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SHOW NOTES FOR EPISODE 193: FROM HIGH SCHOOL SHOP TEACHER TO REAL ESTATE MOGUL
He was a high school shop teacher in Minnesota who loved teaching and the kids he taught but, with a new marriage, kids of his own and limited salary, he was having a tough time making ends meet. He started reading books by Robert Kiyosaki and others, got the real estate bug and became a part-time flipper and landlord. In this podcast episode, Todd Dexheimer shares how he took flipping a few houses in his free time to running a multi-million dollar real estate investment enterprise.
What You Will Learn
- How you can leverage your skills with power tools into a multi-million dollar business
- Why buying when the market is low can give you a great advantage and leverage in your real estate business
- How flipping and finding a partner can solve the “lack of start-up capital” problem
- The value of putting a strong team and systems together early on in your real estate investing business
- What you can do when your local market gets too expensive
- The importance of finding a good attorney early on
- Where you can find financial partners
About Our Guest
Todd Dexheimer
Todd Dexheimer, a former high school shop teacher who started investing in Real Estate in 2008, mainly in single family homes and small multi-family properties. In 2016, he rebranded his company into Venture D, in order to syndicate commercial and multi-family properties. Since 2008, Todd has purchased and renovated nearly 300 properties. Currently, Todd owns approximately 350 units located in the Twin Cities, Minnesota, Milwaukee, WI, Lexington, KY and Cincinnati, OH.
More About Todd
- As a kid in high school he was pretty handy with power tools
- In college, he decided to pursue education degree
- Once he got a job as a shop teacher, he liked the job but wanted more challenge and income
- Started reading Kiyosaki books, real estate books
- Wanted to be an entrepreneur
- His mentors were the books
- He and his wife moved from a small Minnesota town into the twin cities
- The 2008 crash happened and he saw the opportunity to pick up properties cheap
- Saw how he could buy a single family house for $60,000, put in $10,000 in repairs (using his shop skills), and rent it out for $1,400 a month.
First Purchase
- He had very little money and wasn’t sure how he was going to purchase
- Had real estate agents looking for foreclosure properties for him
- Bought 3 houses at one time, summer 2008
- First was a rental for $60K and did $10K in repairs. Purchased as a rental with a mortgage
- Second house, they bought cheap with FHA 203K loan for 3.5% down (that included repair allowance) and they lived there as they repaired the house with the idea to flip it eventually. Only $5K out-of-pocket for the house
- Third house, was a flip that they didn’t live in. They partnered with other people to purchase it
- He had a full-time construction job during the summer break from school
- After work, he would run out to the properties to do repairs – worked all hours of the day to complete the jobs
- Worked until midnight, got up at 5am and did that 7-days-a-week
- Same schedule continued when he had to start back working as a teacher
- Had first daughter at this time
- Did this until 2012-2013
- However, he didn’t want to be a flipper
- Met a banker who showed him how to do this to build up his rental property portfolio
- Limitations though: you could only buy 4 investment properties in your name at the time and couldn’t get commercial loans at the time
- Found a partner
- Maxed out and couldn’t get any new properties, so started flipping a lot of properties to raise money
- Would flip two or three properties to get down payment for a rental property (averaged $10K profit per flip)
- Finally, got some partners to buy a few more rentals and was then able to get commercial loans
- Investors, at first, came from his business partner. Word of mouth brought new investors from there. Also, met investors at real estate meet-ups, other networking events, friends
- Rehab expenses were running $30-100K per house
- Summer 2009, really ramped up and started hiring people
- Had built up rental income and reduced teaching to part-time
- Got contractor’s license
- Had multiple construction crews
- Created systems
- Could be flipping 15 houses at a time
- Summer 2010, went full-time in real estate
Goal of 1,000 Rentals
- Early on, his goal was to acquire 1,000 rentals and be able to do real estate full-time
- However, flipping really slowed down his plan (flipping became full-time job)
- All properties flipped and acquired were purchased in the Twin Cities
Today’s Operation
- At one point he had 75 units
- Today, has 50 plus units
- The teams and systems he has in place help it to run smooth
- Staff
- Bookkeeper
- Showing agents
- Maintenance
- Doesn’t flip anymore
- 2016, started buying out-of-state because Minnesota’s multifamily markets have more compressed cap rates now than a few years ago and the value-add buying just make sense
- Out-of-State Purchases
- Dozen units in Milwaukee, WI
- 2 in Cincinnati, OH
- Leaning toward offloading single family properties
- The efficiencies just aren’t there
- Repairs wipe out income
- Can sell 25 SFRs and buy a 100-150 unit apartment building
Biggest Mistake
- Sold a property that wasn’t finished and to complete construction repairs as part of the sale
- Didn’t have a good strong contract
- Not very detailed
- The contract didn’t have the proper lien waiver/rights
- Change orders were done by handshake or via email
- Didn’t want to pay final bill
- Tried to sue him
- Lost $75,000
- What he learned: Get a good attorney early on – one of the most important members of your team
Biggest Success
- Making the shift to multifamily
- Making the mindshift – you don’t need to graduate to multifamily
- Doing his first syndication
- Raised a little under $1,000,000 on first syndication
Advice for Old Dawgs Interested in Real Estate Investing
- Rental real estate is your best investment
- Can start with small multifamily
- If you are a passive investor
- hard money lender
- syndication investor
- NNN properties
Current Business
- 10 year goal – $200 million in controllable assets
- 2,500-3,000 units
- Would like to use his teaching skills to educate people on how to reasonably handle their finances
- He’d also like to see personal financial training in primary and high school schools
Rap-It-Up
- Favorite real estate book: Multifamily Millions by David Lindahl
- Favorite business book: How to Win Friends and Influence People by Dale Carnegie
- Most valuable web site for success (other than your own): BiggerPockets.com
- Favorite app: Podcast and Audible apps
- Favorite quote: “Everyone has a plan until they get punched in the mouth.” – Mike Tyson
- 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? Partner with people who know what they are doing. Start with the closest people to you (friends and family). Go to RE networking clubs, local business clubs and organizations.
How to Reach Todd
- Website: VentureDProperties.com
- eMail: Todd@VentureDProperties.com
- LinkedIn: https://www.linkedin.com/in/dexproperties/
- His Podcast: PillarsofWealthCreation.com
This Episode Brought to You by HealthIQ.com
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