Transcription
Yo, what's good with y'all? What's popping? It's your boy Abram Mitchell, and y'all are now tuned in for another episode of The Triple Li Show, where you unlock the secrets of a millionaire mindset. And man, bro, every week, every week, bro, we make sure that we want to bring on the best of the best as far as our guests, and we want to like make sure y'all get the most game possible.
So today, man, it's going to be a good episode. This is a special episode because quite a few of y'all done requested this guest. Quite a few of y'all seen in the comments and said, "When we going to do an episode with Paul?" "When you and Paul going to do an episode?" And I remember, you know, just telling some of y'all, "The time ain't right yet. The time ain't right. We sitting on it."
So, this week, we got a very, very, very special guest by the name of Mr. Paul Simu. What's good with you? What's popping, my boy? How you doing?
Good up here as always. How you feeling?
Feel great. Great. Good. New year, new opportunities.
Yes, sir. Yes, sir. So, man, the people been asking about this one, dog. The people been like, "Man, when you and Paul?" You know, me and you, I think in 2022, for a lot of it, we did a lot of like content together because we was getting, we had a lot of projects going on together. Uh, where we at? South 11, we was in Fontaine, and now, when we was in Simpkins, uh, we was focused on trying to get, seeing what we was going to do with the Pike. So I feel like we had a lot of content out there as a result. A lot of people like, you know, see us doing a lot of business together.
But, man, Paul, I'mma introduce you. So Paul is probably one of the youngest, turned go-getters in the real estate space that I know. We'll be honest. And that ain't like coming from me, 'cause I know a lot of people that's in this space that range from all ages. But when it comes to Paul, uh, when I first met him, he was already building houses. A lot of y'all see me in new construction and see me developing, and y'all see me talking about, uh, my first new construction deal and how I was able to do so well on it. Well, one of the people that was the reason for me being able to, you know, break into that space is Paul. 'Cause Paul was already in the new construction field before I ever got started.
And I remember I had that deal. Remember, I was about to sell it to Connor again. He had already busted me on the on a flip the year prior. And, um, I was going to make like $40,000 wholesaling this deal. And then I ended up looking at it, and I remember shooting the text to Paul, I'm like, "Bro, you think I could build on this one?" He was like, "Yeah, you could build right next to it." 'Cause people that, like, if you never built before, you'll look at a lot and then you'll be like, "Nah, I can't build on this." But somebody that knows the actual dimensions and the numbers, like, "Yeah, you could fit a house right there easily."
At first, I was thinking, 'cause basically I built the house right next to an existing house, I was thinking I couldn't fit a house right there. But I could end up turning that $40,000 deal to a $350,000 payday. So, appreciate you for that game, brother, 'cause that opened up a whole another field of opportunity for me. So my first question, really, is like, bro, who is Paul? For the people that's watching, who is Paul Simu, bro? How you get to where you at so young?
Majority of, of my path really has just been pushing and pushing and pushing and trying to do something that I haven't done before. 'Cause initially, you know, getting in real estate, I didn't really have an end goal in mind. I just wanted to make money. So the way I was making money was wholesaling. Mhm. That turned into making money by flipping. I see people making more money building houses. So I do think, um, a big part of my progression so fast just because I wanted to do something I haven't done before. So never wholesaled a house, decided to wholesale, built a business around that. Never flipped a house, decided to start flipping houses. That became my main source of income. Didn't do new construction. Well, a lot of people are doing well on new construction. That's what I decided to do. So really, it's just adding tools to my toolbox and not being, not being one to take no for an answer has has really got me here within four, four and a half years.
Okay. So you started four and a half years ago. You was in college when you first started. And was it hard to, like, learn a whole new field while you was in college at the same time?
Absolutely. But it's a matter of, of how bad you want it. So for me, as a college student with not a lot of money, seeing people making a lot of money, you know, I want to be on the other side of the table. So you're going to do whatever you need to do to be able to get to the other side of the table. Which for me, the avenue was, was initially wholesaling.
Okay. When was the first time, like, you, like you in college and, like, when was the first time you came across, like, you could flip houses without having to buy it or something like that?
Oh, you had to. Before, before that question, you had to, like, understand, like, some type of, like, buying low and selling high before you even did it with houses. Like, what, what other ways did you do little hustles to make money before you even got into real estate?
Absolutely. So I was flipping cars before I got into the real estate business. And I continued to actually flip cars for a little bit of time just because I felt like it was easy. Buy, buy something cheap, might do some minor fixes to it, and then sell it. And for me, I was buying cars in areas where there wasn't a lot of demand and selling these cars in Nashville where there's a demand for cars. So it's, it's the same concept, just a different game.
You was like, buy them from the auction?
I was buying them from auction and I was buying them off of Facebook Marketplace.
Okay. In Alabama, in Georgia, where there's not a lot of people, so they'll naturally sell cars cheaper and then just driving them here and reselling them.
Okay. See, uh, we had TJ on here a few weeks ago, and he do that. He still do that. He's still flipping cars. A lot of, I know a few people that get into that business, flipping cars, 'cause I mean, you go get a car at the auction for what, like, $1,500, sell for like $6, $7,000, and boom, come up quick. That's crazy. 'Cause, shit, I think I was telling you the other day, my last apartment, I left my, my car, my Camaro there, and they ended up towing it, and then the tow company sold it. So I bet it's probably somebody like you that go buy, get a, come across a good, good deal low, and they probably go to flip that thing 'cause it's, I mean, shit, it's a perfectly good car. I don't even know, bro.
