How Smart Real Estate Investors Adapt in a Tough Market and Avoid Getting Exposed

Blake Ferguson (00:00)
Yeah, I remember every everybody was refining. Everybody was buying it up. People were selling for ridiculous amounts. It was it was a golden age, but you just knew it wouldn’t last. But you like you said, like the, the ones who know what they’re doing will adapt to any market no matter how soft it is.

Micah Johnson (00:00)
⁓ man.

Right. Right, man. it’s.

Hello everyone, welcome to the Real Estate Pros Podcast. I’m your host, Micah Johnson. And today I’m joined by Blake, who’s been making some serious moves in real estate investing now for the last 14 years. Blake, welcome in man, glad to have you.

Blake Ferguson (02:02)
Glad to be here, thanks for having me.

Micah Johnson (02:04)
Absolutely, man. Absolutely. I’m excited for our talk today. You’ve been doing real estate now since 2012. You’re in the Nashville area and you’re watching the market do some interesting things. I’m pumping at your perspective on what’s going on and how you are making sure you stay in business there. So for folks that are not familiar with you yet, man, tell us some more about yourself. What’s your main focus right now?

Blake Ferguson (02:18)
Yeah, definitely.

So right now my main focus is ⁓ long-term rental properties and flipping single-family homes. I got into business, like you said, about 14 years ago, kind of accidentally. I bought my first house, which was a double-wide trailer here in Nashville for 36K. So that was able to pay that off quickly. I lived there for five years, house hacked for a while, and then… ⁓

because I didn’t have a payment on this thing anymore. I was able to keep it and buy a new house. And then once I moved out of the place and rented it out fully, that’s when I realized there was something to this sole real estate thing. So I quit my job in the music industry here in Nashville, which is also a big thing. If y’all didn’t know, which you probably have. Yeah. Yeah. It is the thing. It goes, it goes, it goes.

Micah Johnson (02:53)
Thank you.

Mmm.

Right. Kind of like, it’s kind of like the thing. ⁓

Blake Ferguson (03:12)
Music and then real estate is right under it. And then everything else down here doesn’t matter. Maybe barbecue is a little higher, yeah. So yeah, then whiskey. Yes. Big time. Big time. so yeah, in 2020, um, I jumped full full time into property management. And then my focus at first was to solely burr, be R R R R. And I’m sure your audience.

Micah Johnson (03:15)
Right.

Maybe whiskey could be involved.

Right.

Blake Ferguson (03:39)
knows that that means it’s buy, renovate, rent, refinance, repeat. And that’s all I wanted to do. I didn’t have any interest in flipping. ⁓ but then that was back when rates were three, 4%. And so, ⁓ I was able to get a few, ⁓ few properties under my belt, my own personal portfolio. But then once rates jumped up and the prices here in Nashville skyrocketed, the numbers just didn’t make sense. So I was like,

Micah Johnson (03:47)
Gotcha.

Right.

Right.

Blake Ferguson (04:05)
All right, time to pivot. I’ve got like, you know, a nice little portfolio of long-term rentals here. It might be a while before I can, you know, collect others that are in the price range without going outside of Nashville. ⁓ so I, yeah, I try to stay where I am. I, I, I filled it with the idea of, know, maybe going a few hours distance.

Micah Johnson (04:20)
Right. Trying to stay where you are.

Blake Ferguson (04:29)
But I figured, you know, just try to keep it closer to home at this point. So I pivoted to flipping and that’s what I’ve been doing for the past couple of years.

Micah Johnson (04:32)
Right.

Nice. So in the flipping process, what do you find in that’s different from what you obviously the buying or a burring, you’re at least rehabbing it there, but what are you doing that’s different and the ultimate goal of it all? And what are you enjoying about that process?

Blake Ferguson (04:51)
Well, flipping it’s it’s you’re selling it. You’re not going to be renting it out. So the renovation is going to be slightly different. when you renovate a property that you intend to keep in rent, you’re probably not going to spend as much and go with the higher end, you know, fixtures and finishes as you would with a flip. So that’s, that’s the main difference is realizing this is going to be somebody else’s home. This isn’t going to be like a temporary place that they’re going to live for.

Micah Johnson (05:06)
Right.

Right.

