PadSplit Investing Explained: Turn Single-Family Homes Into Cash Flow

Donny Coram (00:00)
We’re basically creating a multifamily home out of a single family residence. So that means my PadSplit alone, which I had rented out for years, years I’ve been renting this property out for between thirty two hundred and thirty five hundred dollars a month. Never had any trouble getting it filled, and I was making a decent return on an investment. Now that exact same property is making me about $2,800 a month in take-home income. So I’m super excited.

about this model because it’s creating wealth at a much faster rate and it’s providing for a huge need in America right now, which is the affordable housing crisis that’s forcing a lot of people into homelessness. So it’s not just about the money, though the money is amazing, it’s also about helping people to grow wealth and keep people off the streets.

Joseph Crooms (02:15)
Welcome to Investor Fuel Real Estate Pros podcast. And today I’m your host, Joseph Crooms I’m joined today by someone I’ve been looking forward to chatting with. His name is Donny Coram. he’s been doing serious business and flipping, but now he’s entering another niche.

So we’re gonna let him explain both of them. Say Donny, glad to have you. Say hello to everyone.

Donny Coram (02:39)
Hey man, glad to be here, Joe. Thanks for having me. Really excited.

Joseph Crooms (02:42)
Sounds good. I think our listeners are going to take something away from which how you’ve been approaching this new venture in real estate for you. And but before we dive in, or let’s dive in, go for for so for people who may not be familiar with your world, give us the short version of where you came from in real estate and where you’re at now.

Donny Coram (03:04)
Yeah, thanks Joe. I guess the background is I’ve done over four hundred fix and flips in my career going back twenty years, mostly focused around the Colorado Springs, Colorado market, but did some in Florida, did a couple here in Arizona where I’m located now. So my most of it has been the the flipping space, but I’m a a lender, a appraiser, a home inspector. So I got several professional licenses along the way, but the focus has been really on the fix and flip market up until now.

Joseph Crooms (03:29)
Okay. And how many of those properties do you still own or you just flipped them and s and and got rid of them?

Donny Coram (03:35)
Well, looking back, I obviously wish I’d kept a lot more of them. but you know, in that era, the flipping was all the rage. I mean we we did forty flips in twenty twenty, forty-seven flips in twenty-one and forty-five and twenty-two. I wish I’d kept a great deal more, and I tried to keep a great deal more. At the peak of our portfolio, we had about eighteen properties that I that I had online. Today I’ve got two remaining in my portfolio. We had to sell off a lot of them to survive the flipping crisis, which kind of befell everybody in twenty-three through twenty-four.

Joseph Crooms (04:03)
question. How did you get into this pr present field? And can you explain a little more or why and what’s it all about?

Donny Coram (04:11)
Sure. So right now I’m I’m mastering the co living space with PadSplit, the leading investor in the co living marketplace. And you know it’s it’s I I have a corporate job, I’m gonna

account executive with the company right now. And it’s strange because I haven’t been like in a corporate employed position in over 15 years. So it’s strange to make this transition. But I really saw the opportunity that PadSplit offers to investors. And obviously, being an investor for as long as I have been, I speak investor really well. So today I’m an account executive for PadSplit, based in the Phoenix region, but I can work with investors in the co-living space anywhere in the United States of America. I can provide lending to people looking to enter the PadSplit space and just generally offer consulting and guidance to help get people from

the desire to operate a successful co-living home to actually doing it while providing the actual funding necessary to get that deal done.

Joseph Crooms (05:46)
What what what about the business model that interests you that so much that you said, you know what, let me go back in the corporate world for this deal. Can you explain exactly what you’re moving, what your product is, and what really piqued your interest?

