Kelly Cook on Flips, Rentals, and Building Cash Flow in Any Market

Kelly Cook (00:00)
I’m sitting around unemployed fast forward to January unemployed time figure out what I’m gonna do with my life I’m not sure yet and this guy walks in the door my sister’s house and

this guy goes you know hey I’m the landlord I’m gonna change the air filters I’m like oh okay so you own this house he’s like yeah

I go right on, is that what you do? He goes, well, I also am a real estate agent. And I go, what is that? No clue, right? At this point, I’m 24 years old, And I, no clue,

And he’s like, this is what I do. I help people buy homes and whatever, right? And sell homes. And I’m like, oh wow, okay, sounds interesting.

He goes, I go, yeah, do you like it? He goes, oh man, it has its days, but I like it a lot. And the main reason why is because of the of money I can make. And I go.

kind of money can you make?

And he goes, dude, last month I made $25,000.

I helped five people close transactions. I made about 5,000 each and made 25 grand. I’m like, what? I go, and what do I do? And he’s like, go sign up at a school and get a license. And I’m like, OK.

Dylan Silver (02:29)
Hey folks, welcome back to the show. Today’s guest is a Scottsdale based realtor who also manages a portfolio of rental properties. Please welcome Kelly Cook. Kelly, welcome to the show.

Kelly Cook (02:42)
What’s up Dylan, how you doing man?

Dylan Silver (02:43)
Man, I’m doing great. And I said right before we hopped on here, said, this is someone who’s definitely done a podcast or two. Because look at the studio that you’re in. You got the lighting, you got the mic. Looks like you’ve done a handful of these before.

Kelly Cook (02:45)
You

Yes, have my own podcast as well and totally enjoy just dropping knowledge, man, and having a good city on the background.

Dylan Silver (03:03)
I always like to start off at the top, Kelly, by asking folks how they got into the real estate space.

Kelly Cook (03:09)
Um, man, good question. Um, I was coaching football, uh, at old miss university in sec. And, uh, you know, I was, I was, uh, did it for two years. I was actually coaching Nebraska year before and head coach got fired and people don’t realize that when head coach is fired, we’re all fired. They might keep one guy, one coach, you know, for transitional purposes, new head coach has his own people that have been in Nebraska. Then I had to get in, get on at Ole Miss, um, or anywhere. And Ole Miss was one of seven.

universities at the time that had a graduate assistant role, which is just like any other coach, but you get paid peanuts. and I got on at Ole Miss. It was great. you know, new head coach had seven straight winning seasons and the SEC conference with no facilities. had a big development project underway and, we lost Eli Manning, who was a, obviously a hall of fame quarterback, probably in the future here. And, ⁓ we go four and seven, they fired him. Couldn’t believe it. So this is my second year in.

Dylan Silver (03:56)
Yeah.

Kelly Cook (04:01)
two firings and I’m like, you know, in most professions, if you chose to work 95 hours a week, you’d probably be pretty successful in that one. You get canned for it. So I was like, you know, I don’t know what I want to do. Um, so what I, what I determined I do is I take a year off and see if I really, how much I really miss coaching. So, um, I, I just packed my stuff up, which wasn’t much often in one car and I drove to Phoenix, Arizona, Scottsdale, Arizona, where my, my sister was living at the time. And she said, Hey, you know, I had two choices. I can go back to Omaha, where I was from.

Dylan Silver (04:01)
Yeah.

Kelly Cook (04:30)
And I could live on one of my parents couches because they were divorced since I was real little and they each had a one bedroom apartment and I could live on a couch or I could drive out to Scottsdale, Arizona. Sounds pretty nice and and live in my own bedroom, bedroom for free, right? A four bedroom house. Sister was married at the time. And so I’m like, you know what? That sounds like a better plan. So I roll out to defeat the Scots on right before Christmas here in 2004 and got a Christmas tree in a in a

sleeveless t-shirt right because it’s beautiful it’s like 72 degrees in a Christmas tree yeah yeah and I’m sitting around unemployed fast forward to January unemployed time figure out what I’m gonna do with my life I’m not sure yet and this guy walks in the door my sister’s house and you know it’s like a Tuesday like two o’clock in the afternoon right I’m the only one in the house because of course they’re there at work I’m unemployed and this guy goes you know hey I’m the landlord I’m gonna change the air filters I’m like oh okay so you own this house he’s like yeah

Dylan Silver (05:50)
It’s nice out there.

