Mastering Real Estate: Secrets to Building a Thriving Business

Stephen Schmidt (00:00.32)
Welcome to the show where we interview the nation’s leading real estate entrepreneurs. It’s your host Stephen Schmidt and I’m back at it like a bad habit and I got a Really cool trick for you guys here in the studio today. I’m interviewing Randy Shelley He reigns out from the great state of Tennessee out in Chattanooga in a subsection Chattanooga that he told me how to pronounce and I already forgot So I was good go with Chattanooga for today And Randy is in the hard money lending space. He also has built an absolutely dynamic

real estate portfolio in the apartment space as well as storage. So we’re going to get into a great conversation today. Before we do that, just keep in mind at Investor Fuel, we help real estate investors, service providers, and real estate entrepreneurs, 2 to 5X their businesses so they can build the businesses they’ve always wanted in order to live the lives they’ve always dreamed of. With that being said, Randy, welcome to the show this afternoon.

Randy Shelley (00:53.966)
Thanks, man.

Stephen Schmidt (00:57.492)
Glad to have you on. me ask you this, because we had a great conversation before we got recording. And for the context of our listeners, could you give us little bit of insights on how you got started in this space? What did that look like? And then how did you get to where you’re at today? How has things evolved for you to where you’re at now?

Randy Shelley (01:16.055)
Going all the way back, I got a civil engineering degree from Tennessee Tech. Did that for two years. was listening to Dave Ramsey at the time. He suggested Rich Dad Poor Dad. Read Rich Dad Poor Dad, got laid off, went into real estate. So, been doing that since 2008.

So I kinda, when I got into it, saw a lot of people, the big guys going down at the time. It was really hard to find in like money. Back then it was easy to find deals. It’s almost flipped nowadays on that end. go ahead, what? Yeah, so just started wholesaling originally.

Stephen Schmidt (01:54.58)
right.

Stephen Schmidt (01:57.984)
Oh, I just saying, right.

Randy Shelley (02:05.239)
Then got, was always pretty good at raising in private capital. within race and private capital bought my first rental, no money down, bought my first rehab, no money down. And, just kind of, built that up to where w w well, when I was wholesaling, I got hooked up with a guy buying off the courthouse steps. had some of his own capital where he was just buying cash and then reselling. So just kind of, kind of, I guess that hotel or whatever.

Um, back, I mean, this is back, you know, 2009. So eventually I had sold him a few houses. I was selling a lot of houses for him to my buyers, uh, just in the wholesale side. We started, um, doing more deals. So we wound up partnering and, we started a pretty big flipping business. So that kind of led up into.

where we brought on another partner later on, but we had like in 2017, we had like 36 houses going at one time and I just kind of got burnt out and our spreads when we ramped up started dropping. So, you know, on average, when we first started, if you gave me a hundred grand in private money, I could make about 50 grand in profit on that money. When we ramped up, you know, we were doing rehabs.

And, know, we would do a $40,000 rehab and sometimes make 10 to 15. And it just seemed like the risk wasn’t worth the reward because I was the one mainly lining up all the capital and everything else. So that kind of led me into the hard money lending business. that started, I started that in 2017 and that’s kind of what, you know, I’m doing primarily today.

In that time, I opened up a property management company with two other people. I got bought out of that. And then, also got into self storage and rental. I always had single family houses and that just led me into bigger and bigger stuff. How I, how I did all that, mainly acquire it with private money and do the birth, essentially, biotech rehab, you know, refinance and then do it again.

Stephen Schmidt (04:23.975)
Now, I mean, just so can put some pieces of this puzzle together here, you talk about how you had a really successful flipping business where you guys were ramping up and doing a ton of projects at a single time. But you also, and I’ll let you say the number if you so desire, but you also have quite a few doors in the long term rental space from what it sounds like based on our earlier conversation.

At what point did that factor into the flipping business? Were you doing that in tandem to it or did that come after once you got into the hard money space?

