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SHOW NOTES FOR EPISODE 439: HOW I GREW MY REAL ESTATE BUSINESS TO OVER $1 MILLION IN PROFITS IN 12 MONTHS
After 20 years in corporate life, Mike realized that his hope for a great retirement looked bleak. He decided to find a side hustle to make a little extra money to supplement his retirement funds. In today’s episode, author, entrepreneur and real estate investor Mike Simmons shares how he grew his side hustle from just a “little extra money” into a multi-million dollar enterprise.
What You Will Learn
- How to fix ‘n flip while working a full-time job
- Why the scenario of getting a good education, good job and retiring in 40 years doesn’t guarantee a good retirement
- A low risk way to quit your job to do real estate investing full-time
- Why flipping a good way to get started
- How to get over the hardest obstacle – just starting
- Why shifting strategies can be even more profitable
- The value of joining a mastermind group
- How creating systems, processes and building a powerhouse team makes all the difference in scaling up fast
- Two great ways for old dawgs to get started in real estate investing
About Our Guest
Mike Simmons
Mike Simmons is a real estate investor, podcaster, and speaker who shared the stage with Gary Vaynerchuk at his Agent2021 Conference in Miami Gardens, Florida, in 2018. He is the producer and host of a popular podcast called ‘’Just Start Real Estate’’ and a partner in ‘’7 Figure Flipping’’ – one of the nation’s largest real estate mastermind groups. Most recently, he has written a new book titled ‘’Level Jumping: How I Grew My Business to Over $1 Million in Profits in 12 Months’’ which tells the story of his success as an entrepreneur and real estate investor.
More About Mike
- Born and raised in Michigan
- His dad was a Marine who later worked in the automotive industry (union, tool & dye)
- No entrepreneurs in the family
- The family career goal:
- Graduate high school
- College if you want
- Get a union job
- Work as many hours as you can
- Retire in 30 years
- He bought into the goal
- Got a union job right after high school, working for UPS
- He worked there for 5 years
- At 24 years of age, his back was really messed up
- Went to the Chiropractor three days a week just to function
- He knew that physically, he wasn’t going to be able to continue with the job
- Left UPS and got into the automotive industry
- Got a pretty good job
- Started working his way up the corporate ladder
- Realized in his late 20s that he wouldn’t get far without a college education
- Went back to college in his early 30s
- Got a degree, got promotions, got raises but what he was working toward wasn’t really what he wanted
- He remained in the corporate world for 20 years
- He started thinking about retirement – What will it look like? How old will I be? How much income will I need to generate to realistically retire?
- He did some simple math – taking inflation, cost of living, what he made, and expected raises and came to the realization that he would not be able to retire until he was 130!
- Because he got married young, he didn’t have much savings and didn’t have the income to insure a good retirement
- In 2003, he started thinking about how he could make money on the side and maybe generate some passive income
- He looked into the stock market and day trading and he didn’t like it at all
- However, when he was Googling “investments,” real estate kept popping up into his searches and, as he dug deeper, he started reading about regular people who were building wealth through real estate
- He continued reading and researching more and more on real estate investing over the next 5 years!
- He was a little too fearful to jump right in and always felt he needed to learn more and do more research
- He started going to local REIA meetings and realized that 90% of the people there had never done a deal either but he still still felt like he was a real estate investor because he was hanging out with other investors and wannabees
Taking the Step to “Just Start” in Real Estate
- In 2008-2009, he started investing in real estate on the side while still working full-time
- He decided to start flipping houses
- Everyone was saying not to get into real estate
- He knew if the media was saying it, it had to be the opposite
- He felt like a kid in a candy store
- Great deals were everywhere
- He still had the security of his day job so his wife and kids weren’t too concerned. They saw it as more of a “side hustle”
- In Michigan, during the winter, it gets dark at 5pm
- After work, it was typical that he would be in some dark, cold (sub zero temperature) basement with a flashlight, looking at the electric panels and foundation of some prospective property
- He’d go almost every day to the properties being flipped
- He knew he had to build his business up enough to generate enough income to do it full-time presented a plan to his wife
- They agreed that he would save up one year’s worth of his 9 to 5 salary – in cash, in the bank.
- Then, he would quit his job, go full-time at real estate and if, after 8 months, it doesn’t look good for him going out on his own, he would still have 4 months to get back in the industry and find another job
- They agreed to not share their plan with their families until it looked like it was going to work
- The local paper, the Detroit News, asked him if he would answer some questions for a real estate story and he said “Yes” thinking that it would be in the back of the paper where no one would see it
- The story ended up running on the front page of the Sunday edition, full color, with his picture on the front!
- Then everyone knew
Why Flipping?
- HGTV had a ton of flipping shows on at that time (2008-2009)
- And when he was researching real estate, he watched these shows
- He didn’t have a lot of money and saw that he could afford to flip but not buy rentals
- Their first purchase was purchased with credit cards and some cash they had in the bank — was a bit of a risk
- Fortunately, the deal went well and they made a fair amount of money — enough to keep them moving forward with other deals
- The first house he bought was for $40,000, he put $15,000 into it and sold it for $75,000 – They made a quick $15,000 – His wife was now on board!