Kelly Cook (06:15)
I go right on, is that what you do? He goes, well, I also am a real estate agent. And I go, what is that? No clue, right? At this point, I’m 24 years old, And I, no clue, 25 years old. And he’s like, this is what I do. I help people buy homes and whatever, right? And sell homes. And I’m like, oh wow, okay, sounds interesting. He goes, I go, yeah, do you like it? He goes, oh man, it has its days, but I like it a lot. And the main reason why is because of the of money I can make. And I go.

my eyes lit up. I’m like, kind of money can you make? Because mind you, when I was a graduate assistant in Old Miss, Nebraska, I was average making $800 a month, a month, working 95 hours a week. And the NCAA can get away with that because they’re giving you free graduate credit. So you’re not like, you’re not a regular W-2 employee, if you will. anyway, I go, how much? And he goes, dude, last month I made $25,000.

Dylan Silver (06:50)
⁓ my gosh.

Yeah.

Kelly Cook (07:06)
And I go, wait, you mean like last year you made 25,000? Because how I grew up, dude, if one of my parents made 25,000 a year, that was a phenomenal year. And yeah, and he goes, no, last month I helped five people close transactions. I made about 5,000 each and made 25 grand. I’m like, what? I go, and what do I do? And he’s like, go sign up at a school and get a license. And I’m like, OK.

Dylan Silver (07:09)
Yeah.

I’m gonna hear, yeah.

Kelly Cook (07:30)
So like this is five, man. There’s no YouTube. There’s no Zillow. There’s nothing right. So I he leaves and I go right to the desktop, you know, computer that had a tube on it. You know, the big old back of it, right? The same. It’s no flat screen. And I think Google was around, but it probably wasn’t a publicly traded company yet. So I’m searching like, you know, real estate school and I found it and signed up and the rest. I borrowed money from my sister actually because I didn’t have any. And the rest is history, man. The rest is history.

Dylan Silver (07:41)
Thank

God bless her, right? God bless

sister of her. Bringing you to Scottsdale and then also the real estate. Is she an investor?

Kelly Cook (08:00)
She’s not, I’ve been trying for years to get her to do it. She just, you know, she understands it.

Dylan Silver (08:05)
Well, know what

she invests vicariously, you she invested in you in a way she gave you a effectively ⁓ a tuition loan.

Kelly Cook (08:13)
She did. No

doubt, man. No doubt. And she’s actually in commercial real estate of all things, but she just never really gotten to the investing side. I, you know, but yes, vicariously.

Dylan Silver (08:22)
You know, I think it’s interesting hearing these stories because we talk about, you know, how people get into the business. And for me, it was similar thing. So I was working a lot of hours. I worked for Nissan. I worked for Dodge Chrysler, Jeep, Ram, Stellantis. And I made decent money, but I was thinking like, man, I literally do not have any time or even energy. I forget time, but just I’m living here to work. What’s the solution? Kind of seeing people who are

you know, 20, 30 years ahead of me and like, do I want to swap my existence with theirs? I’m not sure. How do I, what do I do? And I think a lot of people do this. They’ll Google it and real estate seemed like the thing to do. And so started for me with wholesaling. I did wholesale for two years. Finally felt like I got to a point where I needed to have a real estate license. And now that’s still the vertical that I play in the stress real estate. And I love talking with investors.

Walk me through the investing journey, because I think a lot of people when they go into real estate as a realtor, it’s not always a natural transition to then become an investor themselves.

