales, I was selling equipment to ophthalmologists who did cataract surgery in the operating room. So I did that up until 2019. And that was two years ago when I left full time to pursue real estate. Nice,
Brian Briscoe 3:13
nice. And it's funny you say, you know, when when you're in college, you never know what you want to be when you grow up. But I've joked around a lot. I've been in the military for 20 years. And I've said this recently that when I realized that I wanted to be a full time real estate guy, real estate investor when I grew up, that's why I decided to finally leave the Marine Corps. So anyway, several years in sales and a medical device sales, one of my partners spent a lot of time in medical device sales, too. So it's good, solid profession. And, quite frankly, you're always selling and I think that's going to be something that is going to pay dividends, you know, in the in the real estate business. So you decided to leave full time to do real estate. Did you have any real estate as like a side hustle prior to? Or was it just Hey, I'm stopping this. And I'm starting that tell us how that transition went? Sure.
Paul Shannon 4:02
Yeah, I guess I had a little bit of experience, but not anything substantial, and not for a very long period of time either. I really didn't have time, to be honest. I mean, that was one of the big reasons I left my career was because it just got more and more time intensive. It was taken away from some of the other priorities in my life, like my family, my health. So last year, I was in that career. I spent at nights in hotels, I was on the road all the time. You know, a lot of times there were dinners at night, and there was a few bottles of wine had with customers, etc, etc. So it was just go go go. And there wasn't a lot of time for real estate. But I had I had always been interested in I wanted to get into it. And it's really when the why became more apparent and more acute that I decided that I didn't have a choice time you can always make time if it's that big of a priority, and at that point, it became that big of a priority. So I initially bought a duplex in the beginning of 2018. It was tentative it was an old property. So I got some good experience there and dealing with tenants leases, maintenance issues since property was built in 1920. So I had regular phone calls, there was deferred maintenance on it. From there, I bought a single family home at auction that was in pretty rough condition and went through my first full rehab and working with contractors directly, which was a big learning experience and a lot of mistakes were made. And it was agonizing at some points, but it ended up working out really, really well. That property I bought for $55,000. I put 30 into it. I filled it with a tenant for 1200 a month. I refight it, it appraised for 145. So I got all my money back in about 20. Yeah, 20 something okay, in addition, so that's when kind of a light bulb went off that. Wow. You know, first of all, that was a really scary experience with a lot of learning lessons. But here I am standing. And I did well with it. And I still had fun. And I wanted to move forward and do it again. So there's something wrong with me here. Yeah,
Brian Briscoe 5:58
no. And that's, that's a definite lightbulb moment. I just, you just got to ask you a question. I mean, that's what most people refer to as the burn method. Did you know that going in? Or did you just kind of figure that out along the way?
Paul Shannon 6:11
I did know that term. And I was familiar with it. I was kind of a bigger pockets podcast junkie. At that point, I had analysis paralysis, I suppose you could say for years, when it came to real estate, I always thought that, you know, because I had no experience in contracting myself, I had no experience with leases, I could get sued, it was always the worst scenario that was in my head, that was probably going to happen. It wasn't about what you know, could happen that could go really well, it was always the worst, and I was going to have a total loss and, you know, make this investment I pay cash for and it just disappears overnight. But the fact of the matter is, is real estate, it's it rarely happens. And it's really difficult to make a big loss like that in real estate, all you have to do really is if you make a mistake, let's say you overpay is you just maybe have to wait a little bit longer to get your money back, you're gonna collect rents, you're gonna probably participate in some appreciation. So at the end of the day, it really is just about going in and taking action and trying to learn and you're gonna make mistakes. But that's what I found was that, you know, I learned a lot from that flip, I learned a lot from the duplex I bought, I wanted to move forward. And I thought, Well, hey, you know what, this is obviously not going to provide, you know, a supplement to the money I was making in my medical sales career. And if I focus full time on this, there's no better time to take a chance on myself than now. So let's go, let's see if we can scale this thing. I was obviously like I said before, you know, really not enamored with the fact that I wasn't around my family as much we were about to have our third child. My wife works a full time job. Life was just getting too stressful, and my priorities are out of balance. So I thought no, what if this doesn't go well, and this isn't the right decision, you can always fall back on my career in a couple years and go back in a medical device. But that hasn't been the case. And I'm actually, you know, I'm thrilled I made that decision. And things haven't panned out the way unnecessarily mapped them out. I'd say they panned out better, and it's just been a different direction. But it's, it's been fun.
