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Show Summary
In this conversation, Mark Doty discusses the challenges and fears associated with leaving a stable job to pursue entrepreneurship. He emphasizes the importance of overcoming fear, taking risks, and living without regret. Doty encourages listeners to view their current jobs as fallback plans while pursuing their true passions.
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Investor Fuel Show Transcript:
Mark Doty (00:00)
what you’re doing now is your fallback plan. Like if you’re listening to this podcast, you’re already thinking about it. I mean, yeah, you have to do some preparation, but at the end of the day, I think living with the regret of notgoing after something that you really want and believe you can do because you’re scared of leaving the job that you currently have, is just the wrong way to think about it. It’s more like you’ve got one life to live and if you always want to be an entrepreneur and go and flip houses or start your wholesaling business rather than work in a cubicle, I think that’s never gonna leave you unless you give it a shot.
Quentin (02:10)
Hello everyone. Welcome to the Real Estate Pros podcast. I am your host, Q Edmonds. And you know what I’m going say? I am super excited to be here today. Excited about my guest. He’s going to tell you about building some ADUs. And I’m excited for him to tell you about it. If you don’t know, I’m going to let him tell you. A lot of you I’m sure do know, but those that don’t, he’s going to fill us in. I’m excited about what this guy’s doing. Like he want to bring in the right investors. And he…You know, he knows what he’s doing and I’m excited for us to get a chance to peek through his lens. And so I just want to introduce you all to Mr. Mark Doty. Mr. Mark, how you doing today, Sir?
Mark Doty (02:50)
I’m good. Thanks Q. I’m glad to be here. Happy to have a little chat with you about investing in California.Quentin (02:56)
Yeah, man. Listen, I’m excited, man. I’m excited for the viewers to get to know what you’re doing. So look, man, I want you to take us into your world. I want you to tell us what your main focus is these days. If you want to give us a little bit of an origin story, how you got started. We love origin stories. And you already told us what Mark’s job is written in, man. So listen, take us away, Mark. us in on what you’re doing,Mark Doty (03:19)
Yeah, awesome, thank you. So I got started doing development projects in San Diego about five or six years ago. I grew up in the Midwest, came out to San Diego, and I was working a W-2 job as a medical device rep for a long time, moved up through the ranks, did really well. And then my company went through an organization, which is a huge company that everyone isheard of, but they’re a big company that went through a reorganization. And in that, I got shuffled into a new position that paid way less. So a big pay reduction. And it just kind of like shook my world. I, at that time, I’m married. I got three little kids who are, who I’m, they weren’t all even in elementary school yet. So they’re still young, but I have all these bills to pay with ⁓ daycare and stuff. And then I’m taking a pay cut.
from my corporate job. And I was just like, this is not the answer. I’ve done a great job in the corporate world, but if I move out of this job, if I’m unhappy and decide I want to quit and move somewhere else, it’s going to be another major medical device company that can go through the same kind of restructuring. And I just felt like I didn’t have any power over what I was doing. So I started looking into things. I read Rich Dad Poor Dad, like,
probably a million other people that you’ve talked to, that planted a seed. I started looking into different kinds of real estate that I could do, whether that’s like value add multifamily or flipping or wholesaling or self storage, like all the things. And I came to the conclusion that I didn’t want to do projects outside of my market. I didn’t want to go to, like I went to college in Missouri.
but I didn’t want to go to Kansas City as a multifamily market because I didn’t have a team. I didn’t have boots on the ground that would be able to manage the project and people that I would know and trust and be able to walk by and really like learn how to do the model. So I focused on San Diego and the projects that work in San Diego with the million dollar price point and then the rent ratios that go along with that. Like you don’t get…
regular cash flow that you could, I mean, this is five years ago also, so there’s been a change there. But like five years ago, you weren’t getting the kind of cash flow in San Diego that would make it pencil to do any of those other models. So what I fell into is accessory dwelling units. And what that is, is it’s infill development. And the rationale behind what that means is, so California, San Diego specifically is landless.
