Devin’s daily focus is finding investors for himself to work with. Him and his team have extensive backgrounds in real estate, which they use to educate clients, and help them find great investment properties. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“Warren Buffet is a great example with all of his real estate investments” – Devin Doherty
Devin Doherty Real Estate Background:
- Real Estate Broker and Owner of Doherty Real Estate Group at Keller Williams
- Twenty years of commercial and residential property management experience
- Licensed general contractor, experienced in custom home construction & remodels
- Experienced Short Sale & Foreclosure Negotiator
- Based in Orange County, California
- Say hi to him at www.fivedoors.com
- Best Ever Book: The Bible
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TRANSCRIPTION
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 fluff. With us today, Devin Doherty. How are you doing, Devin?
Devin Doherty: I am super-fantastic, Joe.
Joe Fairless: Well, nice to have you on the show, and glad to hear that. I feel like there should be an expialidocious at the end of that…
Devin Doherty: [laughs]
Joe Fairless: A little bit about Devin – he is a real estate broker and owner of Doherty Real Estate Group at Keller Williams. He’s got 20 years of commercial and residential property management experience. He’s a licensed general contractor experiencing custom home construction and remodels. He’s based in Orange County, California. With that being said, Devin, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Devin Doherty: Sure, you bet, Joe. My current focus is on our national real estate team, which is the Five Doors Network, with Keller Williams. We’re operating in about 20 locations currently, and my personal mission in life and our mission in our business is to build generational wealth through real estate. What that translates into is our ability to provide value to our clients, who are both our agents, and their clients, and their ability to find investment opportunities in real estate that make sense for them to either make a first-time move, or multiple moves down the path.
My mentor is Gary Keller, so I’ve been very blessed to be able to be fed that perspective for a number of years with Keller Williams.
Joe Fairless: So building generational wealth through real estate, and you said your clients are the agents and their clients… So just so I’m understanding it correctly – are you saying your focus is your brokerage?
Devin Doherty: Yeah, our brokerage specifically searches out clients that are interested in investing in real estate, whether that’s first-time investing, or whether they are multiple-time investing. We actually have an anti-listing agent mindset, where we will sell homes that are only needing to be sold after we have a conversation about why we should hold the property, or how we might be able to hold the property.
So yes, we’re out there looking for listings. As a matter of fact, we’ve just celebrated our 800th sale this year, today. That’s 800 people who were asked the question “How is it that we can hold this property instead of selling it?” and they chose to sell it anyway, because of whatever it was – a move up, a move down, lifestyle, death, divorce, all the typical reasons that somebody might sell.
We then take that potential sale, we determine whether they wanna sell it at wholesale or retail, and we coach them through the process of — if they’re wanting to go the retail route, how we can be the best representatives to get them the most amount of money in the marketplace… And if it’s a wholesale opportunity, then we have an investment division who will look at those deals and see if there’s something that makes sense for the agent to purchase, or for the team to purchase, or for the organization to purchase.
Joe Fairless: Well, congratulations on the 800 mark so far, and we’re a little past half the year, so you’re gonna continue to go strong and creep towards the 2,000 mark in closings, so nice work on that.
So your focus is on finding investors who you can work with, right?
Devin Doherty: That’s correct.
Joe Fairless: Okay. Why investors? Because a lot of agents and brokerages prefer to shy away from investors.
Devin Doherty: It’s a great question. I think, Joe, the thing that we like to do is we like to align ourselves and think that actually every single homeowner is an investor… And the fact is that they actually don’t know the power of what they’re holding, and when we show them why it makes more sense to invest in real estate than to invest in the capital markets, for instance, with the leverage that could be provided, that we would help them align with their highest purpose and intent, and that is that they wanna be able to provide a college education for their children, or retirement income, or really talk about generational wealth – what would it look like for them to actually be able to leave something to their children’s children. And the only way to really look at that is to take something that they’re not looking at, maybe with the right perspective, and help them upgrade their mindset.
Joe Fairless: How do you — “convince” isn’t the right word, but how do you show them that real estate is the right approach to take, versus stocks and bonds?
Devin Doherty: It’s a great question. I think the first thing we do is we point to some of the great thought leaders that I know that you’ve interviewed, and some of the people that are out there that have made this point very clear… I think a great example of that is Warren Buffett and the amount of investment that he’s done in real estate in recent years. You look at the amount of homes that he’s purchased through his investment arms… I think it’s pretty evident that Wall-Street has moved to Main Street, and so many people are wanting to take more control of the capital markets, and you just don’t have that ability… And then you add leverage on top – you invest a dollar, you get return on a dollar in the capital market, where you invest a dollar in real estate, you might put 10% down and you might have return on ten dollars, or you could even go into a no money down situation and now you’re talking about a massive return.
