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Show Summary
In this episode of the Real Estate Pros podcast, Micah Johnson interviews Ernest Smith, a seasoned real estate professional with extensive experience in fix and flips, general contracting, and real estate brokerage. Ernest shares his journey from house hacking during college to becoming a licensed general contractor and realtor. He discusses the challenges of managing contractors, the importance of networking, and the need for education in the real estate industry. The conversation emphasizes the significance of understanding the market, building a reliable team, and streamlining processes for success in real estate investments.
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Ernest Smith (00:00)
And so we had an opportunity topay more because we were also doing those things in-house. So it helped us and win more opportunities. And everybody’s like, well, you’re paying more for it. Yeah, but I’m also paying $30,000 less in fees to my GCs and my realtors. So there’s a little bit of a trade-off. Like if I can get $15,000 more, I’m still $15,000 less, you know, and it’s…
but I’m beating them out, you know, so there is kind of a little bit of a formula to it, but certainly.
Micah Johnson (00:32)
Exactly.But
Hey everyone, I’m Micah Johnson with the Real Estate Pros podcast. And today I’m joined by someone I’ve been looking forward to speaking with. His name is Ernest Smith, who has been making some moves in real estate for quite some time now. He’s been in the fix and flip space, in opening brokerages and general contracting. I’m Ernest, I’m glad to have you here, man.
Ernest Smith (02:29)
I’m like, I appreciate it. Thanks for having me on.Micah Johnson (02:31)
Excited to have you. So I think our listeners are really going to get take away something from how you’re approaching really real estate as a whole. Like we were talking about a second ago, you’re more of a jack of all trades guy and your journey through here. So let’s dive in. So first off for people who may not be familiar with your world, give us a short version. What’s your main focus these days and what markets are you operating in?Ernest Smith (02:51)
Main focus, we do a lot of fix and flips. That’s kind of been our, you know, bread and butter for the most part. It’s where we’ve, you know, I’ve always kind of been in that side. I started out in college and drafting design engineering, got into later down the road after house hacking and doing a kind of a side thing, ⁓ found that there was needs, the needs of the general contractors and needs of realtors.And, you know, then you’re trying to build the team. And then when you weren’t able to find great, comparable people, you just stepped in and kind of took it over. So I ended up becoming a general contractor in 2014, ⁓ a licensed realtor in 2018. And, ⁓ you know, so that’s kind of where those years have kind of progressed to. you know, so yeah, yeah.
Micah Johnson (03:41)
That’s awesome. you from college, so you said you got started house hacking. Now what was that connection? Like what were you doing in college and what led that to, you know what, I’m going to start house hacking. And if you want to explain a little bit about what that is for someone that’s listening and wouldn’t know.Ernest Smith (03:53)
Sure.Yeah. So in drafting design engineering, you, really kind of got into, you know, what side of the engineering you wanted to get into. And so for me, architecture was always kind of like that main focus for me. always, there’s always that necessity of people needing houses. I always liked the idea of taking essentially art that I was really good at, at the time. Now, now I don’t know if I can even draw stick figures. ⁓
You know, go, you know, then I was good at art and then then you have the house side. So when drafting came into it, it was really the art form because you’re doing it on the draft table with pencils and paper and rulers and all that stuff. So there was an art form that was to that, which really draw me to it. But then technology came in. So then we started getting things like AutoCAD and Rivet and all these three dimensional programs. And that was great because it made the speed of execution
faster, you’re able to get these projects done. You know, if you screwed up, you weren’t wasting hours of time racing and in lines and all that. So that was kind of my introduction into is is doing it all from on the paper standpoint. ⁓ Fast forward, I got into doing the house hacking. So I understood the technology or I understood the the knowledge based side of what went into a house. Then on when I started on house hacking, now I’m dealing with the real life situation.
And, but I knew what it was. Like I knew floor joys were two by eights or two by tens or two by twelves. And I knew walls are two by fours or six. You know, like I knew the components that went into what it took to build a house. ⁓ and so, ⁓ then, and I was always pretty good with being handy. my father was kind of a mechanic, so I was always kind of in the garages with them, working on cars and boats and you name it. And so, you know,
Imploding something, dissecting it, and then knowing how to go and rebuild it was kind of a natural working for me. So it’s just kind of one of those things that I just progressed into it. You kind of learn as you went. is, man, what was this early 2000s? So we didn’t have the YouTube universities and we didn’t have these platforms like we do today, the social medias to really learn from, if you will.