That man, that shit crazy, bro. I didn't even know they could just sell your car like that.
You knew that mechanics lean?
Yep.
Yeah, bro. That's, that's a way for people to get titles to cars that don't have titles. They say that they're in storage, then they'll put it mechanically on and then get a title within six months.
They ain't send me nothing though. That's the thing. I ain't get nothing from them. They claimed they did all the paperwork they needed to. But I said I was going to, like, try to find it, see if I could buy it back, something like that. That's my first whip. But it is what it is.
So you started off flipping cars, and you was doing that in college. And then you came across wholesaling real estate, and basically, you said that was the same concept. How long it took you to get your first deal?
Took me about two and a half months, I'd say. Two and a half, three months.
Okay. And what, how you found that deal?
It was off the MLS. It was something that just got listed that I just happened to grab really quickly. Just little bits and pieces. So it wasn't any off-market situation. I really didn't even know how to reach out to people off-market. I was just looking at things on the MLS. Mhm. And it was something that just happened to be cheap for that area. Mhm.
And then, like, you did you even know what wholesaling was at that time, or you just knew what a deal was?
I knew what the fundamentals were behind it, but I had, okay, done any wholesale transactions. So for that one, I actually had the person that ended up buying it, he sent me an assignment contract and showed me how to send that deal to title company and deal with it in other ways. I didn't know how to do any of that.
So the buyer sent you the assignment contract, and he wrote up the contracts?
Yep.
How much you end up making on that deal?
It was $8,000.
Shit, that's a lot on you, college. That's a lot. You ever made that flipping cars? Like, there was, like, on one transaction up until that point?
No. There was one car I made $5,000 on, and I was happy as hell that day.
So, so when you made that, hey, how that felt?
That felt amazing. Yeah. And it was, it was really a proof of concept for me. Mhm. More than anything. Like, this is something I can actually do. 'Cause, yeah, I've seen people do it, but do yourself, you don't really, you don't really know. And most people that do a wholesale deal or any off-market deal, majority of them don't do another one.
So, so you at this point, boom, you closed a deal, you made $8,000. You still in college at this point. Eventually, you dropped out. Did you do that immediately, or you were trying to do both of them?
I was, I was juggling both about a year and a half. And it got to the point where I had to pick one. Either I run after this dream that seems to be working right now, or I decide to do what's tried and true and actually finish and get my degree. So there was, there was a little bit of hesitancy, uh, obviously on my end. But once the numbers just became bigger and bigger, then it, it didn't make sense to stick around in school for much longer. Mhm.
Why you, why you feel like you, you wanted to make money? Like, get rich? Like, it seemed like from young, you wanted to, like, make a lot of money, you know what I'm saying? 'Cause you could have just stayed flipping cars, like you say, you could have just finished and got your degree, got a job.
I think it's when you, for me, it was when I see better and better. It's, it's like that image won't ever come out of my mind. So I truly believe if I didn't know better or see better, I wouldn't want better. But I did. And that, that was the, that was it right there. You, you know, like, I wanted better for myself. And as I continually progressed within my own business and as a person, I, I started doing better for myself. And as someone that wants to continuously strive and improve myself, I was now applying that in a financial way more than anything else. Mhm. At that point.
Okay. Was you, like, would you say, like, you the first person in your family to, like, kind of had that mindset, or like, was there other people in your family that kind of, you believe in that way?
I said, I've always had that mindset. But like I said, financially, just when I'm just not applying it. So I always wanted to improve myself and be better. But it was always related to school work, 'cause that's what I was taught. You know, like, don't stop at anything, always try to get the best grades 'cause that's your way out. So I'm applying the same concepts, but just doing it in a business aspect. Yeah. Versus doing it in a, in a, in a school aspect. Yeah.
No, I see. I felt like with football, like, a lot of the things that I'm doing in business is similar to what I did. Like, as an athlete. You played ball?
I did not. You played basketball?
Huh? A little bit. You played, like, in school?
All right. Cool, cool. So in, in football, it's like, it's a game of inches. It's a team sport. It's a big mindset thing. It's about hard work. It's about not giving up. And like, I feel like a lot of those traits carry over into entrepreneurship. You know what I'm saying? 'Cause business is good and all, like you said, you make $8,000 on your first deal. We going to talk about some larger deals than that. But you and me both know that, you know, from the outside looking in, yes, we have these big breaks. But like, there's a lot of stuff that go down in between. You know what I'm saying? Like the deals that fall through, or the subs that ain't doing what they supposed to be doing, you know what I'm saying? Or when, when the market or the, uh, economy is just, you know, giving us something different, you know what I'm saying? We got to respond to that. So I definitely agree with you, like, when you were saying, like, "I already had that mindset, but now I was using it in the financial field."
You know, so when did you say you made that decision to drop out?
About a year and a half after your first deal. So at this point, was your focus like immediately into the new construction space, or was you still, like, focused on flipping and wholesaling? And what year was this?
