Welcome back to the Investor Fuel Show! I’m really excited to have my buddy, Brant Phillips on today! We are going to talk about his transition from fix-and-flips (he’s flipped hundreds of houses), into affordable housing! Lots of good stuff shared in this episode, don’t miss it!

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FlipNerd Show Transcript:

Mike: [00:00:00] Hey everybody. Welcome back to the show. Really excited to have my buddy Brad Phillips on today. We’re going to talk about his transition from being a fix and flipper flip flipping hundreds of houses into affordable housing.

Professional real estate investors know that it’s not really about the real estate back. Real estate is just a vehicle to freedom. A group of over a hundred of a nation’s leading real estate investors from across the country. Meet several times a year at the investor fuel real estate mastermind to share ideas on how to strengthen each other’s businesses, but also to come together as one.

And those more fulfilling lives for all of those around us on today’s show, we’re going to continue our conversation of fueling our businesses and our lives.

Brant: I’m glad you’re here.[00:01:00]

Mike: Hey, Brant. Welcome back to the show. Well, welcome to the show you haven’t been back on before. So welcome to the show, my friend,

Brant: Mike, thanks for having me on really looking forward

Mike: to it. Yeah. Glad to see it. And it’s always, it’s always good to have a fellow Texan on you just down the road. Of course, for folks that don’t live in Texas, they might not realize that Dallas and Houston are actually about five hours apart, but just down the road, as we like to say it.

Brant: That’s right.

Mike: Hey man, you’re you you’ve uh, you and I started largely the same way, lots of rehabbing. And then you’ve kind of transitioned into more of kind of affordable housing, mobile homes, old home parks and development stuff. We’re going to talk about today before we jump into that, just tell everybody your, your backstory a little bit.

Tell us about kinda how you got started in this.

Brant: Yeah, I got started real estate cause like a lot of people, I absolutely hated my job. You know, it’s seven years in law enforcement that wasn’t bad. And then I went into corporate America and I hated it, day one. Um, so I said, I got to figure out something to do, you know?

So like a lot of people read rich dad, poor dad, a few other books. [00:02:00] And um, and I just dove, I dove in, you know, my wife and I were we’re pretty much broke. I got started also like a lot of people in real estate and, um, had, you know, we had no. But I’ve read, you know, read and saw books about you can do real estate with no money down.

That was pretty compelling to me. So I actually used a credit card to buy a rental property. My first one, and when I got started, this was in 2007. But Tim more that year 10, the next year with partnerships went full-time in 2009 and, and kinda the rest is history. Um, you know, we’ve gone on to do hundreds of deals.

You name it. I’ve probably done it in the world of real estate, especially single family, flipping, renting, owner financing, all that kind of stuff. But yeah, that’s, that’s kinda the, the quick bite.

Mike: Yeah. And I know, I know part of your story here. So you got to a point to where you’re stacking up rentals, and then you start realizing how much you hate rentals or you start kind of re you like the idea of passive income.

You, but you’re like, surely [00:03:00] there’s an easier way than this. I mean, that’s, that’s part of.

Brant: Yeah. And I got up to about 50 rentals relatively quick and, um, had hired my first assistant. I had a construction manager, but hired an assistant just to manage my properties. And, uh, I, I didn’t like him to be honest with you, you know, this whole idea of passive income.

It wasn’t that way for me, maybe it is for others, but even. If I wasn’t taking the calls or dealing with any of that kind of stuff, I was, I was still writing the checks and I was still having to deal with even the stress of just some stressful situations. So, you know, Um, I’m not dumb. Like I realized like the benefits of having a, you know, a rental property.

So I’ve held onto a lot of them I still do to this day, but it’s never, it never excited me. Right. And I’m a big energy guy. I, I like to wake up in the morning when I’m doing things like this podcast with you, or I’m flipping houses or doing deals, I’d like to actually enjoy that, you know? And, uh, [00:04:00] so I just kind of said, you know what, I’m going to keep this amount of rentals, uh, for wealth long-term wealth and stuff like that.