Brian Briscoe 8:05
Yeah, you know, and there's a lot of things in there that I want to unpack. But the first thing is, I always like to ask everybody about their big burning wine, you've you've, you've talked about family, you've talked about time blown away, and everything else, which I think resonates with a lot of people. But if you could distill that big burning y down into, you know, one or two sentences, you know, what, what is your Why?
Paul Shannon 8:29
Well, I think there was a specific evening I spent in a hotel room, where I just gotten back from a dinner, and it was kind of sleepless that night, I was thinking about, you know, what's my life gonna look like, in 20 years, when I'm retired. And at the pace I was going, I thought, well, I'm going to be probably pretty unhealthy. I will have missed my kids growing up. You know, hopefully, my wife still loves me and can tolerate the fact that I was never around. And I just didn't like the person that I could have became. And I didn't necessarily admire the people that were in my company that were 20 years older than me either that were close to retirement. In fact, a guy that I worked with who I really respected, I respected all the people I work with, I'm creating memories with a lot of folks and I miss, I miss working with a lot of mister people. But a guy that I really respected. He worked till he was about 67 years old, he pushed it really hard. And, you know, he retired and two years later, he passed away. I was really sad. I thought to myself, man, you know, that's, that's the worst outcome for me. I want to live my life and design work around my life and my family first. And that's really all that matters.
Brian Briscoe 9:35
Yeah, I mean, there there has to be a place for work. But I think too many people end up focusing on their work and not focusing on life. And I appreciate how you said that. I think you nailed it on the head. So let's talk about this 40 unit here and I know you know from from talking with you earlier, it was kind of you know, there's a crescendo coming through. You started with that that one and then a two In a couple of other things, but let's let's just launch right into the 40. And maybe we can backfill things as needed. So 40 unit Evansville, how did you find this property?
Paul Shannon 10:13
I went direct to seller, I had started to look outside of Indianapolis and the tertiary markets for a number of reasons. And when I decided I wanted to go larger, I started by contacting brokers and really wasn't getting much traction. As a newbie to the apartment game, there wasn't a lot of credibility there. Even though I had done some single family projects at that point I had done, I actually had about 30 properties in my portfolio. But they were all you know, single family homes and small multifamily. So that didn't really translate necessary, necessarily into credibility with these brokers. So I got a little bit frustrated and decided that hey, nope, I've got to figure some other way out, do this. And I started just kind of driving for dollars, I guess you could say I was trying to familiarize myself with town a little bit more. And I would drive by an apartment building, and I'd see it and say, hey, that's something I'd like to own. So I'd look it up. And, you know, find out who the owner was, and see if I could search their LLC or their name on the internet and find a phone number. I did that with a number of properties, the property that I found, that I acquired, I got a guy on the phone who bought the property originally and then sold it on contract to the decision maker and that person that had the paper was nice enough to give me the the decision makers phone number and talk to that person and the way the negotiations went. Nice.