Or you know, just find mentors that are in those fields, you know, as easily that you can find. it’s a, so yeah, a lot of hard, hard knocks school of hard knocks there.
Micah Johnson (07:15)
Yeah, when I was reading your profile, what it said you did, you moved 12 times in six years, something like that. And all those were house hacks.Ernest Smith (07:21)
Yeah, six or seven years.Yeah. Yeah. So I mean, because, you know, some of these, some of these houses that, you know, I ended up buying were really lipstick ones, you know, and there’s always like, I need a place to live anyway. And so I would end up just, I was being a gypsy for the first, you know, quite a few years. I was single, didn’t have any, you know, didn’t have any kids in it, all that. So it was very easy for me.
Micah Johnson (07:24)
Wow, man, that’s cool.Ernest Smith (07:47)
And really is just, you you have the hassle of just moving, ⁓ you know, but for the most part, it was pretty good. Yeah.Micah Johnson (07:55)
That’s cool. That’s cool. have a couple of friends that are, they got started house hacking as well. find it, it’s so interesting to me that whole process and then take us through what made the jump, where it went from, you know what, I’m going to do this this way to how do I have a business doing this? What was that? What was going through your mind there in that transition?Ernest Smith (08:15)
Um, during those years, like I was working, um, in the early part, I was a restaurateur. So I was partnered with another friend of mine and we had, um, for like, we did smoothies and juices and breakfast wraps and that kind of stuff. And that was, uh, like 98 to 2003. So that was kind of in the very beginning side of it. Well, after that I got into doing, uh, food sales. So I got out of the restaurant business, my partner and his wife wanted to move.back out West and it was just an opportunity because this is around 9-11. So a lot of dynamics changed that we just didn’t have any control over. So we kind of grew that business. The goal of that one was to grow at the five and to be able look at either selling it off or scaling it. And then we ended up just opting to scale because of the way that the economy went at that time. Got into doing food sales. So while I was doing the sales, the real estate was just kind of an extra.
Like I’m just gonna go in and do it as a hobby and, you know, live in a house, living in for a year or two years, do the short-term gains or capital gains free, you know, because you can do for single, you can do up to $250,000 in profit. If you’re married, it’s up to 500,000 in profit if you’re doing capital gains. And so the theory that I had learned at that time is if you go and do it four or five houses, by the time you got to your fifth or sixth house, like,
and you just keep rolling over like the snowball, you’re gonna have this house paid off in no fees, no cost. And so that was the goal is be able to still live in a house that was completely paid for. And it was fine because I was working the W-2 job and everything else. But you find just like anything else, that changes.
Micah Johnson (09:47)
ThankI heard that man. does things shift as we go along. So you’re in the W2 world, you’re growing restaurants. We were talking again before we recorded more of a jack of all trades guy, which makes a lot of sense with how your trajectory is gone. So when did it shift to, I want to, I want to fix some flip more full time. I want to use real estate as this lever to really change my life.
Ernest Smith (10:21)
Sure. Well, again, it was kind of the process of the needs and wants. So in a lot of these flips, I would still need to get general contractors involved because of some of them were taking them down to studs. Others were just in various forms. So we needed HVAC or plumbing or a mechanical or, so we’re always leaning to get permits and stuff done.And I found even those over those two times, even when I was in sales, because I was in food sales, my clients, the restaurants for the most part, ⁓ didn’t want to see a breakfast lunch or dinner, you know, so I had those opportunities to go check on my houses. So I was on my job sites way more than my general contractors were. And, and I started to kind of just irking me because I was like, look, I’m paying you a lot of money to be here and managing these.
projects and you’re not, know, so it’s like, and then, so when I realized like I knew, not to say like I was, I knew more than them. didn’t necessarily, but, but I felt like the process is, I understood better because I was there doing more, but, but that also wasn’t thinking of it as a general contractor. was looking at it as, you know, the investor, like I need to this done. You know, you get this done for me.
