How Smart Real Estate Investors Avoid Bad Deals, Bad Numbers, and Costly Mistakes

RJ Avery (00:00)
if it feels scammy, it seems scammy, it’s probably scammy. You know what mean? It most likely is. That’s the thing. There’s no such thing as a shortcut in this business realistically.

Scott Bursey (00:07)
understood.

Welcome back to the Real Estate Pros podcast. I’m your host, Scott Bursey. And today we’re talking about market agility and growth strategy with a top tier industry leader. I’m thrilled to welcome RJ Avery, the head of Flex Group Real Estate to the podcast. RJ, thanks for being with us.

RJ Avery (02:05)
Yeah Scott, appreciate you having me on. Happy to talk about whatever we’re going to talk about today. The Improfessional.

Scott Bursey (02:09)
Yes, it’s just

a pleasure to have you on. For those of our listeners who may not be familiar with your world, please tell us how did your career begin and where are you now?

RJ Avery (02:23)
⁓ well, I got into the real estate industry, ⁓ basically in 2008, right after the largest financial crisis in modern history, I guess. longest story short, the reason I got into it was I was always in the service industry outside of college and through college and ended up staying in it during college. ⁓ was blessed to become a father back in 2007. And at that time I was working at a small East Dallas Italian restaurant and I had a

real estate broker and his buddy would come in every three times a week in that little down period between two to five. And ⁓ I learned, I kind of got to know him. And then once I was going to become a father, started talking to him about, hey, don’t, really want to be in the service industry anymore because in my mind, you know, the hours and blah, blah, blah, and family life, he suggested getting a real estate license. Ultimately I did. Like I said, literally came in with my license passed and Bear Stearns was collapsing. ⁓

So needless to say, I’ve got a crash course on how housing actually works. All the stuff that you saw in the movie, the big short, I kind of learned about all that stuff on the fly through dealing with like my first listing appointment was a, you know, a welder and his wife and their house payment went from $700 a month to 900 to 1200 to 1800 and then capped at 2,600 a month within like five months because of that adjustable rate.

stuff and ultimately saw an opportunity and saw the reality was that like a lot of the agents around me for lack of a better word were dinosaurs. They didn’t know how to use websites. They didn’t know how to use a camera. You know, I knew how to do all of these things and I made a decision very quickly to go work for a smaller name broker that you know, nobody would know as a buddy of mine who actually dropped out of college and became an agent years prior and

went on with this 1 % basically what they call, what I would call commission negotiable, but the industry, because they would like to deride the services that I do, would call me discount real estate. Generally just saying that I charge 1 % to list a house on the market for sale instead of what most people would charge, which would be 3%. And using that model, by 2012 in my market here in Forney, I was the top selling real estate agent for at least three or four years there. ⁓

And it was really just through that, just through offering a better deal and answering my phone and showing up to collect the business. There was no magic to it, just that.

Scott Bursey (05:51)
That’s quite a journey from an eatery to a top tier industry leader. That’s awesome. Let’s jump right in. Given the current interest rate environment, what’s the single most effective strategy investors should focus on right now in your mind, RJ?

RJ Avery (06:12)
Well, investors, know, investing in real estate is something that I do not think is for the weak. ⁓ It’s ⁓ social media, TikTok culture, I think has made investment this hustle culture idea ⁓ has made it seem easier and has probably brought a lot of people into the fold that maybe shouldn’t even really being investing. You know, a lot of the people I know that have been successful real estate investors.

it’s a long-term situation. You’re typically willing to buy homes and sit on them for five to 10 to 20 years to really reap the true benefits of actually being a real estate investor. ⁓ When I came into the industry in 07, on the back of the financial collapse, a lot of people got caught with their pants down on flips. ⁓ And I think we’re kind of starting to see a similar thing right now ⁓ just because

with flipping you have to be very careful and do your numbers and never trust the wholesaler. I would just say that. Never trust numbers given to you by somebody else. Always run numbers yourself. Always check comps yourself. View the property yourself. Always as an investor, especially if you’re gonna be doing a flip, make sure you really do your math because that’s where I’ve seen so many people caught off guard.