Kelly Cook (10:01)
Yeah, no, I read this book. There’s a lot of good books out there, but there’s a book that a lot of people don’t talk much about, but it’s called Creating Wealth by Robert G. Allen. And I read this book, and by the way, that was a ⁓ Domino. The first Domino was my buddy’s in college, my buddy’s mom. I was at his house, wherever he’s from, visiting, and she gave me this book called Rich Dad Poor Dad. Everyone knows that one.

And I read this book and I was like probably 21, 20 at the time. In college, I’m sitting there going, this is straight fire. I didn’t know any of this stuff. None of it. Wasn’t taught any of this stuff growing up. so I’m like, is wow. So I’m like, I’m getting into it. And then all of a I get this Robert G. Allen book. And effectively, what he says on this deal is that he says, he made a whole case study in his book where if you were to buy,

let’s see if I don’t mess this up. If you were to buy a bunch of $100,000 homes, now this is back in the late 90s or whatever, right? Or even before then. But if you were to buy a bunch of $100,000 single family homes, so let’s say you bought two a year, okay? So you saved, did what you had to do to get two a year. At the end of 10 years, you’re have 20 homes. Well, then he made a case for the fact that the first 10 homes that you bought in the first five years, by the end of the 10th year, would basically have appreciated as such to where

You could sell half of your portfolio than a 10 years, sell 10 homes for the appreciation number he gave, which wasn’t crazy. He was just very conservative. And that equity that you were to receive from selling the first 10 homes you bought would pay for all the mortgages of your final 10 homes. And therefore in 10 years, you would have a portfolio or net worth of 10 homes.

each 100 some thousand dollars at this point, all paid off free and clear. And let’s say they didn’t even appreciate. He goes, if you want to make a million dollars in real estate in 10 years, this is how you do it. And of course, from there, we all know it’s going to appreciate. That’s just what happens in real estate. And I’m sitting there reading that book going, hold on. So if I just, what if I, what if I just didn’t do half that? What if I just bought one a year? I could figure that out. Cause you know, two was like, Oh, I don’t know if I can do it. Right. But, like, and, and it’s so true. And that was the, that was the hare versus the tortoise. That was the mentality I got.

Way back when I was like, wow, okay, all I gotta do is figure out a way to get one. And I got my first one by talking to my stepdad about it at the time. And my stepdad, he had some knowledge of investing. He was like an investor himself and not that big, maybe two houses, something like that. And he gave me a loan for the 80-20. He was the 20 % down for me. So I had paid him back on a side loan that the bank never knew about. he co-signed for, basically I co-signed with him for the 80 % loan.

And that’s how I started and I rented out the first house to my college roommates.

Dylan Silver (12:42)
Now you had a patient approach, right? So you mentioned one a year, two maybe, right? At any point in time did you have this kind of thought, hey, I’m just gonna ramp it up, I’m gonna do a bunch, or was there always, you I’m gonna be patient with it, I’m gonna do, and I’m gonna be patient?

Kelly Cook (12:55)
Yeah, there was. There definitely was, because I’m a high D and I got to go fast, right? There definitely was. But then it took, it’s weird how like something you can learn so quickly now, but even then, because the internet podcast, et cetera, like this one, you can learn something very, quickly now. But even then you still have to execute on it. And a of people don’t execute on things they learn. It takes them a long time. It’s that old saying of, and so true, one of my favorite sayings, and I don’t want to get this wrong, backwards, but like the student appears, the teacher appears when the student is ready.

The teacher appears when the student is ready, right? And if you’re not ready to receive it, you just want to execute. might hear it and say, that’s a great idea, but you won’t execute it. You gotta be ready to receive it. And so if I’d have known about more creative finance and distressed properties, I didn’t know anything about that. I didn’t read books on that. I didn’t know anything about that. I just was like, find a house on market somewhere and then go buy it then hold it and let time do the work. yeah, think I would have now.

