From Soldier to Success: A Real Estate Journey Uncovered

Dylan Silver (00:00.502)
Hey folks, welcome back to the show. I’m your host Dylan Silver and today on the show we have Shawn McArthur in the Missouri area, real estate entrepreneur. Shawn, welcome to the show.

Shawn McArthur (00:11.428)
And I’m glad to be here, thanks for having me.

Dylan Silver (00:13.43)
At the top of the show, Shawn, I like to ask my guests how they got into the real estate space.

Shawn McArthur (00:19.964)
Yeah, so actually, it started for me a couple of years ago. I was actually active duty army and was investing in the stock market during COVID and ended up doing really well. Thought I was great in investing in stocks and then like the world actually came back to normal and I ended up getting belligerent in my stocks trying to day trade. And so I wanted something that I could actually like was more tangible. I could run numbers. I had more control over it versus trying to throw an option out there and unless you’re super technical, if you are, you know, great for you, but

Realized that, started getting into flipping, just really just fell in love with the space and actually left the military early to become a licensed real estate agent and then started kind of just flipping from there.

Dylan Silver (00:59.15)
have lost my shirt trading options. I thought I was brilliant, was making all this money, and then I bought a call option for Tesla, and then it just went in half. And that was the end of my thinking I’m a professional day trader.

Shawn McArthur (01:14.268)
Very soon. I think mine was GameStop. It was that was the one that that was the moment that sparked it for me I had done really well in a bunch of investments and I thought I was doing really good and I lost $10,000 in 10 minutes because I was in a meeting and it went from my call option I bought for 20 bucks went over 10,000 and crashed back down and nothing within 20 minutes and I was like, alright I can’t like unless I’m gonna be a full-time person like I’m out of here. No way

Dylan Silver (01:38.092)
Yeah man, I remember where I was when that happened. had just gotten out of the car business. I was in a real estate wholesale company and I had placed this trade in a meeting and similarly it just started crashing and then mine wasn’t that fast but like over the period of the next two days like I lost like half of my portfolio because I was just yoloing into Tesla and then I learned like okay.

Shawn McArthur (01:59.856)
Yeah.

Dylan Silver (02:02.336)
let me look at this real estate thing a little bit more carefully and let me stop doing that. And pretty much since then I’ve been like, not today, trader, but I digress. So you’re going from military to civilian world, realtor. Did you get licensed in Missouri? Was that the first stop for you?

Shawn McArthur (02:11.174)
Yeah

Shawn McArthur (02:19.184)
I did, yep, yeah, literally right outside the military base we were stationed at. just got like, I actually ended up buying, or working with the first team that I bought my home with here. I just really ended up falling in love with that team. I just really loved like their passion, their mission, and it really aligned with a lot of the core values we had in the military. So jumped straight in from there and yeah, just kind of really took off from there. I ended up selling, I think 30 houses in my first six months as an agent, which is really cool. It just was different.

A lot of people in the real estate space, I’m sure you’ve seen too, they don’t really want to put the work in. As long as you have the right systems, if you put in the work and the ethic, like work ethic, you’ll have results. It just takes that time and that consistency, which a lot of people lack.

Dylan Silver (03:01.07)
30 homes in 6 months is absolutely nuts. Wow. So, you must have been working for a heck of a broker.

Shawn McArthur (03:04.164)
Yeah. It was.

Shawn McArthur (03:09.688)
Yeah, it was an awesome team. They’ve got great systems of processes, which we could have a whole other podcast just on systems and processes, but like a lot of systems of processes dialed in. And then I just put the exact same work ethic. mean, the military, you know, I get, I get to on base around 4 a.m. and would go home at seven or 8 p.m. every day. And I just kind of brought that same mentality to the real estate space. And if you’ve ever met a real estate agent, a lot of them, you know, they don’t like to treat their business as a business. They think because they’re an agent, they can work whenever they want to. It’s true.

But your results kind of followed from there. And so I just didn’t. I was at the office every day before, you know, by eight, 730, stayed there until six or seven, worked, weekends, and you know, the results kind of followed from there, so.