Recently, with the amount of people investing and trying to own rentals, especially here in North Texas, ⁓ in the new construction area specifically, you you’ve seen people, I don’t know who’s telling people that these houses will rent for what they’ll rent for, but they call me because they need property management. And I have to be the one to break the bad news that, well, I’m sorry, I don’t, if your brother or cousin’s mother told you that this is going to rent for 2,700.

There’s no possible way. You we’re only going to get 22, 2300 for it. ⁓ So I would say, you know, I don’t, it’s not about being skeptical or being pessimistic, but it is about being skeptical and asking questions. And, know, when it comes to being an actual end investor with a person with the money, who’s putting your money down, you know, be very, very skeptical of the data you’re given by other people. If somebody says, this house is a hundred thousand dollars.

The remodel’s 40, the ARV’s 280. Look into it because that’s the thing for investment. It’s not, it’s buyer beware and definitely do your homework because it’s not a part-time job.

Scott Bursey (08:53)
The there is do your due diligence. that’s a powerful shift in perspective, RJ, curious. Flex group real estate is clearly in a growth phase. What’s the biggest internal lesson you’ve learned about successfully scaling a brokerage team?

RJ Avery (08:59)
Mm-hmm.

Yes sir.

well, it’s that real estate attracts people who are both amazing and also just delusional. ⁓ you know, people that, you know, the numbers are the numbers. The 70 % of people who get their license don’t renew the second, you know, at the two year mark. And then by five years, another 90 % of people are gone out of the, from having a license.

Now a lot of people those end up in real estate adjacent areas, end up at builders, they end up at title companies. ⁓ But yeah, I mean, that’s really it is just that holding people accountable and realizing that number one, the good agents are going to be the ones you don’t have to hold accountable.

The ones that you, you know, that’s why I was able to succeed in this industry is because I’m not afraid of making a mistake. ⁓

inaction is a mistake, not doing something is a mistake, not trying is a mistake. ⁓ You know, and that’s the biggest problem I’ve seen, especially these younger generation. I think they’re much more, you know, social media and the way that people interact with social media and everything has changed a lot of how we, ⁓ I guess, process self-awareness and also makes people much ⁓ more concerned with failure. And I think that can be a

a detriment to anybody who wants to succeed. Because yeah, as we grow this company, like I said, with agents specifically, it’s just been, it’s hard to tell. It’s hard to tell a person if they’re, if they’re, if they’re really, if they’re really all in, you know, the biggest reason I’ve had agents fail is because, you know, you text them and say, Hey, it’s Saturday afternoon. I got a call. This person wants to see this house in a few hours. Oh, well, I love.

I I mean, that’s, you know, I hate to say it and you know, and this is sad but true and I don’t think it’s the only reason. But you know, the reason the mother of my first child and myself didn’t work out is that she did not understand the reality of being a self-employed, you know, for a lot. I tried to explain it this way way back then. was like, it’s kind of like being a drug dealer. Like you have to go. You just have to go. When the phone rings, the job calls, you go.

You know, it’s not, it’s sometimes it’s going to waste your time, but you got to keep learning the numbers, keep figuring out how to answer the calls, qualify the clients before you waste time. But you have to be able to go and you know, there’s no, there’s no time for excuses at the end of the day. It’s just you constant action learning.

Scott Bursey (12:35)
Absolutely. When that phone rings,

yeah, it sounds to me like, you know, when somebody needs you, you need to pounce on that opportunity and capitalize on that opportunity, no matter when it is. Absolutely. That’s essential advice, RJ. And…

We’re seeing mixed signals in the commercial versus residential markets right now. Where do you see the best untapped opportunities for mid-size investors in, let’s say, the next 12 months?

RJ Avery (13:08)
I’d be looking anywhere. Any, any, well, Texas is really what I know. I can’t really speak to much more than that. any of these cities, commerce comes to mind, Stephenville. And the reason I say this is commerce is where Texas A commerce is. They just moved up to division one school from division two, about four or five years ago. ⁓

So in Stephenville is where Tarleton is there’s smaller kind of boutique school But they’re headed that direction in my opinion over the next 10 to 15 years any of small college towns across Texas Where the college has been for you know 40 50 60 years. It’s established Abilene is another one Lubbock These small areas. I think are probably your best bet right now as far as getting something

at a reasonable price that can actually possibly cash flow still or at the very much break even and does have an upswing potential because of the fact that these areas are going to continue to grow because of the college. You know, as far as like the major Metroplex is, if you’ve got big money, know, multifamily is definitely still the place to go. If you’re looking to, if you can park money for minimum five years, you know, ideally.