But. Not for me. That’s how I kind of discovered owner financing that way. I absolutely love owner financing. So we do a lot more of those these days, but, uh, yeah, I just realized, you know, Uh, I’m not a landlord kind of guy where I’m going to go get a couple hundred rentals. Um, I did have that goal for a while.

I’m like, it’s not me. So kind of focused on the flipping owner financing stuff for it kind of just fell into that. Um, not fell into it, but that was kind of my focus for many, many years. Yeah.

Mike: Yeah. A lot more into multifamily over the past couple of years and doing some huge deals there just to move the needle faster and further, you know, but we do have a single family portfolio.

And a couple of years ago, I thought about, I’m just going to owner finance all of these off, you know, and we didn’t even manage them ourselves. And they’re still kind of a pain. But the appreciation, which I never really expected here in Texas, it’s been so amazing over the last few years. I was like, and I, you know, I just think the dollar is just being destroyed.

So [00:05:00] I was like, man, this is, if this keeps going in this direction, like, I feel like I need to hang on for that reason alone, you know?

Brant: Yeah,

Mike: but, uh, who knows, you know what, we’ll, we’ll, it’s easy to look back and say with all that what’s happened over the last eight or 10 years, like, what will we look back in eight or 10 years and think like, who knows?

You know? Yeah. So you started doing more stuff with a mobile home. So talk a little bit about, I mean, talk a little about kinda why affordable housing makes sense. I mean, I, I know some of your beliefs, but kind of share why that, why you moved in that direction. I guess

Brant: you kind of touched on it, you know, the, the dollars.

And, you know, with, you know, one thing that, that I have always enjoyed, you know, with, with my business and, and fixing and flipping homes and even. Not to knock all tennis and we’ve got some wonderful tenants, you know, 10 has been in the homes 10 plus years and very little trouble for us, but you, you want to feel like you’re really helping people and, um, serving others when you’re doing your business and being profitable.

And one of the [00:06:00] big things, you know, in America is living the American dream of having that, you know, three bedroom, two bathroom home, and a nice clean community. And that dream is, there’s a, there’s a gap from those who are actually going to be able to obtain it now. Right? Like investors are developing entire subdivisions of rental property.

Right. And it’s, it’s not going to be home ownership. And like I kinda mentioned. Love the owner finance model, not necessarily the rental model. Why? Because we know who takes better care of a property and owner versus a renter. You know, where are your expenses hotter with, with renters versus, uh, you know, with owners?

So that was kind of one of the things that always stuck out with me. And now. Where we’re at today. Um, you know, that gap is just widening and widening and, uh, the dream of, you know, the 3, 2, 2 with, you know, brick home in the suburbs. Just, let’s just be honest, you know, middle, lower middle class, [00:07:00] even some middle-class, they’re not going to be able to afford it.

I’ve been, uh, you know, I’ve been told and read that in Euston pricing, the Dallas median price housing is going to be 4 50, 500, maybe in the five, you know, five, six years from now. So you probably should hold on to those rentals, you know? Um, so that’s one thing about it, but that’s where this idea of, you know, mobile homes and manufactured housing kind of.

Kind of came to me a few years ago and didn’t really come to me. I had a, uh, you know, a friend, if you would talk about that now or not, but, um, had a buddy who was doing that. You want me to talk about that now or share whatever you want? I think I’m jumping ahead a little bit, a part of the, you know, part of this also, Mike, that is what’s really.

Such a focus of mine is there when I mentioned I’ve done it all, you know, I’ve went through this, uh, brief period of time where I’m like, Hey, I think it’d be a lot of fun to go flip a million [00:08:00] dollar houses. You know? So we did that for a while and, um, none of them were a million. They were like, you know, 500 to $800,000.

And this is going back into 20 14, 20 15 time. You know, for those of you watching this in Houston, you may have remember whenever oil crash back then. And so that was our, that was like 50% of the, the over $500,000 market in Euston. So we were building some of these homes. We’re flipping some of them. And none of them were selling.

It was like my most painful time in real estate. And I’m like, you know, I don’t think this is very sustainable when you have one exit strategy and it ain’t working. So I ended up like holding someone’s rentals, negative cash, like very negative cashflow for awhile and things like that. So I decided. Not my game.

