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Show Summary
In this episode of the Real Estate Pros podcast, John Harcar interviews Gerald Hennessey, a seasoned real estate investor. Gerald shares his journey from being a mortgage broker to becoming a successful investor, detailing his experiences during the 2008 recession and how it shaped his approach to real estate. He discusses the importance of mentorship, the integration of AI in his business, and offers valuable advice for aspiring investors, emphasizing the need to identify and solve problems for sellers.
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Investor Fuel Show Transcript:
Gerald Hennessey (00:00)
He asked me, you know, how long have you been doing this? And I said, this is my first one. Right. And he, just starts laughing. And so I go, what’s so funny? He goes, nothing. Let me make you an opportunity of a lifetime. Like I’ll, I’llJohn Harcar (00:08)
Mmm.Gerald Hennessey (00:14)
We’ll partner up on this. He said, we’ll partner up on this. We’ll use my crews, my money, everything. You just pay attention, watch, take notes, ask questions, and we’ll split it 50-50.John Harcar (00:14)
Wow, that’s cool.Wow, that’s huge, dude.
Gerald Hennessey (00:28)
And I said, yeah, absolutely.Let’s do it.
John Harcar (02:03)
Hey, guys. Welcome back to the show. ⁓ I’m your host, John Harcar and today on the Real Estate Pros podcast, I’m kinda honored and excited and looking forward to talking to Gerald Hennessey and Gerald and I go way back. ⁓ like way back. I’m not gonna kinda say the I don’t wanna date myself on the age and everything but since high school. and you know, we wewin our separate ways, connected again, finding out we’re both in real estate. So we thought we’d have him come on here and share his knowledge with you guys. So Gerald, welcome to the show.
Gerald Hennessey (02:35)
Great to be here, John. It’s always good to see it. Of course, like you said, it’s been ⁓ many years since we go way, way, way back, you know, back to high school. And I think you were, you were on the football team, right? Percy football.John Harcar (02:38)
Yeah, you too.Yeah. Yeah.
Yeah,
yeah, I was the quote unquote jock guy, you know, that’s so it was it was fun. But, know, that’s so long ago. Well, cool. So what I like to do, you know, when folks come on to our podcast, obviously, because our audience doesn’t know who you are. So why don’t you kind of tell us a little bit about, know, your background, you know, what got you into real estate and what really, you know, where you’re at today?
Gerald Hennessey (02:51)
Right?Yeah.
Yeah, so after high school so many years ago, actually, so about 19 years ago, I got into real estate investing and I came from the ⁓ mortgage broker lending space, right? So I had a job working for a broker and so I was slinging mortgage loans and I had a couple of investor clients that when I was looking at their tax returns and their books and everything to get them approved for a mortgage, I started seeing…
John Harcar (03:25)
Hmm, okay.Gerald Hennessey (03:41)
that I was on the wrong side of real estate, that there was way more opportunity being on the investor side, right? So in 2006, I purchased my first investment property up in the state of Washington. And it’s kind of interesting how that came about. I ended up getting a mentor by default because the first investment property that I purchased up in Tacoma, Washington, I made an offer to a guyJohn Harcar (03:43)
Right?Gerald Hennessey (04:09)
He accepted, the guy was, he had his house boarded up because the utilities were off and he was living in his car in the front yard. Right? So he didn’t even have a phone or anything. He had to borrow somebody else’s phone, neighbor’s phone and all that just to connect with him. So I make an offer, he signs it. I give him some earnest money and cash so that he can just survive. Right? Then I go, I take my agreement to escrow and go and open escrow and then.John Harcar (04:16)
jeez.Yeah, yeah,
Gerald Hennessey (04:33)
Next thing you know, a few days later I get a call from him saying that, I’m sorry we’re not going to be able to honor our deal because I made a deal with somebody else for more money. And I was like, you can’t do that. He’s like, well I did. So long story short, I ended up connecting with, I asked him to hook me up with the other guy and I’ll work it out with him. The other guy is a 30 year…John Harcar (04:43)
Mmm.Sure.