Dylan Silver (03:50.252)
it’s not all selling sunset, you know, like that TV show, you know, it’s really a grind. And for me, I’ve started to carve out a niche for myself. I’m brand new, licensed, licensed in the last two weeks. And I have a ton of respect for stories like yourself because it is truly rare. Like, I can count on one hand the number of people that come out of the gate doing, you know, half of the volume that you did in the first six months. So…

Shawn McArthur (03:52.73)
It’s not.

Dylan Silver (04:18.498)
You go from there, you’re making good money, selling homes. At that point, are you looking at real estate portfolio? Is that on the horizon?

Shawn McArthur (04:25.788)
Yeah, so I mean that was always my passion and I’m sure we’ll touch on it later too, like where I’m at now with it, but that was always my passion. I actually flipped my very first home towards the tail end of me being in the military. It was actually a meth house. So I really dove straight into there. In an awesome neighborhood, you would never have expected it, but the entire basement had to be meth remediated. Disaster. Didn’t end up losing money, didn’t make any money, but it was a very…

well worth it education. But yeah, like the goal is always to invest in the real estate. So as I was building the real estate, as an agent side, was learning and in courses and joining mentorships and trying to learn that side to kind of slowly pick that up.

Dylan Silver (05:09.112)
There’s nothing quite like flipping a meth lab, Shawn.

Shawn McArthur (05:12.188)
It is I’ll tell you that I would recommend it for your first one. If you’re out there, don’t do it stick to something else wholesale that one maybe

Dylan Silver (05:18.986)
It’s a lot of work and I know in some cases even like they if it if it gets I don’t know the exact designation the home has to be like torn down so it can be quite a huge undertaking so you had that deal become licensed you’re seeing money coming in are you then looking at more fix and flips is that the next move?

Shawn McArthur (05:37.724)
Yeah, so really wanted to get the active income dialed in. right now we’re, you know, we’ll talk about the progression there into the multifamily space, but really it was, we want to get our systems dialed in into the fix and flips. And so I actually talked to my team leader. He had kind of was like, Hey, I want to get more into the investing space. They kind of pulled out of it a little bit. And I just was really passionate. I’m in a pace more, we stopped to community. I had done some Ryan Pineda courses, kind of few different things there. And so.

I was like, I’m ready, let’s partner up. So basically I talked with him and said, hey, I’ve done a couple on my own, partnered with a contractor. Didn’t all go super great. We can dive into that too, if you want to. But then I decided to partner with him and kind of just started the real estate business. were, our team sells six to 700 homes a year, which is crazy, especially in our market is about 10,000 people. So we’ve got like 25 % market share almost, which is crazy.

Dylan Silver (06:28.547)
Yeah.

Shawn McArthur (06:32.176)
Yeah, it’s a whole other thing there too. But yeah, so we kind of partnered with him and I was like, hey, I want to kind of get this going. So we started slow, just started picking it up and really just giving agents another tool in their tool belt to be able to help them and help sort of sellers at a higher level.

Dylan Silver (06:47.19)
So at this point, and it sounds like you were really focused entirely on scaling up your real estate business as a realtor. So it wasn’t at that point, hey, let me work on fixing and flipping. But then quickly, as you’re getting more closings and you’re seeing the benefits of the work that you put in, you start to take a look at, how do we develop a strategy to scale with fix and flips?

Shawn McArthur (07:15.644)
Exactly. Yeah, so I did that 30 in like the six months and then my first full year did 55 and then was like, all right. So after that, kind of really, what I really wanted to do was have a good understanding of the business before I, we a hundred percent dove into the fix and flips. I wanted to see my potential there and see what that path looked like. I found out very quickly that that wasn’t for me long-term. just, if I never showed another home in my whole life, I was cool with that. I was the guy who was always paying showing partners and just didn’t love showing homes.

So we kind of push it from there and rolled onto as we got past that, now focusing more on the fix and flips and just kind of transition slowly out of the realtor space, more heavily into the fix and flips.

