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Show Summary
In this conversation, Gregg shares his experiences in the real estate industry, discussing the challenges of control and delegation, the importance of partnerships during downturns, and the value of networking. He reflects on his early days in the business, the lessons learned from various exit strategies, and the significance of building a reliable vendor network. The discussion emphasizes the need for collaboration and the right mindset in navigating the complexities of real estate investment.
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Gregg (00:00)
I bought that in 2003, so was 55 units in one transaction. And I went in 33 and a third with these two partners, but I structured it to where I got 10 % of the gross receipts as a property manager because that was my strong suit because I had been managing 50 of my own. So that pretty much doubled my inventory there. And I actually put down zero. And the way I structured that was,It was $180,000 to close this deal and it was like a $2.1 million deal. And so I told him, said, for my $60,000 out of my property management fee, I will pay, not take $1,000 a month for 60 months. And then my 33 and a third position as whole.
Erika
Hello everyone, welcome to the Real Estate Pros podcast. I’m your host Erika and today I’m joined by someone that I’ve been looking forward to chat with, Gregg Simmons. He’s been making serious moves in the real estate investing space. Gregg, I’m glad to have you here.Gregg
Thank you, glad to be here.Erika
I think our listeners are really going to learn from all the experience that you have. So let’s dive on in. For people who may not be familiar with your world, can you share your journey and what led you to real estate in the first place?Gregg
I would say what led me to real estate was an idea of being able to work as a entrepreneur and not continue punching someone’s clock and got a little foundation and education behind me and started diving into it with ⁓ one rental. Then it turned into three and it turned into 10 units and I knew I had to go to 33 pretty much very fast and I had enough information and ability to do that because I had been utilizing a hard money lender that really wasn’t that hard. ⁓ And he had some ⁓ investors that were putting up money for ⁓the hard money for individuals and the loans that they were given were not performing. So I had a huge opportunity to look at the non-performing notes and to pick some of those up and get some rehab money. So I got from 10 to 33 pretty fast. And then in the process of doing that, met wholesalers and found different avenues in which to purchase homes.
I got up to 50 or 55 and then it caught the attention of a couple of friends of mine that are developers and they said, go find something really big, way outside of the box of what you could afford to do or you think that you can do yourself. So the only thing I ever bought in the newspaper, there was a husband and wife that listed as a mobile home community, not a mobile home park. They just happened, they developed it and there was a hundred mobile homes on lots in there.
Well, whenever they developed it, they kept 55 and then they sold 45. Well, on the 55 that they kept, ⁓ they advertised those for sale and I was like, why are y’all selling this? And they told me that they adopted their ⁓ housekeepers’ children that I guess were here from Venezuela or whatever. So they wanted to focus on that and then the husband was a pilot in his career. So anyway, we got the numbers to work and
I bought that in 2003, so was 55 units in one transaction. And I went in 33 and a third with these two partners, but I structured it to where I got 10 % of the gross receipts as a property manager because that was my strong suit because I had been managing 50 of my own. So that pretty much doubled my inventory there. And I actually put down zero. And the way I structured that was,
It was $180,000 to close this deal and it was like a $2.1 million deal. And so I told him, said, for my $60,000 out of my property management fee, I will pay, not take $1,000 a month for 60 months. And then my 33 and a third position as whole.
So two months ago, we’ve actually satisfied the second note. So we had a note on the land with the bank and then we had a note on the mobile homes.
with the seller, which was quite beneficial to us because we only had to carry general liability insurance, which reduced our insurance obligation from having to have property damage coverage. And in the mobile home world, that can get expensive. when we first bought that, was performing, think, at $22,500 a month. We’ve now got that performing each month, $70,000 a month.
So at the end of the day, I’m getting paid $7,000 a month for property management, but now we’re doing capital distributions. We were doing them annually, like $60,000 a piece or whatever. Now we’re doing $10,000 a month, and at the end of the next fiscal year, if there’s a bigger surplus, we’ll take addition to that. So technically, I’m making $120,000 a year now. I’m a 33 and 1 3rd owner of
an asset that’s worth around eight million dollars now and we bought in at two million and I’m getting property management approximately seven thousand dollars a month so seventeen thousand dollars a month from somebody who started out with one rental I think was pretty phenomenal and I’m pretty excited about it and then from there ⁓ those two partners had a title lawyer that was closing their development deals and he says hey let’s get some mobile home parks
So we bought two mobile home parks and the same deal there. I said, this time I don’t want to put down anything and I want 10 % of the gross receipts on those mobile home parks. So I got away with it one time and then the next time I had to put down like 10 grand or something like that as my portion of that. But ⁓ I’ve since sold those two mobile home parks because I’d hit 350 doors by that time. I had a bunch of my own.