Blake Ferguson (06:04)
two to four years and then move out. It’s going to be something they’re going to keep. you like attention to detail, making it a little bit higher quality and doing little things, just little things, know, you know, tile, do a unique tile on the fireplace or put in some built in shelves here and there, something you wouldn’t do with a rental property, you would with a flip, just to make it stand out.

Micah Johnson (06:07)
Exactly.

Now,

here’s a question for you. So you’re in Nashville for music. How much does doing the flipping part tap into those creative juices for you? Music folks, you all are creative, right? Like, is there a crossover?

Blake Ferguson (06:34)
it’s great. It’s great. Yeah, I love

it. Great. Yeah, because I’m, I’m a musician myself. That’s the reason I came to Nashville in the first place back, you know, when I graduated high school. And I and I still do that as a hobby. But being able to I love the process of like picking out flooring, picking out tile doing paint choices, like that stuff is that’s the funnest part for me.

Micah Johnson (06:43)
Right.

Blake Ferguson (06:55)
You know, I love I love the math part. I love the financing, finding the deals. That’s fun. But once actually doing the renovations and seeing your ideas and visions come to life, that’s way that’s I enjoy that the most for sure.

Micah Johnson (06:55)
Okay.

Right. It’s got to be like writing a song, kind of, right? It’s first paper, it’s words, it’s notes. And then all of sudden it’s this thing that is just beautiful and comes off natural.

Blake Ferguson (07:10)
It is. Yeah.

Yeah, the different rooms are like the different instruments. And it all comes together. I never thought of that analogy. Yeah.

Micah Johnson (07:19)
Right. Right. I love that man. It’s a great analogy.

Yeah, it’s it’s what it’s on the show. I get to talk. I like to find out about how people like what’s behind it. We all get all of a sudden get into real estate. It scratches some sort of itch for us. That’s why we stay in because it’s it’s simple. It’s not easy. There’s a lot of stuff that you just deal with in the industry and you got to have thick skin to deal with it. And it keeps most people out. But that’s when people like, how do you do it? It’s like, well, you don’t understand the itch it does for me.

Like you don’t understand what I get out of it. Does it pay the finances? Yes. But there’s this emotional paycheck you get from it where, hmm, this is the part that you really like. And I love that because for creative, yeah, but it really, if you’re creative and like creating, it’s an avenue where it can actually help you grow, right? They always talk about musicians, artists being poor. Like you don’t have to be, those skills that you have, they’re very useful for other things too.

Blake Ferguson (07:49)
Right.

Yeah, absolutely.

Micah Johnson (08:14)
You kind of open your mind up to it. It’s that same pattern happening.

Blake Ferguson (08:15)
Yeah.

And you can always do it. If it’s not paying the bills, then fine, you can pivot to something else, but that doesn’t mean you have to stop doing what you love. I still do it to that day. But real estate, I can be creative and it tends to pay the bills a little bit better than sitting on a stool down on Broadway playing the guitar with a hat in front of me with dollar bills in it from drunk people.

Micah Johnson (08:26)
Exactly.

Okay, I gotta just ask like, what’s it like from the stool? So I’ve seen people’s playing on the stool. I’ve never personally been there like, dude, what’s it like? Okay. ⁓

Blake Ferguson (08:47)
Depends on the crowd. Depends on the crowd.

You can have a great crowd. You can have a crowd of four or five people, but if they’re into it and they’re having a great time, it doesn’t matter. It’s almost like paying a… It’s like better that than playing a packed room with people who aren’t paying attention or just duds. So it’s all about the energy of the crowd. Yeah.

Micah Johnson (09:02)
Right. Okay. Okay. That’s

cool. Now do you got like a certain playlist you hit on the street? Like this is my street list or is it.

Blake Ferguson (09:12)
Yeah, just

all just nothing that anyone in Nashville wants to hear just like emo and pop punk from the 2000s. They’re like, well, he came here for George straight. What are you doing?

Micah Johnson (09:18)
I did.

We’re spicing it up. That’s what we’re doing. It’s the spice of life variety. It’s the spice of life. Didn’t you know? Come on, man. Try it out. Okay. I’m going to realist back to real estate. So let’s touch back to property management. That’s a pretty interesting one to choose, man. Not, everybody goes into that branch. What about that drew you in there?

