Why Real Estate Investors Are Pivoting From Fix and Flips to New Construction

Landon Stone (00:00)
I’m really focused on two things. So as the market has changed, have ⁓ seen fix-and-flips harder to execute on. We’ve had some big clients that did a lot with us completely pivot because sellers want more. There’s a lot more wholesalers in the market driving off market prices unless you’re going direct to seller, which that has its own economics to it.

expectations have really changed. ⁓ They’re getting pickier because the cost of buying a house is increasing, not just the price of homes, but interest rates and the realization of what it costs to maintain a home.

Michelle Kesil (02:19)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil, today I’m joined by someone I’m looking forward to chatting with, Landon Stone, who is a real estate broker, investor, and builder, helping clients and investors in the North Carolina real estate space. excited to have you here today, Landon.

Landon Stone (02:44)
Yeah, thanks for having me, Michelle. I appreciate it. Excited to get into things.

Michelle Kesil (02:50)
Of course. Yeah, let’s dive in. So first off, for those not familiar with you and your world, can you share what your main focus is?

Landon Stone (02:59)
Yep, my main focus is helping real estate agents build a career in real estate and investors build wealth through real estate. ⁓ How we kind of got started was really focusing on the investment space and being able to build services that help real estate investors. We early on landed on

⁓ clients that were not from the area, don’t live in the area, don’t have connections in the area, and they needed more than just an agent to open doors and tell them what they feel about the property. They needed someone that had an investor mindset, had the investor experience, but that also could help see the process through, whether it was buying a house that needed renovations or repairs to turn around and resell it or to rent it out.

⁓ We just started identifying opportunities where we could help serve them better, but also help protect that asset and that investment through the whole process, as opposed to typically real estate broker will help you buy it. They’ll be there for you if you’re gonna sell it in the past, but that middle piece or the numbers that you were operating with gonna actually line up on the renovation. Is it gonna rent for what it should or is it gonna sell for what it should?

really focused on how can we make it more turnkey for the investor so that they can get some better, more predictable returns, but then also we can build relationships that can repeat themselves through their journey.

Michelle Kesil (04:39)
Yeah, and

did you get into this journey yourself?

Landon Stone (04:44)
Yeah, so.

I originally, I’m in North Carolina now, I grew up in West Texas. I graduated college from Texas Tech University and through college I worked at a men’s retail clothing store. And as I was graduating college, we made the decision to move up to North Carolina.

I ended up keeping that career and ended up as a retail store manager up here. And through a lot of the relationships that I made in that environment, I realized like two,

the quality of life that a lot of my clients or my customers that were in real estate had. And so in March of 2017, I made the decision that I was gonna cut ties with the W-2 predictable job. I purchased a house that I was gonna flip. I renovated that just about all myself with some help of some family and friends and ended up selling that. And through that process, I learned

I’d really want to help other people do this. I did succeed, but I was really close to screwing up in a major way. We just took too much time. I’d bid off more than I really could chew, even though I did manage to get it down. And so that evolved into me getting my brokerage license and start representing people buying and selling, but still with that experience and that mindset that I had of why I got into real estate. was just really passionate.

about the freedom that investing in real estate had given me and wanted to help teach and help other people accomplish the same thing. And so that’s kind of what started this.

Michelle Kesil (07:27)
Yeah, amazing. And I know that you’re in a few different facets with the investing and the brokerage and ⁓ how do they sort of tie in together? Like what have you learned as an investor that you share with like your clients and vice versa?

Landon Stone (07:48)
Yeah, so I think the biggest thing that I have learned is having the right team around you.

One of the reasons why my first flip nearly failed is I closed the day before the note was due and it sold quickly. The problem was how long it took to do the renovation because I was trying to do it all myself. I was trying to save as much money as I could throughout the process and at the end of the day the profit was pretty good on it. But when I went back and I looked at it and I calculated how much I made versus how much time I spent, I really didn’t make

more money, I made less money flipping that house than I would have just staying at my other job. Now there were other trade-offs that I would trade still, the freedom, the ability to work for myself, all of those things, but the power of having a team around you so that you can really accomplish your goals and not be in it alone was a big one.