- His previous day job was managing timelines and managing budgets – pretty much what he did with his flipping projects
- He never did any of the actual construction work himself (except a little painting on the first house) because he knew that it would hold him back – that works for a guy who does a house or two a year but not for Mike – Mike wanted to do at least 10 houses per year
- His focus was primarily on finding deals, raising money and managing the jobs, the business and his workers
- He did real estate for about 4 years while he was working full-time
Attracting Investors
- Mike had a friend that was giving him advice on his first fix ‘n flip
- His friend recommended that he share everything that he was doing on that first property online in his Facebook account
- He took before and after videos
- Video taped himself sharing his goals and what he is going to do
- When people started seeing what he was doing, some wanted to get involved and invest
- Before the project was finished, he had two people who wanted to fully-fund the next project
- He never had to borrow or take out hard money loans from that point onward
- Mike also started sharing what he was doing at REIA meetings where he attracted even more investors
Switching Strategies
- He flipped houses for about 6 years with the same crew and things went well for awhile
- Later on, however, he started having problems with his realtor and his contractor
- He realized he needed a new team if he was going to make this thing last
- He found a great house, got it under contract, but didn’t have the team to flip it
- He reached out to another flipper he knew who need deals
- Mike offered to wholesale the house to him and ended up making $15,000
- It was the fastest, easiest $15K he had ever made
- It was at that point that he switched from being a flipper to being a wholesaler
- He ended up joining a mastermind group and he was, all of sudden, surrounded by experienced wholesalers that were helping him to grow his new business
Scaling Up
- We went from doing 2 deals a month to going 12 to 14 deals a month
- It was all about creating systems, processes and building his own personal team
- That’s when yielded $1 million in profits in just one year
Biggest Mistake
- Having a mindset that blocked him from being successful
- He used to have the mindset that he couldn’t build a team because he doesn’t have a big enough business to do that
- But, at the same time, he knew couldn’t build a bigger business without building a winning team
- He realized he couldn’t do everything
- He had to look at his business objectively and ask the hard questions:
- What am I bad at?
- What am I good at?
- What do I enjoy doing?
- One thing he discovered about himself is that he was not a good detail guy and he was not strong in sales
- He knew he needed to had to hire people that could fill the gaps
- His first employee was a “detail person” – a transaction manager
- The second employee was a sales person
Your Biggest Success
- Joining a mastermind group where he was surrounded by like-minded people, some of whom were much further down the road to success than Mike
- He was stuck in his little, Midwest, Michigan bubble
- Once he was around people who had achieved at much higher levels than himself, and who had visions and aspirations beyond what Mike thought realistic, he could now realize that he could far surpass what he projected before
- He found out about the mastermind from a guest he had on his podcast
- The mastermind is called “7 Figure Flipping”
- They meet once a quarter and there is also a big annual event called “Flip Hacking Live”
- It’s a Facebook group, there are tutorials and other resources to help you
- He learned how to track his company’s KPIs (Key Performance Indicators – metrics for your company) and it was life-changing
Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years
- If you don’t want to be super active in a business, he recommends two options
- Get a rental portfolio
- Find a good market that is stable and has an industry that will always be there
- 12% ROI is very doable
- Mike has a rental portfolio of 20 single family homes based entirely on opportunities and deals that his local market rejected
- For example, if he finds a property for $35,000, puts $10,000 into it, that would rent out for $850 per month and he can’t find a local buyer who would be interested, he buys it himself
- His entire portfolio consists of properties rejected by others
- His portfolio is generating an average ROI of 14%
- Be a private investor
- Use IRA or 401K to lend out private money to investors/flippers
- Can get 10-13% returns
- You can make the process much easier and people will be willing to pay more for the convenience
- Get a rental portfolio
Current Business
- He is going to liquidate his rental portfolio soon
- He invests more for cash flow but also for equity
- He will liquidate to do more private lending
- He has a wholesaling company that is operated by his staff and he has very little participation
- Flipping is only 5% of his business
- As he nears retirement, he will focus more on teaching within his mastermind group and doing his podcast
Rap-It-Up
- Favorite real estate book: The Art of the Deal by Donald Trump
- Favorite business book: Traction by Gino Wickman
- Most valuable web site for success (other than your own): YouTube
- Favorite app: Zillow (good for basic house info – i.e. # of bedrooms, bath, sq ft, etc.) Google Drive
- Favorite quote: “Just start!”
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? I would start over as a house flipper. Wholesalers exist to find houses for flippers.
How to Reach Mike
- Website: MikeSimmons.com
Get Mike’s Book
DISCLAIMER: Many of the above strategies take knowledge and have a higher degree of risk. You need to do your research and/or work with someone who is experienced to reduce your risk.
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