Blake Ferguson (09:58)
Yeah, yeah, exactly.

No, it’s not.

I think because I had before I jumped in the real estate, I was managing my one rental property by myself. And it just it seemed it was just so simple. Like I maybe would get a call once every few months about something and it was just some little minor thing. I was just like, this is like great money for doing sitting around like doing nothing almost. Like I could handle you know, doing hunt like

hundreds of these at any time. And the property management that I work for, I’ve been with them for six years. They’re great. We’re really small boutique property management shop, investor owned and operated here in Nashville called Renew Real Estate. And, you know, if you set up systems, if you put systems in place and utilize software and technology, you can streamline property management so seamlessly and make it so easy to the point where you’re

Micah Johnson (11:03)
Mm.

Blake Ferguson (11:04)
almost, you you’re just sitting back and letting your systems do all the work for you, you know, tenants pay online, they put they submit work orders through a portal and it automatically goes to the vendor who needs it, you know, they have, they got a clogged toilet. That’s, that’s like the quintessential cliche thing that people don’t want to do in property management, I don’t want to unclog toilets. It’s like, I’m not unclogging any toilets. That’s not what I’m doing. You know, we’ve set up systems to where if somebody has a leak, or HVAC issue, they put it in

Micah Johnson (11:20)
Right.

Right.

Blake Ferguson (11:32)
the work order and it automatically gets sent to the technician, you know, and it’s just hands off and it’s just seamless and great.

Micah Johnson (11:38)
Yeah. Well, and that’s where it comes.

Property management has come such a long way in the past decade on the kind of systems that allow for that. Cause it makes it easier for the tenants too. Right. Having been a tenant in the past, I don’t want to talk to my landlord that much, right? I have no reason I reach out and do stuff. And usually when it is something’s going wrong. So when you can just log in and send it over, that’s simple. That’s simple to do.

Blake Ferguson (11:48)
Right. Yeah.

Mm-hmm.

Micah Johnson (12:00)
And it makes it like single family is one of the ones where you get enough and doing it yourself. You can get yourself pretty stressed out where the more simple you can really keep that. Cause it’s not everybody in one spot. You got a bunch of people all over that it really, really worked well for those folks that do that. It’s helping investors grow their portfolios in ways that they couldn’t before.

Blake Ferguson (12:14)
Yeah, scattered sight.

Yeah, absolutely. And investors turn to us for all kinds of like, advice and consultation, because we know what we’ve got hands on on the market at all times, we know what things are running for. We know what kind of tend like how the areas are going in the different pockets, different neighborhoods. So investors can really rely on us to give them up to date information on the market and where things are going so they can make their decisions accordingly.

Micah Johnson (12:50)
Hmm. Interesting, man. Well, I mean, Nashville, they’re one of the markets here the last year, year and a half, that’s kind of taken a little bit of a beating had a big run and now it’s lower. And so what are you, what’s it like being in a market that that’s happening where you’re having to work with landlords where it’s, don’t like hearing that rents going off the opposite direction of their favorite way of up.

Blake Ferguson (13:11)
Yeah.

Yeah. So that’s, that is a conversation that I’ve had with many, many investors the past year, two years or so since the market has softened up. you know, they’re used to their single family home, say back 2002, 2003, renting for say 2,500 a month. And now it sits on the market for a month, month and a half at two grand, you know, 500 less than what they were getting for

before. And so they’re calling us being like, what’s going on? Why aren’t you? Why? Why am I not getting these these prices that I was before? And we have to explain to them, you know, the market’s softening up, it’s going down. And that’s like a hard conversation you have to have because in real estate in general, over the years, everything goes up, prices go up, rent increases, if you look at the grand spectrum over many, many, years, it’s always going up. So a lot of investors have that mindset, like, how can I

Micah Johnson (13:55)
Right.

Blake Ferguson (14:03)
I bought this place thinking it was going to get 1600 a month. That’s what it was before. And now I’m losing money. My cash flows down or negative. And it’s having that those are tough conversations, but we always remind them like these are cycles. You can look at the past, this will come back up. It will. So hold on tight diamond hands to your property. Don’t get rid of it.

Micah Johnson (14:11)
Right. ⁓ yeah.

Right.