So in 2014, like mind you, 14 years later than what we’re beginning at here, ⁓ I went and got my general loan contractors license. And then in ⁓ kind of subsequent story would be with the realtor side is that even though I worked with other realtors up to that point, it was finding the consistent one. It was one that understood, hey, I’m doing this as an investing investor. ⁓ There’s gonna be opportunities that I’m gonna be.
buying more houses, I’m gonna be selling more houses, but I can have you on the front side and the backside. Like you can get double paid off of projects. And some of them jumped on board with that, but then others were just kind of like, yeah, maybe it wasn’t happening fast enough, or they didn’t like the feeling that they were getting a low dollar amount out of it because I was low balling. And a lot of them have issues with low balling because they just don’t understand why or really how they need to, you know, ⁓
Micah Johnson (13:03)
Mm-hmm.Ernest Smith (13:07)
communicate that to the other side. Because nowadays as a realtor, I’m putting four offers in on one property at one time. And where people are stole that one transaction. So I do things even a little differently on that side because my take on it is that I have one opportunity to get in front of that seller to be able to get their house. And if I can give them, hey, we can look at this as from the investor standpoint, where we could docash, we could be cash is king. We could potentially be 40, 50, 60 cents on a dollar, per se. ⁓ We can look at it strategically with creative financing. So we can look at owner financing. If they own the property, we could do subject to, we can do lease with the options. So we had a lot of different ways to kind of look at it other than just being that transaction. Hey, I’m gonna pay you full price for what you have on the market and pay retail.
a lot of ways to ⁓ do property. ⁓ with all of those components now is a little bit more in control and I could be a little bit more selective because now where some investors thresholds because they knew they had to go pay a general contractor. They knew they had to go pay a realtor. ⁓ They were having to pay even less or offer less to these sellers.
And so we had an opportunity to
pay more because we were also doing those things in-house. So it helped us and win more opportunities. And everybody’s like, well, you’re paying more for it. Yeah, but I’m also paying $30,000 less in fees to my GCs and my realtors. So there’s a little bit of a trade-off. Like if I can get $15,000 more, I’m still $15,000 less, you know, and it’s…
but I’m beating them out, you know, so there is kind of a little bit of a formula to it, but certainly.
Micah Johnson (15:01)
Exactly.But
it’s what you talked about there with the realtors working with investors. was, I was a, I got, I was a realtor. got started in 2014 and I met my first investor in 2017. And like you said, not all realtors like to work with investors, but if you have the mindset for it, it’s completely life-changing. I went from selling 50 houses a year to 50 different people to 50 to one guy.
Ernest Smith (15:24)
⁓Micah Johnson (15:29)
And it was like, holy cow, this is cool. I like the way this runs because it’s, it’s just a completely different world that you get to participate in. love what you were talking about there. Simply just moving a line item. You can get a seller more money if you control more on your back end. So that’s, that’s really smart to do. You’re not the first person I’ve heard talk about the struggles with the general contractors. That’s a big one in the fix and flip world is GC subs, how you.how to actually get projects done. Cause that is difficult. What’s that like for you? Once you’ve got that GC license, did that get more simple? Do you still find struggles there?
Ernest Smith (16:49)
No, there’s still struggles. No, there’s still struggles. mean, when because now it’s like I, yes, I’m involved in those and sometimes way more than I want to be at one point. So there’s I kind of did two different scenarios. So one scenario back in 2017, 18, I had just about 20 guys like 18 or 19 guys or whatever that worked for me. So W2’sMicah Johnson (16:50)
ThankErnest Smith (17:16)
And that was great because I can sit there and say, you two over here and you six over there and you, but you know, like I can disperse them how I needed to. And they were all pretty, ⁓ some had less ⁓ skills across the board. Like they weren’t all handyman kind of deal. And then some were very specific to what they were. like I had to pair them up with someone else. So those were good, but on the same side then.what you found was that you had to now go out and even do more sales, more contacts, more marketing, more, you know, more, more, more, And because you had, you know, your monthly spend on those guys on a salary side was constant. You know, you’re like 65, $70,000 a month that you’re spending out in salaries. So there was a, it took one guy that I brought in to kind of implode the whole entire thing, you know, unfortunately.
⁓ where I felt like he was a very good fit. He was gonna be kind of my liaison with ⁓ doing the ⁓ logistics of things and buying stuff and setting our vendors that we had set up, getting things to flow better in that side. And I went on vacation, come back and just, I mean, I’m talking like,
take it and throw it against the wall. Cause like it was bad guys were leaving. They’re almost fist fights happening. Found out this guy was trying to overtake the company. You know, so I was like, is this really the best model for me? So then I started kind of segregating. Well, then of course we had COVID happened in 2020 and you know, that kind of changed the dynamic also. So at that particular point I was kind of switching over to, um, to using just subcontractors.
Now that’s good because I can hire them rights, but I can also fire them faster. They’re not on my payroll. So they’re tied to the project. So it’s either, hey, you got to perform to get paid or you don’t perform, you don’t get paid, you get fired. I can replace you. And then I just, but now it’s a matter of like, how do I hold the carrot in front of them to keep them, you know, coming into your projects.