So I started in the real estate business end of 2018. And I ended up dropping out, it was March of 2020. Now, that's, that's when I decided. Matter of fact, my bad, to cut you off. I told your ass, "Drop out." Yeah. The first time we met in the office, you was like, "You still at school?" You like, "Yeah." It was that was summer of 2020. And what happened was, March of 2020, nobody went back to school. So, like, that's when I decided not to go back to school. Yeah. It was August of 2020 when the next semester rolled around when I didn't, it was the first three weeks and I didn't log into a single class. And I knew I, I mentally had had already checked out. So I just made it.
So you ain't tell them nothing, you just stopped showing up to class?
'Cause all the classes were online. And I didn't, I just didn't have the mental capacity for it. I kept telling myself, "I'm going to log in the next day, the next day, the next day." And I didn't. So it was like, first week of September, I just unenrolled and called it a day.
You think if COVID happened, you would still be, like, you would have finished?
If it didn't happen? I mean, I think I probably would have. I think I more than likely would have finished. Um, but COVID was definitely the catalyst. Uh, and really us not being at school in person, 'cause online school is not for me. And I already didn't have much motivation to be there. So if I don't have to be there and I don't want to be there, then I'm not going to be there. But I definitely think I probably would have stuck it through if it was in person. Mhm.
See, my thought process was just like somebody had laid it out. From they was like, "It's 100% of you. Either you could try to give 30% to this, wholesaling, 25% to school, and whatever else percentage to something else, or you could just go all in on the real estate game." And I was just like, "Man, you know what? Like, I'm doing well in school, but it's like, I'm not about to get no jobs or nothing like that. None of that's going to make me happy." So why not just drop out, move to Nashville, and just, you know, go all in? Go 10x, 100x on this business. Which that ended up being the right decision. And for anybody watching, I'm, I'm not saying you have to drop out. I'm not saying you have to quit your job. I'm saying you have to go all in. You know what I'm saying? Now, whether that's you doing what you got to do during the day and then working at night, or whatever vice versa, you have to go all in. Because, um, I heard somebody say, "How you do anything is how you do everything." So if you giving lackadaisical effort to, you know, a new business, something you don't even know, you know, fully yet, then how you going to get the results? You know?
So whenever you said COVID kind of was the catalyst to, like, basically, did you start realizing what you was missing out on 'cause you had more time to work on your real estate business?
Yeah, that, that's absolutely what it was. And honestly, more than anything, I started seeing real tangible traction in my business. And I can't juggle having to keep a certain GPA 'cause I had an academic scholarship and juggle trying to grow a business at the same time. It just doesn't work. Because I can't put 100% of my attention on two things. Yeah. And I, and I was learning that if I start putting more and more attention toward my business, it was doing better and better and better. Yeah. So it just didn't make sense. It was already what I was doing. Um, it was already what I was, I was in school for. I just started doing it a couple years early. So.
And that's what, like, oh, so you was in school for construction management?
Okay. For construction management. So when you realize, "I don't need my degree to do this," then that's basically like, "All right, cool." So, all right, so now you focus on your business 100%. And I know, like, we both know running a wholesale company is a lot different than new construction. But we also know from being in Nashville that, like, 2020 was like when everything kind of went crazy. Like, it started, how I remember is, and maybe you got a different experience. COVID, I started hearing about it in like December, November of 2019. Then January 2020, they like started shutting everything down. Then the business, like, we'll lock up some deals, but we couldn't get them off. Up until like March, that's when it was like everything just started going crazy. Like people just bidding wars, properties appreciating like crazy. And a lot of developers during that time in Nashville, and still was, was making ridiculous amounts of money.
So did you, like, notice, 'cause you, I know when you was, like, wholesaling the lot, I know like a lot of your deals was land deals and two builds. So like, you was in a sense, like, if you look at it now, you was probably giving away a bunch of deals that you would, at this point, buy them for the same price that you were selling them for. So was it like during that time where you made that pivot into the new construction space?
That was the start of my pivot. Now, for anybody, um, trying to scale or grow a new construction business, it's not going to get off the ground as quickly as you hope. Yes. And you're responsible for not just the holding costs, but you're also responsible for any operational costs during the process of these new construction projects. So I still had to have something paying the bills while I'm trying to grow a new construction business. And that was wholesaling and flipping houses for me. Okay. So I did not stop doing those two things, but I did eventually start doing less of those two things the more that my new construction business started to grow.
Okay. So basically using the wholesale money as like bill payers, almost? Like, this was funding? You built this business to fund a larger opportunity, basically?
That's exactly it. It was used as a stepping stone to bigger opportunities. Because being on the, on the daily grind trying to constantly find deals, just because I'm good at it doesn't mean I like doing it. And I started lacking it less and less and less. Mhm. And I really wanted to focus on what I actually enjoy doing, which is building houses.
Okay. What, what's the best, um, wholesale deal you had up until that point? Up until the point of in 2020 where you started like looking at wholesaling as a stepping stone? Because, you know, most people, you get into it, and like, let me know if you agree, like, we don't, I, I didn't really know nothing about real estate like at all, you feel me? So when I started flipping these houses on paper, wholesaling, flipping the contracts, and you know, you make $20,000, then you get your first $40,000, $40,000 deal, then you start making hundreds of thousands of dollars. Some people, you get to a million wholesaling, you kind of don't even think about actual real estate investing. You know what I'm saying? Like, for a good part, I was like, "Man, I'm not worried about none of that. I'm just going to flip this contract and let them do their thing." Until I started paying attention to what people was making on the on the back side of those deals. You know what I'm saying? Like, I'm making 25, 30k upfront, and then you got some people making 100, 150,000, 200,000 on some of these deals if you know what you're doing. And of course, a big part of it also is the market was appreciating so fast. But still, like, how important you think it is, like, for people that get into wholesaling to also learn how to transition? Because taxes, like, you ain't really got too much write-offs or nothing whenever you hold.
