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Show Summary
In this episode of the Real Estate Pros podcast, host Erika speaks with Ray Woods, a successful real estate investor. Ray shares his journey from a small town in Mississippi to becoming a prominent figure in the real estate market. He discusses the importance of building relationships, navigating different markets, and the common misconceptions surrounding multifamily investing. Ray emphasizes the need for financial stability before diving into real estate and shares valuable lessons learned from challenges faced along the way. He also outlines his future goals and strategies for scaling his real estate business.
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Investor Fuel Show Transcript:
Ray Woods (00:00)
finding a deal is easy. Getting the capital is easy. Finding a deal that makes sense is easy. It’s not. Any guru out there that tells you you can close your first multifamily in 90 days, you get a property under contract. Most of those properties, you’re gonna have a 60 or 90 day due diligence. So the math is not math in there.And people teaching people that they can get into something so fast from the perspective of an individual that has 10, 20 years of this experience. You can’t, it is very difficult to compare the learning curve of somebody that is completely new to something and somebody that has done this for years.
Erika (02:19)
Hey everyone, welcome to the Real Estate Pros podcast. I’m your host Erika and today I’m joined by someone that I’ve been looking forward to chat with, Ray Woods. He’s been making serious moves in the real estate world. Ray, it’s awesome to have you on the show today.Ray Woods (02:35)
Erika, I appreciate you having me. Thank you.Erika (02:37)
So let’s dive right into your story. for those who aren’t familiar with your world, tell us about your journey. How did you get started in investing in real estate?Ray Woods (02:48)
⁓ So I’m from a small town in South Mississippi down by the coast Gulfport Biloxi for those who know where that’s atand ended up going to school. tried to get away from my area. There was nothing down there, nothing for me, no growth, no nothing. So I ended up going to Ole Miss. The furthest I can get away from the south of Mississippi. Went to school for engineering, ended up getting out and moving to Alabama, which is where I kind of first got my idea of real estate in general, right? And when I moved to Alabama, I actually started a course for fortune builders. I went to an event out here in Atlanta, Georgia, where I met some of the guys there in the fortune.
Builders group where they talked about wholesaling and fixing and flipping and tax write-offs and business this and entrepreneur this didn’t know anything about it and I kind of just took it from there and one of the guys that I’ve never met that put this in my head was a connection from a lady I met at the scrap dock at my first job my first engineering job in Alabama I wanted to go to school
I wanted to go back to school to get my masters in sports engineering. And when I got on the phone with him, he basically told me, don’t you take, don’t you go back to school. You need to get into entrepreneurship. You need to study this. You need to read this book. You need to read that book. And I basically went down a huge rabbit hole from Robert Kiyosaki all the way down to whoever you can name it and going through this journey in real estate now.
Erika (04:15)
And the fast forward that journey to today, what markets are you operating in and what kind of opportunities and challenges do you see there?Ray Woods (04:26)
Yeah, so the two markets that me and my team are focusing is the Atlanta market, Atlanta and surrounding cities, as well as Pennsylvania market, so Pittsburgh, Lancaster, you know.those different cities in Pennsylvania up there. So those are kind of the two things. The challenge that we see, because we primarily do focus on multifamily now, the challenge that we see in the Atlanta market is a lot of deals do not make sense financially. They don’t make sense. They don’t meet the requirements to get a long term loan from the banks. So we made that transition over to a different market to see if those properties will make more sense over in Pennsylvania.
as opportunities, those same properties that don’t make sense end up being the same properties that get foreclosed on. I’ve underwritten well over two, three hundred properties and I’ve seen at least 20 of them go back on the market or get the keys have to get to handy back. And so that’s an opportunity to grab onto those properties because they’re going to be cheap.
Erika (05:29)
Yeah, absolutely.For you, what’s your process like for finding a good deal?