Donny Coram (05:59)
Yeah, you know, the big challenge that investors face is everybody wants to hold on to a large portfolio of investment properties and build wealth over the long term. That’s been the American dream since day one, right? The reality of the market the way it is today is if you get into a single family rental

You’re gonna have to put 20% down to get going. You’re buying at a very expensive time of the market, and the interest rates aren’t great today. So, with all that comp combination of factors, if you make two to three hundred dollars a month in passive, and I do passive in air quotes because we know there’s no such thing as a fully passive investment, but if you manage to make two to three hundred dollars a month on a single family rental play right now, you’re doing extremely well. That’s just where the market is. So, what excites me about PadSplit is we can take that exact same price.

Property, and the more bedrooms that you have, the more little cash flowing you’re gonna be able to create.

We’re basically creating a multifamily home out of a single family residence. So that means my PadSplit alone, which I had rented out for years, years I’ve been renting this property out for between thirty two hundred and thirty five hundred dollars a month. Never had any trouble getting it filled, and I was making a decent return on an investment. Now that exact same property is making me about $2,800 a month in take-home income. So I’m super excited.

about this model because it’s creating wealth at a much faster rate and it’s providing for a huge need in America right now, which is the affordable housing crisis that’s forcing a lot of people into homelessness. So it’s not just about the money, though the money is amazing, it’s also about helping people to grow wealth and keep people off the streets.

So I just love the passion for the company that I’m working with now.

Joseph Crooms (07:36)
Donny, do you so when you’re f if they already have a home, they got three bedrooms, do y’all offer any remodeling if they may have to do, like get a second bath a second bath or or anything like that?

Donny Coram (07:47)
Absolutely. The neat thing about what I offer is the full turnkey consulting model. We’re gonna determine the highest and best use of the square footage you’ve already got. PadSplit generally wants four bedroom houses and up. It doesn’t quite cash flow at three bedrooms most of the time. So four is kind of the target. We’d love to see them go all the way up to eight bedrooms, but the reality of the way we structure these properties, Joe, is we don’t need a living room, right? We don’t need a big dining room. These are all potential conversions into bedrooms that’d go from space you weren’t gonna get any.

money for as a single family rental, then now you can potentially get $800 to $1,000 a month in extra income by converting a dining room or a living room space into another bedroom. It’s a huge opportunity for investors willing to do some construction to the home to maximize their return. And that’s sort of the real magic of this is taking that useless square footage from a single family rental perspective and converting it to another cash-flowing income producing property by making another bedroom.

Joseph Crooms (08:44)
I would imagine that most of your owners of these properties most likely don’t live on the property. that’s that what you normally is that your c basic clientele?

Donny Coram (08:53)
Yeah, and listen, there’s a lot of people who live in their PadSplit as well. I don’t recommend it. I’m not sure I’d want to live with my tenants, not knocking the tenants. It’s just it’s a different, different relationship when you’re the owner and you live in the property, right? There’s always that dream of

owning a fourplex a living one of the units, but I can tell you anybody who’s actually done that has regretted it later on, right? So in the end, the goal is to get create rental property. Or if you’ve got a property right now you’re sitting on that’s got six bedrooms in it already and maybe the kids have aged out. They’ve all moved on to college. My parents are in that spot right now. You know, at 70 years old they’ve got all adult children, right? But they got a seven bedroom property that they simply don’t need. This is an opportunity to convert those properties into cash flowing rentals

Then instead of making $800 a month, $900 a month above your debt service, they could comfortably making three to four thousand dollars a month, supplement their retirement, travel the world, live the life that you really want to live using square footage that you fully really weren’t utilizing anyway, right? So converting to PadSplit is huge right now. And then adding more bedrooms again into spaces that were super useful to meet with the family in the dining room, right? Or to watch TV in the living room, but you simply don’t need that for a good PadSplit. You want to convert that.

that to bedroom space and turn that into income so you can live life on your terms.

Joseph Crooms (10:46)
Don, do you help people in situations like your parents? Sure. Do you also offer a service? Hey listen, I’ll get you this I can I can get this house converted, get you into something else, do you offer that type of service as well?