It's extremely important. And for me, to answer your question, is before I really made that transition, I did a land deal in 2020, end of 2020, and I ended up doing six figures on it. Okay. It wasn't anything crazy. Um, but it was a piece of land that had an underlying lot line. And for the area that was extremely rare, which is Green Hills. So someone ended up being able to put two houses on instead of one. Mhm. So I probably could have made more than that, but I was, I was happy just to be able to make.
You made a hundred on that deal on just flipping the paper?
Correct.
All right. How you felt when you was like, "I can make $100,000 flipping the paper?"
You focus on what they was going like, "Why is somebody paying you $100,000?" Oh, no, I just, I just wanted the money. So I mean, I, I knew what the value add was because that's how I ended up being paid that fee. But I didn't, of course, you know, what roughly, at least for me, what someone was going to make on the flip side. But at that time, there's no way I would have been able to execute on a deal like that by myself. Yeah. So it was, it was fine for me just being able to take what I can and go. Because at that time, that was a deal that actually was a referral for me. So it was something that did not put much marketing money into. So my ROI there was almost infinite.
You got a free lead with that one. That's the best deals. It's crazy. You said, um, underlying lot line. 'Cause like, the first, I'm going be honest, my first probably year, I wasn't even paying attention about the flip side, what they was making on the other side. 'Cause again, I focus on making money. Shit, I'm 21 years old. I ain't focus on all that. But I remember I sold this deal and I made $25,000. And this is why, like, you know, people, they learn something, like flipping houses on paper, wholesaling, new construction, whatever it is, you learn something new. And then you start trying to be perfect at it. You know what I'm saying? And overanalyze it. And then as a result, you don't do anything. And what I'm going to say is, uh, you just mentioned underlying lot lines. I remember I had a deal back in 2019 that I, I made $25,000 on it. But I sold it $150,000 too cheap. I left $150k on the table because I didn't know what underlying lot lines was. I didn't know that instead of putting two houses on that lot, you could put three of them. I sold it to Bill Nashville, and, uh, they got a very good deal out of that. And I got a new piece of information because now I know what underlying lot line is. And that's, that's why I feel like it's so important for anybody that's in wholesaling, that's flipping contracts, is to learn the other side of the business. 'Cause there was a point where I didn't care to learn the other side of the business, and as a result, pockets was hurting for it.
If you was in a situation where you didn't know what an underlying lot line was, you probably would have got got on that deal. You probably have sold it, give me 20,000, boom, I'm good. You know what I'm saying? So, 'cause it ain't like nobody investor go sit you down and say, "Hey bro, you know this got an underlying lot line on it, and you selling it to me $100,000 too cheap." You know what I'm saying? Like, ain't nobody going to do that. So, like, the game really sold separately when it comes to things like that. And you might learn, you know, zoning laws and and planning and stuff like that. That don't mean you have to get into the other side of it. But now you could maximize profits on your deals if you know the other side. You know, whenever, "Okay, I'm about to sell this deal. What are they about to do with it? How they going to make money? How much money they going to make on it? How is he able to put this on here?" It helped me as a wholesaler and allowed me to get into that other side of the game.
So, what, what would you say is like, the most important? Name three things. What's the three most important things somebody needs to know if they want to get into the new construction space? Or what's the three things you had to learn? Are three resources, three relationships, whatever. What's the three things you needed to make that transition into the new construction world?
For me, uh, the biggest one is the financial side. You have to be liquid enough to be able to carry all your projects and carry them through a bad market. Okay? And also, relationships with lenders matter a lot. Because right now, the lending environment isn't the greatest. A little, it's a little better than it was a couple months ago, but it's still hard to get construction loans. But for me, I'm still aggressively chasing deals because I know the money is there. And that's not something everybody can say. A lot of people sitting on stuff that they can't finance. Mhm. Or they're sitting on the sidelines because their banks are telling them, "Hey, we don't have any construction money to lend right now." So those two things. And I'd also say, right now, more than ever, um, which it's really hard to do as just an investor, but being able to stick to budgets and being able to build cost-effectively when we're, when we are not in a market that's in the upswing, that is extremely important right now. Because appreciation will not save you. And it is more important now than ever to really be able to stick to an effective budget and timeline. Because that's what you can't control. You can't control what the house will sell for. So.
Yep. I agree with you on that. So I'mma break them down. So the first thing you said was liquidity. So I know that's like, you can't really say a certain number on it because you don't know if somebody just trying to do one project or, I know very well, me and you both know, like, if you trying to do anywhere between three to five, upwards of 10 projects simultaneously, you have to have liquidity. You have to have consistent cash flow coming in, uh, to float certain project costs, to pay certain bills. But, um, let's say it's somebody that's just trying to do their first deal. Is there a certain number that they need, or is it consistent cash flow?