I’ve lost some of my, in my career too. think anybody who does a decent amount of volume at any level is going to have some, stories about losing. And if, and if you don’t, you probably didn’t, you’re probably not doing enough volume. Right. So, um, I have done a couple of syndications, not to fast forward the same too much, but a couple of syndications. I’m still in, um, a couple, but I’ve lost on a couple that actually went completely sideways. I mean, foreclosed, right. And I always thought, because I came out as a real estate sales agent, I went through, I licensed an Oh five. I went through the great recession.

I saw what happened with single pay. mean, everybody losing their houses, right? And my thought process and its indication here recently was, well, you know, if it’s a 200 unit apartment complex, certainly the bank doesn’t want to take that back. Who wants that headache, right? All those doors. So they’ll, they’ll work with, if something happens, they’ll work with the operators and they’ll, they’ll restructure the financing, the debt somehow. That’s what I’m saying. And, unfortunately, one of these, just didn’t, but it said, Nope, we’re taking it back. And so when that happens, all the limited partners poof.

Money’s gone.

Dylan Silver (15:21)
Yeah, it’s a challenging thing. I’ve thought often about raising capital and this type of thing. And I had a syndication attorney on the show. And you mentioned syndications. It’s tricky. It’s tricky. And the attorney actually told me, he said, Dylan, you’d honestly be better off going.

you know, capital partners route than syndication, because with syndication, now you’re exposed to securities law. So he’s like, if you if you make any slight misstep, it’s a big risk to you. And so I said, OK, well, let me take a look at a different strategy. I’m curious at pivoting a bit here, Kelly.

You mentioned acquiring one or two properties a year. Was it always in the same asset class? Was it always single family or multi-family? Did you ever take a look at, let me do a land dealer. Let me maybe look at commercial residential.

Kelly Cook (16:06)
Yeah, I heard a thing a long time ago that says, you know, if cash is king, cash flows the kingdom. And I believe that. And I’m all about the cash flow. There’s people who do equity plays on buy and hold. And that’s great. It all depends on where you’re at in life, maybe, or whatever. But even then, I think cash flows the kingdom. I’m just a cash flow kind of guy. So I never did land because I know how to make that cash flow is tricky.

and can get very creative and you know, whatever, right. But for me, it’s always been primarily the same asset class, single family homes. But then more recently in less like five. Seven, eight years right in there, I have bought small multifamily and I do like that a lot. You have a different demographic of tenant of a tenant pool, right? That’s the downside to an extent. But you have property managers and people who can obviously hire to help offset that. But.

Single family and small family, meaning four doors or less is ideally where I like to operate right now. Yeah.

Dylan Silver (16:56)
Bless.

I think there’s a lot of people who are hearing this thinking, okay, well, if this person is doing this over a period of years, not just a handful five, and it’s been the same process or a similar process that’s been working, it’s kind of a good sign. Because I think a lot of times we have this shiny object syndrome where we think, I want to go do this, I want to go do this, let me go multifamily, let me go commercial residential. Okay, I’ve got 40 deals in the single family space, I’ve mastered single family. Then the market shifts and fix and flip becomes harder and people are pivoting towards new builds and so on and so forth. I saw that a

lot in Dallas, worked with a lot of investors who were very much fix and flip heavy and then with the market shifting they had to go and really pivot to new builds. we are coming up on time here, Kelly. Where can folks go if maybe they’re in the Scottsdale area or if they have a deal they want you to look at or maybe they’re looking for a property themselves?

Kelly Cook (17:47)
Yeah, no, I love that. still do. I probably do about four fixed flips a year. We’ll wholesale a deal every once in a while. Not very often, but yeah, I love to do a deal. we have, if it’s not me, we have other investors as a real estate agent, right? On our list. I would love to maybe look at it, look at some wholesale deals people have, distress real estate people have. So yeah, by all means, at Kelly Cook Homes, Instagram at Kelly Cook Homes. But my cell phone, can hit me up or shoot me a text at 480-227-2028.

Dylan Silver (18:15)
Kelly, thank you so much for coming on the show here today.

Kelly Cook (18:18)
Yeah, thanks Dylan. Appreciate you.