Gerald Hennessey (04:56)
real estate investor, veteran. He’s a doctor. He has his own practice. has his own pension fund that he uses to as his own funding capital for all of the projects that he does. And so I go and meet with themJohn Harcar (05:01)
Wow.Gerald Hennessey (05:57)
He asked me, you know, how long have you been doing this? And I said, this is my first one. Right. And he, just starts laughing. And so I go, what’s so funny? He goes, nothing. Let me make you an opportunity of a lifetime. Like I’ll, I’llJohn Harcar (06:05)
Mmm.Gerald Hennessey (06:11)
We’ll partner up on this. He said, we’ll partner up on this. We’ll use my crews, my money, everything. You just pay attention, watch, take notes, ask questions, and we’ll split it 50-50.John Harcar (06:12)
Wow, that’s cool.Wow, that’s huge, dude.
Gerald Hennessey (06:25)
And I said, yeah, absolutely.Let’s do it.
Right. So I had a mentor be cut by default that taught me the inside and out of his experience that lasted decades. Right. So I ended up making my half of that was $30,000 on my first flip, you know, in real estate. And so I took that money and the rest of my money, and I went and started buying properties like crazy in 2007, the following year, I ended up buying 27 properties. Yeah.
John Harcar (06:36)
youOoh, crash coming.
Gerald Hennessey (06:55)
I ended up buying 27 properties in four different states all by myself. I was much younger back then, but I was just getting after it. was flying all over. Yeah, my own cash plus the $30,000 that I got from that first flip. And I was leveraging really hard because we could do that back then.John Harcar (07:02)
were you cat were you using your own cash? Were you using hard money? What were you doing to fund these things?Mm.
Gerald Hennessey (07:16)
That was pretty much the peak of the market. ⁓ And so I bought 27 properties in four different states, in Arizona, in Texas, in Nevada, in Vegas, and in Washington. And the following, the months that followed did not go well. I spent all my cash fixing up these properties with planning to sell them and cash them out. Within a matter of months, I ended up finding myselfJohn Harcar (07:16)
Sure.No.
Gerald Hennessey (07:44)
going from 1.7 million in equity to being upside down, almost a million dollars on everything. ⁓ Because most folks don’t remember back in 2007, 2008, the recession and real estate crash, mean, it was a reckoning. Anybody that was in real estate got hurt at least a little bit, but a lot of people got really wiped out. So for me, it was a blessing though. It’s really hard to say that, but looking back now, I can say that with confidence thatJohn Harcar (07:50)
Cheese.Now, big time.
Mm-hmm.
Gerald Hennessey (08:14)
Having such a reckoning happened to me. It taught me many different lessons in real estate. It taught me how to pivot as well because after all of that took place, it was really hard to get anybody to loan institutionally to loan any mortgage money. Even if you had perfect credit, nobody was lending. All these mortgage companies, they all shut their doors and went bankrupt and went out of business. And so I had to learn by force back in 2007, 2008.John Harcar (08:29)
Anything, yeah. Sure.Gerald Hennessey (08:43)
how to get creative with real estate, with regard to the financing of it, because I didn’t have a choice, right? So there were a lot of people that still needed to sell their properties. They were over it. They didn’t know what to do. Many people that did not have equity, but maybe they had a mortgage with a decent interest rate and decent low payments on it. We just started getting creative with it and it rise out of the ashes like a phoenix.John Harcar (09:08)
So you were doingcreative before creative was popular in a sense.
Gerald Hennessey (09:14)
Yeah, the word sub to that everybody talks about today wasn’t even a thing. It was subject to, and it was just a description of a tool or a solution that we had, right? Which that was a very common one. We just take over the payments on a mortgage, leaving it in place, taking control of the title. ⁓ We even back then used trusts to hold the title to the property so that we didn’t have any issues with the mortgage or.⁓ And so, ⁓ getting creative is what it’s all about when a situation does not fit for a regular cash deal.