We’ve just helped a veteran – actually, he’s active duty – in San Antonio, Texas, in one of our locations, we helped him create $1,000/month cashflow from buying a 4-unit building where he’s living in one of the units and the other three units are paying him to rent, and he’s putting $1,000/month in his pocket, and he’s getting a place to live… That’s the kind of conversations we love to have.
Joe Fairless: You’re in Orange County, he’s in San Antonio… How did you come to work with him?
Devin Doherty: He was actually referred to me from an Orange County financial advisor. Believe it or not, there are some financial advisors out there in the world of capital markets who understand the value of leverage. She actually connected me to him in San Antonio, and then I put him with one of our team members in San Antonio. We’re a nationwide company, so that’s what allows us to be able to make those kind of connections and help people literally anywhere.
Joe Fairless: Got it. Okay. Do you invest yourself?
Devin Doherty: Of course. I’m super-blessed, because I married into the concept of generational wealth. My father is also a forty-year veteran in the lending industry, so my wife’s father’s mother started the Beverly Hills Board of Real Estate back after World War II, so I back in 1991 was brought into a family business by choice. I actually started in the technology industry… But by choice I was able to align myself with how — my wife’s name is Judy; we’ve just celebrated our 25th wedding anniversary last week, and I’m super-excited…
But what I can tell you is that when I look back at what they’re done, they’ve literally just made small moves over time, and now that we’ve done some investing together and some apart, over 100 doors of real estate in some of the best areas of Southern California, which are Beverly Hills, Bel Air, Brentwood, Pacific Palisades… And along near the airport as well.
What’s great about that is that we’ve been able to get this kind of perspective that when you start with that generational wealth mindset, then you actually have a really clear opportunity to be able to go and look at the market and start turning over rocks, looking for those opportunities for yourself. So that’s kind of where the bias started from – I was blessed to have that experience.
Joe Fairless: First off, clearly, congratulations to you and your wife on 25 years. That’s incredible. I think that should be celebrated 25 times more than the announcement of a wedding, and getting married. It’s always — not always, but recently, it’s boggled my mind, because I just got married, how when we post on Facebook about our wedding, tons of people love it, comments… But when you post about 5, 10, 20-year anniversary, you don’t get as many comments… Like, wait, wait, wait… It should be the opposite. You should celebrate the 25 years much more than the initial. But that’s a sidebar.
As far as the generational wealth thing goes, what did the previous generations do to put in place safeguards, so that future generations don’t mess it up?
Devin Doherty: That is a great question. As a matter of fact, we actually ran into that question early on in my relationship with the family, and we hired a consultant who is basically a strategic family business consultant, specific to how it is that businesses past down from father to son, and son to grandson… And the statistics are actually terrible with what–
Joe Fairless: The third generation.
Devin Doherty: Yeah, the third generation. And the reason for that is that there’s a loss of vision, there’s a loss of connectivity to the vision, and then there’s also a disconnect between what it actually took to get the wealth, versus what it takes to continue to grow it or maintain it. Jim Stovall wrote a book called The Ultimate Gift, and he actually has a series of movies about it… And what’s really interesting about all of that is that what we’ve found in our own family was that we had to align with the highest purpose and intent, and that moves away from — at a certain point you wanna create security for yourself, and then you wanna create opportunity, and then you wanna give back. And until you’re aligned on the giving side of it, there’s actually not a real good understanding of why that makes sense… And until you have people in your life who are not takers, if you will, who are givers, you actually don’t have the ability to create a common goal, or a common vision. That’s a big challenge.
Joe Fairless: Okay. I heard all that, so help me break that down into the answer to the question… And I apologize if I’ve missed it. So what safeguards are in place to protect the future generations from messing up what previous generations did?
Devin Doherty: I’ll give you a great example. My son is ten years old, and he was out at an open house with us this last weekend. My 12-year-old son is in the business of helping us find opportunities. My 15-year-old daughter is working in an environment where she’s investing 15, 20, 25 hours a week in a job where she is getting value from it. I would say that the magic pill in all of this is the ability for people to connect to the real big picture opportunity, which is teaching the value of hard work and knowing that it didn’t come for free.
If you look at Warren Buffett’s plan for his kids, he’s only gonna leave them a very small amount of money, and the rest of it is all gonna go to charity, and I think that that’s the thing that’s really interesting – if people don’t align with the fact that they’re doing this for something great than themselves, there’s no opportunity whatsoever to not mess it up.
Joe Fairless: Okay. Anything in the contracts, or something that’s passed down, that also is included? Or is it just “You’ve gotta raise your kids right, teach them the value of hard work, and know what the bigger picture is for your generation and future generations”? Or are there some tactical things that you all do as well?
