JF2267: Burn The Ships With Adam Balsinger

Started in real estate 6 years ago and while working a sales job with the goal of making money on the side flipping houses until he could go full-time. Real estate slowly took over his focus and eventually his sales numbers started to fall and eventually he was let go. This forced Adam to focus 100% of his efforts on real estate and now the rest is history.

Adam Balsinger  Real Estate Background:

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Best Ever Tweet:

“Focus on one thing at a time” – Adam Balsinger

TRANSCRIPTION

Theo Hicks: Hello Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks, and today we’ll be speaking with Adam Balsinger. Adam, how are you doing today?

Adam Balsinger: I’m really doing well. Theo. Thanks for having me. Excited to be on the show.

Theo Hicks: Thanks for joining us, looking forward to our conversation. A little bit about Adam’s background. He’s a full-time real estate investor focusing on his wholesale business, as well as his multifamily syndication business. He has 6 years of real estate experience, his portfolio consists of 12 legacy rental units, 50 multifamily doors as an LP, 92 more as a GP, and his wholesaling and flipping business just went over a hundred. He is based in Charlotte, North Carolina and you can say hi to him at his Instagram page which is @realestateadam7. So Adam, would you mind telling us a little more about your background and what you’re focused on today?

Adam Balsinger: Sure. I got into real estate 6 or 7 years ago, and I think my entry to real estate was probably a little bit different than a lot of people. I’d been selling software at that time; I’ve always been in some sort of entrepreneurial or sales type of capacity ever since I’ve graduated from college back in the early 2000s. So I’d been selling software at that time, I decided I wanted to get into real estate, and my intent, Theo, was to try to do that under the radar. I was going to work on my flipping business, so my entrance into real estate was fix and flips. And the idea was that I was going to work my full-time job, I was going to flip part-time after hours and over the weekend, and that I was eventually going to transition to full-time real estate fixing and flipping properties.

Well, my interest in real estate far outweighed my interest in continuing to sell software and being an employee. So it didn’t really go according to plan. I spent a lot more time working on the fix and flip business, my numbers tanked in my software sales, so I was actually let go after three months of trying to do the two. So my rug was pulled out from under me, and I was kind of forced to make things work with the real estate business. Not necessarily a way that I would recommend to other people; I think the smarter away to go about doing it is to slowly establish what you’re doing, get some consistent revenue coming in, and then step away from what you’re doing full-time.

There’s an old story, I forget who the general was, but would talk about– and you hear this a lot with leadership and mentality. Him and his soldiers would land on the beach, and he would actually burn the ships so that there was no retreat, so the only possible outcome was death or victory. And it kind of put me into that position having the salary and a 9 to 5 job pulled out from under me.

So I started doing fix and flips and my business has kind of grown and evolved over time. The intent was to just do fix and flips, stat cash, buy single-family rental properties, and retire with a portfolio of 10 to 20 of those properties. And I think a lot of people get into real estate expecting something, from things they read or podcasts they listen to… And then you get into it and you realize that your expectations may not have been really aligned with reality… So things just evolve, things change over time. Right now I’m partners in two separate businesses’; my fix and flip business – I’m originally from Philadelphia, that business is in the greater Philadelphia area. So that’s business number 1. And then the other business which is a little newer is multifamily syndication; I’m a partner in that business and I’m located here in Charlotte. We focus in the South-East of the United States on the multifamily business.

Theo Hicks: Your story about getting into real estate and then being fired in 3 months is very interesting. I kind of want to talk about that a little bit more if you don’t mind. So…

Adam Balsinger: Sure.

Theo Hicks: Had you done any deals at this point? Or you just…

Adam Balsinger: No.

Theo Hicks: So how did you pay for your first fix and flip deal if you didn’t have a job?

Adam Balsinger: Hard money lender and then a gap funder. So we had a hard money lender come in for the bulk of the purchase, as well as the renovation. And at the time I did not have the money to cover what the hard money lender was not going to fund, so I actually had to go out and borrow that capital from somebody else. I had a private lender to cover the difference.

Theo Hicks: Maybe kind of walk us through – so you got fired… How long until you find your first deal? And then how did you meet this private lender? How did you meet this hard money lender? How did you find that deal? Kind of walk us through that.

Adam Balsinger: Yeah. So before I really jumped in feet first, I paid for a guru education on fixing and flipping, and that took quite a bit of capital and of itself to pay for that course. So I had the bit of the network that I had already established as I was going and getting started. So I was able to leverage some of those relationships to be able to find the hard money lender, as well as then the private lender. So that was all through networking that I was able to find these things. And actually, I was able to find my first deal as a result of the networking that I had done through the guru education that I had done.

Theo Hicks: And then, would you have money saved up from your job to cover living expenses, or was that an issue as well?