Donny Coram (10:59)
Absolutely. What I really want to be, Joe, is a full service consulting firm from the acquisition of the property, the analysis of the financial situation that the homeowner is in right now, to providing the capital to buy the deal if they’re trying to buy it or to tap the equity to do the construction to convert it to PadSplit. You also have to add furniture, so there’s some monetary needs along the way to getting the construction done.

To getting it listed on the PadSplit platform and everything they need in between, right? So my service takes you from beginning to end to the desire to own a co-living space that could cash flow to the actual ownership of that property and hopefully a couple of properties. So you’ve got income coming in for lifetime and generational wealth, you’re all transferring down to generation that you simply can’t do with a single family residence.

Joseph Crooms (11:44)
That’s amazing. why Arizona? Is that a key marketplace or or or or i i and you just find that I’m there now, this is what’s happening, I know Arizona’s it’s got college communities, got tell me about why there.

Donny Coram (11:58)
Yeah, a little bit of both. We moved from Colorado and I’ll be frank with you, if I never have to see snow again, I’ll be the happiest dude you’ve ever met, right? I’m a we’re we’re tropical people, Joe. I’m not big on being cold. I don’t understand.

Joseph Crooms (12:09)
I’m with you, brother.

Donny Coram (12:10)
It’s

hanging out. It’s snowing outside of Colorado. It don’t make any sense to me, right? So that was the primary reason I moved out here. But also the economics work here a lot better. Maricopa County, where I’m located, has four point six million residents in it. El Paso County, where I’m from, had seven hundred and fifty thousand residents. So when I saw the opportunity to break out of dealing with the snow

and move into a community that has a lot more money and a lot more need for people to find affordable housing. The opportunity spoke for itself. I was happy to be out here. I’m looking at my pool in my backyard right now. You know, I’m truly living the life I wanted to lead and I’m helping people to find affordable housing and helping investors to build wealth all at the same time. This absolutely was the perfect move for me and my family.

Joseph Crooms (12:54)
Wow, that’s great, that’s great. and so you say you can work in any state. Have you thought about approaching some urban cities and say, Hey listen, we got this platform. Yeah, have you approached any of them or or not really, just concentrating right now.

Donny Coram (13:07)
You know, right now I am kind of focused on the Phoenix market, but to your point, you know, I’m

Vice President of Economic Development of the NAACP in Colorado Springs. So we are pushing a movement right now to talk to the city and get the every city is facing an affordable housing crisis right now. How do we deal with this homeless problem that’s getting way worse in cities like Portland, where it’s just a normal thing to have homeless people everywhere? Colorado Springs didn’t have much of a homeless problem even two years ago, now has a massive homeless problem. The cost of living across the country, Joe, has gone

way up, but the incomes support that problem have not gone way up. So this is a problem everywhere in the U.S. We need to be talking with the cities. We need to be working with urban development committees, and we can prevent this problem from getting worse through the co-living PadSplit model. And I aim to step in and help across the board. But you know, being honest, there’s not a lot of push for this in the minority community, right? We don’t have as much people looking at the wealth building aspect of it or the prevention aspect of it. So I’m just happy to be a part of the change that needs to happen and

be a a a loud voice in the room about we can make this better and make some additional capital while doing it. It’s totally a win-win for the investor and the communities that we serve.

Joseph Crooms (14:20)
Thanks for sharing that, Donny. Donny, let me say, do you do any commercial flips? Like say you’re following factory, any acquisitions. Are you doing any acquisitions? I saw this building, it’s empty, it’s and and boom, I I think we can do the same thing there if we if we as a company put our investment there. Do you do you lead anywhere like that?

