Flipping, Lending, and Growing Wealth: Shane Roach’s Strategy for Real Estate Success

Share via:

Subscribe via:

In this episode of the Real Estate Pros podcast, host Micah Johnson interviews Shane Roach, an experienced real estate investor who shares his journey from his first fix and flip in 1992 to becoming a private money lender. Shane discusses the importance of building a network, exploring alternative investment strategies, and protecting oneself as a lender. He emphasizes the need for community support and the various ways to succeed in real estate investing.

Resources and Links from this show:

Listen to the Audio Version of this Episode

Investor Fuel Show Transcript:

Shane Roach (00:00)
again, one of those wonderful things in this industry, right? There’s a million ways to make a million dollars is that it was never on my radar. It never on my radar that, this is way we wanted to go. But working through this community, a lot of the new investors that came in, they all have the same question, which was, you know, raise their hand and go, where do I find the money to do my first, my first deal? After hearing that for about a hundred times, you’ll

Finally sinks into the cranium that, I need to be the answer to that question.

Micah Johnson (02:03)
Hey everyone, welcome to the Real Estate Pros podcast. I’m your host, Micah Johnson. And today I am joined by Shane Roach, who’s been making serious moves in the single family

space for quite some time now. Shane, glad to have you, man. Welcome in.

Shane Roach (02:17)
Micah, it’s a pleasure. Thank you very much for having me.

Micah Johnson (02:21)
Absolutely. I’m excited for our talk today. think our listeners are really gonna get something from the way that you’ve one, started opening people’s minds to other ways to invest in real estate that you don’t just have to be the property owner. And also, man, you’ve been doing this for a while. So I love hearing the experience and getting those stories shared out there. So let’s dive in. No, no, no, it’s experience. It’s season, right?

Shane Roach (02:41)
think he just called me old, but I’m not sure.

Right?

Micah Johnson (02:47)
And always

say this, everybody gets to be young, not everybody gets to be old. So it’s a, if you make it, you’re doing all right. So for people who may not know you yet, what’s your main focus right now and what markets are you working in?

Shane Roach (02:54)
Amen.

know, as you said, we’ve been in this for quite a few years. did my first fix and flip back in 1992. So been at it for a while. Right now what we’re doing primarily is fix and flip rehabs down in St. Petersburg, Florida, Treasure Island, St. Pete Beach area. It’s not our only market, but it’s our primary focus at the moment.

Micah Johnson (03:24)
Okay. And how long you’ve been down there working?

Shane Roach (03:27)
⁓ Almost one year now. A lot of these houses that we’re picking up from insurance, from owners who have taken their insurance money and want to get out, it’s because the hurricane damaged properties that are there.

Micah Johnson (03:38)
Got it.

Now, just a quick side note for someone that’s thinking about that. I’m in Florida, Hurricane David. Those are popular houses after what should someone who’s thinking about possibly messing with one of those pay attention to.

Shane Roach (03:52)
Well, there’s a lot of permitting around that. So you really have to know what you’re doing because you can’t just go in and just kind of wing it. A lot of those houses, they’ve been through an insurance audit. You know, the cities are very aware of the damage that’s in them. There’s a lot of specialty things for like salt water damage. So a lot of electrical has got to be redone. The houses that we’re picking up have been stripped of drywall, usually from the floor up about four feet.

And you know, so that kind of helps because it’s all exposed, but you just got to be aware that, there’s water in the house. So I always bring special challenges.

Micah Johnson (04:28)
Yeah.

for sure, man. That’s ⁓ I remember when the hurricanes came through, I’m in St. Augustine and we got hit kind of like Tampa did or the St. Peter area did twice in two years. And that’s rare. Like normally you don’t get hit twice hard at one time. it’s all the houses on our island over here. That four foot rip up was everywhere. You saw drywall piled up. So, yeah, that’s that’s funny that that’s that way.

OK, so let’s take a step back now.