You’ve got the ocean, you’ve got Mexico, you’ve got mountains, and then you have a big military installation called Camp Pendleton up north. So it’s locked into a small geography and there’s no more land where you can build. There’s no urban sprawl in San Diego Metro because it’s all blocked in. So But we still have population growth. So there’s a housing crisis here. Pricing is out of control. Rent is out of control.
Quentin (06:59)
Hmm.Mark Doty (07:24)
And what the state has done is it’s passed regulation that allow for infill development, which is where the ADUs come from. They said that on almost almost any piece of property, you can build two or sometimes three and more, depending on the zoning of these small apartments on the land. an ADU uses all of the same infrastructure, the electricity, the sewer.⁓ the water from the city, but it goes on to the same property. So you build like a little house, a little granny flat, a casita, these small apartments on the same plot of land, and they’re called ADUs. So that is a model that works in San Diego that doesn’t work in a lot of other parts of the land, but that’s kind of the model that I’ve fallen into.
I’ll give you a minute there. I talked for a minute. I’m not even positive. I answered your question. That’s kind of like where I am today though. I’ve been doing this for about five years. I’ve completed 12 projects. I’m on a path from going from like like a $2 million purchase price and I’m turning four units, four properties into $15 million of ARV. So big jump in construction. And then the goal for the next few years,
Quentin (08:27)
You know.Mark Doty (08:48)
is to go from 15 million in asset value to 50 million. So that’s a, that was a lot. I’ll kind of let, take my breath or pause and take a breath.Quentin (08:59)
I appreciate you, Mark. But no, you did absolutely, you absolutely answered the question in a very succinct way, in a very way that let us know exactly what you’re doing and took us along the journey with you. And so you answered it just right, I think my next question for you would be, what are some of the key strategies that you do to kind of keep that machine running smoothly?Mark Doty (09:54)
So these are like pretty complicated projects and the team is the most important aspect. So in what I’m doing, I mean, and I admit, and I learned all of this stuff by making mistakes, but it’s hiring the right kind of person. So an architect is not an architect and they just do all projects. So you have to find like architects, designers, engineering people who do ADUs.You have to find construction crews that are used to doing ground up construction and heavy rehabs. So for my part of it, it’s just finding the right people who have experience doing the kind of projects that I’ve done and then fighting the capital to be able to complete these projects. They’re capital intensive. And when you’re doing four or five or six projects at a time,
You run out of your own money real fast. So bringing on other people who want to invest in kind of projects like this is another one of the bottlenecks that I run into. But the two keys are capital and then the right team.
Quentin (10:56)
I man. I hear it and I love how you said, you kind of learn kind of like trial and error. And so I always tell people when we get on their podcast that there is a process to success. There’s times when things get real, when deals go sideways, times when you have to fast. These are the process, the journey to success. And so I would just wonder, are there any stories that you can share?about when times when things kinda got real for you, you had to pivot fast.
Mark Doty (11:25)
Yeah, I can give you a couple quick stories. I could… The one that seems like it resonates with just everybody is that there’s projects, there’s problems on every project. And you don’t know, you can’t project what’s inside the walls of a house. Whether you’re doing a flip, like you don’t know what’s in there. You don’t know if there’s mold or asbestos or whatever. Like you can’t tell until you’re into the project. So…you always have to have additional capital that you’ll be able to tap into when you need it. The way that I tapped into that initially is I set up a HELOC on my primary residence so that I had a way more budget that I needed and I ran into problems on my first project. The first one that I bought was in San Diego. It was a duplex that I was turning into a triplex. So was adding a unit from a bonus room and
After we had rehabbed the unit one and unit two and we’re blocking off and preparing to turn unit three into the third unit, not just an extra bedroom, COVID hit. Okay, so COVID hits and we don’t know whether or not we’re able to have our contractors on site or we’re all gonna die because of this new thing that’s coming through. It slowed down the city’s entitlement process. It slowed down our contractors.