And so and doing it in the timely fashion because a lot of them are like, yeah, yeah, we’re going to do this in five days. And here we are, you know, 10 days later and, know, they’re getting things done. for them, it’s it’s a matter of like I have to hold their feet to the fire. And now I have consequences. Hey, I’ll give you five days. This is what you’re telling me. I’ll give you two days of grace period. And then if you go over that grace period, then I’m going to start deducting you per day, X amount of dollars per day. And until you get it finished.
And then if you don’t get a finish, then I’m going to fire you. I’m going to find someone else. So it’s like because this is a process and needs to get done. And so those little tweaks to businesses of things ⁓ helped a lot, ⁓ but it really kind of cut the BS when I was very straightforward to the guys and say this is what’s going to happen and it’s totally up to you. I’m giving you a long enough a rope to, ⁓ you know, take care of yourself with, but the, ⁓
Micah Johnson (20:02)
Interesting.Ernest Smith (20:24)
You know, but, ⁓ it was just kind of an opportunity, you know, really. And if I look at my phone now, and if you say, Ernie, you know, what, what do you have in your phone for, ⁓ electricians? mean, I’d be just going through, going through the Rolodex of, of contacts and, know, same thing with all of them, you know, because again, ⁓ some of them were just from the networks I meet people and, ⁓ you know, being at these local meetups and different things, like you get some trades that come out.Micah Johnson (20:37)
The Rolodex.Ernest Smith (20:53)
Hey, let me get your contact, duh, duh, duh, duh, And then others were referred from other investors. so you kind of build, you start building your team with who you work with well. They understand ⁓ what the goal is. So there’s a lot that comes along with that. there’s also a lot of headaches that comes along with it also, because now it’s like, hey, I fired you.Now I have to go find someone else that can do it for the cost that is left. Plus, you know, now you’re working with someone totally new. So there’s a learning curve to that. And so I haven’t really found the best blend in a lot of that, but you know, in the time like contractors are, you know, a dozen, ⁓ it’s, know, it’s, but then also then you’re dealing with like today’s, you know, politics, right? You know, it’s like, ⁓
the immigration, the migrants that come in, it’s like they’re coming here to work for their families, but then you get the wrong people that screw the system and then ⁓ kind of mess it up with the other ones. And ⁓ there’s a lot of things that go out of that. being in the Charlotte market, we had ⁓ the ICE come in for about a week and a half or two weeks. There wasn’t anybody working.
Micah Johnson (22:17)
Wow.Ernest Smith (22:17)
like shut down and, and, you know, you, if you want to, things to happen, like you needed to find someone that was a legit, you know, subs and, and that was a challenge, you know, because a lot of people just, you know, they’re, they want to sit in front of the computers these days, you know.Micah Johnson (22:35)
Yeah. Yeah.I’ve seen the sub world take some hits and it’s, interesting because I used to, I, ⁓ I was a carpenter’s apprentice in my early twenties, learning from a master craftsman on flipping houses. And it seems as though some of the dignity went away from it that to build the pride and equality of product seems to have gone down. And that’s, that’s, I’m interested in how we fix that over time because
Like you, love real estate, taking a house that can’t be lived in and making it where it’s livable again, where a family can come in. I love that. That is, to me, it’s one of the best feelings in the world to like revive something to where people can now participate in it again and give it a whole new story. So it is interesting.
Ernest Smith (23:17)
I’ll have to tell youa story on that one. So I feel the same way as like, I’d like to take something that was loved, fell on, just repair and then put love back into it and sell it to someone that’s gonna have another family to come in and have memories. Well, we did one project and I chuckled because I can laugh about it now. At the time I was like, I felt like it was a big kick in the gut. But so this house we ended up buying,
think it was like 196,000. We put like maybe 50 something thousand into the renovation of it. So anyway, we ended up selling the product. was like $320,000. We ended up selling this house for him. like, yeah, this is great. We made 50, 60 grand on this thing. And like two months after we had sold it, we were in the same neighborhood looking at some other houses. I was like, hey, let’s drive by where the house is at and see what they did. Well, we literally drove by the house.
because they had torn the house down to build a $1.8 million house. And I was just like, And so, know, so I was, you know, it was like, man, I felt like a bad breakup. Like I didn’t, you know, it’s like, you didn’t know what to do. You know, you had five, six months of your time and effort and energy and, you know, go into it. And even though you hit your numbers and you made your percentages and, and, yeah, it was.