Right.

Blake Ferguson (15:10)
a lot of them they do they’re like they panic and they want to sell because you their margins are getting so small it’s like just hold on man just hold on this is a long game it’s the long game

Micah Johnson (15:10)
Right.

Right.

It’s a get rich, slow scheme. That’s how you got to think about it. It’s a, just play it out. does go up nationally. Right. Yeah. It’s, it’s fascinating because you’re right. The overall it’s always going up. It’s in those, the nuance of local markets. That’s where national statistics can be a little bit.

Blake Ferguson (15:23)
Yeah.

I wouldn’t call it a scheme. It’s just getting really slow. Schemes. Yeah.

Micah Johnson (15:41)
They can deceive you a little bit because it’s, different. Every market here. I’m Jack. I’m right under Jacksonville. Jacksonville is different. Tampa’s different. Orlando’s different. Daytona’s different. Like it’s all everywhere has their different little flavor. And that’s what those folks can go through is also, man, you’re feeling that squeeze, especially if you didn’t buy well, if you didn’t buy well, that can be hard. And it creates in real estate. You named it earlier in a prerecording. It’s the gap.

Blake Ferguson (15:53)
Right.

Micah Johnson (16:06)
When the gap gets made, especially between a seller or landlord and what’s possible, what’s where their mind and what’s really possible, especially when we’re going down, when we were going up so hard and heavy, the bigger that gap gets. Now the only thing that shrinks at his time, right now, they literally have to accept the fact that it’s just not going to do it. And it’s not anybody’s fault. It’s just what’s happening. We’re all at the same mercy of it. And

Blake Ferguson (16:18)
Yeah.

Yeah.

Micah Johnson (16:32)
That’s where I’ve seen some folks starting to get excited this year because folks are just used more used to the interest number now. Right. I was talking to a guy the other day investing since the 80s. He’s like, interest is cheap because it was 19 % when he got into it. Like he’s you’re talking about him about five, six percent. Get out of here, man. Don’t even talk to me about that. And it’s just like it’s fascinating because you have a perspective on it. And when they don’t know it doubled twice in the shortest time in history ever.

Blake Ferguson (16:40)
Mm-hmm.

Yeah.

Micah Johnson (17:00)
Like we all did live through something no one’s ever seen before. That’s for sure. We’re just seeing people get used to it. what that’s such buyer sentiment and seller sentiment has way bigger of an effect than people realize. Cause it’s literally what you think. It’s what they think is happening is going to determine their decision. And when they’re using information, determining like non-realistic things, that’s where these conversations happen. Where it’s like, look, man,

Blake Ferguson (17:04)
Yeah, I was unprecedented.

Yeah.

Micah Johnson (17:26)
trying to just show you there’s this gap. You’re here. This is where it really is. It’s not me. I’m not out there trying to rent it for less brother. I promise. ⁓

Blake Ferguson (17:32)
Yeah.

Yeah, hey,

when we make you make money, we make money. You know, in all fairness, the guy from the 80s when it was 19%, like that’s probably when houses were like $4, you know. So there’s that there’s that problem, you know, if you don’t mind the higher interest if prices are down, because you can you can. It was yeah.

Micah Johnson (17:40)
Right, right.

true. True.

Right. Right. Yeah. Dollars worth a lot more back then. Um,

Oh, it’s, it’s interesting though, man. Cause it’s really, truly perception because the best do their best in markets like these. That’s what I’ve seen time and time again, folks who are really good at it. They shine now it gets rid of the riff raff. Like if you’re not good at it, yeah. If you bought poorly, you’re going to get exposed. Like this is where your whole business gets exposed. The 20 to 23.

Blake Ferguson (18:08)
Yeah.

Yeah, you gotta adapt.

Yeah.

Micah Johnson (18:23)
Everybody thought they were a genius man. I CEO things easy. Look how awesome and cool I am. And then whoop, the market cycle hits and it’s like, I never thought of any of that.

Blake Ferguson (18:31)
I saw it.

Yeah.

Yeah, I remember every everybody was refining. Everybody was buying it up. People were selling for ridiculous amounts. It was it was a golden age, but you just knew it wouldn’t last. But you like you said, like the, the ones who know what they’re doing will adapt to any market no matter how soft it is.