John Harcar (10:29)
that before we kind of go forward, I always like to talk about back stuff, right? You answered one of my questions, right? I like to ask people, know, did you have any influence in your past family, friends, neighbors, aunts, uncles, somebody in real estate? You were in the mortgage part. You saw the other side, the better side, kind of like my story. I was in data and I saw people what they were making from my data. And I’m like, I’m in the wrong side. ⁓So when you started, right? Do you think that if you didn’t find that mentor, if you didn’t have that, you know, that connection with that guy that you’d be where you are at today? I mean, do you think that you would have learned and excelled and grew in the speed you did?
Gerald Hennessey (11:15)
think it would have taken a lot longer. I mean, I was very determined and even during that time, after that time, I really focused on studying and a lot of the material that we had available was not even really on the internet, right? I mean, the internet was a thing, but it just wasn’t as popular and available as it is now. Nowadays, you can choose from thousands of different YouTube videos, podcasts, episodes like this, and learn very easily.John Harcar (11:31)
Night.Gerald Hennessey (11:44)
But back then we had workbooks and notebooks that you would pay to go to a seminar and you get delivered this book that you would, you know, and so, yeah, and I still have one of them somewhere, but it was, it was actually how I got my first contracts, right? So I went to a seminar, pretty popular one, and then even guys like Ron LeGrand, you know, and,John Harcar (11:50)
Yeah.It’s like that thick.
Hmm.
Gerald Hennessey (12:08)
One of them in particular, I came home with this notebook, ⁓ a ⁓ three ring binder that had all these pages in it. And depending upon the situation, you’d go, okay, here’s the contract that you use for the situation. I just open it up and I take it and I type it up and then there you go, right? But at the same time, I also ⁓ invested a lot of time and money meeting with attorneys that specialized in different areas because there’sJohn Harcar (12:20)
Mm-hmm. Mm-hmm.Yeah, yeah, yeah.
Gerald Hennessey (12:36)
There’s some things in real estate that can go wrong and then there’s other things that can go really, really wrong, really fast. In particular, at that time back in 2007, I bought a whole bunch of properties in Lake Havasu, Arizona. ⁓ I bought a bulk of them at the same time from one investor seller.John Harcar (12:43)
Right.Gerald Hennessey (12:59)
And so we finally made the deal after hours and it was after the title company had closed. So we just, met with a notary and got everything signed and I had original deeds in my hand. And whenever I buy a property, I quickly go to the property, I changed the locks and I put just a small piece paper in the window that says, for any questions regarding this property, please call it. And I put my number, right? That way somebody can let me know if there’s a problem. ⁓And so I did that to these properties right after I got the deed and I had to go out to Texas to my other properties out in Dallas. And so I went and hopped on a plane and by the time I got off the plane and turned my phone back on, it was blowing up and I had a ton of messages from the Mojave County Sheriff’s Department. And I was like, this is going to be good. So I call them back and they,
John Harcar (13:50)
⁓ Yeah, right?Gerald Hennessey (13:55)
And they tell me that I go, what’s going on? And they said, the deputy said that, we’re looking for the owner of this property. And they gave me the address and I said, well, I can’t help you unless you tell me what’s going on. Right. Cause I didn’t want to like admit that I’m the owner and then be liable for something if there was a problem and there absolutely was. ⁓ so he finally ends up telling me, I go, come on, just tell me what’s going on. He goes, all right. We, nine one one responded.to a call at this property a couple hours ago because there were two kids that jumped the fence and it had a pool in the backyard. And one of the kids pushed the other one into the pool. And when they went in, they hit their head on the coping on the side of the pool and was knocked unconscious in the water. And then the other kid ran to the neighbor and had them call 911. the paramedics responded.
John Harcar (14:42)
⁓ damn.Gerald Hennessey (14:53)
They had to resuscitate the kid. Luckily he lived, but the parents were out for blood and they demanded to know who the owner of the property is and all that sort of stuff. so, you know, to me it smelled like a million dollar plus like lawsuit. So I said, I’m sorry, I can’t help you. I don’t know who owns the property. And I ripped up the deed to that property and walked away.John Harcar (15:13)
Yep.Wow, did any of the recourse come back to you or anything else happen? Nothing, nothing.
Gerald Hennessey (16:05)
Never. It went backon the previous owner because those deeds were unrecorded. And by the way, at that time, I was still in the infancy of my real estate investing career and I was taking title to properties in my name at that time. After that incident, I’ve never taken a property in my name ever since. I’ve always used trusts with a trustee.
