June 29, 2017

JF1031: From $0 to $6,000,000 in FOUR YEARS!

He was always curious about real estate.  When both of his parents had health issues, Andrew and his brother knew it was time to begin investing.  Find out how they were able to scale their business so quickly.

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Andrew Campbell Real Estate Background:
-Founding Partner of Wildhorn Capital Real Estate Investor and Entrepreneur
-In 4 years he and his brother Mark have built a $6,000,000+ portfolio of 72 units
-Prior to full time investing he was a partner at an award winning app developer
-BS in Advertising from The University of Texas at Austin and an MBA from Baylor University
-Based in Austin, Texas
-Say hi to him at www.wildhorncap.com
-Best Ever Book: Millionaire Real Estate Investor


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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Andrew Campbell. How are you doing, my friend?

Andrew Campbell: I’m doing good. How are you, Joe?

Joe Fairless: I’m doing well, nice to have you on the show. A little bit about Andrew — you’re gonna love this, Best Ever listeners… In four years, him and his brother have built a six million dollar plus portfolio of 72 units, and he’s had a full-time job along the way. He’s transitioning into doing real estate full-time right now.

He’s a founding partner of Wildhorn Capital, so you better believe we’re gonna get into the details of how he’s built the portfolio of 72 units while having his full-time job. Based in Austin, Texas… With that being said, Andrew, do you wanna give the Best Ever listeners a little bit more about your background your current focus?

Andrew Campbell: I appreciate the introduction. I came into real estate just out of curiosity. I didn’t grow up in a real estate household. I was always the guy that would pick up fliers when we were on vacation, and I just always had an interest for it.

I went to business school and had business cases about developing a block of homes… It was just always something that interested me. In 2007 my dad had a big stroke, and I was living out of state, and I moved home to kind of take care of him. That really changed the trajectory of my life and where my focus was. I realized I had to step away from my corporate job and I realized I didn’t have the flexibility or the time to take care of him and be able to deal with whatever life would throw at you.
I think that really turned my curiosity and interest into a passion. It took me a couple years more before we actually took the plunge and started investing. Our focus was “Hey, we need to create some more flexibility in our lifestyle and create some passive income that we can deal with life when something like that happens.”

Joe Fairless: I wanna get into the details of the deals, but before we get into the details of the deals… In those couple years that you knew you wanted to transition to real estate but you didn’t buy something, what were you doing?

Andrew Campbell: Mostly being scared. I think I read some books, and I had a friend that had a few duplexes. I didn’t have that push over the top. It was an accidental landlording of a condo; my brother had moved out of state and he was renting out his house, so we were sort of doing it, but I’d say we were dabbling and we weren’t committed investors. It took a couple years before we said “Hey, let’s sell the properties we have to generate capital and go buy intentional investment properties.”

Joe Fairless: Do you remember the moment in time or the timeframe when that happened, and if so, what made the switch from accidental landlording, not having the push, to “Okay, now let’s sell this and then get into something…”?

Andrew Campbell: It was very clear… Our mom was diagnosed with cancer. In 2007 our dad had a stroke, and in 2011 she was diagnosed with cancer, and that was sort of the straw that broke the camel’s back. It was really like “Okay, we got the message loud and clear; we’ve got to turn this from a hobby into a business and really hammer down.”

That was when we decided, “Okay, let’s sell both of these and do it very intentionally and purposefully.”

Joe Fairless: First off, thoughts are with your family on that; that’s first and foremost.

Andrew Campbell: I appreciate it.

Joe Fairless: So in 2011 – that’s when you sold (I guess) your condo that you were accidentally landlording…?

Andrew Campbell: It was 2012. We both liquidated those properties, and in 2013 we bought our first investment properties.

Joe Fairless: Okay, so you didn’t do a 1031.

Andrew Campbell: No. I didn’t know enough to do that.

Joe Fairless: Okay. So in 2012 you sold a condo… What did your brother sell?

Andrew Campbell: He had a single-family house.

Joe Fairless: Okay. Was he living in it, or it was an investment property?