And what I realized was that a lot of my assets were partnered with other people and I was having to use a lot of my time in order to manage that. And it was great for diversification during the downfall between 08 and like 12. And so what I did was with all the cash or the money that I was making, I nest egged it. And when everything crashed, I went out and I bought about 60 houses for myself. And I said, you know what?
Now’s the time to sell these trailer parks with these partners ⁓ and focus on myself and my family. So partnerships are good. I still have that one partnership with those two guys. This has been the best one that I’ve had. ⁓ There was a third mobile home park. There was a 60 unit that they had begged me for like five years to get involved in because they weren’t making any money. They had general liability claims, losing insurance, and were not making anything on it. And I denied them all five years.
Well, during the downturn, everybody was in trouble financially, development-wise and what have you, because that’s what those guys were into. And they said, one developer guy said, I’ll buy these other two guys, three guys out of it. Do you want a piece of it? And I said, if we’re 50-50, I’ll do it. So I bought into that one.
and i said well how much did you pay him off well i it was it was hard to do that maybe he had a market was only forty thousand so i got a forty acre mobile home park with sixty units on it for forty thousand well at the time i really don’t want to spend my money so i went a little aggressive and i said will you hold the fit the forty thousand dollars on a fifteen-year note at eight percent and he said yes cuz he knew that i could get that park performing
It wasn’t making hardly anything. think like $6,500 a month. I got it performing like $25,000 a month, which again, I get the property management fee of $2,500 plus I’m half owner. Well, I tried to bring in some better products, some better homes, but it was kind of the same result. It was in a rural area. The clientele was a little rough for lack of better terms. And my development buddy knew a guy who was doing RV communities. And he says,
If we’re tired of doing this, really don’t want to sell it right now because we’re not going to, well, we would still come out like a champ, but why don’t we do an RV park? said, let’s go for it. So I sold some of the trailers in there. Some of them were owned by the people that own the house that were renting the lot from us. And then I just tore down some that weren’t all that good. So then we had to go through the city of this small town and get a special exception.
for a 55 and older community and we’ve done all the soft costs on that and we’re ready to dig and we are approved for a 221 unit RV park. So that’s, it’s gonna be a huge deal whether or not we stay the course and break dirt ourselves or if we settle off to one of these national companies. So other than that, know, doing some flips and then maintaining my fleet of rentals of about 110, that’s where I’m at right now.
Erika (12:30)
Yeah, and wow, that’s a that’s really exciting when when it comes to, you know, the deals that you’ve done. And I’m sure there’s been a lot of variety. But for you, how do you identify and source those deals? What is typically worked well for you?Gregg (12:48)
Well, I mean, most people think that my percentages are ridiculous of what I want on my annual return. I mean, during the downturn, I wouldn’t touch anything under 33, 36 % annual return. And some people say, where the heck are you buying this? Well, it’s not in the nicer deed restricted neighborhoods, this, that, and the other. It’s more in the lower socioeconomic areas, but not slums. And you go in there and…You get a great deal on something, you fix it up. I already knew what the rental income was going to be on those or what they would rent for. And I just turned them. And during the downturn, like I say, I bought a bunch of them. It was over 50 of them. And so my strategy was, and then the banks weren’t lending money at that time. I don’t know that that’ll ever happen again. The banks and the government have it positioned to where they probably want. But I went in and I found the one with the least amount of turn.
I turned it in order to get the income to keep turning them and turning them and turning them. And it took me about two or three years. And then I had all of those turns and I picked up a few other ones in the process. So, you know, that’s kind of how I really grew fast with regards to my own product, other than my partnership with those two guys. And then the one that I’m doing the RV park on. So I kind of had to refocus myself and draw back in and focus on me.
instead of diversifying and doing all these partnerships. But whenever I started, the first thing I thought of was a percentage of something is better than a percentage of nothing. And then it wound up growing outside of the scope of to where I was having to share. And then I was like, you know what, I’ve got the skill base. These guys don’t even come around and look at this stuff or whatever. They’re just waiting on a capital distribution.
I need to go back and capture some of this stuff for myself. So I kind of went back to focusing on what am I doing for me? But I will say that those partnerships certainly helped during the downturn to have a diversified income because it was a pretty tough time.
Erika (14:56)
Yeah, and you know, just because something, you know, works for you before doesn’t mean, you know, you need to keep doing that. Sometimes it, you know, serves a purpose and it’s a time, time to move on. I’m sure you’ve had to, you know,pivot, you know, over the years and, you know, speaking of that has a, there been a moment on your journey that’s really tested you, you know, maybe a deal went totally sideways. Can you share a moment like that and what you learned from it?