Dylan Silver (07:56.654)
wow, this is really a remarkable story because I think a lot of people would have felt like you sold almost 60 homes in that first year, right? And then you say, hey, you know what? I’m gonna go into fix and flips. And so it’s like you got to the pinnacle of the sport and then you hung up the jersey like Jordan in what was it, 92 or 93. And so it’s remarkable to think about. But as you then go into fix and flips, is it a deal where, hey, I gotta,

Shawn McArthur (08:16.111)
Yes.

Dylan Silver (08:25.804)
reestablish myself, I gotta learn the skills of the trade, did you partner with people? How did that work to where it was a smooth transition or was it bumps along the way?

Shawn McArthur (08:35.332)
Yeah, definitely bumps along the way. I did a couple on my own before I partnered with our team leader on them and those did not go super well. So I was actually telling our team recently that I paid for a lot of education intentionally and I also unintentionally paid for a ton of education. And when I mean that, mean lost a ton of money on some flips because just partnered with the wrong people, which is, as I found the wrong partnerships are worse than a bad deal.

I had the right deal, I had the right numbers, but I had a bad partnership and the contractors didn’t do what they were supposed to and I found out later I had been stealing. And so that had really, I was like, all my numbers are dialed in, we’re selling it for exactly what we thought we would. Why are these going over budget? Why are they taking too long? And just realize I was with the wrong people. Since I had changed partnerships, I’ve never lost money again on a deal. Deals have been going faster. And so that just pushed to that partnering with the right people.

Dylan Silver (09:30.36)
What do you feel about people learning the skills of being a general contractor themselves when they’re going into these flips? I’ve spoken with and been around flippers and it feels like if you’re in the flipping game, it does behoove you to gain some level of fluency with general contracting work so that when you go on with site, you pretty much know what’s going on.

Shawn McArthur (09:52.026)
That was, if I could impart one piece of knowledge to anybody, that’s what it would be. It would be if you’re the operator running the business, you at least need to know enough of the language, what is right and wrong, to go in there and go, hey, this is too expensive, this is taking too long, you’re not doing this right, you’re stealing from me there. When I first started, didn’t, so my thought was, me partner with a contractor who I know will take care of me and is super in this business, will split profits, they’re gonna take care of us because…

were aligned on the back end, so they’re of course gonna take care of us on the front end because our profits are aligned. Well, not necessarily. If they can make all their money on the front end, don’t have to worry about profits, that’s kind of the problem. So yeah, I learned the wrong ways there and just didn’t understand the space. I I didn’t even think I owned a screwdriver until two years ago. Like, I just never did any of my own maintenance, nothing. And now, you know, I’m going into houses and…

saying, hey, this mudding and taping’s wrong, and hey, you need to paint better, hey, this drywall doesn’t look incorrect, or you need to texture this differently, and you start learning that lingo. Now, do I know how to go and mud and tape? Absolutely not, but I know what right looks like.

Dylan Silver (10:57.1)
I know what right looks like. Yeah, 100%. That’s the way I would say it. You want to be able to go into these sites yourselves and know if it’s on schedule, but if you don’t know what you don’t know, then literally you won’t. And so I can’t tell you how many people, Shawn, that I’ve spoken with who are in your shoes when you were looking at that first flip. You’re into a site, things are over budget, over time, and not sure where the money’s going. It feels just like a money pit.

And so very quickly you gotta learn how to partner with the right people. And also, I gotta understand a lot of this myself. But pivoting a bit here, Shawn, so you go and you get these first flips. Couple in the beginning didn’t go so well. You licked your wounds and partnered with the right people and now you’re scaling. you still have your real estate license, but your focus is on the fix and flips. So now you have the right partners, right people, you know how to underwrite the deals, not losing money.

And so at this point you’re thinking, I’m gonna go and I’m gonna scale this and how do I scale it?