Micah Johnson (24:28)
I’ve heard that.Ernest Smith (24:39)
Like that did not go to the family.Micah Johnson (24:39)
They were playing a whole different game.Yeah, they were playing a whole different game there. They didn’t even know what was going on. That’s wild. So let’s get up to where are you now? What’s your main focus these days?
Ernest Smith (24:46)
Yeah.So, the last, kind of, man, we’re still doing a lot of fix and flips. ⁓ I say a lot. mean, we’re not like, ⁓ you know, hundreds a year kind of thing. ⁓ So in the last probably two years for me, so the networking side of things has been really big for me. ⁓ One, because when we find in the real estate fix and flip side, there’s never enough deals and there’s never enough money. So I needed to solve.
You know, I need to solve that equation. So so some of these groups that I’ve gotten into have a lot more people that have a lot deeper pockets than me. But understand, ⁓ you know, the fix a flip game is a very is a short run. You know, you’re talking between six and eight months typically. And so for them to be able to do potentially two deals a year ⁓ utilizing that money and get somewhere between 15, 20 percent returns on their money, ⁓ they’re all about it. You know.
And even some, we’ll do like out of their IRAs and things as well. And they’re used to getting like a 6 % return or 8 % returns. And so we can start out at 8 % or 10%. And for them, they’re like, this is fantastic. they get a faster turnaround. Well, so now because of the years of doing the fix and flip, I’ve built my portfolio up of…
Performing so not only that but I’m a licensed general contractor. I’m a licensed realtor. So I’ve been you know, I’ve been background checked by the state ⁓ so And not to say that there aren’t other people that have and then they don’t do a good job But there’s the integrity that goes along with it and then the the ethics of things so for me like I I probably it may take a little longer, but I’m gonna get the project done and it’s gonna get done, right? So that way we don’t have any problems with it on the back end so
⁓ So there’s a lot. So in, I say all this because so we’re finding the resources and we more people and more money. And then, ⁓ and then there’s kind of a need and out of being a realtor, I kind of find out the realtors that I network with. ⁓ They’re very singular transaction based. I need to go find a house that I can get the seller to ⁓ agree to or a buyer to agree to.
negotiation with that. And it’s a very sales transaction. So, you know, here’s, here’s this house now I need to go find another house to do not need to find another house to do. And those that have the the marketing dollars behind them or go out and constantly or ⁓ beating the streets knocking the doors. ⁓ Those are the ones that are getting referrals. Now what you find is, ⁓ it’s great, because you have a homeowner. So you’re helping the homeowner sell their house. Now you’re gonna
hopefully take that homeowner and get them to go buy a house. Well, that’s two transactions you could potentially get. But what you find is that I’m dealing with a retail buyer that particularly buys maybe once every three to five years or five to 10 years maybe. And ⁓ so once I helped them buy or sell or whichever, I potentially lost that person. And so ⁓ there was kind of, I think you had mentioned it,
Micah Johnson (27:56)
Mm.Ernest Smith (28:00)
beginning is like you had one guy that was able to go do 50 deals or you had 50 individual deals to go do. So it’s easier to kind of touch with those investors that are out there buying because they have the connections and they have the money. And so ⁓ the brokerage that I just brought into North Carolina ⁓ gave me the freedom to be able to offer to my agentsMicah Johnson (28:04)
Mm-mm.Ernest Smith (28:25)
the opportunity to be an investor. And so a lot of the other ones are, hey, no, no, no, like you got to go out and do your sales. Well, you’re going to get sales by working with the investor. But I also want you to build your portfolio for your own self because in the times of like this year when things have been not moving as much houses have been sitting longer on the market. They’re doing reduced costs on them to try to sell for those that need to sell.And there’s a lot that kind of goes with that. With that, mean, people’s ⁓ profits have gone down, you know, so they haven’t made as much money this year as they had or 2008 or nine, right? Like they didn’t make that type of money. And then there’s some ⁓ and in those scenarios, 2008, nine, ⁓ where the real estate played a different role, like because they were over leveraged and they didn’t they weren’t able to take care of their
⁓ notes because their rents weren’t as high as they were supposed to. And, know, so there’s a lot of people that lost a lot of money in those timeframes because they just didn’t do the process right.