Gregg (16:09)
Yeah, I would say this, that out of all the deals that I did, there was only one, and it’s such a minuscule amount of money, but I’ll never forget it. I lost on one deal and I owned a rental next door to a house and there was an older gentleman that lived there, whatever, and he was fixing to lose his house to a tax deed. And I said, you know what? I’m going to be a good Samaritan. I’m going come along and I’m going to buy this house.And the pay, think it was like right at $5,000. It was like $4,700 or something like that. So anyway, I went in and I bought the tax deed. The next darn day, the city shows up with a demolition permit. And I was like, oh, I just lost five grand because I didn’t want to overcome it. Because once I bought it and I went by there, the older gentleman had moved out. And I’m like, dang it. Because if he would have stayed there,
I would have practically given him the place away for rental wise. was going to rent it to him for $500 a month. I would have had my money back in a year and then I could have, you know, probably put a little bit into it and either sold it to somebody else or just basically told him, Hey dude, uh, you just, you just live here and I’ll give you a note. I’ll hold the mortgage or whatever, and then work in the taxes and stuff and then make it work out. But when he took off, I was like going, Oh my goodness. Um,
So anyway, how do you say, well, how do you get out of something like that? Well, I quit claimed it to some guy who didn’t have anything that worked for me. And he’s like, I don’t care. I’m fixing to move to Texas. So anyway, the city wound up putting tax liens back on it. They weren’t getting anything out of him and the lot sitting vacant next to a house that I own. So anyway, it was an exit strategy. It maybe wasn’t the most scrupulous idea, but at least it wasn’t on me and my LLC. But that was the one that I lost on. And there was a couple of courthouse sales.
to where I thought I had them, but with the courthouse steps sell, which you don’t actually go to the courthouse steps anymore unless you’re in a small community, they sell them online. There was one that I thought that I bought and then somebody had, I don’t know, a lawyer or somebody had intervened or they bank rubbed it. I can’t remember what it was and it took like two weeks to get my money back. And that kind of chapped me a little bit because I was already a little baited on, here’s what I’m going to do with this house and I’m going to fix it up. I’m going to rent it.
And then I wind up figuring out, you didn’t on it. so anyway, just a couple of ⁓ new practices that I hadn’t had happen before. And so you just got to have a wealth of information or access to individuals who do in order to not make mistakes.
Erika (18:48)
Yeah, absolutely. ⁓ you know, especially when you’re starting off, you know, you really got to make sure that you can lean on different people and get good information from them. When you were early, earlier off in your journey, was there any networking groups or connections that you made that were a game changer?Gregg (19:10)
I was really guarded because at the time I started in 2001, there were so many sharks out there that were willing to eat the minnows. ⁓ and I could kind of pick up on it, the personality traits and some of their sales tactics. they were suggesting retail values that were, you know, in market values that were not realistic because I had done my homework. So I kind of stayed away from that, but I would say the gentleman that I was using.to broker me money, ⁓ the hard money whenever I did that in the early years. The first one I went to was knocking my head off and then I realized pretty quick, the way I realized that he was not the guy to stay with was I’d done like 10 deals with this guy. My first three deals I did with 3 % down. So I started my business with $5,000 and an idea. And ⁓ I had run in that company that I was running, I had a full-time maintenance guy.
who needed extra money, he moonlit for me doing these houses after he got off of our real job. ⁓ whenever I realized that the hard money that I was on wasn’t all that realistic and the guy was trying to turn his money twice a year, which there’s not a problem with that, but then was refinancing them on the backside for me and getting me on bank loans, I knew that his points and his interests…
for the hard money initially to get me in these things was not the route to go. So when I met my second broker, who’s still one of my very good friends, ⁓ I was helping him solve problems by getting non-performing assets from his lenders, a new home that was going to be performing with me. And he was helping me basically directly buy with zero down. So there’s a bunch of different ways that you can buy without having a lot of money ⁓ or much money at all.
You just got to kind of ⁓ build your vendor network, I guess.
Erika (21:08)
Absolutely. Well, Greg, this has been great with you sharing your advice on the show today. If someone here listening wants to connect, collaborate, learn more about what you’re doing, what’s the best way for them to reach you?Gregg (21:24)
They could email me. That would be fine. My email is greggsimmons91 @ gmail.com.Erika (21:37)
So, again, Greg, I appreciate you being on the show, sharing your story and ⁓ perspective. We need more people in this space who are doing things the right way with all the dedication and experience you have.Gregg (21:50)
So thank you.Erika (21:53)
And for our listeners, if you enjoyed this episode, make sure that you’re subscribed to the real estate pros podcast. We’ve got more conversations lined up with pros like Gregg, who are out there building fantastic real estate businesses. We’ll see you on the next episode.