Shawn McArthur (11:59.992)
Exactly. Yeah. from there really it was we were doing one or two deals and then we went to four deals a year and then now we’re probably three a month. So it really scaled really quickly. And so really as mostly it was about finding the right people and then putting processes in place. If you have to reinvent the wheel every single project, it’s going to take a ton of your time. And that’s what I was finding was it was eating time the time up. I’m always at job sites and you can’t be

getting more properties and running numbers and comps if you’re also having to be at the projects babysitting contractors and babysitting the project. So what we had to find was we need the systems in place so that way, there’s gonna be little nuances, but for the most part, we’re using the same paint, using the same flooring, we’re using the same connections. For the most part, the houses are looking very similar, and so you’re able to scale a lot faster from there if you don’t have to go in and reinvent the wheel every single time. And if you’re using the similar contractors,

or even better if you’ve got a contractor guide to give them, then they know what to do, they know what they’re looking for, they don’t have to ask you on every single item because they already kind of know the standard.

Dylan Silver (13:03.276)
Now, when you’re finding three deals a month, acquisitions has got to play a huge role in this. So are these off-market properties that you’re finding? Are you getting them off of the MLS? What’s your acquisition strategy?

Shawn McArthur (13:15.26)
So really it makes a both. the majority of them are off-market properties and I would say there’s a lot of different freeways. So we’re not doing any paid marketing, at least our company, the flipping company, isn’t. So what we’re doing is we’re partnering with the agents. So our team leader, they’re always getting in new real estate leads. And so what we do is we go in there and say, hey, we’ve got a cash offer program. And so when people come to the agents, it’s a benefit to them because A, now they’re getting in more homes. A lot of people that say they want a cash offer.

Most of time they don’t really want one or they don’t need one. And so it gets them in more doors. And then two, the ones they do need it, that allows us to go in there and say, hey, no problem, let’s get a cash offer. And we’re able to get that to them really quickly. We actually just got two in our contract today from an agent that we’ve probably bought four from so far because she understands. And you’ll start to see this too, the ones that you’ve worked with before and they see how beneficial the cash offer program is. There’s a lot of investors out there, as you know, that aren’t actually closing on deals.

So if you can prove yourself that, we’re gonna close on deals, every single day we’ve gotten under contract, we’ve closed at 100 % of asking price, every single one, we don’t renegotiate, we’re not trying to go beat these people up, we’re trying to go in on the front end, tell you where we’re at, and then we’re gonna close every single time.

Dylan Silver (14:31.054)
So at this point, you have the referral network of realtors who, they are presenting this offer to their client, they have a couple different ways. MLS, cash offer, we have Shawn McArthur, he closes, so if you want to set your home quickly, here’s your cash offer. So at a certain point, the man hours that you’re having to put in to acquire these deals is effectively becoming offloaded by the reputation that you’ve built by your password.

Shawn McArthur (14:59.652)
Exactly, like they’re finding the deals for us, they’re pitching the sellers on the deal, they’re actually running the numbers. We actually have a whole system and process for them. So they actually have to give us comparables when they go there because if they’re gonna do it anyways, they’re already gonna list the house if we don’t buy it anyways. So before we were doing all the legwork and I was spending 45 minutes to an hour per deal, well, if you’re looking at 30 deals before you find one, that’s a lot of time per week that you’re not able to focus on other stuff.

Dylan Silver (15:14.669)
Yeah.

Shawn McArthur (15:26.3)
So we’ve got some really great systems now that we use to make it faster and then we just compare that to what the agent send us, make sure they’re pretty aligned, know, send them a quick 70 % value for the most part and good to go from there. We know very, very easily now and quickly whether it’s a good deal for us or it’s not going to be. We know what our numbers are and we’re not swinging outside the batter’s box to try and get a deal. It’s that’s where really where we went wrong before and where we’ve really scaled back is just knowing what our buy box is and outside of that.

We’d love to help you, but it’s just not going to be a great fit for us at this time.

Dylan Silver (15:58.37)
Yeah, mean, fixing and flipping is no small task right now. Margins are getting slimmer and slimmer. know many people, when you talk about the trajectory of a real estate entrepreneur, people might go from wholesaling to fix and flipping. I know a lot of people now, based off the degree of difficulty and the smaller margins, are now looking at hard money lending and note buying, so on and so forth. And so you’re exactly right. Like, people looking at getting a property

to fix and flip and maybe overpaying for it but then thinking to make it up in the appreciation, it’s not gonna happen.