Randy Shelley (05:00.536)
The single families, yes. The key to where I shifted in 2017 kind of led me into the bigger stuff. We had bought a few smaller apartment buildings, but after

Like we split up the partnership of the flipping business. took, I took the hard money lending business myself, but I kept my partner that was still acquisitions off the courthouse steps. Through that we, we had bought a big warehouse is like 50,000 square foot warehouse. We didn’t even get into it. I mean, it was, it was a risky deal, but we bought that for like a million dollars and then six months later sold it for 1.9.

And then we, because we bought it with the intent to keep it, we had a tenant move out in the meantime, we could 1031 that and we 1031 that into one of the larger apartment buildings that I bought, which was a 48 unit here in Chattanooga, which led me to another 32 unit, which led me to 372 doors we bought as a acquisition, which kind of one thing led to the next. you know, it was kind of the same with storage.

I think I forgot what year we started the storage, but it was around 2000 range. It’s like just, you know, 2000 to 2002, you know, we acquired 1200 doors of storage. So, um, it just, I, I’ve always been the type that just takes massive action. Even when we were doing a lot of wholesaling back in the day, you know, um, we had like, we were wholesaling 40 half of the year and, it

I’ve just got a hustle factor and when I want to go in a certain direction, I can go with it. And in 2017, I just got tired of doing a lot of single family houses and it was a way for us to scale bigger, quicker. That was it.

Stephen Schmidt (06:55.549)
Yeah, I love how you explain that so nonchalant to you’re like so what happened was Good grief, that’s amazing. So on the on the note of massive action because I think this is the Kicker for a lot of people because we only have so much time and you you I guess on one hand it probably didn’t feel like a luxury back then but when you Got laid off from your job or left that position as civil engineer You kind of only had one path to go didn’t you?

Randy Shelley (07:25.325)
the votes baby.

Stephen Schmidt (07:26.589)
Yeah, no kidding. So you also only have 24 hours in a day just like everybody else. So when you talk about massive action…

Stephen Schmidt (07:37.279)
How much of that came from personal effort versus also putting people in the right places as far as like a team structure goes for you to be able to do more with the leverage of other people’s time as well.

Randy Shelley (07:51.874)
I did not do that to later on other than partners. had several partners early on, even in the wholesaling business. And I’ve always been, I guess, kind of good at picking the, I always pick partners with very different personalities than I’ve got. That way you’re not, you’re bringing different things to the, the, the equation and the team. so I don’t know if that’s just a natural ability or what, but I’ve always had a pretty good.

crack record with that. then team wise, you know, it’s now that I had, we had employees under the property management business. I’ve got just a few employees under the hard money lending business. It is key. I can’t say that I was great at that early on. But, even now you make mistakes, you know, today just had a property management company quit.

which we were about to fire them anyway. So it’s not like I’ve got a perfect track record on picking, you know, perfect people and everything else, but you just do the best you can with what you got. And, know, you need to grow in your leadership. If you grow in your leadership, you’ll grow in how you interact with other people and, and have, you know, there’s a book called Crucial Conversations. You got to have key conversations.

whether it be in a partnership or with employees to really get down to, you know, the results to move you in a direction to get you to the results that you need to move towards.

Stephen Schmidt (09:28.511)
Absolutely.

With growing a team later on, what are some of the things that you implemented in terms of leadership in order to have a well oiled machine moving and running in order to… Yeah. So are you fully integrated with the EOS in your current businesses?

Randy Shelley (09:47.073)
book Traction. Traction’s got a great system for that.

Randy Shelley (09:55.01)
Yeah, the last two years especially, yes. At least in the lending company, yes, 100%.

Stephen Schmidt (10:01.981)
I spent such a buzzword the last three or four years too. It’s like nobody knew what EOS was five years ago. And now at least in the business circles I run in, everybody’s all about EOS now.

Randy Shelley (10:12.493)
bad thing is I waited too long. Dude, I read Traction probably six years ago and I didn’t implement it for years. So, and then, you you read, I just read another book not too long ago that’s kind of the, you know, Whitman wrote it. It’s the one that came behind Traction. And I’m like, oh, I’m not doing this specifically right. I’m not doing this specifically right. But it is great for getting Traction in your business. It like that, that system works.

Stephen Schmidt (10:40.927)
And that’s what allows you to take time off and go chase your kids around the country, right?