Donny Coram (15:18)
Absolutely, but know this, Joe, that we are really reliant on the individual investor, right? So I want to talk to people who have that vision. They’ve got a commercial building, they’re eyeing a commercial building right now that they think would be a good PadSplit conversion, and then we’re gonna figure out how to get that deal funded. I think the big gap in the PadSplit model right now is you know, there’s a bunch of DSCR loans to buy single family rentals. That’s that’s pretty prevalent out there, right? And for a while there was funding for Airbnbs. They were using the AirDNA data, but there’s not a

ton of financing resources just yet out there to fund these co-living spaces through PadSplit, right? Because the data is just now coming into its own and that it’s super lucrative, very low risk for the lender, but they’re just now figuring this out. This is the opportunity. Okay. In two years, mark my words. There can be lots of lenders offering financing on this, but today I’m working with a handful of lenders that will do this today so I can bridge that gap for individual investors today who either want to convert

acquire or in your case buy a commercial property, I have the financing available to make all that possible. We just have to have a conversation about the vision that the investor is working with so we can put that together and align it with the financing that can get it done.

Joseph Crooms (16:31)
Understood. So, what caught my attention about what you were doing that you did the flipping and it really you know and and so how did the flipping knowledge translate into what you’re doing now?

Donny Coram (16:43)
It’s a great question, but in the end, the all of real estate operates on one principle, finding the right deal.

Right? Stock investing, all investing. Anyone can buy a house for retail to feed to put your family in. That’s super easy because they’re everywhere, right? But finding a deal is an art form and a science all wrapped into one. So after doing over 400 flips, I’ve just gotten very akin and created a large network of deal hunters, wholesale networks, people I talk to consistently that are bringing me deals. So when a client comes to me and says, Hey, I need to acquire a deal, I’ve got an answer for them no matter where they are in the country.

I can help investors to find the right deals. If you buy a retail property, even with the PadSplit model, you’ll do well because we’re converting the income stream and you can do well. But imagine buying a deal, something priced significantly below market.

So you’ve got equity built in on day one and you’re adding income. It truly is the perfect storm, and you really have to have a background in the fix and flipping that I have to really identify what a good deal looks like and have the confidence to move forward on that deal when the opportunity presents itself. Because professional investors don’t do a lot of time deliberating, right? If they find the right opportunity, they can pull the trigger. Well, if you’re just getting started started, you’re gonna be nervous. You know, you’re not gonna be certain if this is the right deal, or et cetera. I bridge that gap for you. We leverage my experience.

and my access to capital to help investors to push past their limitations of buying their first couple of deals, give them that confidence to pull the trigger right away and allow them to get into more opportunities much faster.

Joseph Crooms (18:14)
Now, Donny, I know every operator had a moment when things just got real. It’d be a deal that went sideways or a time that you had to pivot fast. You mind you can go back in the past or give us in the future. Can you mind sharing one of those ones with us?

Donny Coram (18:30)
Man, I don’t have to go that far back. You know, what was interesting about twenty twenty is you could yell house for sale, right? And it was selling so fast. We were flipping houses so quickly, it was amazing. Twenty one was better still, and twenty two it seemed like it was just never gonna stop. It was amazing. But then twenty three happened.

Right. And actually it started in twenty two because the rate started to trickle up in about fourth quarter of twenty two is when we saw the big rate increase. But by twenty three, it was a disaster. So going back, there was a time where I was carrying six million dollars or so worth of hard money notes.

At somewhere between ten and twelve percent, depending on the property. My debt service alone was thirty to forty thousand dollars a month. And then I had to cover the construction costs, cover my operating team costs, right? We were bringing in multiple millions of dollars, but our overhead was pretty close to multiple millions of dollars as well, right? So that gap really killed us during that time frame. Twenty-four was crickets. We thought things would get better with the election season heading into twenty-five. They did not.

Right. And now here we are in twenty six, picking up the pieces from two to three really bad years. I think any heavy operator in that market is still kind of reeling from what happened then and I’m no exception. I really saw this thing at its height and then at its bottom. And because I was so heavily leveraged during that time, I took a pretty massive hit to my personal equity during that time.

Joseph Crooms (19:54)
What is the key to keeping your machine personally running smooth, but with this new business?

Donny Coram (20:00)
Consistent income.