Devin Doherty: Yeah, I’d say there’s obviously tactical things. The point is that you can have a lot of language and estate plans about how to manage this, and estate plans can be very well written… For instance, there’s a tool inside of Judy’s dad’s estate plan which has been discussed, called the Generation Skipping Tool, which basically means that “Hey, look, if you’re not gonna do it, we’re gonna leave it for your kids.”
Joe Fairless: [laughs]
Devin Doherty: So generational skipping trusts are actually en vogue, because one of the things that we have as we align with the Bible and the teachings of the Bible as a Christian, and one of the things that I’ll say is that the Bible is very clear, and one of the reasons why we started Five Doors is because it says that you’re supposed to pass an inheritance to your children’s children. So it doesn’t necessarily say anything about what you should pass to your children.
So you’ve just had that beautiful baby, and yet you don’t know how that baby’s gonna show up in the world, and make things happen. Or I’m sorry, you didn’t have a baby, you just got married. But you get the point – down the road you’re gonna have that baby, and you actually could choose to pour in, you can share everything that you want with them, but you actually can’t control that… And yet the innocent person is that children’s child. So what kind of legacy do we wanna leave for them? How is it we’re gonna connect to them, to make a difference for that children’s children?
Joe Fairless: Interesting. I’m sure the Generation Skipping Tool has given some people some night sweats, who are listening, who have the generational wealth… They’re like “Oh, I hate that term. Yes, I know of it…” [laughter]
Devin Doherty: Yes, as we all move towards significance in whatever that looks like for us, what I would say is that we also have to plan accordingly. I was at a seminar, and the speaker – who happened to be my business partner, Seth Campbell – was mentioning this concept of “How many of you actually know your great grandparents, or know any of their names?” And I’m sitting there in this class, going “You know what – he’s right, I actually don’t know any of my great grandparents’ names.” And what that translated into was “Well, what kind of legacy did they leave for you if you don’t even know their name?”
And then if you compare or contrast that to, let’s say, Abraham Lincoln, I’m sure generations down the line people knew who Abraham Lincoln was. And I think that when you take that and you then overlay real estate, and wealth building on top of it, it can get really funky. My wife grew up in a very rich area in the Pacific Palisades, and the fact is that not all parents are emotionally available, and willing to commit to the parenting that’s necessary to train the child in a way that they’re gonna be seeing the significance of what is available to them; then they treat money in a completely different way.
Joe Fairless: Yeah. Someone I’ve interviewed on the show, Richard Wilson – he heads up a family office in Miami, and he talked about some interesting things that 500 million net worth families do for their kids. This has reminded me of that conversation… It’s really interesting.
Devin, what was the last property that you bought? And tell us a little bit about it.
Devin Doherty: Well, again, my focus is not so much on myself, it’s the success that I see through others. A lot of the investment opportunities that I find, I actually give out as gifts to people who are in our world. So I would say that one example is that we recently had one of our administrative executives looking to level up her life and create more passive income, so we were able to find her a positive cashflow duplex in her area that she lives, and be able to make the right moves to support her in getting the right financing and all the things that were necessary… And that gives me so much more joy than even finding things for myself.
When I say “finding things for myself”, since she’s part of my team, I’m creating security for her, and that creates a win for us anyway. It’s just that when I look at opportunities for us – yes, I find those opportunities; we recently have taken down some other types of deals. But the things I get passionate about are helping people either get the first opportunity, or the second opportunity… Because that’s actually what unlocks really, as you know, every other opportunity.
Joe Fairless: Right. Okay… But as far as some of the things you’ve taken down, what was the last one you took down or purchased, and what’s that deal?
Devin Doherty: Well, we flip properties on a pretty regular basis… So I use hard money, meaning that I just throw dollars into deals. Those kinds of deals we do quite often. Our team did 175 flips last year, so there’s a lot of great deals inside of that.
In terms of specific deals, we still look for conversations with what our potential sellers — we literally dial for dollars to find opportunities for potential sellers. An example of one is that we just had a three-unit building in the city of Orange, which is here in Orange County… And it was an absentee seller, who was out of the area, and they wanted to sell the property. It’s the kind of deal that we would normally take down. That was a three-unit that was around 750k.
Joe Fairless: With the generational wealth focus, how come you’re doing 175 flips, versus doing more long-term stuff?
Devin Doherty: Great question, I love that question. As a matter of fact, what we intend with our flips is that we’re facilitating the ability to build cash to be able to hold. So we actually have a 10 to 1 ration, where it’s our intention — 10 flips equals one hold. So we continue to flip, because it’s a great source of income. And you don’t always hold a property that you don’t need to hold, or you may not want to hold, for whatever reason. So flipping for us is another active income tool to create passive income through holding.
Joe Fairless: Okay. And by “us”, is it you and your wife and your family, or is it your brokerage, or…?