Randy Shelley (10:47.125)
Yeah, well, we’re on a two month right now. I’m in my buddy’s basement in Indiana, but last year we went up the entire West coast from like San Diego to Whistler, Canada and RV. And we bought a class ARV like three years ago, but I’ve been doing this for three years, but I heard you got magic times with kids from like six to 12 is what I heard from other people that’s older than me. So I was just like, well, we’re going to just take off the whole summer. Even if it’s a sacrifice to my business, that’s fine.

And we are going to just take off for two months. It’s been almost two and a half months last year. And it’ll be a little over two months and a week or actually two months and two weeks this year. But we’re going up the East coast this year. We just kicked in all of a sudden to visit some friends here in Indiana. And then we’re going to make our way all the way up to Maine and everything else. But yeah.

Stephen Schmidt (11:40.927)
That’s awesome. Do you think you’re a good salesperson?

Randy Shelley (11:44.781)
I’m good at selling the things I’m passionate about, yes.

Stephen Schmidt (11:50.995)
What do you think makes somebody a good salesperson? Especially in the real estate space.

Randy Shelley (11:59.662)
Confidence believing in yourself You can learn skills to make you better definitely in some of the Who’s that like FBI negotiator guy? He’s got some great Yeah, yeah, yeah boss yeah, yeah, so he’s got some great stuff on you know interactions and you know, he sometimes it’s just

Stephen Schmidt (12:17.061)
It’s not Voss is it? I know exactly. Rich Voss or something.

Randy Shelley (12:29.823)
Sometimes it’s just, you you got to know the other person’s personality pretty quick, you know, and kind of who you’re talking to. If you’re talking to a very analytical person, you’re very, you know, you, you talk to everybody differently depending on what their personality type is. But, you know, those are some skills you can learn their skill side. But then, you know, I think more than anything is the confidence and just belief in your product or what you got.

for that, but yeah, I think I’m pretty good salesman, so.

Stephen Schmidt (13:03.871)
Yeah, I always anytime somebody does some some big things I mean Realistically if you go back to the wholesaling in the flipping side of the business It’s a little bit different of a sale because you’re not necessarily You’re not necessarily selling something to somebody other than the idea of you taking a property off their hands, right? So it’s it’s a kind of a unique a unique cell in my opinion, but at the same time

You don’t have any properties to go flip if you can’t find the properties and ultimately there’s a lot of different ways to do that, but go ahead. You look like you’re gonna say something

Randy Shelley (13:38.018)
I’m not the greatest. I’m going to say I’m not that I was never the greatest with that where I really thrived in the wholesaling business was really on the dispositions because I would, I would, we would either get stuff off the courthouse steps. I had a lot of other wholesalers that were bringing deals to me. Now I, I, now I bought a bunch myself just direct from seller.

Stephen Schmidt (13:48.445)
Mmm.

Randy Shelley (14:05.921)
But I would say that I’m not the best direct to seller type person for that. was always probably better at dispositions and raising money,

Stephen Schmidt (14:15.791)
sense. there’s your area of expertise. So now when you started when you started Mission Funding, which is the name of the company.

Stephen Schmidt (14:25.489)
Anytime somebody has a name like Mission, why’d you pick that name for one? Out of curiosity.

Randy Shelley (14:30.029)
To start off, we haven’t had it that long. We started off Chattanooga funding and we DBA’d. I bought a website. I feel like I paid too much, but I paid like five grand for admission funding because I had the guy that I hired to run my lending company. I knew that we needed to rebrand because I didn’t always want to be Chattanooga funding. And two, we went through a bunch of different names and that’s the only name that I was just like, I really liked that.

Stephen Schmidt (14:34.047)
Okay. Okay.

Randy Shelley (14:59.723)
Domain was for sale. was just like, let’s pull the trigger and do it. and then I start, you know, so it’s the same company that Chad Nugent funding was. I just changed the name and I love the name because it kind of aligns with everything I do. So.

Stephen Schmidt (15:15.549)
And so talk a little bit on that. When you say it aligns with everything you do, what is the mission of mission?

Randy Shelley (15:23.405)
Actually, you know, I should have it memorized. want actually let me I’m gonna pull up actually our traction thing. I should have this memorized. So apologize that I don’t but I got it right here

Stephen Schmidt (15:35.423)
You’re good.