Adam Balsinger: I did, yes. There was enough there that leanly I was able to kind of get by. You know, I wasn’t doing any fancy vacations or anything like that for quite a while. I was still pretty young too, and we wind up with more responsibilities as life goes on. I was joking with you that I’ve got this pile of Amazon boxes for — my wife and I, we’re due by the end of September, so the baby will be here probably by the time that this episode actually airs. So I didn’t have anything like that. I was a single guy, I was renting with some buddies from college, I was basically only paying for one room… So it was easier for me to manage, just because the expenses were already pretty low.

Theo Hicks: Okay. So how long did the first deal take to complete, and then how much money did you personally make on that deal?

Adam Balsinger: The deal took a while. Actually, the first couple of deals that I did were in the Atlanta market, from Philadelphia. So just through networking – I was obviously working on developing the relationships in Philadelphia that could help me find deals… But just through some of the people I met with the guru program that I mentioned before, it just so happened that a deal or two kind of fell on my lap in the Atlanta MSA… So it took a little while; they were bigger renovations at that time, and of course, this is going back now… But popping the top, ripping off the roof on like a ranch or a bungalow, and then adding the second story – that was a really popular way to flip properties in Atlanta at the time. So that was really the first — I guess two deals that I had done were those types of renovations.

I did really well on one of them, and we may be made 10 or 15 grand, something like that on the other. And it’s just because there are some things that you can miss sometimes when you’re not there, boots on the ground depending on who you’re relying on, or your inspection of your contractors, the work that your contractors are doing – those things are all really important.

So we had fixed up this one property, put it on the market, and it just sat on the market, and sat, and sat, and sat. And we could not figure out why; we had dropped the price a couple of different times… I wound up flying down to Atlanta from Philadelphia to walk the property, and Theo, no kidding man, as soon as I walk through that property I was like, “I know why this thing hasn’t sold.” And it was because as a way to try to save some money on the renovation, we decided that we were going to re-use the original trim in this house. You know, people love original stuff, it’s retro, original, it helps you on the marketing with people that look for that kind of stuff… But it had been painted — it looked like the trim had been painted three thousand different times. You could see the drip, and then the drip had been painted over… So it just looked like crap. So we pulled all that trim off, put on new trim on, painted that, and the house sold in a week, no joke, after that took place. So just one of the things you learn as time goes on, to look at some of these details.

And we had boots on the ground; our real estate agent, she and I are still super tight… And it was just something that she missed. She just for whatever reason wasn’t equating the property sitting and the price point that we were marketing at as that trim being a problem.

Theo Hicks: That’s a very bold first deal, turning a ranch into a two-story. I’d like to see it. So at what point…

Adam Balsinger: I didn’t have a job anymore. I was like… I’d been looking for deals, so that I was just like, “Well, hey the numbers work, it seems like.” I talked to a couple of people that employ that strategy. It’s a great strategy. If that’s your niche, then there are fewer people willing to do that heavy of a lift, that are looking for cosmetic renovations. So if you’ve got the team and you like doing that type of renovation, I think it’s a really good niche for people to play in. It’s got to be the right market, factors have to really line up for it.

Theo Hicks: Perfect. Let’s transition really quickly into multifamily. So I’m assuming that you invested in the LP first and then did the GP afterwards?

Adam Balsinger: That is a correct assumption.

Theo Hicks: That’s what I figured. Let’s talk about the GP. So, why did you transition into multifamily?

Adam Balsinger: Well, the whole catalyst for getting into real estate full time and doing fix and flips in the first place, as I had said before, was for rental properties. Passive income was what I was really after. I’ve always been more attracted to real estate than the stock market. Having a physical, tangible asset, I really like the idea, and I think that with what’s going on with the economy and fiat currencies all around the world, that this decision in my approach, I think, could really pay off here in the mid-term to the long-term.

But as we were picking up one single-family house, and you wind up with a loan on it, you’re making a hundred bucks a door, after you’re paying your expenses. So, I very quickly realized that 10 to 20 houses making a hundred dollars a month off of those was not going to go very far. So, I started thinking, “Okay, I’m going to need a lot more doors in my portfolio to generate the type of income that I’m looking for than I initially anticipated.”

So, let’s say I’m adding 10 doors a year, that still takes a really long time. You’re BRRRing and you’re making a hundred or two hundred a door… You’re dead by the time you’re making enough money to be able to live off of. So, I started thinking, “How can I scale this? How can I do it quicker? How can I amass that number of doors in a shorter period of time and be able to have the passive income that I wanted coming in?” And the answer was multifamily.

So we did the LP as a way to establish a track record to make my team more real when we were talking to brokers. One of the challenges we had initially was, “Oh, we own 12 doors. We want to buy a hundred unit property” and we were having a lot of difficulty being taken seriously. So we partnered up.