You’ve been doing this for a while. How did you get into flipping first? And then take us through your journey from then to now.

Shane Roach (05:55)
Yeah, Micah.

So I did my first fix and flip back in 1992, not because I wanted to be a real estate investor. It was really out of necessity. You know, I just moved to Detroit area from college and I didn’t want a roommate and I didn’t want to live in an apartment. I was tired of living in the dorms and I bought what I could afford. So while working full time, I moved into the back room of this house and I totally gutted it, remodeled it over two years.

while working a full-time job. And then I sold that house and went, dang, that wasn’t a bad little hobby, you know? So ever since then that bug was born, it’s been with me ever since. And I stumbled through real estate, you long before YouTube University was a thing. Just trying to figure this thing out. I didn’t know about underwriting. I just kind of looked at a house and went, I can make this work, right? And, ⁓

Micah Johnson (06:24)
end.

Yeah.

Shane Roach (06:52)
Back then, you you’re just young and we just did all the work. You know, had friends come help me. We’d tear off roofs. We’d redry wall the house, redo the siding. just, my dad and my uncles were all builders. So it kind of, it was in my blood and you know, it was just the way we did it. And then I did something foolish. I met a girl, fell in love, got married, you know, started having babies, raising a family and all of sudden.

Micah Johnson (07:07)
Yeah!

Shane Roach (07:19)
Remodeling the house you’re living in gets really, really tough. rather than stop, what do you do? You go buy another house, right? And somewhere along the way, somebody said, hey, you ever think about turning one of these into a rental? You want to have that long-term wealth. I was like, OK, I’ll try it. And yeah.

Micah Johnson (07:22)
Yeah, yeah, that’s an ideal for health.

Yeah, obviously.

No, but okay.

Shane Roach (07:46)
Of course, about eight years, seven, eight years, we got picked up 22 doors. And

the time, I was doing everything. I was doing the remodel work, finding the next deal, underwriting it, replacing the kitchen cabinets, knocking on the doors, collecting the rent, and really just kind of got burned out through that whole process. Kids were getting a little older. So I was like, man.

And life just kind of happened. My career picked me up and said, hey, we got an opportunity for you down in Dallas, Texas. And I’m like, good. Changed lifestyle. We actually sold everything in Michigan. And every once in a I do what I shouldn’t do is I go back and I look at the pricing, the values of those properties and go, why did I do that? Don’t do that. That’s water under the bridge. It’s so long behind you.

Micah Johnson (08:17)
Yeah?

And I’m a go.

Yeah,

yeah, major money move on.

Shane Roach (08:42)
Right.

So while we were in Texas, ⁓ actually, I didn’t look at a piece of real estate for a long time, until my youngest graduated high school, you know, and at that time I retired from my corporate job and was running a ⁓ company that we started. But I still had a lot of time on my hands. I was like, what am I going to do? Well, I to get back into real estate. But I knew I wanted to do it differently and I didn’t want to hang drywall anymore. I don’t want to get on the roof and shingle anymore.

Um, so I hired a, we just kind of built out a team. have a business partner out of Phoenix. Uh, her name is Cindy and, we just started meeting like this every day. Just turn the camera on the zoom and we’re talking about properties. were underwriting which ones were good, which ones were bad. We just started sharing it with some friends who are in real estate as well. And what started off as a close group of 40 people.

turned into 4,000 because we put them in a Facebook group called Creative Real Estate University. And that’s just a free group. we don’t really teach a course. We just kind of hop on and share, here’s what our business is doing. Here’s what we’re having success in.

Micah Johnson (09:44)
Whoa.

Shane Roach (10:29)
Here’s where we’re struggling. And then we try to answer questions. A lot of people coming up through real estate want to know, where do I get started? Or how do I get started?

Micah Johnson (10:39)
Right.

Shane Roach (10:40)
I was that way for a long time. this is kind of like my way of giving back to the community and helping people out.