By the way, five grand, that’s not too bad for a website. I have a marketing background, so that’s not too bad.

Randy Shelley (15:43.276)
Yeah, it’s more than I’ve ever paid before for something. But our purpose, our cause, our passion to help people grow their wealth by funding lucrative investments that improve our community, our niche to provide fast experience, creative deal structuring to grow our clients wealth. That comes straight from traction. And I should have that memorized that I didn’t.

Stephen Schmidt (16:01.865)
There you go.

Stephen Schmidt (16:07.379)
That’s alright, you’re gonna have it memorized the next time somebody asks you, bet you dollars to donuts. You got put on the spot on air. no. So, let me ask you this.

You’ve created some pretty massive success for yourself and other people in which you’re still currently doing. What does the next 12 to 18 months really look like for you? And I want to frame this question in a way that maybe is a little bit different than how someone would normally ask it, but.

You know, it used to be you could plan five years out in business. You could plan, you know, pretty far into the future. But now with the changing of information with AI and everything just rapidly changing it, really, you can’t plan, in my opinion, for more than 18 months, especially market volatility, everything all factored in. So like the next 12 to 18 months, what’s the real big focus for you in business or life in general?

Randy Shelley (16:58.733)
So we had we read this is probably goes back a year We and I’m actually reread that actually just finished it today again for the second time But 10x is easier than 2x great book So with that, I think we had this might be going back a year and a half. We had seven point five million on the street

so to 10 X that, would be 75 million on the street. So that we put that as our 10 year goal. Actually, I’ll take the back. we did this two years ago because I’m looking at it right now. so our goal was to eventually get to 75 million on the street, in the, the lending business. So I’m passionate about growing that I see with all these banks tightening up and there’s a

bigger opportunity than probably I’ve seen before to grow the lending business because everybody is tightening up. And we’ve done really well. I think the reason we’ve done so well though is because I had a huge flipping background before I ever got into the lending business. So our default rate is like less than 2%. You know, it’s actually 1 % and something.

which is, you know, below the national average, but if you look back, even on our defaults, we’ve only lost money on one deal out of, we’re probably approaching 350 loans now. So I’ll, I’ll, I’ll take that all day long, even though we’ve took, took back some on defaults, you know, we’ve only lost on one. So I’ll take that track record all day long. So, but,

I don’t know if I answered your original question or not. What was your original question? Sorry, I might have gotten off track there.

Stephen Schmidt (19:01.791)
The original question was, what does growth look like for you in the next 12 to 18 months?

Randy Shelley (19:07.093)
We, want to grow. So we had a plan to put 18 million on the street.

Stephen Schmidt (19:14.191)
And one of the things that you’ve brought up several times, you’ve brought up multiple books, so I can tell that personal development, education is obviously a big thing for you. Are you an avid reader? Is that your only avenue of getting new or refreshing on old information that’s then still applicable today? Or what do you do to educate yourself with things changing so rapidly?

Randy Shelley (19:37.098)
YouTube, Audible, I’ve been in some high level masterminds before. YouTube and Audible are the things that I’m probably the most consistent at. So I’m not, I’m not a big sit down and read a book type person, but I can listen, you know, especially driving the RV or something, you know, we’ll have a four hour drive or something like that. So you can, you can, you can get through a book in four hours. So.

Stephen Schmidt (20:02.367)
Christ.

Randy Shelley (20:03.485)
So, I’ve interrupted to, you know, it’s a windshield time, but you know, the best I look back and, know, I’ve always been good at, know, not, sometimes not, but not listen to the radio and listen to books and listen to tons of YouTube stuff. You know, get a YouTube premium account and turn it on twice the speed. That’s what to do with Audible too. And then you can get through some books.

Stephen Schmidt (20:30.803)
Yeah, I’m the same exact way. listened to primarily podcasts is my avenue. But yeah, everything in 2x speed. It’s interesting because I think over the last decade of me really diving into my own self development, I used to be able to do 1x and then it was like 1.5. And now it’s like, can’t, they’re not speaking fast enough for me to consume information. So it’s almost like I retain more when it is going faster, which means you can.