And then that was where some of the learning came about hiring the wrong team. You know, I hired the wrong architect who knew how to do an addition onto your house, but didn’t know how to turn that addition into an apartment using the city’s ADU regulations. So it’s like, I learned a bunch on that project. The one year timeline turned into two years pretty quickly. And the thing that saved me on the project was that I had set up the financing beforehand.
and was able to sustain through those cost overruns, time overruns. But yeah, man, like that’s why I say things like, yeah, you just have to have guys that experience in your niche because they’re not all the same in any of those fields.
Quentin (13:32)
Yeah. Now, man, listen, sir, thank you. Thank you for sharing. And I hear you 100%. You got to have the people, like you said, that are experienced in your field. And I thank you for, man, just even sharing the story. I really appreciate it. Now, I heard you very clear, man. I know you’re trying to go into that 15 million of asset, then you want to take it to 50 million of asset. So I know that are some of your goals, but are there any other goals, real goals that you want to lay out for your business and what you’re doing?Mark Doty (14:42)
I mean, for the business, that’s really it. It’s just like to scale up. We’ve gotten to a point where we know what kind of projects we’re looking for. We’re outsourcing a lot of those functions. So bringing those in-house, like that’s a scary early step in entrepreneurship is hiring people. And I’ve been able to, I’ve hired some people and they haven’t worked out. And it’s like, you feel like you wasted all this time and energy to bring people on board.So I would say, yeah, there’s the asset value, but it’s growing the group of investors and it’s growing the team so that we’ve got a more reliable workflow when we find one of these projects.
Quentin (15:27)
I it, man. I’m sorry for the long pause. was just writing down something that you said about growing the investor and I hear you know, that kind of lead me to relationships and I would love to get your thought on building relationships. So I guess I’ll ask the question this way. When it comes to building relationships and growing your network, what has made the biggest difference for you?Mark Doty (15:49)
Well, in the early stages, it was just getting out there. It was getting out there and going to meetups. So you can only read so many books and listen to so many podcasts and see YouTube University. You can only do that for so long. I think that’s a necessary part of everybody’s development when they’re early in this thing. But then you have to take some steps to grow.The first steps are going to meetups and starting to talk to real humans and getting on the phone with agents and making offers and like figuring out that you do know what you’re talking about. And then my growth from there was getting into paid masterminds, which I was completely turned off on in the early stages. I was listening to Brandon Turner and BiggerPockets where they were all very anti-mentorship, anti-guru, which
I think makes sense when you’re early. You can learn a lot of that stuff on YouTube, but then eventually you’ve got to make relationships with people that know what they’re doing. And those people aren’t going to free meetups. They’re not wasting time figuring out if they understand the talk tracks because they’re busy. So they’re looking to build their crew and they’re looking for people who have passed through those first few stages. So
Like for me, that’s been in masterminds. I’ve been in three different masterminds and they’re key in stages. but like the same thing I would say about building your team would apply to masterminds is make sure make sure that there’s people in that group that are who you want to be when you grow up. I’ve been in some where, so like I started in a mastermind that was that was specific to wholesaling and house flipping, which was
really impactful on me leaving my W2 job to do this because these were people who had done the same thing. They had left their job and now they’re doing it for real. They’re really doing it, but none of them are doing ADU development or infill development. Like they don’t know what entitlement and stuff is. So I moved to another mastermind that has more of a focus on what I want to be and have as part of my business. So I think like,
Quentin (17:54)
Yeah.Mark Doty (18:06)
You just make sure that you’re joining groups that are filled with people that you’ll connect with that are doing what you want to do. Whether or not you’re there yet that is less important than the role models are present in that group is what I would say about that.Quentin (18:22)
Absolutely, man. Love that relationships are everything in this space. And I think what you just laid out and how it’s masterminds have been beneficial for you. I think that’s a good nugget for the people that’s listening on how to grow their business, on how to grow their niche. And so, I love how you said just doing your due diligence, making sure the room has exactly what you need. And so I absolutely love that. And so listen, man, I want to give you a chance.right here, because I love your perspective. love the way you’re talking, the way you think. Is there any other advice, encouragement, inspiration, maybe you want to give to our viewers about entrepreneurship or specifically about ADUs? Like I want to open the floor up to you to really just inspire people if there’s something that’s on your mind.