Micah Johnson (10:47)
Well, let me ask you about that. So how big of a difference did it make building those relationships and growing that network?

Shane Roach (10:56)
That it’s been a game changer for me. It really has because besides being focused on what we’re doing all the time, you start hearing from other people in the industry of, I got this going on in this market and I’m having a great time. I’m crushing it. Or man, I just got killed on a deal over here. No rehab to house and it hasn’t sold in six months. You start getting a better understanding of the micro climates within different

markets and it’s like yeah so we really kind of opened our eyes as to what works what doesn’t work and how fast that changes you know a hot market could be cold as ice next year and you just got to kind of be paying attention to it.

Micah Johnson (11:36)
Exactly.

I think it’s fabulous that you built a group where y’all actually shared the real information. Cause that’s, that’s something I noticed in my career as I grew and joined different groups belong to things was having access to not just your info. Cause it’s, it’s easy to feel like you’re on your own little Island in real estate, especially cause you could like fix and flipping, even though we know everybody that does it, it seems not very many people do it. It’s still a very small.

Shane Roach (11:59)
Especially, yeah.

Micah Johnson (12:09)
business sector compared to other things. So once you’re trying to get to those higher levels, access to information becomes imperative because you just don’t know what you don’t know.

Shane Roach (12:21)
Yeah, there’s a big difference between the one investor trying to do one house, you know, a year or every couple of years even, versus the guy who wants to do two or three a month. And that’s a big journey difference and a different mindset difference ⁓ along that path.

Micah Johnson (12:29)
Mm-hmm.

I couldn’t agree more. And that’s something when I’ve spoken with real estate investors in the past is working with them in a way to help them understand what are you wanting to build here? What exactly are you trying to do? Cause you can do real estate a lot of different ways. If you just want the hobby and do one deal every couple of years, okay, there’s a certain set of tools you’re going to need for that. But when you want to change that and start doing more than 12 to 15 a year,

That’s a whole different set of skills that you need to start having, a whole different set. It’s a completely different toolbox.

Shane Roach (13:14)
completely different. know, like one of the things I love about this industry, real estate, is there’s a million ways to make a million dollars. And one of the things that’s always been frustrating and I hate about this is there’s a million ways to make a million dollars, right? So people get into this and they just, see all those different opportunities and they get kind of lost in trying to chase them all at once. And it’s like, you don’t have to chase them all. Just pick one, find your niche.

Micah Johnson (13:28)
Right.

Shane Roach (13:43)
Find your specialty, find that passion that draws you in, and get really good at it.

Micah Johnson (13:49)
I couldn’t agree more. And that’s where I tell folks a lot. And if you listen to this and you’ve chosen one form of it, if it’s not doing it for you, I mean, you don’t have to quit it right away, but just know that like, okay, I don’t like this particular version of real estate. What’s the one that’s gonna do it? Because when you start to line up a version that pays your emotional paycheck and your financial one, you got alignment. You can make it places from that point.

Shane Roach (14:15)
Absolutely, absolutely.

Micah Johnson (14:18)
So during your journey, we were talking about a little bit pre-recording, you discovered another one of those ways to invest in real estate that was different than how you got started. So let’s talk about that a little bit and what it did to change your perspective.

Shane Roach (14:33)
Yeah. And

again, one of those wonderful things in this industry, right? There’s a million ways to make a million dollars is that it was never on my radar. It never on my radar that, this is way we wanted to go. But working through this community, a lot of the new investors that came in, they all have the same question, which was,

know, raise their hand and go, where do I find the money to do my first, my first deal? After hearing that for about a hundred times, you’ll

Finally sinks into the cranium that, I need to be the answer to that question.