You know, a and and the reality of flipping, going back to why it’s not a great idea in this market, is when the houses were selling relatively consistently and we were doing four to five, six, seven flips in a month, right? I knew money was coming in to cover those operating costs. Today, as this model rebuilds, the consistency is coming from consulting, it’s coming from the PadSplit acquisitions, and it’s coming from my lending platform. You know, so every operator needs to realize that flipping is wonderful when it’s working. It brings in a lot of money in a relatively short period of time.

But when it’s not working, as it has not been for the past couple of years, it can sap your resources extremely quickly. So regardless of where you are in your desire to get your real estate investment career set up, you gotta look at your consistent income because my bills didn’t go away because flipping stopped.

Right? I still have to pay my mortgages, my car payments, my insurance, et cetera. Right. And when the income seized up, I had two debts: my own personal expenses, and now these corporate debts, also laden by debt service, construction costs, operations, and et cetera. So I tell all investors: if you’re going to fix and flip properties, do not make it your primary source of income. That’s not necessarily the case with PadSplit. With this new model I’m going into, if you’re making $2,000 or $2,500 a month in income and you lose a tenant

in one of your properties, you might go from twenty five hundred dollars a month to eighteen hundred dollars a month in income, right? But it’s not gonna wipe you out. You’re still gonna have income coming in. If you’ve got four or five of those operating, you’re still gonna have some rough months, but you can now live full time on semi-passive income because one property can throw off a whole lot more than what a single family residence can throw off doing one at a time.

Joseph Crooms (21:43)
Donny, how long have you been with plaques, Ms. how long have you been with

Donny Coram (21:47)
Pad

Yeah, I started with PadSplit a few months ago. So I’m very new to the company at this moment. So just kind of getting going right now. But again, I’ve had a PadSplit for about two years now. So I’ve been in the co-living space for quite some time. and I’m you know, with my real estate investment background, it really is just a slight shift for me to go from a buy and flip strategy to a buy and hold strategy. The semantics, the day-to-day operations, it’s fundamentally the same. The payoff, the paycheck is drastically different and a lot more consistent and a lot more stable.

Joseph Crooms (22:15)
Great. Well, Donny, that’s that’s that’s the kind of stuff people don’t really talk about enough. You know, what can happen? Are you able to make a pivot? And it’s honestly what separates the folks who just dabble from the ones who stay in the game long term. When I mean long term, I’m staying in my niche. I’m staying in my lane. so that’s what you’re focused on. So let me ask you this. What are you focused on solving next? What’s the next real goal for you?

Donny Coram (22:43)
The next real goal is to start getting consistent consulting clients my paddock. You know, the the key to this it still works way better at scale. You know, you doing one property at a time, there’s just a limit to what you can get for construction discounts, right? What you have to pay for parts and et cetera. The upside to being part of my network is the more investors that I bring in to work with to help you properties, the less expensive the model gets for everybody. You know, so it really is building this with the consulting mindset in mind.

I want to build more PadSplits for myself, but in getting other clients to buy PadSplits and get into this co-living space model, I’m going to get better deals on my properties. We’re going to get better deals on construction. My clients are going to get better deals. Everybody wins we operate as a group.

Joseph Crooms (23:27)
Now I know a lot of people listening are early in their journey. They’re looking to level up and I think they benefit from hearing this. What come what what comes to the building relationships and growing a network? What’s made the biggest difference for you?

Donny Coram (23:42)
Full transparency in creating a win-win situation. I think a lot of people go into this model hoping to get too good of a deal on the construction side, right?

Hoping to take advantage of people in a lot of spaces. I’m looking for a situation where everybody who’s involved has an opportunity to win. And there’s a way to do it, but you can’t focus on the individual needs, but rather the needs of the group. And think about that for any organization, right? In order to accomplish more, we have to work as a unified unit. It’s just very difficult when you involve money to get people to start thinking about anything but what’s in it for me, right? And I still think about what’s in it for me. I gotta make a living, I gotta support my family as well.

But when we operate as a cohesive unit, we all benefit over the long term. That’s the fundamental of our country. That’s the fundamental of any successful organization. And that really should be the fundamental of humanity. But you know, it’s hard when you’re competing with people. I’m trying to reduce the competition and explain that together everyone achieves more.