Mark Doty (19:09)
think overall, from an inspirational standpoint, there are people in the audience that are just scared to get started. And I think that’s the scariest thing. So I worked really hard to make it up to the income that I had at my job. And every year I was trying to make more money and getting more security, stability.I had a bunch of mouths to feed. I had like expensive lifestyle stuff. So I was, I was terrified to leave my job, but I think looking back on it, the thing that made me jump ship and decide to do it was that I would, I would always like live with that regret if I didn’t pull the trigger and jump. And let’s say everything went sideways and I couldn’t figure it out and I
crashed and burned. I could still go back to my job. I mean, I’ve got 15 years of corporate, excellent sales experience. Like what I was doing, and I would say to the listener,
what you’re doing now is your fallback plan. Like if you’re listening to this podcast, you’re already thinking about it. I mean, yeah, you have to do some preparation, but at the end of the day, I think living with the regret of not
going after something that you really want and believe you can do because you’re scared of leaving the job that you currently have, is just the wrong way to think about it. It’s more like you’ve got one life to live and if you always want to be an entrepreneur and go and flip houses or start your wholesaling business rather than work in a cubicle, I think that’s never gonna leave you unless you give it a shot.
And if you fail, you can go get…
go get the same job that have now. Most likely. I think the worst case scenario is really not that bad for anybody.
Quentin (21:02)
Yeah. Listen, man, I love it. Thank you so much. think I love what you’re saying. I love how you said what you’re doing right now. That’s the fallback plan. And I mean, you’ve been doing that for years now. Now it’s the time to take the leap. Like, what’s the next step? You already got the fallback plan in place. What’s the next step? And so I love everything that you said, man. Listen, Mr. Mark, before we wrap, if someone wanted to reach out to you, connect with you, collaborate with you, learn more about what you’re doing, what’s the best way for them to reach out to you, sir?Mark Doty (21:31)
Yeah, that’s great. I’ve got a Doty Capital. Doty Capital Group is my website. LinkedIn is probably the best way to find me. Mark Doty D-O-T-Y is my handle on LinkedIn. Connect there, send a message. There are generally two people that I’m looking for. So I come onto a podcast. Kind of like I like spreading the message that…your worst case scenario is really probably what you’re doing now. I think that’s a good message for people to hear. But then I’m looking for two groups of people. I’m looking for people who want to put money to work, be private and passive investors on projects like this in San Diego, which is not a huge group. It’s a kind of unusual model. And then the other group would be people who want to do projects like this and are looking to learn. There’s a
There’s a pathway for either one of those people in my business. Those are the people that I’m looking for in kind of putting the word out on podcasts like this one. But LinkedIn is probably the best way to make the initial connection and to figure out what kind of projects I’m doing and, you know, like what I’m all about.
Quentin (22:41)
Well, listen, there he is, Mr. Mark Doty sir. Thank you so much, man. Thank you for your time. Thank you for your story. Thank you for your perspective. It has really been great having you here and just the value that you’ve given our audience. I know it’s people really going to take a great deal away from this. So again, thank you so much,Mark Doty (22:59)
Great, yeah, thanks for having me on. I appreciate it.Quentin (23:01)
Absolutely. Well, listen, you all heard Mr. Mark, you got the value. Go ahead and subscribe. That way you can come in once the shows are live. I greatly appreciate you, Mr. Mark, and to everyone else, we will see you on the next time.