Devin Doherty: It’s my Five Doors team that we formed. I have 150 agents nationwide, so the team at large is the one that is using these tools. What we do is we personalize it down to that individual, so if an agent on our team finds an opportunity, we teach them how to either hold it if they can, or flip it for the profit, so that they can develop holding dollars. Does that make sense?
Joe Fairless: Yeah, but you don’t profit from that, right? On that?
Devin Doherty: No, we do.
Joe Fairless: You do.
Devin Doherty: Yeah, I profit directly from it. I profit from the brokerage income side, as well as the flipping opportunity.
Joe Fairless: Oh, okay.
Devin Doherty: So we’re directly involved in that. Basically, what we’ve done is we’ve just taken the things that we love to do on our own and just made it a fun party, with a whole lot of people.
Joe Fairless: Got it.
Devin Doherty: And in that process, what we now have is we now have 150 people looking for opportunities, and that number is gonna obviously continue to grow… And because of that, that allows us to have this window into finding these wholesale deals that are worth holding. And there’s more and more of those kinds of opportunities that become available to us, as we turn over more rocks. As you know, it’s just about a finding game.
Joe Fairless: When you hold a property, how many people actually own it?
Devin Doherty: Great question. We have two methods. We have the individual owner method, like the one I talked to you about with one of our administrative professionals, and then we also have a group method, where we have a fund. The fund will actually hold the property, and then they get a piece of that fund.
Joe Fairless: Okay, they get some sort of ownership percentage or shares in the fund?
Devin Doherty: Yes, exactly.
Joe Fairless: Okay.
Devin Doherty: The biggest challenge with the real estate industry is that we teach people how to go out there and find a seller, sell the home, they take a transactional income, and they’ve done nothing for their generational wealth opportunities in that process. They haven’t made a really great relationship with the seller, because the seller is no longer in that home. They haven’t shown the seller how they could potentially keep the home…
Some of our best clients are the people we’ve taught how to build wealth with. That’s completely missed when you’re missing the overall focus. And what we do is we put all of our aegis in the position of them being a cash buyer. When they act like a cash buyer in the marketplace, they could take a wholesale deal down, they could take a retail deal down… Whatever it looks like, it makes it much easier for them to find opportunities when they have the mindset of a cash buyer.
Joe Fairless: It makes sense… And we’ve talked about a lot of different things, from generational wealth to your business model, your 10 to 1 ratio… What is your best real estate investing advice ever?
Devin Doherty: I think I’d have to go back one statement and say that if you can help your audience align with the fact that they are truly cash buyers, and that they just need to figure out who their partner needs to be in that – and I know you’re a partner in that, and I know that there’s many other people that are out there that have either hard money, or other people’s money that they can use, as you can help people align with their mindset of being a cash buyer, when they have a focus on generational wealth (because they’ve gotta have that first, right?), if you could teach them to have the focus on generational wealth and then attach that to them being a cash buyer, that’s like a double whammy. That’s absolutely the best advice that I could possibly give.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Devin Doherty: I’m ready.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:20:54].19] to [00:21:35].23]
Joe Fairless: Best ever book you’ve read?
Devin Doherty: The Bible.
Joe Fairless: Best ever deal you’ve done, that you haven’t talked about?
Devin Doherty: A house that we moved out of that we were renting… And we moved out of the house, we left an offer – no money down, seller-carried offer; we left the offer, we moved out, and two weeks later the owner said “Hey, we wanna take your deal.” We moved back in two weeks later and got the deal.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Devin Doherty: A transaction mistake… I’d say the biggest mistake I’ve made in transactions is not understanding why the deal is being done from the opposite side. Not getting a clear understanding on that.
Joe Fairless: Best ever way you like to give back?
Devin Doherty: I love to give back just the way that you do, in the form of teaching, training and coaching. I’m a coach for MAPS at Keller Williams, and I’m also a trainer for Keller Williams, so I love being able to give this kind of advice in one-to-one and group settings.
Joe Fairless: And how can the Best Ever listeners get in touch with you and learn more about your company?
Devin Doherty: Our website is FiveDoors.com, and you can reach us toll-free at 866-338-4677. That’s the best opportunity.
Joe Fairless: Well, Devin, thank you for talking about generational wealth, the approach to take. One, you can have safeguards within the estate plan, the generation-skipping tool that you’ve mentioned, but then more macro-level, the way you approach the generational wealth focus with kids, and that is show the value of hard work, because that tends to be something that needs to be reinforced outside of the first generation… And especially outside of the second generation. And then also the big picture opportunity – have the shared vision.
First we’ll want security, second the opportunity, and third, give back… But we really can’t get to the third part until we’re all aligned with the macro-level stuff. And then also your approach with Five Doors.
Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Devin Doherty: Thank you, Joe.