I'd say, um, more than anything right now, you'd probably want at least 10% of the total project cost, okay? Just available. And that's something that even the banks are going to require. Okay? So if the project is going to cost $500,000, that's like your minimum project. You need at least $50,000 sitting in the bank. I'd say you want at least 50. And honestly, the more expensive the project goes, the higher that number goes because your mistakes can punish you more on a $500,000 project versus a $200,000 project. Okay? So, so for me, that number would probably go even higher, probably closer to 15 to 20%. Okay? Uh, and of course, you know, that does mean that you're going to need to have some sort of, or I assume you have some sort of other income that that's paying you, uh, during the process. But it, it is most definitely harder now to execute a new construction project than it was before in the past. Yeah. And your risk has to, it has to be in line with that. Mhm.
Yeah. And the reason he's saying that basically is like, whenever you go to build a house, when are you anticipating getting paid off that project? 9 to 12 months. Okay? So if you don't have a way to make money in between that 9 to 12 months, how you going to survive? You know what I'm saying? Like, yeah, you might hit a big lick, you might make a 100, 200,000. But if you don't even make it to the end of the project, you never realize those gains. It's like the stock market, unrealized gains. So 10% in between, 10 to 20% have that available in cash. If you're doing a $200,000 project, which that's low, like he's including the land cost plus the build cost. So if you're doing a $200,000 project, $20,000. If you're doing a $500,000 project, $50,000 to $100,000 in in-hand liquid. I'm not going to say ready to go, but it might, you might have to spend it at a certain point. So liquidity.
The second thing you said was relationships with lenders. So that's a broad subject. I know when I got in, like, I would say you need relationships with, with all types of lenders. So hard money lenders, private lenders, and bankers. People always ask me, "Do you use hard money or bank money or private money?" And I have multiple deals where I use all three. Do you have any situations like that?
Absolutely. Right now, uh, more than anything, it is harder to get bank money, but it is still the best route. Because if you build with anything else, chances are that is only a short-term loan. And banks have the ability to offer a construction to permanent loan, which lets it automatically convert to a 30-year mortgage in the case that it does not sell. So that, that's something that definitely helps risk, or it helps, uh, hedge your risk. And that's what I'm trying to do on any project, even if it is a house I've got no intention on ever renting or living in. It's something that I'm going to go ahead and amortize that loan.
How important that is, 'cause so you say you looking for construction to permanent loans? What's the normal loan that somebody will get?
Normal loan is just straight construction financing. It's not amortized. It's interest only, uh, based upon what you draw. And it terms out within usually within a year. Okay? So 12 months, you get to build that house and sell it. Correct.
All right. Cool. And if that 12 months go by, your bank, not saying they will, they can, basically like, foreclose or take the property or call that loan due?
They could call the loan due. They could foreclose on it. Uh, usually banks, banks are in the business of lending money, not owning property. So they're usually going to want to work with you. But just having that exposure is something that I'm usually not comfortable with. Yeah. Of of that being the option. So being able to put something on long-term debt right now, uh, can definitely help. Because not everything will sell. And it makes your payment lower too, your monthly payment. So, uh, basically, like, in a market like we in now, it takes a little longer to sell properties. And sometimes, you know, with there's a lot of factors that make a project go over 12 months. But you don't want to be in a position, not saying the banks will do it, but you don't want to be in a position where they can do it. And the second something happens to them, then they come and get you. You know what I'm saying? Like, if that bank get in a situation where they don't have any cash and they have too much money out, they they will start calling up some of the investors and letting them know, "Hey, I need $100,000, or I need $150,000, or I need $200,000, or I need you to pay this entire loan." And if you're in a position where you can't just get that money to them, then boom, you put in all that work to build that house, you invested the sweat equity, you invested your own money, you invested time, you invested mental stress capacity, all that stuff to get nothing. You know? So, um, I think that's a smart move, uh, looking to do construction to permanent loans, especially with the market we in right now, because it is taking longer. Um, I'm not going to say properties are not selling. Um, you just got to be smart of what part of town you're building in. And this is for any market. Um, look to build in a part of town, um, and I see you say it a lot, where there's not too much new construction available, um, and it's still a desirable place to live, and your price point is still considered affordable for that relative location.
So the third thing you talked about. What's the first thing? Liquidity. Second thing was, uh, lender relationships. The third thing, what you said was probably one of the hardest, is to maintain the budgeting on that project and cutting cost. What's some ways you doing that right now, or how, how are you doing that?
Well, the biggest thing, first and foremost, for me is, I'm not paying anybody else to build my own projects. Because that's something that, it doesn't just come with me paying that person a fee. Why would you pay somebody else to build your house in the first place? Because if you're not a general contractor, you're not a builder, then you can't do it. So, okay, you're an investor, which is what a lot of people are. They typically pay somebody else a certain fee or percentage of the project to get it done, which is never percentage of no project, which is there's nothing wrong with it. That's the tried and true way that a lot of people do because they don't want the day-to-day headache. And I don't blame them. Yeah. I'm willing to take on the day-to-day headache when I know for a fact that it's going to save me at least 30 to 50,000 per house, sometimes more than that. So I think more, bro, like, absolutely. With, 'cause I seen, 'cause you got, you can't just count the amount that you paying them. You got to count probably the time that you able to cut off the project, which is interest payments that goes back into your pocket. And then some people just let the contractors make all the decisions. Which we did that before on a project, and absolutely, so ended up how we wanted it to. So it's definitely not just, "What am I paying that person? What is their fee?" Because if that person is using subcontractors that cost 10 to 20% more than what I would want to pay, then you're not just paying for it because you're paying them. You're paying for it because you're paying their people a substantial premium as well. So it's, it's, it's not always, uh, black and white. There's, there's a gray there. And that gray area is something that I did not like at all, um, with most of the projects that I had having other people build. So that's the number one way I've been able to cut my own costs down and control the timeline. Because if something takes you 20% longer, but costs the same monetarily, in new construction, that extra time spent still costs you. So it's not just spending more money on building the house itself. It could be spending more money because you have to hold that project longer, or spending more money because you sell it for less because the market changed because it took you a longer time to build it. So that's, that's probably the biggest thing for me as to why I decided to take it in-house versus continuing to hire other people. I had to be in the driver's seat.