Micah Johnson (29:33)
Right? Kind of ate him up. Now we were talking beforehand, you’re doing some speaking now too, right? Around this, traveling around?Ernest Smith (29:35)
There youYes, yeah. I did. So a lot of my would just do like local meetups and I belong or co-host or hosted several meetups around the Charlotte area talking about real estate, as you can imagine. I don’t feel like my wife is like, is that all you talk about is just real estate? And she’s like, what about Britney Spears? I’m like, I don’t care about Britney Spears. Like she doesn’t do anything to our wallets. She’s fun to watch.
but doesn’t do anything for it. So anyway, we… ⁓ So I guess the big part is like, and when you’re really looking about real estate itself, ⁓ so speaking on it, because I think, because I feel like I have kind of a trifecta, if you will, like being the investor, being a general contractor and being a realtor,
All three of those come into play in real estate and typically throughout the transactions even. And so when I have the opportunity to talk with the sellers, I say, hey, look, here’s the situation, here’s the four offers, here’s kind of what we can do. ⁓ So now kind of looking at it as ⁓ there’s a lot of people that need to hear how to do these fix and flips ⁓ because they watch TV shows like
the DIY network or HGTV and they see Chip and Joanna out there swinging the hammers and doing all those things and like, this is great. Look at all this stuff and we can make all this kind of money. Sure, you can, but you can also lose your ass, right? So I mean, it’s, that’s, and, but even like with Chip and Joanna, for instance, I mean, they do a lot of high-end stuff to their items, right? They’re, you know, the materials that they’re putting into it, the house that they’re doing.
Ernest Smith (31:22)
So anyway, you get into these fix and flips. And I think ⁓ where…The newbie investors get into it. They’re like, well, I’m to hire the professional general contractor. I’m going to hire these professional MMPs, the mechanical electrical plumbing, and they’re going to know how to take care of it. And they’re going to go ahead and give us kind of a ⁓ price for the scope of work. Well, you don’t know the scope of work. So how are you going to tell them what the scope of work is? Like you don’t understand.
what’s gonna happen or what needs to happen or what you wanna put into it or what toilet you wanna select. Cause a toilet you can spend $100 on or you can spend five or $600 on. You can spend a couple thousand dollars on if you want the fancy ones with the bidets and the warm seats and all that stuff. So is that gonna go into a $300,000 flip? No. The $100 toilet is gonna go in the $300,000 flip. So it’s again, it’s kind of understanding what goes into it.
And so one of the things I usually end up saying is like, fix what is needed. Do not add your wants, make your margins. and really, you know, that’s pretty as simple as I can put it. The, when you understand what, the house needs, and then also where the ARV is at on the backside, like it starts dictating to you what your budget is. And then you have to look at it as, Hey, we want to open up this wall.
Do you have to open up the wall because that’s gonna cost you $8,000 to open up the wall. Do you have that in the budget? Well, no, we just think it’s better. Well, yeah, but you didn’t think about that when you were negotiating the deal. so ⁓ a lot of the people I feel that I run across in these subgroup meetings and these masterminds and stuff like I belong into is they don’t have the knowledge behind them. Even though they have the YouTubes and things to watch, it’s not the real world stuff.
Once you get into it’s like, man, I’m this transitioning area, but I wouldn’t live in this house the way it is. But this is what I’d want to do. I want the soaker tub in it I want this in it. And they’re putting all these things in there that doesn’t really have a place. And then they sit there and complain at the back end and be like, what was me? You we got screwed over by the contractor. we got screwed over by this person. ⁓ you know, we went way over budget. And it’s like, yeah, because you weren’t able to relate to the.
communicate to the contractor what needs to get done and keep them accountable to the scope of work in order for you to maintain the budget throughout. So, ⁓ yes, speaking’s been kind of big for me here. ⁓ More so in 2026, it’s ramping up because I feel like there’s a lot of people that ⁓ it could help if that’s the case.
Micah Johnson (33:59)
Agreed, man. Cause it’s that knowledge. There’s one thing seeing it on TV where Chip and Joanna actually already have a buyer that’s buying that home retail that you’re watching them take all apart. Like, and I see a lot of folks that end up overbuilding for an area because of their want list and don’t, don’t account for it. So getting out there and getting that education. It’s so important. And the folks that I really appreciate the guys like yourself that go out there and do that because it’s, it’s life changing.There are people that will lose everything because of that. we talk about real estate. You said it earlier. Yes, you can be very successful, but you can also lose everything in this game if you’re not careful about it, because there’s so many little things that happen when you’re in it. I always talk to people, someone tells me I’m in real estate while asking, well, what kind? And if they can’t answer that question, then I know they’re not really serious about it because real estate is the most broad term that exists in our industry.