Randy Shelley (20:56.095)
Yeah. Now there’s some people that talk really fast and I do have turned them down to like maybe 1.5, but most of the time too it works really well.

Stephen Schmidt (21:02.173)
Yeah.

sure. Why is why is the education piece so important to what you’re doing? I mean, if you’ve already got some things figured out, why keep why keep educating?

Randy Shelley (21:13.655)
Because it’s in your leadership. If you’re not growing, you’re not going to be able to go to the next level. If you’re not a constant student, you are going to hit a ceiling and plateau yourself and not be able to move past that.

Stephen Schmidt (21:36.767)
agree. If you had to go back to when you started but you could take all of the knowledge that you’ve gained over the last two decades let’s call it, what would you do different and what would you do the same with the knowledge that you have today?

Randy Shelley (21:52.801)
Go bigger, quicker.

Randy Shelley (21:57.742)
Randy Shelley (22:03.413)
relationships are crucial. And in a sense of like, I’ve had the same people lending to me probably for over 16 years now. I’ve made them a lot of money over the years. But they’re just really good people. The I would say most of the time, they’re just they’re just people that are the work really good business people that just wanted to

get a passive return on their investment. So the relationships, if I could change anything about myself, I would want to be a better connector and really, know, as soon as I meet somebody, follow up and, you know, somebody that’s like, you know, that I see as significant or whatever, do a better job following up and everything else. I think that’s where.

probably don’t do the best job. And then, you know, when I’m traveling, you know, it’s, I probably, I probably, I need to probably grow in that area. But man, if I had to go back with what I know, just go bigger, quicker, because too many people have this limited thinking and they’re, they’re stuck in their own box. And I don’t know if you’re familiar, Bill Cook, he’s, he used to be out of Cardiff, Georgia. He moved to.

down to Florida, but he does this thing called what box and it was from another guy. But essentially everybody has a box. And I was given Bill heck on a real estate cruise a while back because I’m like, he’s got a residential box and this is his box. And he thinks that this is the box and there’s, can do commercial. There’s so many other things that you can do.

And you can go, you know, I know some guys that the one of the biggest hard money lenders I know is out of Houston. He’s got like 176 million on the street. And he, I went to his house for a mastermind and he was like, why don’t you have 60 million out? And he’s like, I know guys with less talent than you that’s got more, but it’s not all about how it’s not all about how much you have on the street. It’s how well you run your business. you know, there there’s, there’s.

Randy Shelley (24:26.889)
Management is so crucial, especially if you want to live a lifestyle of where you can travel too much and everything else. Management people systems are so crucial for that to grow well and, you know, keep everything running extremely well while you’re gone. So maybe the other side of that is the people side, you know, hire people quicker, go bigger quicker.

Stephen Schmidt (24:56.415)
So it was a two-part question of what would you do different what would you do the same but I I like that answer a ton and I want to ask a follow-up to instead of you telling me what you would do the same and that would be if you were to go bigger faster knowing what you know today how would you actually do that if you went back to the beginning

Randy Shelley (25:17.579)
It depends on what area you’re asking me. Are you asking me with lending? Are you asking me with rental property?

Stephen Schmidt (25:24.627)
Well, if you weren’t to keep the same timeline, right? Because obviously you had an evolution within your business. in general, say, so I guess it would be best for us to define what is go bigger, faster mean? What is bigger mean if you were to do that?

Randy Shelley (25:42.668)
just know when with the real estate, like with my local, know, I was buying back all the way to 2009, these single family rentals and these single family rentals were great cashflow. Actually, they’re still great cashflow for many years, but I held onto them and then it really started happening in 2018.

But holy crap, from 2020 to 2021 and two, I saw more appreciation than I’ve seen in my whole life. part of that, it might be with all the influx of dollars that got put into the economy. But I had houses that I bought for 30,000 that are now worth like 250,000. I’m just like, holy crap.

I saw like in Chattanooga it was almost like a two and a half X to three X within just one year and it was it happened in Nashville before it happened here, but it was crazy so

That’s one house. What if you had 100 of those or apartment building or something else and you have that multiply factor, that multiply factor is way more, you know, on the, it went. So when I say bigger.