Brian Briscoe 11:34
Go back a second, not many people I talked to are successful with direct to seller, you know, campaigns, how many sellers did you talk with before you you got to this 40 unit, I would
Paul Shannon 11:47
guesstimate probably about 25. Evansville is a relatively small town. So there's probably 200 apartment buildings that are over 40 units or so. So that's where I started. And when I got to this particular seller in this particular asset, and I started engaging in negotiation, that's kind of where it stopped. So, but like I said, I wasn't getting much traction from the brokers. So it's an interesting thing. Now that I own this property, and it's only been about two and a half months since I've acquired it, the same brokers that weren't giving the time of day are returning my phone calls. Now we're looking up the property record and seeing that I'm the one that acquired the property for this transaction. And now they're starting to call me and want to see if we can meet for coffee. So it's kind of an interesting thing in this business, how you gain momentum, and everything. It just accelerates. You know, we
Brian Briscoe 12:34
saw the same thing. I had several brokers, one in particular who we've since developed a great relationship with, when I first call him calling him I asked him to meet for coffee or lunch and he's like, No, no, I'm not not not even not even in my office for 15 minutes. He's like, and he literally told me he's like, you don't have anything that I work with owners. I don't work with, you know, people who want to be owners, I work with you. And you know, when you're an owner, I'll meet you for coffee, I'll meet you for lunch, I'll meet your for whatever. And sure enough, as soon as we were owners, actually we were a couple weeks out from closing but he he got wind that we were closing. And he reached out to us, and it's awesome. Anyway, that's Yeah, that's that's the nature of the game. The brokers want to work with the owners because the owners are where they're going to get their dollars.
Paul Shannon 13:25
So yeah, there's a much easier path to to a commission from a listing perspective versus representing a buyer, unfortunately, absolutely. So,
Brian Briscoe 13:33
so great. They're now found this place in Evansville, you were driving for dollars in Evansville, you mentioned 30 properties prior to or all those properties in Evansville. Most of them were geographic is everything located.
Paul Shannon 13:50
Most of them are located in Evansville. Yeah, I'm home base here in Indianapolis I had as many as eight doors here in Indianapolis, I sold a few of those off I at one point was it was really just six months after I left my my job my w two that the numbers just stopped penciling out the way that I wanted them to I was doing the burn method. And that was trying to recycle all my capital. So if I bought a house for $50,000, and I put 25,000 into it, I wanted it to appraise for 100 grand. So I knew that I could get my 75 back out, get the 25% and as equity and then indefinitely roll that money into new assets. So as property values went up, and rents didn't that kind of went a little sideways and those numbers won't work anymore. So that's when I went out to tertiary markets. Evansville, I found I was looking at a bunch of different markets, but I really hit it off with a property manager down there. I knew that was such a key component to investing out of your market. But that's the first person on my team. I wanted to identify if you will. And when I met this person, you know, as a young guy, he was hungry. He understood the business from my perspective. They had a general contracting arm of their business in house. So it really was a turning turnkey operation. So I started with one house down there. And just to try them out and see how it worked out. I found this via auction and rolled it into their general contracting team. They did the rehab, I believe it was about 12 $15,000. So it's pretty light rehab. Good kind of first step. And after the rehab was complete, that filled it with a tenant that still manages the property today. But it just gave me kind of a track record to build off with them. We moved into another couple of properties. And then I bought a package of six single family homes, and then a package of three single families and four quads. In the four quads were all vacant. They're pretty rough, very banged up heavy lifts. So this was the first real test, I gave these guys and they pass the flying colors. We crushed it with these projects. I'm really excited how well these guys did with it. But this this was going on during the beginning stages of COVID. So it was a little bit Rocky. And I was a little bit nervous. To be honest, I didn't know what was going on. With Rhett moratoriums, everything was up in the air at that point, this is March and April 2020. So we were wrapping up those projects, and the housing market was relatively strong, surprisingly, going into the summer. And I thought, well, let's see if we can put these up on the market, they're going to look as nice today, as they're ever going to look over the next 10 years or so most of the stuff is new and got a hit. And we sold four, or excuse me three, four unit properties as a package to an investment group out of Atlanta. And then I had a different problem, I had some cash I was sitting on. And as the months rolled on, I started worried about inflation. So it wasn't you know that I was worried about rent, moratoriums, and all the issues that have come along with that it was you know, now I gotta protect my spending power. So so what better way to do that and get into real estate, maybe I shouldn't have sold those four units.