Ernest Smith (34:54)
⁓ yeah. It’s just.Micah Johnson (34:56)
And there’sso many little nuances that you get into as you dig into like each little thing, which is cool about your career arc. What I like to see is you’ve lived it out. You’ve seen firsthand what it’s like. You’ve experienced the problem and then found the solution. Okay. If GC is this, I’ll just be this. You know, if I don’t have the realtors here, I’ll become this so I can keep capturing more and more on the bottom line. And that’s
One of the most effective ways to do it is how can I be more of the line items on the hut? How can I be more of the people getting money instead of giving that stuff out? It’s powerful.
Ernest Smith (35:27)
Yeah.As much as it is, it’s also kind of the, it’s also not because when you look at it, that’s even more hats I gotta wear, you know? And that’s more things that you’re trying to control. And again, if you want to be able to do this in scale, what I find out is that you have to rely on your team. Well, know, going back to 2018, had, you know, 18, 19 guys that worked for me. So I was building my team and then
that dynamic changed and ⁓ maybe it was failure on my side to where I didn’t know how to navigate or manage around that. But then again, is also the opportunity is like, is that really the best way to handle it? ⁓ Because now I have to go out there and interview and I have to do the quality on that, figure out what they know and what they don’t know and then have to educate them and train them. So there’s a lot of other ⁓ nuances that come into having an employee.
versus, hey, I need this trade and I’m gonna go out and look for the trades and now it’s up to them. Here’s the scope of work. Can you handle it? Yes. And then I set up different set of parameters. So the realtor side or the GC side, although they’re great to have, and really it was kind of more of these are just tools in my tool belt. And it was supposed to be like selfishly for me to be able to kind of grow the business.
organically because again, I was working a W-2 job and so it was kind of like, if I do this and I can do three houses or four houses a year and make an extra $100,000, $200,000, $300,000 off of those deals while I was working the W-2 then fantastic, those are great. Those are just good vacations I can have or buy a new car or do whatever. then in 20, was it like 2016 or so, 2017?
⁓ is kind of when I’d made the jump out of corporate America, the sales that I had, we were starting to have tons of competition coming in that were really undercutting us as a food company. ⁓ so then became harder to even just scrape up some minimum orders to get compensation out of. then the company I’d worked with, I had my territory cut three different times because
I was great at going out and opening up new accounts. And they said that as an opportunity to say, hey, we’re going to pull some of these low producing ones off of you, give you more time to go out and find some new deals. And we’re going to go ahead and give them to X, Y, and Z. But meanwhile, they were pulling some of that gross profit dollars. So, you know, you can only do that so many times and you’re just like, enough’s enough. And so I made the transition into the real estate side.
And then, but now it’s, it’s again become, I’d started leaning more into the GCing because it’s like, well, I can get more cashflow out of that. can, you know, have multiple projects. I can have crews going on. So when I’m doing my fix and flips, I would just, you know, keep, keep the ball rolling. And so I kind of like set the realtor thing aside. But then what you started figuring out is you’re creating yourself a job. Well, I don’t want a job. I want to be able to have residual income and start doing.
buy and hold. So I started taking some of those proceeds I would make off of some of the houses and then I would end up, you know, buying a rental property with them to start having that residual income coming in. And again, it was, it was a matter of, there are probably a lot of houses that I should have kept that I didn’t keep because of knowledge, lack of knowledge. And, and so that’s when I started getting into a lot more of these local groups.
the larger groups, the masterminds, and, you know, because you don’t know what you don’t know. And it’s constant, like you see all the books behind me. Like I don’t do a ton of reading. Like I’ll grab a book and go through a couple chapters here and there. ⁓ Especially if there’s like something that’s really playing on me at that moment, I just need to find. And then there’s, ⁓ you know, of course, obviously like YouTube or whatever you can go into is like, hey, how do you want to change your oil filter in the car? You know?