Shawn McArthur (16:32.604)
Yeah, that’s a very dangerous game to play, especially as rates change and the markets, you know, we’ve seen literally since we started this rates have gone from 2 % to 8 % back down to 7 % then to 6 now back to 7. So like, and buyers this whole time are like, it’s a rollercoaster. So you’ve got to really have your numbers dialed in because if you end up holding this project for six months, do you have numbers that can support that? Or are you running your numbers based off of…

Best case scenario for everything, that’s where I went wrong. I used to run my numbers with, well, I think we can sell it for a little bit more. I’m sure we could get this thing done in three weeks, not two months. And that’s really where you have to really see what your averages are and go off that. You know your KPI is better than anyone else does. You’ve got to see what the market’s doing and give yourself some buffer. It’s better to not buy the deal and pass up on it. Maybe it’s a great fit for someone else than to buy a bad deal.

Dylan Silver (17:24.014)
So at this point, we’re doing three deals a month, humming along. Basically, the dollar spend for the acquisition of these leads is minimal to none because of the reputation that you’ve built, the realtors that are bringing you the deals. But you’re also now in the multi-family space as well. So have multiple different items cooking on the stove. How did you get into the multi-family space?

Shawn McArthur (17:50.288)
Yeah, so really it’s a progression of what we really wanted to do, a couple different things too. So as we’re doing these cash offers, we’re starting to see a bigger need. So what we’re doing is, one, we’re adding in more tools to our tool belt. And a lot of that’s we’re going to create a finance, seller finance, subject to, a lot of those things. When all you have is a hammer, every single problem is a nail, but not all sellers, not all problems are nails.

So it’s just finding different ways to be able to solve those problems. And multifamily was a problem we were able to solve for a lot of agents. What we found was a couple of different things. We have a lot more control in the multifamily space because we’re not dependent on comparables in the market. It’s based off of the value of the rents, which if you watch real estate trends, rents don’t have the major ups and downs like real estate prices do, because interest rates jump to seven. Rents are pretty solid. They may actually go up a little bit because people can’t buy.

So we’re able to control that more and now we’re able to solve an issue that we’re finding that agents, there was a gap that agents wanted was to how do we invest in real estate? And so that we were able to solve a problem there too.

Dylan Silver (18:57.568)
Okay, so you’re seeing the relative stability in the multifamily space. You’re familiar with the acquisition strategies associated with fix and flips. And did you apply any of those to multifamily acquisition or were you getting these deals off the MLS as well initially?

Shawn McArthur (19:16.188)
So a little bit of both. These deals have been a little bit tougher. A lot of the agents that we work with focus on residential. They honestly don’t even understand the commercial space at all. And so they’ll bring us deals every once in a while. A lot of these we’ve actually found on the MLS. The good thing with our area, we’re looking at other markets eventually too, but our area there’s not a ton of investors buying because they just don’t understand what the values look like. A lot of times there’s a smaller market. We’re not having the big outside investors come in there.

And so what we’re able to do is go talk to these agents and just work out really good deals with them. We can look at rents really quickly and kind of see the value there. But really what we’re looking for is we’re not trying to go into the multifamily space and do massive flips with them. What we’re looking for is rental arbitrage to be able to like jump rents up a little bit. So we just closed on a 12 unit and like the Ozarks a couple of weeks ago and we added almost $300,000 in equity, literally just.

the day we bought it because we can improve rents about $152,000 a unit for 12 units. It’s a pretty good jump in value right there without doing any remodeling.

Dylan Silver (20:19.47)
So let’s talk about rental arbitrage. So when I hear the term rental arbitrage, I’m thinking you’re renting a place and then you either short-term Airbnb type situation or like you mentioned, increase the rents. But it can be a difficult proposition for the landlord because the landlord’s like, well, why don’t I just do that? So how are you going about rental arbitrage?