The most people’s limitation are just around what limits them on what they think they can do. So I would say try to change your thing. mean, Trump, Trump talks about it a lot, you know, the art of thinking big or whatever, or actually, don’t know. Yeah. Yeah. Art of deal. But, uh, he’s always like a big thinker. He’s always like, you know, let’s, but whatever here, here’s the line. Let’s go over here and try to do bigger. So.

Randy Shelley (27:43.522)
Too many people limit themselves and you you need to, you really need to get out. Sometimes you need to get challenged more to go bigger. And here’s the thing, I respect to the other side of it. There’s something to having a very simple life, having your needs, all your needs met and living a very simple life. And I use, I had some, you know, conflict there because

I feel like sometimes maybe I should just sell off a bunch. could have retired when I was 34. One, I would be bored to freaking death. So what’s the point in that? Two, really, you know, if you enjoy what you do, why wouldn’t you work until you die? Like, you know, but you can choose how you work. You can take off for two months. You can do a lot more traveling. You don’t have to. I don’t get people that want to retire.

That usually means you don’t like what you do.

Stephen Schmidt (28:45.407)
Sure. Yeah, I’m with you on that. You know, what I say for myself personally even is that I want to have the option to experience everything life has to offer. But if I was to stop working, what would I do? Yeah, I mean, there’s only so many go-karts you can run around a track and so much fishing you can do and so much. I mean, it’s like.

Randy Shelley (29:04.023)
when they’re to death.

Stephen Schmidt (29:13.341)
Love to do all those things, whatever, but at the same time, I think there’s a greater impact and I think we have purpose when we have work. Now that work might change. For me, when I’m 70, hopefully that’s just philanthropy and giving back to younger generations coming along. know what I mean? Hopefully I’m not sweeping floors at Walmart or anything. But, exactly, for sure, certainly.

Randy Shelley (29:32.683)
You can choose your way. I always want to be able to choose my work. you know, but I mean, if you love what you, you know, I haven’t had to work for a long time. So, and hopefully, you know, that lasts the rest of my life. But when you do what you love, it’s not really work. It’s more fun. So.

Stephen Schmidt (29:52.862)
Yeah, I’m with you. Well, Randy, working these fine folks, connect with you for more, learn more about what you’re working on, and find out more about you.

Randy Shelley (30:01.407)
Anybody that’s looking to invest passively, we’ve got a debt fund, Mission Funding Capital. We’re out of Chattanooga, Tennessee. You can just call me directly, 423-665-5555 is my cell, or you can just email me at randy at missionfunding.com. yeah, we’re looking to grow that. only, you’ll have some people that call me up for funding. We only lend.

And about a 45 minute circle around my office in Chattanooga. It’s just very easy for us to manage that. We got a little over 12 million over. We actually, I think we passed probably 12.5 million on the street just recently, but I’m looking to grow that to, know, I think I can easily put probably 25 million on the street before we had to go to a different city. So we’re, we’re just original lender. We’re not.

the big boys that are nationwide or anything else. yeah, looking just to grow that. So if you’re interested in passive income or that and putting it with a good operator, I’ll be glad to talk to you.

Stephen Schmidt (31:05.663)
There you go folks, we’ll connect with them for more. And when’s your book coming out?

Randy Shelley (31:10.157)
I you know, I’ve thought about writing a book, I don’t know. I’d have to get with a, I don’t know. That’s a good challenge for me. I like, honestly, I like, I liked it. I like that. But honestly, I’d rather do pod, you know, I’m not known in the podcast world because I don’t try, you know, I tried a little bit for a little while, you know, doing one at my office, but I’m not that consistent with it. But

Stephen Schmidt (31:19.535)
You talked about challenges. I was like you need a book, man

Randy Shelley (31:37.557)
I do love these conversations. I love talking to, I love talking real, you know, if you want to get me talking all day, bring up real estate or guns or something like that. I’m good to go talk all day. So, so.

Stephen Schmidt (31:48.999)
I’ll give you some secrets after we hop off here. But folks, I hope you enjoyed today’s show and I will see you in the next episode. Thanks again for being here, Randy.

Randy Shelley (31:58.382)
Thanks.