Ray Woods (06:23)
So the first thing, if I want to put heavy quotes on good deal, is building relationships is key. Because when you build relationships, you’re going to get the deals that don’t come to the market. When you get the deals that don’t come to the market, you have obviously a big head start.Erika (06:29)
Yeah.Ray Woods (06:43)
on finding something that is going to make more sense. can negotiate with the seller a lot more. You can have a better understanding before realtors or agents that don’t know what the hell they’re doing is getting these properties and they’re trying to market them for this high price knowing it’s not going to sell or they’re trying to find a dummy that’s going to buy it when they know it financially doesn’t make sense. SoYou know, building relationship is key. You want to try to go after deals that is not easily accessible to everybody. And the biggest thing people don’t want to do is go make and build relationships. Some people don’t like talking to people. Some people like being inside. Some people want to sit at the computer and try to look for deals.
You can start with that to kind of learn, but once you go deeper into it, you realize that, I’m just spinning my wheels here. And you’re basically may get one out of a hundred deals that are good, that’s listed on Crexie or Loopnet or Zillow or whatever. So building those relationships are key to finding good deals.
Erika (07:43)
When it comes to building those relationships, have there been any network groups or any sort of meetups that have been really helpful for you?Ray Woods (07:53)
I wouldn’t say any specific networking event because if you’ve been in a city for a period of time you’ll end up bumping into the send a lot of the same people in every networking event So because they go to every every single networking event You know what I would say is if you could find somebody that is Pretty heavy in that market and doing well in that market and can prove that and they’re hosting events This is wherethe higher quality of people are going to go to these different events. You’re going to have a section of higher quality people and then you’re to have a section of the newbies that see this guy that’s big and has a lot of money and they’re new. And so you can not only create that relationship with the higher quality people that’s basically like a veteran in a sense, but you can also create a relationship with these newcomers and educate them properly because they could be a bird dog for you or they can bring you deals that you may
not have the time to go look at or have the time to do something. So, you know, find somebody that’s good in the market and then…
You know, again, the simple thing is always you can Google something, Google networking events in my area and just try different things. But you want to make sure when you go to these networking events that it’s actually going to be worth your time. You don’t want to just bombard yourself with networking events and you really get nothing from it. Because you’re going to meet a lot of people and you have to learn how to filter out through who’s going to be really beneficial. And you can’t, you’re not going to work with everybody. It’s no bad blood. You’re just not going to work with everybody.
Erika (09:24)
I know that you do a lot of a multifamily for our listeners here. What would you say is a common misconception for those who are looking to get into the multifamily space?Ray Woods (09:36)
finding a deal is easy. Getting the capital is easy. Finding a deal that makes sense is easy. It’s not. Any guru out there that tells you you can close your first multifamily in 90 days, you get a property under contract. Most of those properties, you’re gonna have a 60 or 90 day due diligence. So the math is not math in there.And people teaching people that they can get into something so fast from the perspective of an individual that has 10, 20 years of this experience. You can’t, it is very difficult to compare the learning curve of somebody that is completely new to something and somebody that has done this for years. And the individuals, the gurus that have done this for years,
act like they can compress this information and somebody can pick it up in just a little bit. It does not work like that.
Erika (11:08)
I’ve seen a lot of advice out there where they’re telling people to quit their job in that. on the flip side of that, Ray, what do you feel like is the balance there? When should people take the leap? What kind of plan should they have?Ray Woods (11:23)
Yeah, so, you know, I recommend people and I tell people all this because a lot of people see what I do and they want to start investing. want to, you know, I want to buy a property. I want to do this, but they’re not financially ready to do any of that, which is kind of what I talk about about my finance coaching program. And, you know, they they don’t have their finances in their household in order, but they’re excited to do the business, which is great. They got the good fire, right? But it’s ideal that you at least save upa year and a year and a half or so of expenses. And understand you need to have a pool of expenses for your household and you need to have a pool of expenses for the business and you could project how much you may think you’re going to spend and then probably multiply that by two or three.