10 to 20 years. If you can park money in some of those places, Austin, Dallas, of course, multi-family four plus unit units, as well as, know, same thing outside when it comes to like outside of the Metroplex is outside of Dallas. Towns like Princeton. I’m in forning. We’re kind of already growing. This is, you know, this is huge already now. But Will’s Point is 35 miles east of us.

It’s basically the same town I grew up in here 40 years or 30 years ago. It’s still very small These are kind of still in my opinion the places that you could get the most bang for your buck long term ⁓ You know

Scott Bursey (15:19)
Makes a lot

of sense. Are you focusing ⁓ on North Texas or do you go as far as Austin?

RJ Avery (16:07)
I have agents in Austin. So ⁓ yeah, I do have agents down there. I’ve got seven agents total right now. Most of them are actually kind of more towards East Texas. ⁓ But I’ve got one very good motivated Austin agent that can handle quite a bit. and obviously I go down there and I help him take pictures and do marketing. ⁓ You know, I drive a hybrid for obvious reasons for the amount of mileage we do. ⁓

Scott Bursey (16:11)
Okay.

RJ Avery (16:35)
No fancy Mercedes or Topo. I’ve got a small little Kia Niro that gets me done. But yeah, I will theoretically I’ll list a house anywhere in the state of Texas just because as long as it makes sense.

Scott Bursey (16:36)
understood.

Okay. Okay.

Okay. Awesome. And ⁓ walk us through this if you would RJ. What one technology or platform do you feel is truly revolutionizing how real estate transactions are handled right now?

RJ Avery (17:11)
Well, I mean, think the biggest change in all was just the fact I think the general public and agents, everybody just the fact that the real estate database coming online on realtor.com circa 1999 was really the biggest. That was the watershed moment in my opinion, because

What people don’t realize, and I think that the National Association of Realtors made a lot of missteps when it comes to representing us, the realtors, which are supposed to be the members and the people, obviously the things there for the general public to be helpful. ⁓ But when they syndicated all of our data and put it in one place for everybody to see, ⁓ that changed everything. Now, subsequently positive stuff, I would say is just auto-document signing.

I I think that the dot loop docu-sign thing, you like I said, I started in 07, 08. Some of my first contracts were on a fax machine. By 2012, I basically had a paperless office, you know, where everything was done via dot loop or via my iPad. I could have people sign it. I think that’s been one of the most revolutionary things for us as agents and one of the most time-saving things, you know, because…

Now, instead of having to literally drive over to somebody’s house to get initials and signatures, it’s just an email. and I mean, you’re talking hours and hours and hours of time, but that is safe. So I think that’s the one actual technology that’s truly revolutionized the way real estate gets done for us as agents and has helped us ⁓ be more productive and save more time and let us be home for dinner more often ⁓ than anything else right now. You know, I mean, there’s all kinds of

and bells and photography, all this stuff. But the reality is, my opinion, the house is in a great location and it’s priced right. I could put the pictures of the wrong house up. ⁓ It’s going to sell. You know what mean? Like somebody just go up and see.

Scott Bursey (19:19)
An iPad, a key

tool for efficiency. Absolutely. Yes. RJ, if you could give a new investor starting today only one piece of non-negotiable advice, what would that be?

RJ Avery (19:38)
Uhhh… I mean, I-

mean, that’s a tough one. It just depends on where they start, how much money you have and all that stuff. I mean, if you’re starting with a large amount of money, if you’re starting with a large amount of money, just be careful. You know, be careful. Like, do your homework. You say it goes back to due diligence. Always believe the numbers. You know, always believe what you can see on paper that actually is comparable. You know, be careful of people that are trying to sell you.

Scott Bursey (19:45)
Right.

RJ Avery (20:11)
success, if that makes sense, like without work. If they’re trying to tell you that this is easy, no problem. This is like, you know, I see it right now with the subject two or the sub two things and the people trying to do all these kinds of deals, which I think could end up being a nightmare down the road for a lot of people. but it’s just like, this is easy. You can go on Zillow and find a free house and you can do this. And it’s just that.