John Harcar (16:11)
Wow.Mm-hmm.
No.
Gerald Hennessey (16:32)
because there’s layers of protection there, right? So when you vest the property in a proper entity, the liability is limited to that property only. So they can sue you and take that property, but that’s it, right? The rest of your estate is protected. Whereas if you’re holding properties in your name, they can come after everything.John Harcar (16:48)
Yeah.yeah, and I’ve heard a lot of stories about that. So what does your business look like today? So you mentioned you bought over in multiple states. You went through the big recession. It sounds like you pivoted. So what does your business look like today? What are you focusing on? Where are you buying, et cetera?
Gerald Hennessey (17:13)
Yeah, so I’ve always been all over the United States because I go where the opportunity is, right? I know a lot of people niche down and they focus on one community. I’ve always just been all over the place because I kind of have an attention deficit, right? So like so many other successful investors, right? So.John Harcar (17:26)
I think most entrepreneurs do.Gerald Hennessey (17:35)
I’ve been all over the place, but one of the things that’s interesting about my business is that it started in the beginning with like a piece of paper, a notepad and a paper, I would just, you know, chicken scratches everywhere. Then I moved on to spreadsheets, right? Like an Excel spreadsheet, and I got organized with just rows and columns of data. Then I finally years later, you know, got into like Podio as a CRM, right? And started using that. Then I started adding all sorts of things to it.John Harcar (18:00)
school yeahGerald Hennessey (18:03)
Then we’ve moved on from there to places like high level as a CRM. And we’ve over the years, we just keep adding more and more and more. And so even like years ago, we would add like ringless voicemail. We would add SMS being managed by the CRM until a few years ago when AI became available and that really turbocharged everything. So in years past,John Harcar (18:26)
Hmm.Gerald Hennessey (18:29)
I would have to take call after call and just sit there constantly texting back and forth with sellers and with buyers whenever I’m wholesaling a deal because if a deal doesn’t fit for me but it fits for someone else, I’m happy to wholesale it. ⁓ But nowadays, things look so much different because I’m able to spend so much more time doing other things, spending time with my children, with my wife, with my family, ⁓ instead of grinding and grinding and grinding every single day.John Harcar (18:42)
Sure, of course.Gerald Hennessey (18:58)
Nowadays, we have artificial intelligence that screens all of the calls that handles all the text messages, all the emails back and forth from all the different source lead sources that we have. Right. And when there’s an opportunity there that’s been identified, now I get involved. Right. So I have various lead sources that, you one of them that’s my favorite is using Craigslist. Every so often I post it and I don’t do it all the time. Yeah.John Harcar (19:18)
All right, okay.Really?
Gerald Hennessey (19:28)
I’ll post an ad on Craigslist offering for bird dogs, right? For those that don’t know what a bird dog is, it’s somebody that’s referring a deal to us as an investor, right? And we pay them, we offer to pay them. So whenever I post an ad saying, hey, I’ll pay you up to $1,500 if you refer me an opportunity to buy a piece of real estate property and I close on it, I give you that cash, 1,500 cash. So whenever I post the ad, get…A lot of people that just want the cash, but they don’t have anything to refer. But then mixed amongst that, I usually get, you know, five to 10 genuine bonafide referrals out of it, right? But the way it comes in every time I post that ad is that I’ll get on the first day, I’ll get a hundred plus SMS is in calls that’ll come in even in the middle of the night. Cause some of them are people that are nocturnal to say the least, right?
John Harcar (20:24)
To see. Yeah,Gerald Hennessey (20:26)
that want the cash, right? So insteadJohn Harcar (20:26)
that’s polite way to say it.Gerald Hennessey (20:31)
of me having to wake up in middle of the night and deal with these things, you know, I have my artificial intelligence set up that where it captures all and manages all of those conversations. It knows what to ask them, where to go next based upon what response they give, and it archives all of these answers into our CRM, right? So that way when I’m ready to go look at it,I can just look at all the details about how they’re laid out, what was said, can even read the transcript of the phone call or the text message thread and understand where to go next in the conversation when I get involved, right? And it’s such an amazing advancement. And I know there’s still a lot of investors out there that are still doing it the old school way, right? Just racking the phone and just hammering those and just smile and dial, right?