I’m going to focus on something that’s sustainable and things that rent flip on her financial self. [00:09:00] And so I kind of really focused on affordable housing, um, many years ago. Yeah.

Mike: You know, what’s amazing. I heard an interesting fact a while back that, and this kind of blew my mind that this is what the person said.

I haven’t validated this, but I talked a couple people and they said, yeah, it’s true. That about 10% of the households in America. Our mobile homes, 10%. That’s a really high, I mean, it blew my mind when I heard of that. But you know, when you start to realize, you know, a lot of people have been there.

There’s not many mobile homes around me, for example, but there’s pockets of Dallas that all of a sudden we drive by and there’s just like a sea of them, you know? Um, so I guess maybe it’s true. And then I know like whenever I go out and, uh, you know, if you’re out in a little more rural areas, they’re everywhere, right?

Yeah.

Brant: For sure. Yeah. Oh, yeah, that’s a big market. And then kind of what opened my eyes to, it was one, one. I had a buddy and, uh, I knew he was doing it and. I made redneck jokes, [00:10:00] got to regret that now have kind of looked a little bit closer. So he was doing it and he’s a very sharp guy, right? Tons of respect for him.

And you know, after two or three years of talking to him on occasion, him still doing it, you know, I was like, What are you doing? You know, what are your numbers look like? And I had like my stereotypes and stigmas and things like that. And he started telling me about a few of his deals and I’m like, that sounds pretty good, you know?

And so I dug a little bit deeper and there were really two things that caught my eye. Number one was, you know, learning about Warren buffet being in, um, the manufactured housing space, um, what with Clayton homes and then also with 21st century mortgage, which is the largest financier of mobile homes. And so that I’m like, all right, if Warren’s playing in this space, you know, there’s probably something there.

And then the, the bigger thing to me was, uh, uh, I learned about Sam Zell and [00:11:00] Sam Zell. Um, In this store really caught my attention was like back in the eighties, they were acquiring some company, uh, like tens of millions or hundreds of millions of dollars. I don’t know. And one of the holdings of the company was a mobile home park.

So he told one of his guys he’s like, go out there, fly out there, take a look at this thing, figure out what we got to do to get rid of it. So the guy goes out, he comes back and he’s like, you’re not going to believe this. And he was like, it’s worse than we thought. And he was like, no, I’ve never seen anything.

Like it it’s like an ATM. Yeah, it’s print and cash. So long story short, they kept it since, and this is in the, um, mid eighties. So since that time, you know, they created their fund or did whatever they did, they have about something like 160,000, uh, mobile home park, lots across the country. So they’re by far the largest holder of mobile home parks.

And that was a big endorsement, but here’s the bigger thing. This is when I read this and I’m like, all [00:12:00] right, I’m just going to do this and see what my experience is. So over the years, they’ve sold off about how half of their portfolio, commercial apartments, storage, skyscrapers they’ve own malls. You name it.

They’ve sold off about half of other types of commercial properties. They’ve never sold a mobile home park. Oh wow. And I was like, I just got to do this. So, you know, so that’s where I kind of just dove in. Um, that’s where I dove in a few years ago. I’m like, all right, let me, you know, try this out and test it out.

And you know, we’re under contract now in our fourth mobile home park and talking to. You know, CC attorneys right now about, you know, going down the path of creating a fund so we can really scale it.

Mike: Oh, cool. Yeah. Keep me posted my friend. I’d be interested in that. It’s interesting. You know, when you talk about affordable housing, I just talked to my property manager today, who he himself owns.

Like, I don’t know. He [00:13:00] has some multi-family too, but I think he has like, uh, maybe a thousand single family doors in the Dallas area. So he’s got, he’s a pretty big investor himself and he’s like, Hey, we were talking about some of our properties. And he’s like, yeah, we’re getting in Lewisville, which is close to the area that I live in, which is, you know, a lot of sixties and seventies built stuff early eighties, maybe, but for a 1200 square.

House that we used to buy those things for like 40 grand and rehab them and sell for like a hundred, 110, you know, he’s like, yeah, we’re getting like 2000 bucks a month for rent for 1200 square feet. And I was like, oh my God, like, it’s changed dramatically. You know,

Brant: it’s going to be 3004. We know it because apartment.