Brian Briscoe 16:46
You know, you saw the four you sold 12. And you ended up rolling that over to buy 40 I think there's a lot of really good, you know, lessons learned from there. I've said three things, you know, three things are important in your first acquisition, find being able to find a deal, being able to raise capital and building a team, you know, if you can do do do those three things, right? You're gonna do okay, you know, and your team, what your property manager, I mean, you slowly built that relationship over a couple of years, to where you were good working with them, they were good working with you. And so you that gave you the confidence to get something bigger, you brought your own capital to the table in this case, and you hustled, and hustled, and hustled, and you drove $4, called a bunch of owners, you know, to define the deals. And I mean, I like like how that progressed for you. It went slow at first and just gradually built. And now you're the owner of a four unit apartment complex with brokers calling you So anyway, great, great story. Great story so far. So let's let's talk about just the the process through the deal. Tell us about from there, you know, first call to the seller, getting under contract, if there's any issues there, and then we'll we'll move from there. Yeah, so
Paul Shannon 18:00
that was a colorful couple months, once I got it under contract, the seller was, I'd say what you call it a typical distressed seller, she had run into some health issues, she had really good intentions for the property, she had put some money in on the front end, but had run out of capital fairly quickly, and just got kind of in over her head. But she was emotionally invested in the property and really didn't want to sell, but felt as though she had to. And it was the best thing for her. But I think with that there came a lot of like rocky emotions on her end. So, you know, I guess one of the challenges is, if you were working with a broker, you'd have that middleman in between you and the seller. But in this case, I didn't have that. So I was kind of I felt like a psychologist at some stages during the negotiation. A lawyer at other times during a negotiation, we had to bring in lawyers at a certain point to kind of mediate between the two of us. And I tried to stay level headed. But in hindsight, you know, there were a few times where I kind of lost my cool too. It was a difficult, arduous couple months, but eventually, you know, we always come back on the phone and say, hey, look, you know, sorry for the last conversation. I know. It wasn't as cordial as we hope. But I think we both want the same things. I think we both are, you know, you know, I want to buy at the end of the day. Yeah, so Exactly. So we were able to work through those issues and still maintain a fairly good relationship. And we still, you know, keep in contact somewhat To this day, when there's issues that arise where, you know, if I have a question about the property that I'm not aware of a certain situation, I don't hesitate to call her. She's got, you know, a tenant that hasn't been made aware that she's no longer, you know, working with the property. She'll let me know on that. And so, from that standpoint, it was, you know, we're still on good speaking terms, but I would say those couple months, it was difficult. But at the end of the day, we're able to close the property. And that's, you know, pretty much a week later we started a repositioning process.
Brian Briscoe 19:52
Yeah, I think that's definitely one of the benefits of a broker, you know, and people a lot of times and I'm selling my My personal residence right now we close in about a week. But every time I sell a house, I look at that brokerage fee. And I'm just like, Oh my gosh, you know, how much but on the flip side, they save you from a lot of that stuffing and working through commercial real estate broker, you know, they save you from having to call 25 owners because they're doing themselves, you know, they save you from having to deal with, you know, the emotional, emotionally distraught owner on the other side, because they're doing that. So, in a lot of ways, I think that's, that's why that's why we use brokers a lot. I think something you said earlier as well is, and we both talked about, but brokers don't like working with the new the tire kickers, so to speak, or the people who don't want to be real estate investors. And I think it's very admirable that you just you started picking up the phone and dialing for dollars and saying, Hey, this is what I want, you know, I want to get something, you know, 40 units or so in Evansville. So driving around doing basically skip tracing to figure out who the owners are, and calling him up and figuring something out. So a lot of goodness there, um, you know, it's, it's gonna be exciting to see what you can do. Now the brokers are actually, you know, talking with you. So that said, let's, let's talk focus, go back to the deal again, so you little bit of a relationship with with the seller, you know, some some rocky moments, some smooth moments, tell us about the lending the loan, what type of loans you guys get, and whether or not there any snags there.