John Harcar (21:06)
Yeah. Yeah.Yeah.
Gerald Hennessey (21:19)
There’s a smarter way to do it that allows you to do so much more volume, right? And it’s not about avoiding the work. It’s about putting the work exactly where you’re most effective.John Harcar (21:31)
Yeah, smarter, not harder. Smarter, not harder. Yeah. Why do you think a lot of people are not as apt to adapt AI and not, you know, it’s still doing the grind? I mean, if we know there’s a better way, why don’t you think people are doing it?Gerald Hennessey (21:47)
Well, it’s really hard to set up for that person that’s not very tech savvy, right? So for me, I’ve always been involved in the technical side and the programming, the coding side of things, you know, since many decades ago, even before my real estate investing career, I was involved in computers and coding and programming, right? So for me, I know how to fine tune it and get it just right, but raw out of the box, most of these products, they don’t necessarily perform right.You know, you really have to get it fine tuned or know someone that understands this that can set it up for you, which I have a number of other real estate investor friends that I’ve set this up for other clients that we’ve done this for. And we’re happy to help anybody that needs help with that. But I think that’s a big area. think there’s a lot of others out there that, that value the human element of it. That AI still is just not there. It still can’t provide.
John Harcar (22:40)
Hmm.Gerald Hennessey (22:44)
You know, we’ve trained it on neuro-linguistic programming, human psychology 101, sales tactics 101, and we’ve also given it a whole database of chit chat, right? Of things that it can, you know, BS back and forth about and just to have small talk, right? But it still doesn’t quite match up to a human conversation.John Harcar (22:57)
Right.Mm-hmm.
No.
Gerald Hennessey (23:10)
Andthe fact is that anybody that’s really good as a real estate investor in this business is good at being human. They’re good at listening and moderating and modulating the conversation based upon the feedback of that person. Right? So when that person says something, you know, that’s meaningful or emotional, they don’t just say, okay, that’s great. Well, tell me about the bedrooms and baths. Right? They, they slow down and man, I’m sorry to hear that.
John Harcar (23:35)
Yeah.It’s the tonality.
It’s the it’s the raising and the learning. It’s the pitch. It’s all the things that make someone who is good at sales good is they understand the human, you know, how how to all those type of things that we just talked about, right? How to how to really correspond with what they’re saying emotionally and put that into your speech. Yeah, because I’ve heard a lot of AIs that are incredible that sound like. But the one thing they lack is that emotional kind of kick.
Gerald Hennessey (24:06)
And so that’s what we’re working on right now, right? So ⁓ in addition to investing in real estate, I just bought this place where I’m at right now out in Kansas City. I ⁓ focus on a lot of deals in Florida, in Texas, in Nevada, in Washington. I’ve even owned properties out in Hawaii as well, but focusing on developing the next generation of this AI because this is where it’s going, right?John Harcar (24:22)
Nice.Huge.
Gerald Hennessey (24:34)
Here’s what we have now, right? So we have a system that we’re finishing up and it’ll be available this next year in 26, that we’ll be able to negotiate the terms of the contract. We’ll auto fill in a contract. We’ll send it over to the seller in a docu-sign while they’re on the phone with them and walk them through the contract.and tell them exactly click here to initial, click here to initial, and it will actually get signed contracts. And the same thing can be done for disposition in a wholesale situation.