Andrew Campbell: No, at that point he was also sort of accidentally landlording. He had moved to Denver, and the house was in Austin. He had been gone for a couple years and then got tired of leasing it, and it wasn’t an intentional property either.

Joe Fairless: Do you remember what you bought them for, what were your all-in costs and what you sold them for, each of those?

Andrew Campbell: I can’t remember exactly his place. I know we bought our condo — it was in these new developments in Austin and I bought it for 275k and ended up selling it for about 360k.

Joe Fairless: Nice. So it took about a year… What were you doing between 2012 and 2013 after you sold the property?

Andrew Campbell: I think once we sold the property, we were then getting more back to the intentional word, being kind of studious about what we wanted to do and the types of properties. We were talking a lot with — we had a friend who kind of got us into the business; we had a joke that he’s our crack dealer. He told us that “Watch out, investing in real estate is like crack” and it totally is true; we’ve been completely addicted.

But we were talking to Tim a lot and really kind of studying neighborhoods, looking at comps, just kind of figuring out what exactly the strategy was gonna be and where we wanted to be.

Joe Fairless: And what did you end up deciding?

Andrew Campbell: So we diverged a little bit. My brother did foreclosed homes; he ended up buying like five foreclosures in a town just South of Austin, kind of a growing suburb.

Joe Fairless: What town?

Andrew Campbell: [unintelligible [00:07:38].14]

Joe Fairless: Okay.

Andrew Campbell: A little suburb just South of Boston, between here and San Antonio. We went to small multifamilies. We bought a duplex and a fourplex within a month of each other, and a mile from each other, kind of just South Austin, but definitely in [unintelligible [00:07:53].11]

Joe Fairless: So your brother was buying foreclosed homes, and then you and your brother bought a duplex and a fourplex in South Austin?

Andrew Campbell: Sorry, my wife and I did the duplex and the fourplex, and he was doing his… So we were always doing it together and talking about it, but we had kind of separate portfolios and slightly separate strategies.

Joe Fairless: Which one ended up making more money, between your brother’s approach and your approach?

Andrew Campbell: I think all-in they were probably pretty similar. He got some really good deals on the foreclosures side, and had seen some incredible appreciation in that area. We had a lot better cash flow from the onset, and we’d also seen some ridiculous appreciation. I think a benefit of being in Austin is we’ve just had a great run in the last really seven years or so. So neither one of us have lost, that’s for sure.

Joe Fairless: And you bought a duplex and a fourplex – you and your wife did. What makes up the six million dollars now? I’m gonna fast-forward all the way to today. You had a duplex and a fourplex, and now you and your brother have 72 units… What does that comprise of?

Andrew Campbell: So there’s still about a dozen single-family homes, and then everything else is small multi… Mostly fourplexes; there’s a couple of duplexes in there. A couple years ago Austin has gotten pretty tight and I think a little bit overheated, so we started buying in San Antonio. I’ve got down there — I guess between the 72 units it’s pretty evenly split at this point. All of the acquisitions in the last two years have been in San Antonio.

Joe Fairless: How are you funding the purchases of the new acquisitions?

Andrew Campbell: Just the saved up capital from the cash flow that we generate. Then in the last year we both did a refinance and pulled out some of the equity that built up in the properties.

Joe Fairless: Can you give us the numbers on the last deal that you closed on?

Andrew Campbell: The last deal that we closed on… I bought two duplexes in San Antonio; that’s on an acre and a half of land, and it was kind of an interesting property… It’s three separate lots. The middle lot kind of served as a driveway, it’s unusable. We bought all three lots [unintelligible [00:10:02].23] two duplexes, so four total units. We paid $190,000 for it, and current rents are $750/unit.

Joe Fairless: So $1,500 and 190k all in…

Andrew Campbell: It’s $3,000, because there’s four total.

Joe Fairless: Oh… I got my calculator. I was like, “I don’t think this math is gonna look friendly…”, but okay. Got it. That’s great. That’s 1.5% rents to all-in price.