Paul Shannon 21:30
That whole process was relatively smooth. And I kind of knew what I wanted, and was positioning myself when the opportunity came to have, you know, a couple different lenders to call. So I had a community bank look at it and ultimately went with a local credit union was able to secure a recourse loan 75%, LTV, four and a quarter 25 year amortization 10 year loan fixed. So and they also they appraised it in its current condition, but they also gave a after repair value. So I kind of knew where I was at, from a value add standpoint, what the property would be worth, before I even closed on it, after I executed my reposition that they're gonna give me a quarter point back once I'm done with that rehab plan. So my loan will drop from four and a quarter down to 4%, which I liked when I considered the variable rate, but to me, you know, this being the largest asset I've acquired, maybe I'd give up a little bit of return, but I needed to sleep at night, and let's just provide me a little bit more security and a little bit more confidence as far as what my returns would be.
Brian Briscoe 22:31
And look, looking over the last 20 years. 4% is a really good rate. I mean, you know, if you extend you open the aperture, you know, over the last probably 50 years, four percents a really good rate, you go back further, it's average. But anyway, so cool. And now 80% LTV, and you told me earlier, it was a recourse loan. Can you tell me why you decided to go with a recourse product? Yeah, well, actually, let me rephrase that did that did that worry you at all.
Paul Shannon 23:00
I mean, there's always concern when you're on the line like that. But we had, I felt like a comfortable level of assets to back up the property, if there were ever an issue. You know, one of the things that one of the mentors I have here in town, kind of turned me on to right away was always have adequate reserves and always have cash available. So before I even closed on this, I tried to secure some lines of credit, I had liquid cash available. So if things don't go as planned, there's always that backdrop to fall on. So that was one thing, but really with this type of asset. In the condition it was in, at the price point it was at during COVID, there really weren't any non recourse options available. It's a little bit too small for like a Freddie small balance loan. And even if I could get that at the time, I may have had to have no 65% LTV, I may have had to have nine months, 18 months of reserves for tax insurance, I mean, then I'm coming up with a lot more cash that is going to make the deal not pencil out quite as good and leave a lot less money to go towards the rehab. So it really made the decision pretty easy for me from that standpoint. You know,
Brian Briscoe 24:04
and I think you brought up a lot of good points, a lot of the benefits to going with loans like that little more flexible, typically a little cheaper as far as rates and terms because they're underwriting you as well. And for that space, it is hard to get the the permanent debt. I mean, we do have one Fannie loan on a $1.1 million purchase, but I mean, you probably you probably have the better loan than we do. But I mean, looking at it from you know, higher up, I think I think you'd look at it as a whole project and evaluated as a whole, which I think people should do. I've heard a lot of people say, never get a recourse loan. We have four of them, but I think we're on the same page as far as that goes, you know, you look at it as you in the entirety and make the best decision with the appropriate amount of risk and looks like you've mitigated all the risks that a recourse loan brings to the table and you should Be on solid ground. So? Oh, yeah. Well, I mean, that's, that's part of the game, right? Yeah, you accept a little bit of risk, you mitigate it, and you hope to make money, you know, on the back end for taking on that risk. And so
Paul Shannon 25:15
so that point there's, there's so many benefits to multifamily, really just generally speaking, I mean, when you talk about risk trying to mitigate it, look at cryptocurrency or just even holding cash or the stock market, you look at the risk of even holding bonds, which has been historically a very secure asset to hold. But as you know, they move opposite of yields prices do, or interest rates, I should say. So when it comes to other asset classes, you have a lot of risk that maybe you don't see on the surface, because financial advisors will tell you, hey, this way, you should be doing 6040 stock bond split, and that's going to get you to retirement. Well, in actuality, a lot of people just take that at face value, and don't see that that's pretty risky in itself. So you know, people get nervous about debt. bad debt is something to be nervous about. But when you take on good debt, that generates cash flow, and mitigate the downside with reserves, that's the fastest way to build wealth.