Shawn McArthur (20:43.312)
Yeah, so what we’re looking at is honestly most of these that we’re finding, our really sweet spot are the properties that the owner is also the property manager, he’s the contractor. So these guys have been, the one at the lake for example, he’s been managing this property from, he lives 45 minutes away, he took it over from his dad and awesome guy, he was amazing. But he was managing all 12 units of these by himself. He also had another.

apartment complex of 40 or 50 units in town that he’s also managing by himself. And he’s doing a lot of the maintenance, the scheduling, the maintenance, and he’s doing all this by himself and it’s getting to retirement age. So some of these units, he hasn’t raised the rents in three years. There are $700 a month, literally lakefront apartment complex, two bed, one bath. And the exact same complex is another one for $1,100 a month, three doors down. He just felt bad and didn’t want to raise the rent on the people. And so we just see that immediately and go, well, if these three are renting for $1,100.

This one’s running for $700. There’s a little bit of room to improve rinse right there.

Dylan Silver (21:44.482)
would love to be more involved in that. I think it’s gonna be, people don’t talk a ton about it. I have heard some people talk about it online, but you hear a lot about wholesaling, you hear a lot about creative finance, but rental arbitrage, I think this is ripe for a bunch of people to dive into this and innovate this space.

Shawn McArthur (22:06.268)
It’s so beautiful because we don’t need to go in and we don’t need to flip it. A lot of people want to go in and overdo the apartment so they want to go in and spend $20,000 a unit. Well, you spent $20,000 a unit and you improved the rent 200 bucks. Like it’s a long time to get your value back. Well, what if we can improve it 150 and we don’t even spend 5,000 a unit? That’s a pretty good deal. Let’s do that all day long. And multifamily on top of that, we’ve got appreciation. Multifamily appreciates differently. We’ve got depreciation where we’re able to…

improve taxes and we’re also having cash flow the whole time. There’s a lot of ways to multifamily we’re able to help win.

Dylan Silver (22:41.876)
I completely agree with everything you said. I think, you know, especially rental arbitrage and multifamily, like that’s a new concept to me. The more I have these conversations, the more I realize that real estate operators and entrepreneurs, they have this ability to problem solve and to create unique and creative solutions to different problem sets. And that’s really the greatest.

unifying factor that I see among high level real estate operators. It’s not just like, I’m great at underwriting deals or I’m great at networking. It’s this ability. I call it like entrepreneurial or real estate neuroplasticity. Like you have to be able to adjust and adapt like you talked about. Military to real estate agent to single family fix and flips to now multifamily, you know.

rental arbitrage, like you’re able to just keep on adjusting the business strategy.

Shawn McArthur (23:39.324)
You have to because entrepreneurs honestly what we’re doing is we’re solving the world’s problems and so affordable rents Good places to live people want to know where to invest money And so that’s what we’re able to also solve a problem there with agents and people that want to partner like hey, man really don’t want to this myself. I want to focus on my superpower I really want to focus on whatever I’m doing a lot of agents don’t really want to learn all this because there’s tons of years of practice and messing up and spending money and

They just want to be able to put their money somewhere and know it’s in a good investment and be able to invest in real estate, not just work in real estate. And so that’s a huge thing we’re able to help solve there for them. And on the flip side, we call our organization Changing Lives Investments because that’s really what we see ourselves doing is we are able to help change lives of not only the people who invest with us, our team members, that kind of stuff, but also the tenants that we’re working with. Like we’re putting them in great locations, very safe homes, and we’re able to help provide that which a landlord who’s trying to invest in

run this on his own. He’s maybe doing a great job, but that’s a lot to do on yourself.

Dylan Silver (24:40.75)
For sure, for sure. We are coming up on time here, Shawn. Where can folks go to get ahold of you?

Shawn McArthur (24:46.192)
Yeah, so Instagram or Facebook’s probably the best. It’s at the Shawn McArthur. I would love to connect with you about real estate. If you have any questions on fixed inflips, multifamily, I’ll show you the communities that we’re working on. We’d love to connect with you.

Dylan Silver (24:59.854)
Thank you so much for your time. Thank you for coming on the show

Shawn McArthur (25:03.388)
Awesome, thank you so much for having me. It was great to be here.