Like there’s typically out there. So I think all in all with the speaking side is really just kind of taking all of it that we’re talking about right now, condense it down, be very specific. ⁓ When you’re getting into doing these estimates, the estimating on projects, ⁓ it’s tedious. No one wants to do it. But once you do it a bunch of times, like now, when I go and do a fix and flip,
I’m painting my ceilings and my walls the same color. It’s alabaster white, and it’s gonna be kind of an eggshell or sometimes flat, depends, but mostly eggshell. All my trim’s gonna be in alabaster white, but semi-gloss. My doors I might paint like a different color, like an urbane bronze or something like that, but I have a color scheme that goes along with it. So I can get guys in, I can get guys out.
my painters are charging me less because they’re just doing one color. They don’t have to worry about cutting it back in for the agreeable gray and these other colors. And not to say that that’s wrong, but there’s just things that you can kind of streamline. I use, most of the time I use a standard doorknobs and handles on my doors or that I have resources for. Like now I have cabinet companies that I buy wholesale from and they’re usually a
better quality than what I would get from the box stores. And, you know, there are a little bit more, I have dove, you know, I got dove tilled drawers. got soft doors and drawer closures, you know. So for them, they kind of, it’s high enough quality. I could put into $800,000 houses, no problem. But it’s also, I can put in rentals and know that they’re going to be lasting me a little bit longer because of the way that they’re made, the integrity’s better.
So, you start putting these pieces of the puzzle together, which some of us is starting out, they don’t have all that.
Micah Johnson (41:26)
You don’t know because the more you can streamline, the easier the whole process is. The more of the process you can make repeatable, better, easier, faster that you can scale everything.Ernest Smith (41:38)
And that’s why new construction’s fantastic because it’s like, hey, here’s the timeline, here’s 257 steps that you have to do to get it from dirt to doorknobs. And everything’s got a timeline and here’s the predecessor tasks. there’s a system that goes along with it. And so now I need to know my selections. What would you need? I need three toilets. Well, what toilets do you want? And the Vandy’s and, so you just start putting the piece of the puzzle together.So, and that’s why I liked ⁓ when I got into doing the architecture is like, I had the blueprint, I created the blueprint and in that blueprint, tells me everything I need to do to this thing. And so I try to give my subs that homework. Like, hey, here’s the room, we’re removing this wall, we’re doing this load bearing beam, we’re doing these things, we’re doing this, we’re doing this, here’s the toilets that I want, there’s the selections, here’s the barcodes, here’s this, you know, like.
You know, I just need you to go in and install, you know, put the pieces of the puzzle together.
Micah Johnson (42:35)
Yep.Do this part. And that’s where in your overall arc that you got to see things from a big scale from, from way zoomed out before you even got into the nitty gritty stuff. And that, and that is helpful. All right. As we wrap up here, if folks want to reach out and find you Ernest, what’s the best way to get ahold of you?
Ernest Smith (42:52)
Ernest Smith official. So across all platforms, it’s ⁓ Instagram and Facebook are probably my two bigger ones, but I’m LinkedIn or TikTok even, you you may catch me doing a dance every once in but ⁓ YouTube, I also have Ernest Goes to Network podcast. started, I’m not like you guys, I don’t have hundreds of episodes, I got like 20.But this book that’s right here, Joe Foster, you can see the Reebok. Well, he was my first interview in my podcast. And so everybody’s like, how did you get a billionaire to be your first podcast interviewer? It’s putting yourself in the right rooms to be able to have those opportunities. And ⁓ when you have those opportunities, you got to be able to ask. ⁓ And Joe’s phenomenal. He ⁓ loves to tell a story about how
Micah Johnson (43:27)
Nice. Yeah, he’s a creator of Remark, right?Ernest Smith (43:46)
him and his brother, how the family, how the grandfather started doing running shoes for track, start telling you the story about how Reebok came in, how they came up with the name, how, you know, all the details about it. And it’s ⁓ pretty amazing. So, but to be able to have that experience, much like what you’re doing right now interviewing, it’s fun just to be able to talk with some of those people and just understand their story. And even though it’s 10 or 20 minutes,⁓ You can learn a lot about people in 10 or 20 minutes. And Joe is great, but yeah, so Ernest goes to Network Podcast or ernestsmithofficial.com They can find me at.
Micah Johnson (44:15)
You can’t, especially in this setting.That’s awesome. All right. I appreciate your time. You’re storing your perspective, Ernest. I think we need more people in this space doing it the way you’re doing it, especially on that education side, helping people move along. That’s what I love about the real estate world is you get into the right rooms. It’s really the abundance mindset that exists. Like when you get in deep enough, you’ll find people that to be successful, we all care about that same thing. For those of you tuning in, if you got value from this, please subscribe like this episode.
Ernest Smith (44:47)
Yeah.Micah Johnson (44:52)
We’ve got more conversations coming up from operators just like Ernest who are out there building real businesses and doing real work for real people. So thank you so much. We’ll see you on the next episode.Ernest Smith (45:02)
Thank you.