Yeah. That's what, now, like, that question, that, that, now what you just said earlier, control. That's the number one thing with me. 'Cause I, I mean, we got experience with this. I feel like, and I ain't going to get too deep into it, but we was part of similar, I mean, not similar, we part of the same situation where I think that was probably the nail in the coffin right there. Was like, "Nah, like, it works when it works, but when it doesn't work, it doesn't work." And what I would say is, when you're in a market that's not appreciating, at one point, we was appreciating 15% a month. The dumbest of the dumbest can make money in real estate when the market is appreciating like that. But when you're fighting against a backwards market, then on top of that, we did a project where we trusted the contractor to do everything, like, literally everything. Make all the decisions, hire all the subs, get all the designs, budgeting, like, all we did was put the deal in front of them, even down to the financing. And we ended up with a project that was way over budget. As a result, I just go on and wreck and say, "I lost money on that deal." And I'm not one of those people that's scared to tell people I lost money on the deal. Because if you got somebody that tell you they never lost money on the deal, they ain't making no money, or they lying to you, like, straight up. That's just what it is. But I had to lose money on the deal and feel that pain and be honest. I seen people lose a lot more. I think we still got out of that situation better than it could have been. But that situation is what told me, like, is where I realized, "Okay, yeah, now I need to have control over my projects." Because, you know, having somebody, I'm going to say it like this, if you pay a builder to build your house for you, and I'm not saying don't do that, understand that they are just getting paid to finish the house. You're an investor. They're not getting paid to make sure that you make money on that deal. And it's not their deal, it's your deal. So they're not investing into it like you. They're not going to watch those numbers like you. Uh, it's very seldom that you will find somebody that will. So it took me, you know, making some mistakes and trusting some builders that I, I, I, I probably shouldn't have. But that's just a part of the game, you know what I'm saying? You go to go through a few builders. And once you find a good one, I think it's probably better to form some type of partnership with the builder, uh, to where they have some equity in the deal. Because now they're incentivized to perform on that deal versus, "I'm going to pay you this fee," and there's no, like, if you mess up, there's no consequence for you. But somebody that's invested in the deal, they're going to look to perform at the highest level. That's what I would say, that's my experience from it.
So, um, you went ahead and got your license from that deal. Uh, how long you been building your own houses for now?
So it's been March of 2022 is when I got my license. And a few months after that was when I started doing, okay, my own thing. So, year, year and a half.
Okay. And what, what would you say is like, the biggest stress relief since being able to do it on your own now? What's the biggest relief?
I mean, honestly, it's being able to get questions to answers. Because if I'm, answers to questions, yeah. All said questions is the answer. Yeah. Being able to get answers to questions. Because a lot of the time before, um, I was just in the dark. So I mean, I, as the builder, there's a, you are the liaison and you are the mediator between the client and the subcontractor. So if that communication is lacking, then there's nothing I can do to get a direct answer versus just waiting for one. So being able to be in real time, able to produce answers and get things done without having to wait on anybody else to do something on their part. You know? And it might not even be anything that's harmful. It's but it's just how it is, you know, like some people live their own lives and have their own things going on. Maybe they don't ask that painter or ask that guy, whatever, until the next day. Well, I want an answer when I want an answer. Yeah. That's just how I am. So really, being able to cut out the dead space between me asking something and getting the answer that I like, I, I, I think that's important too. Because every, every minute, every day matters in in that space, you know what I'm saying? So if you waiting a day for a response, which some people think is like, not, not that important, then now you're waiting a day to make a decision based off that response. So whenever it's just back to that control thing, like whenever you have full control over the project, then I mean, again, you going to be better, probably than somebody else.
So, what, what would you say is like, what was your best deal in real estate? Was like, overall, over wholesaling, new construction, flipping? What's the best deal you done? Like, whenever you think of that, you like, "Man, I'll do that deal over and over and over again."
So I'd say the best deal financially I did, yeah, was two houses in Green Hills. Ended up doing just over a million dollars on both of them. And I'd probably say the best deal time-wise, taking into consideration my time spent, is also a deal in Green Hills. It was one that I wholesaled, didn't do anything to it except take it down with a private lender, then resold it and made 400 on that.
Oh, you. Oh, all right. I thought you were talking about the, uh, the one from, uh, a few weeks ago. No, not a few weeks ago, uh, like 6 months ago. Oh, yeah, that was a great deal too. Yeah, that, that was a fantastic deal, bro. When you texted me about that, I'm like, "S—" When we went to walk the house, I'm like, "Is this person, are they serious?" Yeah, you had to be like, "Man, what'd you say?" I forgot about that deal, I ain't gonna lie. Yeah, that was a great deal too. That, that was a house that I bought off-market, uh, used the heart of my lender to take it down. I did landscaping around the outside, and then I ended up making $300,000 on it without doing anything at all. Easy money.