So we started being a hard money loan broker and providing funds for new investors, which was great for a lot of new starts. But there are some people who are either just getting started or scaling that are tight on funds and they don’t have that 20 % down for a house or the rehab costs. So we started providing that gap funding. So we started off being private money lenders ourselves.

to help close the deal. So we’d bring in hard money and some private money, either as a partnership or as a loan to get the deal done. All of a sudden now I was making money on fix and flips or rehabs that I didn’t find. I didn’t have to go manage the contractors. I didn’t have to worry about when the house sold, you know, I’ve positioned myself as the bank and we made money on the deal no matter what.

Micah Johnson (16:40)
Now, based on your experience in it, have you found, I don’t know how to say this, personality type or a type of person that, hey, this should be something you think about in the industry to capitalize on what you can really do with real estate?

Shane Roach (16:56)
Yeah. So what we’ve found is that that niche that really works well for being a private money lender is someone who wants to get in the real estate because they see the long-term gain, right? They want to be out of their W-2 job or they want to build for their retirement, but they have a full-time family. They have a full-time W-2 job. They don’t have the time to go out, find the leads, negotiate the contracts, to find the contractors, to manage the job.

all those things, well you don’t have to do all those things. You just got to show up with the funds. You can be the private money lender or private money partner on a deal. Now you can get the advantage of the gains as well as hey you don’t have all that time commitment. Let somebody else bring that portion to the deal.

Micah Johnson (17:47)
Yeah, so you can capitalize on the expertise if you’ve got the funds to support it. So somebody, know, a high paying W-2, you got money just sitting there and you’re thinking, how can I use this better? Now, what are some things that someone that might be interested in doing that, what do they need to think about upfront? What are some pitfalls they might hit? What are some ways to make sure they protect themselves?

Shane Roach (17:52)
Right.

Great question because that’s the number one thing we tell everybody is they’re going into being a private money lender. It’s all about setting yourself up for success. So yeah, I wanna get through all the security questions, right? You wanna make sure that you’re recorded on a mortgage note or a deed of trust, depending on what state you’re in. You wanna have a personal guarantee. We always like to have people named as an additional insured on the property. ⁓ Those are all things.

that help protect you. And one of the things that, know, really basic is when you’re going through a title company or a closing attorney, depending on what state you’re in, that’s where all your money needs to flow through. You never wire your funds directly to another person. You might as well just be handing them a bag of money. Have it go through the title office so it all gets recorded on the note, funds get dispersed accordingly, and there’s a trail.

Micah Johnson (19:06)
Absolutely. Yeah, man. I’ve heard horror stories of that, that latter one you said where they just wired the money personally without any protection. someone that walked through that process a little bit for the beginner of how do you go about doing that with the title company? Is there an attorney that you need? What’s, what’s the way to make sure that you’re protected?

Shane Roach (19:07)
Okay.

Yeah. Again, depending on your state, cause some states have closing attorneys versus a title company being the closing agent. but either way they, ⁓ reach out to them directly and they should be able to walk you through aid, the local state laws, but also the local municipality laws. ⁓ cause they’re investing in Dallas, Texas is completely different than Philadelphia, Pennsylvania. and.

Micah Johnson (19:55)
Yeah.

Shane Roach (19:58)
rather than trying to be an expert in all those, rely on that closing attorney to do that for you.

Micah Johnson (20:04)
Is there a particular question you would have them lead out with? So is it?

Shane Roach (20:10)
Yeah. So sometimes now as a private money lender, your number one goal besides reviewing the deal that’s presented to you, because you have to double check all the numbers, you also have to review the borrower. You know, what is the likelihood that they’re going to pay you back? Not just on time, but they’re going to pay you back, right? At the end of the project. is I see a lot of people jump in and say, well, I got a personal guarantee. I’m like,

Do they own anything? Does that person have a job? Do they own other properties? What’s backing that personal guarantee? It’s like, ooh, I don’t know. Well, you need to know because that personal guarantee might be worth $0. If the house goes upside down and you’re trying to collect on it, the deed of trust on the property, that’s your first parachute, right?