You know,

if it feels scammy, it seems scammy, it’s probably scammy. You know what mean? It most likely is. That’s the thing. There’s no such thing as a shortcut in this business realistically.

Scott Bursey (20:47)
understood.

Follow your gut.

RJ Avery (20:53)
Unless

you’ve got a government contract of some sort.

Scott Bursey (20:56)
Right. Let me

ask you this. Where do you feel the vision for the Flex Group is headed? Or what type of vision do you have? Let’s put it that way, down the road. Let’s talk long term. This is a long game. You’re in it for the long haul. What’s the vision for the long game?

RJ Avery (21:16)
Um, I definitely like to attract some younger motivated agents over the next two or three years to understand the value of being commissioned, no, go shabal in real estate and realize that you don’t have to work for one these big brokers to make the money. The numbers are that realistically you go work with one of these big brokers. You’re probably not going to make the cut anyway in the long run. Um, but that if you are passionate about actually helping and working people that

I guess the biggest thing is to me, because so many people in our business get stuck on a percentage, right? They get stuck on this one number that it has to be and everything is this and I don’t do anything less than that. And I’m just of the opinion that you don’t have to hit a home run with every client. ⁓ not every client needs a home run. You know, if a client is, for instance, just recently had this happen.

you know, folks were selling their house or one, they bought a house from me. They went, they they they wanted to buy a house before they sold, which is great. I mean, that’s the, for us and everybody involved because you don’t have to worry about contingencies, all the headaches of the logistics. Um, so went and bought them the house and then we’d go to sell their house and I was going to listen on the market for my general 1 % like I’d always would. Well, they called me and said, Hey, you know, we talked to the neighbor, they want to buy it. Okay, great.

So I talked to the neighbor and I did all the processing for a thousand dollars instead of just doing one percent. And it went lower on them just because to me, being negotiable like that and showing people that you’re truly going to work with them is what’s going to build loyalty and have them actually talk about you and share your name ⁓ instead of it having to revolve around ⁓ your personality, I guess, if that makes sense, and trying to be friends with everybody.

Scott Bursey (23:08)
Yes.

RJ Avery (23:10)
Cause that’s the thing is I don’t think everybody wants to be friends with their real estate agent. You know what I mean? I don’t or their doctor or you know what I mean? It’s, it’s great. Let’s be friendly. Let’s be cordial. Let’s get to know each other. Let’s be genuine. But I think there is an element in this business of people who are not any of those things and they act like that just because they want to get business. And I think there’s a much better way to do it. If I could find two or three younger agents who are driven, ⁓

Scott Bursey (23:13)
you

RJ Avery (23:40)
you know, the sky’s the limit. cause I was able to go from doing nothing by my fourth year selling 40 houses, by my fifth year selling almost a hundred houses. ⁓ And that’s all just through, in my opinion, like I said, being negotiable, showing up and doing the right thing by people. And I think there’s just going to be more and more of a market for that as we continue to move forward. So hopefully just to capitalize on that.

Scott Bursey (24:05)
Excellent, excellent advice. Absolutely. And RJ, if our listeners would like to follow your journey or to collaborate with you, what’s the best way for them to reach you?

RJ Avery (24:17)
We can go on flex group real estate comm obviously that goes directly to me pretty much everything on there goes to me Facebook you can look me up RJ Avery or flex group real estate TikTok I have captain save some dough is my handle on there And that’s kind of where I do actually that’s the only one I really use right now just kind of Blurbs, it’s not obviously not super produced or anything

⁓ But that’s probably the main ones like TikTok @CaptainSaveSomeDough or Flex Group Real Estate either or and then Facebook, RJ Avery or just flexgrouprealestate.com.

Scott Bursey (24:57)
Captain save some dough. I love it. RJ, this has been more than a pleasure. It’s been an honor to have you on the show. Thank you for joining us today.

RJ Avery (25:06)
Is it?

Yeah, I appreciate it Scott. Thanks for your time.

Scott Bursey (25:14)
And for our listeners, we appreciate you. If you receive value from today’s episode, please subscribe. We have more conversations coming up with operators just like RJ. Until next time, guys, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.