Yeah, easy. So, like, wholesalers, yo, he used a hard money lender to take down that deal. Most of y'all just fall in love with a sign and everything. Build a relationship with a lender. Get a good enough relationship, you might not, might not have to put that much money into taking a deal down. And now you could get larger spreads, um, just from really doing the same thing that you was doing on already, finding a low deal and then selling it a little bit higher. So, I, I would say though, that, uh, the catalyst between those three deals is that they all were very expensive. So, I mean, this isn't $100,000, $200,000. This, oh, yeah, Green Hills. This is me personally. Yeah, all three in Green Hills. And this is me personally guaranteeing $750,000, $850,000, and $2 million. Mhm. And that's something that a lot of people probably don't think about, but that is a lot of risk. Risk. And, mhm, for me to take something down for $750,000 and to be able to have somebody in my back pocket that says, "Hey, I know you're good for it." That's something that is extremely hard to find. And I guarantee I would not be playing in those price points if I didn't have somebody that was willing to fund that.
Yeah, and that's why it's so important to build that relationship because when you do good business, then it goes noticed. Because like you said, that person knows that you're good for it. It was a point where they didn't know you were good for it, you know what I'm saying? So that's why in this business, like, whenever you get that opportunity to, you know, get lended on a certain deal, like, make sure that you pay those people back, you know what I'm saying? Because that goes a long way. You know who knows, 5, 10 projects down the line, you might be able to call up that, that person and be like, "I need a million dollars," and they send it over and close on that deal in a week, you know? So that's a good position to be in for sure. U, especially in a market like Nashville, where the average house that we're buying is like probably $400, $450,000 and above. Uh, because you don't want to just be trying to, you know, some people say they use their cash, right? Like, you, you can't really scale that way using your own cash for all your deals. I'm not saying that it's a bad thing to do, but if you're trying to do 10 plus projects, 15 plus projects at a time, you're gonna get capped out, you know, before your lender that's managing $100 million, $200 million, $50 million fund or something like that. So, u, and then they make money from lending to you. So it's, it's just that much more important to build those relationships with all of them too. Like we're talking about hard money, but again, like I said, I got deals that I use hard money, private money, and bank money all on that same deal, uh, to get that deal done.
People are, you're about to say something. Oh, no. I, I've done the exact same thing. I've, uh, gone with private money for a first position for a loan, and then I got the second position. Whatever down payment or equity the first position required, I've then borrowed that from a high net worth individual. So, whatever gets the deal done without giving up too much of the upside. Yeah. I will definitely not do deals just because it will require me giving away too much to be able to even do the deal. Equity, basically. Correct. And I don't want too many cooks in the kitchen. So. Yeah. Yeah. And, and like, uh, it's possible to do new construction deals without any money out of pocket. Uh, because like, when you go to the bank, they're going to, they're going to value this project. Like, say you go to the bank and you have a piece of land and you want to build on it. They're automatically, most of the times, most of the times, they automatically go to hit you with a loan-to-cost approach. They're gonna say, "I'll give you 80% of this project, you need to put the other 20% down." So, in order to get around that, what I would do is I'll take it down, take down that project with hard money, into where now I'm going to the bank already owning the asset. So when I go to the bank owning the asset, instead of a loan-to-cost approach, they'll, they'll do a loan-a-LTV approach, which is loan-to-value. So now they'll give me a loan of 75% to 80% of the value of that project. If I get a good enough deal, then 80% of the value would be more than enough money for the land purchase and the, uh, the project cost. So the bank, for example, let's say you, you, uh, have some plans and you go to the bank and they, uh, what they're going to do is they're going to appraise that set of plans that you're going to build. And, oh, you're about to build like a 2,000 sq ft house. Say they appraise that plan at $500,000 and they say they'll give you a loan of 80% of $500,000. So they'll give you a loan of up to $400,000. Let me change that number right now, it's 75%. So they give you a loan for $375,000. $375,000. What's the last piece of land you bought? How much did you buy it for? I paid $85,000 for it. Okay. So let's say you got a piece of land that you're buying for $85,000. So they give me a loan for $375,000. When I subtract $85,000 from that, I have $290,000 left to build that house. Can you build a house for $290,000? I can. It might not be the house I want to build. Yeah, it just depends on how big the house is, or how big the house is that you're building. If it's between 1,700 and 2,000 sq ft, you might could get away at about $290,000. But now you're at a point where you don't have to put down the 20% of that project. Uh, what I would do now is I would go borrow $100,000 from a private lender to, uh, pay interest costs. So I go to the bank with a piece of property I already own. I bought the land for $85,000. I showed them a piece of, um, I showed them plans that I'm gonna build. They appraise it, say it's gonna be worth $500,000 when I build it. That's how much it's worth. That's what the appraiser does. Banks say, "I'm gonna give you a loan for 75% of this deal." So now they're gonna come in and kick the hard money lender out because the hard money lender is in first position. They're gonna roll the land and the new construction into one loan. 75% of that is $375,000. Now, minus $85,000, I got $290,000 to build my house. Uh, in that situation, I probably, that'll probably be like just enough money to build the house. I would go borrow $100,000 from a private lender, which then would be in second position, and I would pay them somewhere between 12 and 15% on their money, which they're not getting that nowhere else right now, and it's not secured by real estate. Um, and then at that point, I'll be in that deal for zero money out of pocket. That's how you do a new construction deal without none of your own money. So, you ever done a deal like that? I know you have. Yeah, I ain't gotta ask you, I know you ain't. I know you done a deal like that.