Is that the deal goes sideways. You always have to have some equity in that. So when we’re talking to new private money lenders, we try to say 70 % is kind of the rule of thumb is kind of start there. That way there’s some equity in the property that if you have to foreclose on it, heaven forbid, but things happen in real estate. If you have to do that, there’s equity there. Cause if you have to fire sale the project or the projects half torn out,

the valuation might come down. There should be some cushion there that you should still get your funds back, or least the majority of them. The second parachute you have, right, the emergency pull is that personal guarantee. So if there is a difference in that spread, well, you have an opportunity to go back to them and have legal recourse to say, well, you still owe me additional funds.

Micah Johnson (21:56)
Gotcha.

How long did it take you to learn all that?

Shane Roach (22:02)
⁓ It took years to learn all that. It took a few hard knocks to learn all that. you know, lot of conversations. ⁓

Micah Johnson (22:16)
And

that leads right back to real estate’s relationship business. It’s learning from people who know. Now we talked about it before recording, but there’s a guide that you have that talks about this, right?

Shane Roach (22:21)
Absolutely.

I have a guide, it’s called Be the Bank. And it’s a free guide we put together and it’s kind of walks you through the whole process. If you don’t know anything about being a private money lender, this is an opportunity for you to learn the basic steps. So I’ll provide you the link for that. Again, it’s a free charge and also has in there a link. If you ever have questions, there’s a link to my calendar. You can book it a time with me and I’d gladly help you out.

Micah Johnson (23:03)
That’s awesome, man. I appreciate you sharing that. And we’ll make sure that that’s in the show notes for anyone that’s interested in downloading that. Because like we were saying earlier in that group, when you can get information from someone who’s done it, they’ve walked the road. It’s not just a made up guide, right? There’s a lot of gurus out there today that sell one house and then create a course. When you can get information that’s tried and tested and it’s true, it works. I really appreciate you sharing that.

And I appreciate your time and your story today, man. You’ve been kicking butt in this industry for quite some time.

Shane Roach (23:33)
Yeah.

Well, appreciate that, Micah. And again, I went through so many years of the school of hard knocks that, you know, people have asked me, so why don’t you build a course around this? I’m like, I’m too busy doing what I love, but I love helping people as well. So, ⁓ I still give away lot of my time just answering questions and helping people out when I can. But, you know, it’s very much like your show. You know, people look at the very short amount of time that you might be on their computer screen.

Micah Johnson (23:52)
Yeah.

Shane Roach (24:07)
But I know that there’s a whole bunch of other work behind that scene. So we appreciate you offering the show and the opportunities that you have. So thank you.

Micah Johnson (24:18)
Absolutely, man. I love getting to meet folks like yourself and understand your stories more. Cause I think that’s what brings it home, especially for beginners. You don’t even know what you’re getting into when you get into real estate, cause it’s such a big term. you typically, one of us, like usually what is it? ⁓ Rich dad, poor dad is one of the most popular ways that people start getting into it. But that just gets you hyped up. That gives you an idea on like what you’re trying to do, not how you’re going to go about doing that.

So getting information that connects and then connecting with people that have walked that road and just that’s the kind of thing that fills my cup up. I love that. So again, I appreciate your time. You’re storing your perspective today. I think we need more folks out there doing it like you’re doing it, sharing the information. We all grow together. So for those of you tuning in, if you enjoyed today’s episode, Got Value, please make sure you like this episode. Subscribe to our podcast. We got more operators coming up in future conversations.

just like Shane who are out there doing it the right way, building real businesses. So Shane, thanks again. Everybody, we’ll see you on the next episode.

Shane Roach (25:23)
Thank you, Micah, I appreciate you.

Tags:

Investor Fuel

Flipping, Lending, and Growing Wealth: Shane Roach’s Strategy for Real Estate Success

Show Summary

Resources and Links from this show:

Listen to the Audio Version of this Episode

Investor Fuel Show Transcript:

Tags:

Ready to take your business to the next level? Take the next steps below