Is there anything you can do with the acre and it being three lots and two duplexes?

Andrew Campbell: Yeah, it’s zoned very favorably. Each lot is zoned for up to six units… I think it’s six units; it might be four… But I’ve been talking with the city and we’ve got basically the back acre that’s at this point just an expense because I’ve gotta keep it [unintelligible [00:10:54].18] every couple of months.

Yeah, we plan to put three duplexes on the back of that, so kind of one on each lot.

Joe Fairless: And for the Best Ever listeners who are familiar with San Antonio, where in San Antonio are these duplexes?

Andrew Campbell: Just South of downtown, kind of along in the Mission District, off of Roosevelt Road, in kind of Harlandale, South San Antonio. It’s pretty close to downtown.

Joe Fairless: And is that an up and coming area, blue collar…?

Andrew Campbell: It’s pretty blue collar, and it kind of fits our tenant profile [unintelligible [00:11:24].21] our portfolio. We’ve been pretty focused on workforce housing and B and even C areas.  Largely, our tenant base is the hardworking folks, a lot of Hispanics. We’ve got really low turnover. We try to take good care of them, and a lot of them have never moved in the four or five years that we’ve had them. So we kind of look in those neighborhoods, and this was a good match for that criteria.

Joe Fairless: The cash out refinance that you did – have you done multiple of those, or just one?

Andrew Campbell: We’ve just done one.

Joe Fairless: Can you tell us the numbers on that, what your all-in price was and what it appraised for afterwards and how much you were able to get out?

Andrew Campbell: Yeah… We were able to do it with a community bank, and one of our goals — as we’ve bought these, they’ve all been conventional financing with 30-year fixed rates. One of the things that — we didn’t do it sooner because we didn’t wanna lose that, and we didn’t wanna do kind of a portfolio trade-up and get turned on to a 20-25 year schedule… So we found a community bank that would actually let us do the cash out and then they resold them to an investor.

We were able to keep the 30-year schedule, but each property had its own loan. I think the day we closed we were in there for like 4-5 hours, because we had five or six separate closings; they all took place simultaneously.

Joe Fairless: Will you explain that again for me? I didn’t catch exactly what you did.

Andrew Campbell: So in our understanding, when you traditionally come to a cash out refinance, you’re gonna end up rolling all of your loans together and the bank’s gonna take that and look at your whole portfolio and cash you out. But when they do that, you’re gonna get a commercial loan.

Joe Fairless: And you’re talking about multiple properties, not just one.

Andrew Campbell: Correct.

Joe Fairless: Okay, so you did a cash out refinance on your portfolio of properties.

Andrew Campbell: On like half of them. It was a decent chunk of our portfolio.

Joe Fairless: Okay, got it. Please continue.

Andrew Campbell: So we didn’t want to get into a commercial loan that had a floating mortgage rate or a shorter amortization schedule… So we found a community bank that would actually do each property individually… Appraise that property, we pull the equity out of that property, and then they refi that into just a new 30-year conventional loan. That was important for us, because I think that’s been part of our strategy, having those 30-year fixed rates. Actually, on some of the loans the rate actually went down from where we had even bought… So it worked out really well.

Joe Fairless: That’s outstanding. So you have one mortgage payment for a chunk of your portfolio.

Andrew Campbell: That’s the interesting thing – they all are still individual. We still have a dozen – or whatever it is – different payments. Each property has its own loan. We were able to do that and keep the traditional permanent financing on it.

Joe Fairless: I thought you rolled them all up into one… You said the bank would do it individually, but then they did a 30-year conventional loan. I know I’m being dense here, but I’m a little confused.

Andrew Campbell: That’s fine. Each property had its own loan; when we bought it, it had a conventional 30-year fixed rate. When we went and refinanced, each property still has its own loan, conventional 30-year, fixed rate, but we were able to pull the equity out and [unintelligible [00:14:35].01]

Joe Fairless: Oh, okay. Alright.