15 1800 bucks for something that’s not that much.

Mike: Right, right. Or certainly not that big. Yeah. Yeah. Awesome, man. Well, so let’s talk about kind of, so we talked about mobile homes, then I know you’re doing some development now. So developing and putting manufactured homes on, on new developments. I talk a little bit.

You know how you got into that and what that’s all about. Yeah.

Brant: Yeah. [00:14:00] So w the, the deal we just closed on, we were, we’re looking for land, you know, potentially develop a mobile home park is really what we’re looking for. Um, and then how that kind of came about was we just, we found this patch of land. It’s a hundred acres, just kind of ideal for a subdivision city and county.

Wasn’t. So crazy about a mobile home park, the one there. Um, and then we started looking at it to just the demand of, of housing and affordable housing. So we started kind of like, well, maybe we should go down that path and really what the big, um, uh, thing that kind of turned our decision-making on. That was, it came down to the utility set up and w long story short, where we’re going to need to do quarter acre to half acre, lots because of septic water, things like that.

So, It’s kind of hard to build a mobile home park with, uh, with a density like that. So we’d, so it started looking at it through subdivision eyes, um, just made [00:15:00] complete sense. So we, then we took it down earlier this year. So we’re working on doing that. And you know, when we, when we start first started looking at it, we were thinking, you know, manufactured home on half-acre lot, you know, low $200,000 price.

And feeling very good about it now. We’re not so sure when we go to market, if we’ll be, you know, 2 30, 5 to 50, you know, something like that. And, uh, you know, I remember talking to some people when we first had the idea, like you’re crazy, you know, you know, mobile homes on land. They’re not going to sell for that.

And I’m like, here’s a bunch of comps and they’re not brand new and they’re not that nice, you know, better in pushing that price point now. So we’re feeling good about it. I know. Could change. But once again, I’m, I’m just like, I like to have, you know, multiple exit strategies and things like that. I’m like if the market changes, then we’ll owner finance or we’ll sell some to investors or we’ll, you know, which is a least some, if we, if we had to, so we’ve got all these exit strategies, [00:16:00] but we’re really just gonna build a subdivision, everything.

Uh, you know, uh, Fannie Mae financeable, FHA financeable and, and, uh, put about 140 or so homes out there. And just get them sold. Yeah.

Mike: And interestingly enough, this is my belief. Like if the market shifts there probably shifting more into your direction, honestly. I mean, it’s not like somebody that, uh, there’s just a lot, like you said, the market’s increased so much that people might shift into your direction instead of away from it, because when you’re at the, you know, how much lower are you going to go?

Brant: Right. I mean, at the same time. Yeah. And that was the good thing too, with this deal, it was like, Very profitable selling at a much lower price point. Right.

Mike: Got some cushion there. Yeah.

Brant: Yeah, yeah. But we’re, we’re really, I mean, the way things are going, like I said, I mean, there’s a housing shortage, you know, that was the other thing is like there’s, there’s not enough homes.

And then where we’re at on this development, we’re on. Right. Ex [00:17:00] excerpts. Is that how it said, um,

Mike: beyond the suburbs, is that

Brant: beyond the that’s beyond the service suburbs, which is where I love to invest these days, you know, Euston bath, and any major cities, a blood bath, we still buy it. But we do more of our marketing on the outskirts of town.

That’s what you find the best deals with less competition. So that’s where you know, this development is, and that’s where a lot of people want to live these days, especially the remote working remotely, COVID all this kind of stuff. So we just liked it. It just makes sense. You know, we need to do this because we’re, we’re competing with builders, but builders right now.

Buying land gonna develop, we’re going to beat them to market because once we do, you know, roads and utilities, it’s like, you know, products, our products ready, you know, and it’s not on some 5,000 square foot lot. It’s a nice half acre lot. So that’s one of ours.

Mike: I think if there’s ever a time, you know, [00:18:00] Like you said more, more and more people are working virtually working remotely, at least part of the time.