Brian Briscoe 26:08
You know, some something I've realized more and more of late is people are okay with the risks that they know of your interest they're familiar with. And you're right, throwing money in the stock market has a lot of risks involved. But, you know, we're told from a young age that you're supposed to do that. So you don't really look at the risks, you know, and I think you saying, say the same thing with the world's reaction with COVID. You know, there's a lot deadlier diseases out there, there's a lot of things that kill more people every year. But because it's the new risk, people aren't ready to take on new risks that they don't know, they don't understand. And, you know, we've seen that come to play, you know, many, many different times recently, but, you know, you took a little bit of risk, you understood the risk, and you realize, Hey, you know, this isn't that bad, you know, or I can figure out a way to mitigate it, and my risk adjusted returns are going to be worth it, you know, because my family because of, you know, all the things that the prop the housing market. So that said, let's, let's talk about the first steps after so you close you say about two and a half months ago, what have you guys done from there?
Paul Shannon 27:19
Well, we have a lot of work to do still, but we've gotten a lot accomplished as well had about $175,000 rehab budget, there were 30 occupied units and 10 vacant units and the 10 vacant units really were begun just because the previous owner didn't have the money to pump the capital and to get them rent ready. So that was step number one to bring in some additional income, we wanted to get those units ready, we're putting between 7070 500 per unit in, we should be able to get an 18% rent bump from prior rents with those units, the classic units we're going for. So once we validate that we've got a couple units leased up at our pro forma rents, which is great news. Once we can get all 10 rented hopefully at our pro forma, then we may start to look at the other 30 and how we want to move forward with those but the interior renovations were first and then the exterior needed a complete overhaul as well, the the gutters. So there were some water and drainage issues in the courtyard, so had to do some downspout extensions on the ground and we're replacing all the exterior doors, the property was built in the 60s. So it's got kind of a date of look to it, and the doors are really gonna spruce it up and give it some more curb appeal. We got landscaping to do. And a couple of weeks we're tearing out cast iron, plumbing and the crawl and replacing it with PVC. So that's a big project and a big expense. Really the biggest the biggest non noi generating capex item we have on our on our budget list here. All the common areas, we're going to clean those up, put new carpet, new paint, I think that encompasses the full 175 we're looking at, and we should be from where I can see we're about 100 into that right now. We might end up being five or 10%. Over which for me, that's a homerun.
Brian Briscoe 28:59
Yeah, yeah. I mean, it looks like you're all in price is about 1.25. What was the ARV on the appraisal?
Paul Shannon 29:06
Brian Briscoe 29:07
All right, not bad, you know. So, you know, for for what you put into it. I mean, you're you're going to have a nice little ROI just on the force appreciation there. And then every cash flow from there on out, it's just gravy. So well. What's next for you? What what's the next step in your journey?
Paul Shannon 29:26
Well, first things first, I want to get this this deal done. And that's most important and have proof of concept that, you know, this is something I want to do moving forward and I want to continue to grow. But that's the goal is to, you know, take it to the next level. I want to continue to do projects like this, I want to continue to provide affordable housing, I think there's a massive need for affordable housing. And there's also opportunity to make profit on it to and that's really those two things have to come together to make it viable. So I'd like to get into, you know, mid size apartments like this and potentially do joint ventures with other operators other than that And, you know, if the deals big enough, when the opportunity presents itself, I'd be open to syndicating, too. So I'm kind of positioning myself to work with other general partners and just kind of networking that way and seeing where things go, you know,
Brian Briscoe 30:12
right. A lot, a lot of good stuff there. So, you know, we have a lot of people who listen to this podcast who are, you know, probably looking to JB up? So if anything he said is resonating with you, you know, definitely, you know, reach out to him. And, you know, go take it from there. So now, here's my favorite question to the whole podcast, what advice would you give an aspiring investor? Who's six to 12 months behind you?