So, man, we about to get ready to wrap up in a few. But before we wrap up, I want to ask you, what's like your biggest learning lesson in, in business or just in life that helped you today in business? For me, is I can't do everything on my own. I've got to, got to, got to, got to delegate. And I think, um, I think when I really started taking off with new construction, I wanted to run everything by myself, which is, by all means, probably the best way for me to have started, but it's not sustainable. Okay? So for me, it's, I have to delegate. I have to get other people on my team, and I have to be able to give up some of that control. Um, just because, like, it's, it's just not sustainable doing everything on your own. I, I, I learned that lesson wholesaling, I learned that lesson flipping, learned that lesson in new construction, um, hiring other people. And I've learned that lesson now scaling my own business in new construction. Delegation is like having a team, bro. Like, this is something, this is something that me and you used to talk about, 'cause I remember when, um, I first got into it, you was like, "Man, get rid of everything else, you know?" But I'm big on like, I don't get into this to be tied down to it, you know what I'm saying? Like, I'm not in real estate, I'm not making a bunch of money, money to have to be here and have to have my eyes on my projects at all times of the day. Like, I want to go travel, I want to go on vacation, I want to enjoy time with my friends, my boys. Like, I want to do that. And in order to do that, you have to be able to delegate to a team, which for any entrepreneur is like the hardest thing to do, because in your mind, don't nobody do this better than you, you know what I'm saying? It don't matter who it is, ain't nobody on your team gonna do it better than you. And to be honest, they not. That's the thing you got to live with is that, hey, I'm gonna make less money on this project, um, the team is gonna make mistakes, I'm gonna have to train them. But at the end of the day, if you got the end in mind, now you got some of your time back. Now you got some of your peace, your mental clarity back. And what, what's that worth? That's worth the extra $10, $20,000, or $30,000 on that project. It is for me, you know what I'm saying?
Absolutely. Uh, biggest thing for me, uh, was hiring a project manager in my new construction business, which I was so hesitant to do because that was all I knew at the time was doing everything myself. And now, 8 months later, I couldn't imagine not having one. Like, if anything happened to him, I'd immediately have another one within a couple weeks because it, it's, it's worth a lot to me being able to have somebody else that is dependable, shows up, and helps keep everything on track, 'cause I, I cannot be everywhere at once. So, whatever, uh, whatever monetary value I have assigned to that, he's worth five to 10 times that. Yeah. Yeah, bro. It's, it's all around, you know? Bro, this wealth thing, like getting into it, and you probably, I know you agree, like when you start doing it at such a young age, 'cause you, you're 20, you're 23. Yeah, you're 23. So it's like, at 23 years old to already have made millions of dollars and knowing in your mind, "If I made millions of dollars at 23, then by the time I'm 30, [expletive], I'd be knocking on a hundred million." Something like that, you know what I'm saying? But people don't understand that that's just one thing, just one part of your life, you know what I'm saying? You're still young and growing. And if you don't ever get that time to like focus on your mental space, your spiritual space, your body, your health, all that, then like, you could really run yourself into the ground, you know? So I think building a team and delegating gives you that time to like, really check on yourself also, um, at the same time, grow your businesses and your companies. Bro, this was a dope interview, bro. I really appreciate you coming on here. Uh, for everybody that's watching, Paul's gonna be speaking at the Triple N W Room event here in Nashville, January 11th through 13th. And also for the people that's doing the VIP experience, y'all will get the chance to see some of these projects live in person. May have some of the subs there where y'all can ask some questions, but they're gonna be busy working. But, uh, that, that type of game is like, it's so much value to it, you know what I'm saying? Because I'm a person that likes to experience and and see things and put my feet on the ground and walk these projects. And whenever you get the opportunity to walk projects of someone that's done it a lot of times, you know, multiple, multiple times and have done it at the highest level and also experienced mistakes in the game, you know what I'm saying? Learning lessons that just cuts the learning curve that much for you. So, uh, Paul is, uh, going to take the time out of his day to come speak and show us some of the things that's going on in his business, uh, for the VIP people. And for general admission, Paul's gonna be speaking on one of the days. I don't know which day. I don't think Natalie, she's in charge of the schedule. So y'all make sure y'all tuned in. Make sure y'all in Nashville that weekend. You don't want to miss it. Don't start the year off wrong. If you want to win the year, you gotta do it day by day. And being at this event is gonna be, gonna definitely help you get to that point in your life. Uh, make sure y'all like, comment, subscribe, share with a friend. Tell that friend, "Hey, Paul just came on here and gave us the whole blueprint on new construction and how to get into it." Tell them, share with 10 friends. We gotta get this information out here. This is a free podcast, bro. Like, me and him then paid for some of this stuff that we just talked about on here. And when I say paid, paid out of our pocket and paid for making mistakes in the field. All right, now you get being able to learn it from somebody that's done it before, like I said, cuts the learning curve and puts money directly into your pocket. So make sure y'all tune in. This episode's gonna be dropping Monday at 7:00 PM Central Standard Time. H.