because anything can happen. mean, think about it with real estate agents. People quit and they go be a real estate agent. Most real estate agents are failing. They can’t even keep up with the fees it takes to be a real estate agent, let alone pay for the marketing, let alone pay for gas and car maintenance to go network and all these other fees that’s associated with being a realtor. It’s not easy. So the foundation you have to have is make sure you got good income from your job. And honestly,
Until you start making at least one, one and a half times the income from your side hustle to pay for your expenses, you really shouldn’t leave. And then even then make sure you got savings stacked up from your job. You know, I was fortunate enough to ⁓ be with a company where ⁓
I invested into that company a lot earlier, which actually was the first company I’ve ever had a stock option in. And that has been carrying a lot of what’s going on in the real estate world, right? And people should capitalize on things like…
their stock option. They should capitalize on cash back life insurance. They should capitalize on all of these different things that’s going to help carry them. But make sure that whatever you’re going to focus on on your side hustle, that you find somebody that is doing good, that’s a mentor, and don’t be trying to do 20,000 different things because you’re not going to hone in and keep that momentum going.
Erika (13:34)
Absolutely. I was thinking about what you were saying about having, you know, your income saved up in that. And as I’m sure you know, every real estate pro has a moment where things get hairy. Maybe a deal went sideways or you had to pivot fast or spend a lot more money that you weren’t planning on spending. Can you share one of those moments on your journey and what you learned from it?Ray Woods (13:58)
Yeah, so this happened recently too. So we recently closed on a property in Punta Cana, Dominican Republic. the way that we did the numbers for the property was, okay, talk to the banks, talk to what we need to put down with the agents that were helping us at the time. And the agents, that’s a whole nother story. They told us, yeah, you can come 20 % down.You can go to the bank. They’ll give you 80 % everything should be great. I’m like cool Okay, we go see what properties they have to offer we go visit the area make sure location is good How far is it from entertainment? How far is it from the beach all these different things and? When it comes time to talk to the bank oh Yeah, you know policy is you’re not a citizen, so you’re gonna have to come with 30 % down Excuse me
Well, these people said we could do 20 % because the other percentage was going to be used for furnishing the property. It was going to be used for furnishing the property, some reserves to pay for the mortgage until we start getting some bookings. And that’s what that money was going to be for. Right? And so when they said, yeah, we need 30%, well, bam, all the money gone.
All the money going, so now it’s like, well, we had this particular pool of money allocated now for this. Now we have to go pull money from somewhere else or go close a deal to finish what we’re doing for this property. How long can we hold this out now? How long do we, what’s the other reserves we have to pull from maybe our personal bank account or maybe another business to carry this because of some misinformation that was given to us? you know, every other financial that we did.
was very conservative. And the good thing about that is when we actually, when I actually did the underwriting for the property overseas, we estimated the mortgage to be like 21 or 2200 a month. At least the good thing was is down to 13, 1400. So we save a lot of money there on the back end, but on the front end, we had to come with that other money so we could start furnishing on top of, you know, the developer need to fix some stuff with the property. But
Sometimes you do have to tap in, but this is why it’s good to have reserves. And it’s also important that you have some good amount of stacked away just in case. Because you never know. You can’t predict nothing. And even if you stacked a bunch of money, you never know. You never know what you need to pay for.
Erika (16:26)
Absolutely.Well, know, the kind of piggyback off of that story and just, you know, all the different experiences that you’ve had, all the different lessons that you’ve learned along the way. If you were to start to get into real estate today and let’s say it was totally from scratch, right? What would you do?
Ray Woods (17:26)
huh.I would focus more on buying properties with fewer partners and directly for the household. So yes, we have properties that cashflow. Yes, we get income here and there, but.
I would probably go start with a quad, a triplex or quadruplex. Some markets are ideal for those and some markets aren’t. Atlanta has a few of those multi-unit residential homes.
And I would focus on that because that’s a very, that’s at least one of the safest ways you can get into real estate and learn how to manage that type of business. You can learn how to manage the financials, learn what you need to do as far as repairs, property management, asset management. I would start there and build enough income for my household directly.
versus maybe having investors on another property where we have to pay the investors first before we get paid. Get to the point where you pay yourself first.