⁓ I think it really benefits having being investor minded understanding how properties need to return. A lot of people look at a deal and be like, know, fixed up, this could be worth a lot more than what they’re asking, but they fail to take into consideration things like how much does the time cost?

Do you really understand the cost of renovation and the compliance and the permitting involved with the renovations as well? So a lot of that just ties up into the advice that we can give beyond just like real estate market type advice and how to structure an offer, but how to execute beyond the closing.

Michelle Kesil (09:36)
Yeah, absolutely. And what do you feel have been some of the main keys that have allowed your business to be able to grow and run successfully?

Landon Stone (09:47)
The big keys are the people that I’ve met along the way. ⁓ I have an investment partner, Drew, who actually joined our real estate team at the beginning of 2020 with ⁓ similar goals to mine. He got into real estate for the financial freedom. He really wanted to help people buy and sell, but he had goals to become a real estate investor himself.

And so like,

Long story short, had a five year goal to buy his first house. And when we sat down and we kind of ran numbers and all of that, he ended up buying his first house like four months after that conversation, which got him really excited about what real estate can do. A year later, we weren’t just like buying his first house. We have flipped between 20 and 30 homes together over the past few years. Without that relationship, I are

business

wouldn’t be where it’s at today. Finding the deals, underwriting, all of the things that go into it and being able to find better deals means you have to find more deals to pick from.

We’ve also had some great other relationships in our real estate brokerage side that’s really helped, but also on the contractor side, I would say I have several key people that have been in my world for three to five years or more that have really made it happen. I got into this just with kind of a goal and a dream, but without allocating those relationships along the way, I wouldn’t be much farther than where I started.

⁓ There’s no real magic pill to it other than surround yourself with people that are like-minded but also that can push you where you want to go and that you can help push them along at the same time.

Michelle Kesil (12:14)
Yeah, absolutely. The relationships are everything.

Landon Stone (12:18)
Yeah, I totally agree.

Michelle Kesil (12:22)
And what are you most focusing now on solving or scaling to?

Landon Stone (12:28)
Power!

I’m really focused on two things. So as the market has changed, have ⁓ seen fix-and-flips harder to execute on. We’ve had some big clients that did a lot with us completely pivot because sellers want more. There’s a lot more wholesalers in the market driving off market prices unless you’re going direct to seller, which that has its own economics to it.

expectations have really changed. ⁓ They’re getting pickier because the cost of buying a house is increasing, not just the price of homes, but interest rates and the realization of what it costs to maintain a home.

We’ve just seen make buyers a lot pickier. And so we have, we’ve seen clients doing this. We’re doing this ourselves is really pivoting more to new construction, finding

properties that we can just build from scratch. There’s a lot less unforeseen. It’s very rare that you’re to have to rewire a new house after you peel back the walls and all of that stuff. But buyers are typically a little less picky with having something brand new. And so we have found some some partnerships and some abilities to be able to build in our area and offer a great price to a to a first time home buyer.

or to be able to offer a product that an investor can take on that pencils out very similarly to how a flip should. The other side of what we’re focusing on is just growing our real estate team, looking for more motivated and talented real estate agents to help us take on more clients.

Michelle Kesil (14:17)
Yeah, amazing. And how is like the development side of your business working?

Landon Stone (14:27)
It’s going good so far. We have a couple projects off ground. We just started this

the beginning of this year, so we haven’t completed any. Our very first one was actually an agent on our team. He bought his first house a couple years ago, within the first year or two of joining our team, and wanted to take that a step further in investing. What we looked at for him is rather than going out and buying a new house, he actually leveraged the equity that he had built in his current house and were built

building a tiny home in his backyard that will be finished within the next couple weeks.