Andrew Campbell: So they all are still individual…

Joe Fairless: Got it — but you got one cash out payment that was from all those properties… Okay, I’m with you. I’m just curious… I guess it’s better to have each property being on an individual loan versus one, because that’s less risk for you if one property —

Andrew Campbell: Yeah, it gives us flexibility to peel them off one at a time if ever wanna end up selling them (I don’t think we will). Then for us, again, keeping that 30-year schedule was really big.

Joe Fairless: What community bank did you use?

Andrew Campbell: It’s called First Lockhart. Lockhart is a little town famous for barbecue, about 45 minutes South-East of Austin.

Joe Fairless: Alright… They’re famous for barbecue – the community bank is?

Andrew Campbell: The town of Lockhart. [unintelligible [00:15:19].28] three pretty famous barbecue spots.

Joe Fairless: Got it… I was like, “I think you should read through those loan documents very carefully if the bank’s famous for their barbecue.” [laughs] Alright, cool. So that portfolio — when you did that cash out refinancing on half of them or so, was that a big tipping point for your investing, where you had a lot of free cash to then go buy some other stuff?

Andrew Campbell: Yeah, it was, and we took the majority of that cash and we closed on a package of eight fourplexes down in San Antonio, which kind of [unintelligible [00:15:58].29] doubled our portfolio. We closed that earlier this year. That definitely helped catapult this to the next level.

Joe Fairless: How did you decide which ones to do the cash out refinance on?

Andrew Campbell: A little bit based on the longevity, how long we had been in there, where we felt like there was the most equity; also looking at which ones we might look at selling. We’ve been (I think) shifting strategies a little bit, and Mark’s got some of the single-families, and I think we’ve grown to appreciate the efficiency of the multifamily space, and we’re probably looking at selling some of the single-family tier… But we didn’t wanna touch any of those.

Joe Fairless: Based on your experience, what is your best real estate investing advice ever?

Andrew Campbell: Find partners. I think my favorite thing about this business is that everybody is very friendly and willing and wanting to help. Find people that are experienced and wanna help. When we started out, it was a friend who had five or six duplexes, and we literally just drafted on his business plan and trusted him and his advice.

As we’re moving into the multifamily syndication space, it’s working the same way. People are willing to help; find those partners that will help you and use them.

Joe Fairless: The focus for Wildhorn Capital, your company, is what?

Andrew Campbell: It is multifamily syndication. We are focused on executing the same business plan that we’ve been… Buying small multifamilies, but buying bigger properties, and taking everything we’ve learned and looking for properties that are in Texas. We feel like Texas is a good place to be. We’re native Austinites and native Texans, so it’s raising money and partnering with folks and buying bigger properties.

Joe Fairless: You’ve got 72 units, and a portfolio that’s worth over six million bucks; why do syndication? Why not just keep doing what you’re doing and have fewer partners, own it yourself, and not have to answer to outside investors?

Andrew Campbell: I think one of the things that’s happened for us — we got into the business and the goal is “Let’s make passive income and play golf and be on the beach.” That’s with the comment about real estate being like crack – it gets you completely addicted and looking to trade the current jobs for a new job and a new career path. It’s something that we’re both super passionate about… It’s all we talk about and all we talk to our friends about and I think it’s wanting to share that knowledge and that ability to generate wealth with our friends and people that we know. It’s just a passion that we can’t turn off, so we wanna explore it and take it as far as we can.

Joe Fairless: What’s a deal that hasn’t gone according to plan?

Andrew Campbell: We had what I call a near-miss… My brother had a fourplex under contract, and it was kind of to the last hour and they say it’s not gonna be able to close. There was some [unintelligible [00:18:44].08] on a credit card he didn’t even know he had and they weren’t gonna let him close. Being partners, I was able to come in and close it in my name and just kept the terms like we had it and saved the earnest money and swept in. We joke now that we have our conference room and we’re gonna have that first dollar framed — but it’s not gonna be the first dollar we made, because the credit card charge was literally one dollar on some recurring thing that we don’t even know about. It almost cost him the deal and it turned out to be a really good deal for us.
We were glad to keep it in the portfolio, but it was not paying attention to some of the details — it almost caught us.