Erika (18:29)
a lot of sense. Well, Ray, with all that you’ve done so far in investing in real estate, what’s next on the horizon for you? What are you looking to scale? What kind of vision do you have?Ray Woods (18:40)
Yeah, so right now we.We’re a co GP on her 186 unit in Phoenix. We have a 32 unit town development that’s going on here in Atlanta. And we’re just looking to acquire more multifamily units in the Pennsylvania market. ⁓ My team actually just got access to some more leads and we’re gonna be going through those and we wanna make it to where our team on the multifamily side, we can get to the point where we paying ourselves six, seven figures or so in six figures.
I would say five figures to be like, okay, we got some momentum here and then six figures and seven figures. We’re not looking to have no 10,000 units, 20,000 units. We’re looking to just ⁓ get enough units to where.
me and my other four partners can sustain our lifestyle and live without having to worry about money, you know, and enjoy the fruits of our labor. And then educate people along the way. Educate individuals and any individuals that want to invest for that cash flow, then that’s what we’re here for too, because we’re all about education and making sure that we do right by individuals that do put our money with us. So.
That’s kind of what we’re doing, kind of scaling up in the multifamily side. Another small thing me and my partner here in Atlanta are looking for are laundry mats. We’re looking to purchase some laundry mats because ⁓ just the real estate market in Atlanta is very shaky. And so laundry mats is on more of the side of the recession proof side to get something to start ⁓ holding long term and cash flowing from that.
Erika (20:17)
That’s exciting. What steps are you taking right now to make sure that you hit that growth target?Ray Woods (20:23)
⁓ So I actually work with ⁓ David Monroe, CCIM. I’m not sure if you’re familiar with him. So I work pretty close with David and he’s been, he’s a wealth of knowledge. He sticks to principles, fundamentals, has a good moral compass andyou know, following his instruction from his expertise, been in a business for over 15 years to make sure we analyze and underwrite these deals properly. So we don’t put ourselves in a hole because you’ve put yourself in a hole. Now that’s going to just stop you from really buying more properties and scaling like you need to. You don’t you don’t need to buy properties fast. That’s the biggest mistake these investors did. They were they was closing. I would look on the Internet and you can just see anybody closing multiple multifamily deals like multiple multiple in a row.
And I said, man, know, either they really got good connection with good deals or something else going on. Well, that bridge that came into play, that’s how they was closing stuff so fast.
And now they got to turn them keys back over. just stand, sticking to the principles, sticking to the fundamentals to make sure we get something sound because we’re holding long term. We’re not flipping multifamily. We’re not fixing it, selling it five years, seven years. This is 20 years, 30 years plus that we’re looking to hold this to continue that generational wealth and making sure that the team that I’m working with, have the same values. have the same goal, our goals aligned. And cause when we have that clarity between each other,
then reaching that goal is just a lot easier. And that’s pretty big when you’re dealing with other partners, is making sure you’re all on the same page.
Erika (21:55)
Yes, absolutely. And you guys already have the foundation of that team and deals that are going strong. So you want to compound things, not create chaos. Well, Ray, before we wrap up, if someone wants to reach out, connect with you, collaborate, learn more about what you’re doing, what’s the best way for them to reach you?Ray Woods (22:10)
Right, exactly, exactly.Yeah, so I’m really all over social media, Real Estate with Ray. ⁓ I’m pretty responsive on Instagram and then you can find me on YouTube, Facebook, Real Estate with Ray. ⁓ And if you are looking to start investing, but you want to get to that point where you want to make sure your financial foundation is good in your household, RaywoodsMoneyMastery.com is my website. They can go there and reach out to me that way as well.
Erika (22:50)
Well, thanks so much for being on the show today, sharing your insights and your story. It’s been awesome.Ray Woods (22:55)
Thank you, Erika for having me. I appreciate it.Erika (22:57)
And for our listeners, if you got value from this episode, make sure that you’re subscribed to the real estate pros podcast. We’ve got more conversations lined up with pros like Ray, who are out there building fantastic real estate businesses. We’ll see you on the next episode.