And so I think the time is kind of right to live further out because one people know it’s more affordable. Some people appreciate having more land. Some people are like, I don’t ever want that because I don’t want to mow it. But, you know, there’s some people that appreciate having that land, especially the young families, if you’ve got kids that you want to run around and all that stuff.

Right. So, yeah. Awesome. So, where do you think? I mean, obviously, you know, at a high level, I think we, we both agree and both believe that affordable housing is going to, especially in markets like Houston, Dallas that have just blown up. I mean, population wise, there’s, there’s probably not many markets that are growing faster.

Right. For a lot of reasons. And affordable housing is going to continue to have pressure. And so we’re probably a long ways from like LA or San Francisco, but it’s definitely moving in that direction. Right. So, um, it seems like you’re in the right spot at the right time.

Brant: Yeah. You know, I mean, I think, uh, the future looks very promising for those of us in [00:19:00] Texas.

You know, I don’t know if you’re far east coast, west coast, what that looks like. I don’t, I don’t know, but, um, Very grateful to be where we’re at and there’s tons of opportunity for us.

Mike: Yeah. So you’re you, I know you do. You’re primarily primarily focused on mobile home parks. Some other developments, if folks wanted to, if they’re, if they’re wholesaling or fix and flipping, you know, single family houses now.

How do they any tips on how to kind of, how to make that transition to start looking at, um, really kind of cheaper properties, but probably bigger deals overall because you’re looking at parks and developments, but any, any thoughts on how to start to make that transition?

Brant: Yeah. Um, you know, well, like, like anything, you know, find some, you know, people that you can talk to.

Who’ve done it before successfully, whether that’s a coach, a mentor, just, you know, just people in the business and start doing your due diligence, your research, um, Massive amounts of education and then just jump [00:20:00] in. And that’s literally what I did, you know, probably when I really started focusing on it, I went to one seminar bootcamp and, uh, I was under contract and closing on my, my deal.

Like my first deal, like three months later, you know, put another one under contract a couple months later. So educate get that foundation of education and. Pretty much just jump in.

Mike: Yeah. I found like as a single family guy, like I, you know, I transitioned in a Mo a lot of multi-family, but I did it with somebody that knows what they’re doing.

Right. I kind of partnered with somebody, which I think bigger deals, like this are easier to partner up with people. Right. But I think once you’re comfortable, like, you know, there’s a big mindset issue with somebody that’s not successful. Somebody that is successful. In real estate investing and the big things are overcoming the mindset.

Can I raise money? Can I do this? Can I do that? And if you, I think if you’re successful in single family or, uh, whether it’s wholesaling or rehabbing, like making that transition is way easier than starting over. You’re like, you’re you have the confidence that like, [00:21:00] Hey, I don’t know all the answers, but I can figure it out.

Right.

Brant: For sure. For sure. So like one of my things with, with, uh, with single-family. Was, you know, we made a couple of attempts to scale, you know, single family with how many houses would flip and, you know, each fix and flip or fix them rent each year. That’s a really hard model, you know? And so where we kind of can kind of hit our heads against that ceiling a couple of times.

And then I was real asked myself, I’m like, I don’t even think I want to do more than that. Right. So we’ve got, we’ve got a real. You know, um, a good formula here locally in Houston, where I have one construction manager, one acquisition, and like that works for me. And I’ve got, you know, that team built out and just work on, you know, getting them, support them, what they need so I can focus on other things.

So that was really. That’s ideal for me, but what, what I realized I still wanted to scale, but I was just like that model or that vehicle. Wasn’t it for me. I know there’s guys who’ve gone out there and done a [00:22:00] thousand plus homes. I’m like, I’m just, I guess I’m not that guy. Um, and I was kind of okay with that, but I was still getting the itch to scale.

And when I bought my first part. And that’s where I really saw. I was like, I think this is scalable. And I bought that first part. It was like 43 lots. And then I bought my second lunch, very small as 15 lots. But you know, at the end of the year, after getting in it, getting them in a kind of, uh, situate or whatnot, your review on our taxes and stuff like that, then the air is like, right then we were holding about 65 single family homes.