Joseph Crooms (24:39)
I mean you’re about to come to a close, but let me ask you this question ’cause it just came to my mind. what do you think you will do a month? what’s what’s your ideal coming out of the box, what should you be doing a month?

Donny Coram (24:51)
You know, the the company has some goals in mind, but rather than sharing that, I’m gonna share what my goals are. You know, I really believe I can convert two hundred hosts here in my first full year with PadSplit. I’m gonna be working on a national platform to do that, but the idea behind doing this podcast, Joe, and the other podcasts I wanna do is getting the word out there, right? That one, there are people like us who are out there doing this, number number one, and number two, that the opportunity has never been greater than it is right now.

Okay, there’s a gap in time where we all wish we could have gotten in front of Airbnb before Airbnb became Airbnb, right? There’s a time where you can make a lot more money than you can today because the market got saturated. Here we are in PadSplits up and coming. This is the beginning of the co-living space, but not the end of the journey. Today is the time. Now is the time to get involved with this. If you got properties, that would be a good convergence. They’ve already got a lot of bedrooms where we can add bedrooms. Let’s talk about that. If you want to acquire a property, don’t look for a three-bedroom home anymore.

Gonna struggle to rent that out for any sort of profit. Let’s find a four, five, six-bedroom home and add two more bedrooms to that property so it turned into a major cash-flowing rental for you. You just need a little bit of guidance, right? So, my advice to people in general right now is seize the moment. The opportunity to get into co-living is right now. The market is poised for it, and the need with all the homeless that are out there right now is greater than it’s ever been. PadSplit not just about making money, it’s about helping people, and we can do both of those things and make a lot of money.

the process. It’s an excellent opportunity for all investors today.

Joseph Crooms (26:22)
Wow. So relationships are everything, that’s what you’re really saying. And building relationships in, out and wow, that’s right. All right, before we wrap, if someone wants to reach out to you, connect with you, or make a or collaborate or learn more about what you’re doing, what’s the best way to reach you, Donny?

Donny Coram (26:38)
You know, I would love if you’d hop onto LinkedIn because I’m a big LinkedIn guy. I’ll make it easy for you. You can go to www.donnycoram.com. That forwards you directly to my LinkedIn profile right now. Connect with me, send me a little note so you saw me on the show and you’d like to talk a little bit more about your investment journey. Right? If consulting’s the right fit for you, then we’ll discuss. And if it’s not, I’m gonna be the guy who tells you that. And I’ll point you in the right direction to get you where you need to go. Right. But I believe that anybody who’s properly capitalized right now and looking to enter the market should seriously be considered

opening a PadSplit, the opportunity for income is incredible. You just need the right team around you. And the good news is I bring the team with me so we can get everything you need to get done to get it done fast, cost effectively, and profitably.

Joseph Crooms (27:19)
Donny, somebody was looking for their pen. You know, they you you know you know guys look for their pen, trying to write things down. just give them give the contact information one more time.

Donny Coram (27:26)
Yes, sir. www.donnycoram.com. That’s spelled donnycoram.com. donnycoram.com. Reach out to me on LinkedIn, send me a friend request. Let’s have a conversation and discuss where the next step in your investment journey is.

Joseph Crooms (27:46)
Sounds good. Donny, this was pause this. it was really great. Our audience is gonna get a lot out of that. And okay, so moment I was let me say this. for those of you that were listening, I know that you benefited from this conversation with Donny Coram. he gave you all the contact information and we we and you need to pay attention, subscribe to our channel, knowing that we’re gonna have more operators.

on our channel just like Donny, helping communities, helping people and really helping people come together. So thank you for joining us here on Investor Fuel Real Estate Pros Podcast. Donny, tell everybody I’ll talk to you later.

Donny Coram (28:25)
Talk to you guys later. Thanks, Joe.

Joseph Crooms (28:27)
Thank you, man.