Paul Shannon 30:37
That is a good question. I would say two things, really, if that's okay. Yeah. Number one is, is to look at where you want to be in 10 years and work backwards. From there, I think a lot of people go at it kind of chaotically. And they don't really think they think, Oh, this will be fun to do. Let's try this, let's do this. And they don't really connect the dots as to where that's gonna lead them. So if you can really define, I guess your why or what you want life to look like in 10 years, and then work backwards and not get distracted, for example, and easily distraction is I want passive income. So I'm going to build, you know, through the bur method, a single family portfolio, and then all of a sudden, an opportunity comes up that doesn't fit your criteria, but it could be a good flip. So I'm going to try that before you know it, you're flipping houses, and you've just replaced your job. And you're not building passive income at all. As soon as you stop flipping houses, you don't have any more income. Right? So to avoid that, it's just to paint the picture where you want to be and work backwards from there a great book that I read, I'm sure a lot of your listeners has probably heard of it is by Gary Keller. The one thing, the one the one thing that Gary Keller Yeah. So that book, he wrote that. The I've read that one brilliant guy, right, yeah, talks about how, if you've got this big goal, break it down and think about the one thing that could make all the other things you need to do accomplish that goal easier or unnecessary, completely. And then keep asking yourself that question. And it really dissect that goal down into such miniscule bite sized action steps, that it makes it like, Oh, this isn't so big, and so intimidating, that I'm never gonna be able to achieve this, you just keep putting one foot in front of the other. So I love that. But that is, you know, and you always hear a lot too, I'd say this kind of transitions into my second point. And the second piece of advice I would give is that don't speculate, you know, if you're trying to get into investing, focus on cash flow, you hear all the time, take action, take massive action, get out there and just do it. That's great. And I think that's good advice. But at the same time, you know, don't get consumed with that idea that you just got to go out there and just take this big risk and hope it all works out. You got to educate yourself, you got to meet with the right people. At some point, you have to avoid what I did. And that's how paralysis analysis. But buy properties of cash flow from day one, if you're just starting out, don't make these assumptions that I'll have to kind of line up and go right to make it a good investment. Because assumptions lead to potential pitfalls. Yeah, absolutely buy a property that cash flows that has some upside, well, that's fantastic. And learn a few things along the way. If you want to speculate down the road, in certain corners of your portfolio, and I think that's fine. But don't risk it all. It's not worth it. So stick to your criteria, you
Brian Briscoe 33:19
know, something, and this, this is a military thing that gets pounded in our head, you have an unverified or unvalidated assumption is risk is what that is, you know, so if you go in with assumptions that are not validated, you know, you are assuming risk. And the more and more assumptions that you have that aren't validated, the greater that risk becomes sure you may eventually you may once in a while, hit a home run or get on base. But, you know, there's a good chance that if you pile on those assumptions, you know, you're gonna, you're gonna have a hard time just, you know, keep your head above water. So, all right, true. So last question. how can listeners learn more about you?
Paul Shannon 34:00
Thank you for having me on today. Brian was awesome. listeners can find me at Red Hawk investing calm. I'm also pretty active on LinkedIn. So please reach out to me to connect with me there.
Brian Briscoe 34:11
All right, awesome. And we'll put a link to red Hawk investing calm in the show notes as long as well as your LinkedIn profile link. And that'll make it so if anybody wants to reach out to you contact you, they can and you know, if you listened, he says he's looking to potentially JV with other people and potentially syndicate in the Evansville area. So like I said, if that's if that appeals to you reach out to him, you know, and maybe we can we can link people up. So anyway, Paul, amazing talking with you. I think you've done some really great things. They're super impressed by the fact that you know, you went from buying one property to your tackle tackling a 40 unit all by yourself. Not many people can say they've done that. So my hat's off to you. I think you're like I said, I'm excited to see what you can do now. Thank you. Thank you very much, Brian. Thank you for listening to the diary of an apartment investor podcast today brought to you by four oaks capital. If you'd like to know more about how to invest in apartment buildings or want to be a guest on our show, visit our website at four oaks capital.com slash podcast, or email us directly. If you're still listening, you obviously like the show. So pull out your phone, tap, subscribe, and leave us a five star rating on your favorite podcast app. And we'll see you again next week.
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