Micah Johnson (18:36)
⁓ man.

Right. Right, man. it’s.

If you want to be here, you’ll stay. And that that’s the reality. Like you, it’s not a bet. That’s what it does. It really gets rid of the hobbyists. That’s what a hard market does because you don’t want to do the marketing and the work. And cause you do, you got to dig deeper. You got to get, you got to get better across the board. Your whole team has to get better. Like there can be, you got to identify every gap in your business because that’s just what it takes. And if you don’t want to, okay. Real estate don’t care. It’ll just keep on going.

Blake Ferguson (18:56)
Yeah, yeah, and we saw a lot of people drop out.

Mm-hmm.

No,

no, it will. It really will.

Micah Johnson (19:25)
See at the next high market

if that’s how you want to do it. But those of us that are in it, you’ve said it before me, it’s a cycle. We’re all, and it’s been going on for over a hundred years. Like we are all just like getting in a river that’s flowing y’all. And it’s been doing this certain thing. We just don’t know which events cause, we know they’ll happen. We don’t know what they are. That’s just the thing. And they happen about every so often. And okay, deal. How do we deal with this? What are we doing? Like if that’s your mindset, you’ll make it through all of them. Cause that’s just.

Blake Ferguson (19:37)
Mm-hmm.

Mm-hmm.

Micah Johnson (19:53)
If you’re truly playing the long game, that’s then you’re playing the long game. You, you, don’t care about that part.

Blake Ferguson (19:58)
Yeah, well, there’s there’s just so many,

there’s so many directions you can pivot to. ⁓ In real estate, there’s so many avenues you can take, it’s not it’s not so narrow, there’s so many things you can go to.

Micah Johnson (20:03)
Right. Right.

No.

Yeah. It’s a huge umbrella and you rarely do the thing you got in doing the whole time. Very rarely. Most folks are graduating up to different assets, different things. So it’s just like, get in, get going, get in the water. Don’t hold onto the shore all the time. Feel like you’re drowning, like get in the flow, man. Go with it and then see, okay, this is where I want to be. This is what I want to do.

Blake Ferguson (20:18)
Yeah.

Micah Johnson (20:32)
Cause it is, that’s what I love about it. It’s huge. It’s a huge industry. If you understand it and you just get, you just find your niche and then all of sudden you’re there in that sweet spot, man, just killing it.

Blake Ferguson (20:40)
Mm-hmm.

Yeah, absolutely.

Micah Johnson (20:44)
Well, Blake, man, I really appreciate your time today. I really enjoy conversations like these. So for folks that are listening in that are around that Nashville area that want to learn more about the market, learn more about your company, what’s the best way for them to find you?

Blake Ferguson (20:55)
So ⁓ the company that I work for is called Renew Real Estate. do property management, long-term rental properties. You can find us on Instagram, you know, at Renew TN. We’re also on Facebook, heavily on Facebook. same thing, Renew Real Estate Services. Me personally, my Instagram is Blake underscore Ferguson. If you’re if you’re just getting started in the Nashville area or surrounding areas and you

want some resources as far as you know, advice on what markets, vendors, contractors, hard money, financiers, I know, I know all of them, I know a ton of them, I have a lot of resources. So I can definitely help you out and I’d be happy to do so.

Micah Johnson (21:32)
Love that man. Appreciate that. So there, if you’re out there and you’re in the area he’s talking about, y’all know it real estate’s a team sport. If you can talk with someone that has access to the people you need to have in your tool belt to do this industry, well take advantage of that. Like man, thanks for sharing those. Y’all check the show notes. We’ll have all of Blake’s links there for you to reach out to them. Again, man, thanks for being with me today. Appreciate you being here. Absolutely man. And for those of you listening and watching out there,

Blake Ferguson (21:40)
Yeah.

Thanks Micah, enjoyed it. Appreciate it.

Micah Johnson (22:00)
Thank you for being here. If you got value out of today’s episode, please like this episode, share it with someone else you think get value out of it. And if you’re not a subscriber yet, you know what to do. Click that button, follow along. We got more conversations coming up with operators, like people out there building a real business in the industry. Thanks for being with us. We’ll see you on the next episode.

Blake Ferguson (22:20)
Thanks, Micah.