Joe Fairless: What do you have in place now that will attempt to remedy that from happening?

Andrew Campbell: Well, just make sure you know all of the different credit cards you’ve got, and closing down the ones that you don’t keep open. I think that that was almost a really painful lesson and a very easy one to correct.

Joe Fairless: Yeah… I have an Experian subscription, so I’m able to see all my stuff there.

Andrew Campbell: Yeah, I do Credit Karma, and I definitely look at the e-mail every time they send what’s happening with the credit score.

Joe Fairless: Alright, Andrew, are you ready for the Best Ever Lightning Round?

Andrew Campbell: Yes sir, let’s do it

Joe Fairless: Alright. First, a quick word from our Best Ever partners.

Break: [00:19:59].22] to [00:20:51].13]

Joe Fairless: Best ever book you’ve read?

Andrew Campbell: Millionaire Real Estate Investor – it got me on the path into the business.

Joe Fairless: Best ever deal you’ve done?

Andrew Campbell: Other than that fourplex that we saved for my brother, our very first duplex. We bought it for 212k, we fixed both sides, and we got it refinanced last year; I think it appraised at 365k. It’s a cash cow for us.

Joe Fairless: How much did you put into it? You said you bought it for 212k.

Andrew Campbell: We bought it for 212k, we got 225k total into it, and last year when we refinanced it we took 100% of our cash out.

Joe Fairless: You said you fixed it up… Did you two swing the hammers?

Andrew Campbell: No… Back to leveraging partners – our realtor friend had a team and some guys, and we just leveraged them. He actually [unintelligible [00:21:37].14] It was part of our deal when we bought it. He helped us get it all done. We didn’t lift a finger.

Joe Fairless: In addition to what you’ve mentioned earlier, what’s a different mistake that you can think of that you’ve done on a deal?

Andrew Campbell: I don’t know if there’s been many mistakes on the deals we’ve done. I think we’ve missed out on deals, which I would look at back now as a mistake, because we were afraid of having to do work on it, or it didn’t quite meet some of the early criteria that we had. We didn’t really know what we were doing… Being afraid to pull the trigger in those early days – looking back on it now, it was a big mistake.

Joe Fairless: What’s the best ever way you like to give back?

Andrew Campbell: Our neighborhood – we’ve got a dads club that gets together and is really active, and once a month we kind of get together and watch games and drink beer, but we have two big fundraisers. One at Christmas time and one in the spring. We donate all the money to Make A Wish, and they sponsor a couple of kids that are going through rough times, and sponsor their wish.

Joe Fairless: When you first started saying “Dads club… We hang out and drink beer”, I was like, “Wait a second… That’s not what I meant!” [laughs] Then you did the “Make A Wish” and I was like, “Okay, sounds good!” Where can the Best Ever listeners get in touch with you?

Andrew Campbell: They can find me on Bigger Pockets at Andrew Campbell. Also on our website… It’s WildHornCap.com, and e-mail is just andrew@wildhorncap.com.

Joe Fairless: Andrew, thanks for being on the show, talking about how you’ve built a six million dollar plus portfolio in less than five years (about four years), doing the cash out refinance on a decent chunk of your properties, how you did that with the community bank, how you did them individually so that you have the flexibility, and thank you for walking me through that slowly. I’m sure a lot of Best Ever listeners were like, “Dude, don’t you understand what’s going on, Joe?” but thank you for walking me through that, and the approach that you’re taking now…

Also the duplex in San Antonio, the last deal that you’ve bought – just giving us a sense of the type of deals that you’re getting… Or the two duplexes that you got in San Antonio, with the all-in purchase price 190k, 3k rent, so about 1.5% when you do the rent divided by the all-in price.

Thanks for being on the show. I wish you the best with Wildhorn Capital, and I hope you have a best ever day. We’ll talk to you soon!

Andrew Campbell: Thanks a lot, Joe. I appreciate it.

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