So just looking at like, you know, However many tax checks get written because some properties have three or four tax bills. So it was like a hundred and some odd tax bills and insurance checks and all that. I’m like, oh, my parks sit, you have is almost the same amount. And that’s where it really got me like, oh, six gate lots, two checks, you know, versus 65 homes.

It was like a hundred and something. [00:23:00] So what I really found. You know, a part is it’s kind of like one pro you know, it’s like one rental property almost, right. Especially if you’ve got like your eyes and ears are kind of a manager there apart is really like one property. And so, you know, that’s where ever since then, I’m like, yeah, this is, this is where I’m going to scale at.

It was very. Everything I learned in the single family, all that knowledge was transferrable, especially because I don’t like to own any of the mobile homes. So I was able to utilize what I’ve learned with owner financing there, what I’ve learned as being a landlord with lot rent and things like that, giving them, you know, clay clean and safe community.

Before I would give them very nice, clean and safe housing. Now it’s a community, right? We take care of the roads and utilities. So a lot of information that it was, it was transferable. So I don’t think if somebody is wanting to make that transition, it’s not that difficult. Honestly. It’s maybe easier.

Mike: Yeah. Yeah. Awesome. [00:24:00] Awesome. Well, uh, Brent, you’ve been in an investor fuel for a little while now, would you mind just kind of sharing your experience, like maybe a little quick testimonial on, uh, your experience with investor fuel so far the mastermind.

Brant: Oh man. It’s, it’s been great, you know, iron sharpens iron.

So anyone out there who’s looking to grow, look into scale, look into, you know, just, you know, grow your business. If you’re not in a mastermind assumption. I don’t know, man, you got to ask yourself, are you really committed to hitting your goals? You know, almost because there’s just so much, uh, there’s so much, you know, uh, you know, information, you know, ideas, insights, you know, trends that.

Probably not going to catch it for flying solo. Right. And so, yeah, investor, fuel’s been great. A lot of great connections, like great ideas, um, helped a couple of guys in there also, well with mobile home parks, as a matter of fact, and, uh, it’s been great. Uh, a guy, uh, Jimmy earlier this week, he’s like, Hey man, here’s he’s in Oklahoma texted me.

He’s like, Hey, here’s a possible deal in Houston. Take a [00:25:00] look at it. You know? So there’s a lot of stuff like that.

Mike: Yeah, that’s awesome. We’re glad you’re a part of it. Thanks for that. So if folks want to learn more about what you’ve got going on, um, or connect with you in some way, where should they go?

Brant: Yeah. Brandon phillips.com or social media. I’m not sure. I’m in the social media spheres. So yeah. Brent phillips.com is the easiest

Mike: way. Cool. Well, we’ll add your, uh, we’ll add your website in the show notes. So thanks for sharing your story with us today. I’m pretty, pretty excited about it. I it’s, it’s interesting cause I don’t, I don’t know your exact age and I want to ask you that, but I think once you, you’re an investor, you start to mature.

You start to like look for how do I simplify? How do I. Optimize cashflow, how do I optimize my impact? How do I get more of my time back? Right. And so, uh, it’s interesting hearing, you know, your story. Cause I see a lot of similarities with mine. Of course. I always do things to complicate it too, but it’s all in, it’s all on the path of like trying to somehow maybe you have to make it more complicated so you can appreciate the simplification part.

I don’t know.

Brant: Wise, my [00:26:00] wife asked me a lot. Why are you going to do that again?

Mike: I thought you were going to simplify it. Yeah. Well, cool, man. Well, Hey, appreciate your time. Thanks for sharing your story. Yup. Appreciate it. Awesome. And everybody, if you haven’t yet checked out investor fuel, just go to investor fuel.com.

You can learn more about our amazing mastermind. We’ve got just a, an amazing family of investors from coast to coast that are sharing knowledge and learning and growing together with others. Occupied it. Uh, Mr. fuel.com. Other than that, see you on the next day. Take care.

Brant: Are you an active real

Mike: estate investor? If so, and you want to latch onto the power of surrounding yourself with over a hundred of the nation’s leading real estate investors, all committed to building stronger businesses and living richer fuller lives. You should jump on a call with us to learn more about investor fuel, simply visit industry.

Dot com get

Brant: started.[00:27:00]

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