He’ll use a midterm rental or an Airbnb to help offset, if not completely, cover what his mortgage payment is. We’ve got a couple pilot projects going up in High Point, North Carolina that will be one that we’ll build and sell that we just framed that up last week. We’ve got a really cool luxury build going on in Chapel Hill right now.

that’s gonna be all steel and concrete a very brutalist aesthetic and then once we complete those we’ve got a small seven unit development in Winston Salem that we’ll be working on and then from there just kind of keeping it rolling but it has it’s been a lot of fun it’s been really challenging but I would say that without the challenge it’d be boring

Michelle Kesil (16:36)
And yeah, what are some of the obstacles or challenges that you’ve had to overcome and learn from while you’ve been in this real estate world?

Landon Stone (16:47)
I think the greatest challenge has always been bandwidth, when to hire, hiring the right people, being able to manage.

my and continue to focus on growth without failing the people that are already right in front of me. ⁓ I expect that to be a continuous challenge, but we’re really hoping to continue to find additional partners and additional people that want to work with us to help solve those. Aside from that, the interest rate spikes ⁓ after COVID and the market changing is always ⁓

a fun challenge especially in the investing space is sellers expectations and buyers expectations are really far off right now ⁓ especially on distressed property sellers are living in a world where

their home is still going up and buyers are in all reality living closer to reality right now with the realization that homes are more expensive to buy due to the interest rates and the increase on price where that’s created a challenge of how do you find and buy a house right? How do you work a seller through what they’re thinking? And our team has a unique ability that if they’re not, if a seller isn’t open to a cash offer, we always wanna help take

them

to the market and get them the most amount of money for their property. But a lot of sellers right now they want retail price without going through retail channels. ⁓

I don’t know about nationwide or anywhere outside of our market. In a lot of cases, wholesalers will just give them a contract for what they want and drag it out a lot where we’ve also seen a few people lose their homes over it because they’re facing foreclosure. Someone locks their house up in a contract at a price that no investor’s willing to pick up. So just the balancing of those expectations has been a more recent challenge.

Michelle Kesil (18:56)
Yeah,

And what advice would you give to someone that’s looking to get started with investing?

Landon Stone (19:06)
The advice that I would give to someone starting with investing is do a little bit of research first. ⁓ Understand what it requires of you financially, emotionally, whatever it may be. The second piece is have a deep understanding of why you wanna get into investing so that you can make decisions in alignment with your goals, not what you see on the internet or on social media. And then the third would find a good person to either mentor you

or represent you as an agent, which if you’re a new investor, you should find an agent that’s willing to represent you and mentor you in making the right decisions, but also having your back through that process. Speaking from experience is really hard to go through your first investment just leaning on podcasts to get you through. Having someone real life, real in the market, it doesn’t mean that you need to invest in your market, but find someone that you can trust.

to help you through that process if nothing more than a sounding board.

Michelle Kesil (20:14)
absolutely. And are there any opportunities or goals that you have that you are looking forward to?

Landon Stone (20:24)
Yeah, this year is…

much more focused on relationship growth with our team. We’re looking to partner with several motivated real estate agents that care about real estate, that care about the clients to help grow what we’re looking to do, especially in the new construction and the building space. ⁓ Those are our big opportunities for this year is just aligning with the right real estate brokers so that

we continue to attract investors and just normal home buyers and sellers as well that we can always continue to do a good job for them and continue to be available without getting bottlenecked by bandwidth.

Michelle Kesil (21:16)
absolutely. Well, thank you for sharing all of that.

Landon Stone (21:21)
Yeah, absolutely.

Michelle Kesil (21:24)
And before we wrap up here, if someone wants to reach out, connect, and learn more, where can people find you?

Landon Stone (21:31)
⁓ You can shoot me an email. My email is Landon, L-A-N-D-O-N @beyondhomeadvisors.com or my Instagram is @beyondbylandon.

Michelle Kesil (21:48)
Perfect, well appreciate your time and your story, thank you for being here.

Landon Stone (21:53)
Yeah, thanks for having me.

Michelle Kesil (21:55)
Sure. And for the listeners tuning in, you got value, make sure you have subscribed. We have more conversations with operators like Landon who are building real businesses and we’ll see you on our next episode.