John Harcar (25:04)
See, that’s so awesome.Dude, I just can’t wait for my free account. ⁓ Real quick, because we’re running out of time, I could put this a little bit longer, but ⁓ your experience, man, you’ve been around the block, you’ve done a lot, you’ve seen a lot, you know a lot. ⁓ People that are listening to this that maybe are trying to get into this, or they’re trying to make that leap, or maybe it’s about AI, just overall, over-encompassing, what is some…
Gerald Hennessey (25:18)
Right?John Harcar (25:41)
some pearls of wisdom, Some things to set them up for success that you would recommend they do seek out, learn, whatever.Gerald Hennessey (25:50)
So after 19 years of investing in real estate, I still learn new things all the time, right? I still see new things, experience new things all the time. So you’ll never really fully have seen it all or done it all because every once in a while after you say that, you’ll be shocked. But what I would say to anyone that’s looking to get started in this business or you’re kind of newer or younger in the business, maybe you’ve only been in a few years, the whole thing is toJohn Harcar (26:08)
Yeah, true.Gerald Hennessey (26:19)
have conversations with people. Right? So a lot of the best deals that I’ve ever had, the wholesale deals where I’ve made six figures on just one deal, right? Those best ones, they all didn’t come from some marketing tactic or some special lead source. It came from a referral. And there’s, when you get referrals from people, there’s trust.from that other person that gets transferred over to you. So you also have exclusivity. When you’re the only person talking to that seller, you’re bound to get a better opportunity, a better deal than if you’re competing with everybody else out there. Kind of like with a property that’s on the market, which I only focus on off-market deals. I hardly ever will make an offer on a deal that’s on the market for that reason.
John Harcar (26:50)
Yep. Yep.it’s funny. You say that, you know, the referrals and the exclusivity and that kind of trust factor because they refer. That’s how I got my biggest deal ever. It was I said to a guy, hey, you know, you can sell a house. No, do you know anybody else looking to sell by that piece of crap next door? I went next door. The only reason the ladies like I never take these calls. I never talk to anybody. I never let someone come to me. But you came from the next door neighbor.
Right. So yeah, I’ll do business with you and that’s huge. So I love that point.
Gerald Hennessey (27:36)
That’s right.Yeah.
And so for somebody that’s starting out to get back to that point is that it’s great to have a mentor. It’s great to get educated and to seek out that knowledge and deepen your understanding of this business. But the best way to really excel as a real estate investor or wholesaler, depending on where your focus is, is to find the opportunity first.
and then bring it to someone that can help you and walk you through all the details of that. So even if you don’t know what you’re doing yet, all you need to do is find somebody that wants to sell. And here’s another point of it is that we really, real estate investors, real estate wholesalers, we solve problems.
John Harcar (28:14)
Yep.Gerald Hennessey (28:30)
So that’s why somebody’s willing to sell to us at a discount. It’s why somebody’s willing to give us great terms or creative terms on an opportunity. It’s because we’re solving a problem for them. So something to keep in mind is that if somebody, seller, does not have a problem for you to solve, then you don’t have an opportunity. There’s no deal, right? They should just go listen. Yeah, you can’t create a problem. And if you are, then you are the problem, right? ⁓John Harcar (28:51)
Right? Yeah. You can’t make them. You can’t make a problem. ⁓Yeah, true.
Gerald Hennessey (29:00)
So we focus on finding people that have problems that need somebody’s help to solve it. And then we deepen and identify what that problem is so that we know how to solve it. Then that’s when you know you have a deal. If somebody has a problem, you know you can figure it out for them even if you don’t know what the answer is. This is where mentors and other people, other partners can help you with finding the solution. You just have to identify somebody who has a problem. Yeah.John Harcar (29:27)
Find the problem. Cool.All right, man. Well, we’re running out of time here. If there’s anybody that’s listening to this that maybe wants to talk to you further, maybe, you know, someone wants talk to you about the program you’re coming out with next year, how do they get in touch?
Gerald Hennessey (29:41)
Yeah, you can find me on all the socials, Gerald Hennessey, either on Facebook, Instagram, all that, I respond to messages on there.John Harcar (29:50)
Okay, cool. We’ll put all that in the show notes. Gerald, man, thank you for coming on here. Thank you for sharing your knowledge. Good. Good talk to you again, man. I know we’ve talked a little bit over the recent times, but it’s good to have a conversation. ⁓ Guys, I hope everybody out there listened. There’s going to be some nugget drops on here. We’ll make sure we identify them for you. But, ⁓ you know, like he said, you got to go find the problem, right? Be proactive, then find someone who can help you with the solution. It’s going to help you go faster. Gerald, thank you again, folks. See you on the next one. Cheers.