I did actually two different LP deals. I was LP in 330 units. One of the deals that I was in actually has gone full cycle. So it was already bought and resold. So at one point, we were going to brokers and saying, “Hey, we’re part of owners in 330 units, but we’re looking to branch off and do our own deals” So it helped us with the track record. It also helped us grow a network that we could then tap into when we were looking to take down our own property.

Actually, the person that I  invested with, the 280 units that went full cycle, he’s actually my sponsor, one of my key principals, the person that signed on the loan for my 92-unit. So that relationship may not have ever been formed had I not invested capital into his deal.

Theo Hicks: Alright Adam, what is your best real estate investing advice ever?

Adam Balsinger: Focus on one thing at a time. I mentioned that I run those two businesses, right? I do think that that has slowed down the progress for me in the growth and the development of each company. I think that if I had just focused on wholesaling until the time where that was just totally humming and more like an ATM, where it would just print out money every month, that would have helped me speed up the growth of the syndication business faster. So I think that I spread myself a little too thin for a year or two in there.

So my advice to anybody new would be, “Pick what you want to do. Do enough research before getting into it to know that that’s where you want to be, and block out all the noise.” Just listening to this podcast you can probably come up with 20 different investment strategies. Wholesale, fix and flip, single-family, multi-family, notes, BRRR, all this different stuff; creative finance…

It’s so difficult to get good if you are spreading yourself too thin. Dual sport professional athlete, you don’t even see that anymore. There’s only been a couple of people who have been athletic enough to be a professional in two sports. You never saw a three-sport professional athlete. It does not exist. So it’s silly as a new person coming into real estate, thinking that you’re going to become a master of four different strategies. Just laser focus on one, get it down, systemize it, and then add a second one later. You almost want to make it hands off, systemized, that it’s functioning without your daily involvement before you worry about adding on a second vertical. So that would be my big piece of advice. I think a lot of people mess that up, getting started.

Theo Hicks: Alright Adam, are you ready for the Best Ever lightning round?

Adam Balsinger: I’m as ready as I’ll ever be, Theo.

Theo Hicks: Alright. Well first, a quick word from our sponsor.

Break:  [17:21] to [17:57]

Theo Hicks: Okay Adam, what is the Best Ever book you’ve recently read?

Adam Balsinger: So recently – and I push this book on my wholesaling team every chance that I get – is Never Split the Difference by Chris Voss. I think it is a phenomenal negotiating and sales book. One of the best ones I have ever read.

Theo Hicks: If your businesses were to collapse today, what would you do next?

Adam Balsinger: I would immediately start working on wholesaling. I love wholesaling. I think that it’s really really competitive just because the barrier entry is really low, but I think it’s one of the best ways to churn out quick chunks of cash quickly.

Theo Hicks: Tell us about a time you lost money on a deal. How much did you lose and what lesson did you learn?

Adam Balsinger: So I don’t have the exact number that I lost… I know it’s about 5k to 10k. I didn’t want to know the exact number, because it would have made me even angrier. But it had been a fix and flip that went sideways. It was one that we did in the greater Philidelphia area, contractor bailed on us throughout the job, they ate into our rehab budget really significantly, and we did not have the same amount of work that had been accomplished in the property as had been taken out of the renovation budget… So we had a lot of difficulties then finding some decent contractors that could come in and finish the job at a number that wasn’t going to totally kill our profit.

So not only did we have to replace the contractor and then put more money back into the renovation, but it took a really long time for us to find somebody to come in to pick up where the previous person had left off. So it screws up your budget and your timeframe when you have to replace somebody, but we just also took a really long time trying to find that person to come back in. The property probably sat for a month or two as we were trying to find the perfect person to come in and finish the project. And then of course, there were still issues with that contractor.

So it was just one of those deals where it seemed that everything that could go wrong, did. And even then after we sold the property, the exterior guy that had done some stucco repair apparently did not do the stucco repair properly, so the new owner was getting water in one of the back rooms in the property within 3 months of buying the property. So, we wound up having to negotiate money back into their pocket; of course, that’s [unintelligible [00:20:29].09] We didn’t want them to be unhappy with the property, so we gave them some money so that they could get it fixed on their own. So it’s just one of those things where it was like everything that could go wrong, pretty much did.

Theo Hicks: And then lastly, what is the Best Ever place to reach you?

Adam Balsinger: My Instagram, @realestateadam7.

Theo Hicks: Well Adam, I appreciate you coming on the show and sharing with us your Best Ever advice. I really liked how every time you went through some phase in your life you were able to tell us the lesson that you learned. So I tried my best to write all that down, but… Just a few examples.

Number one, I’m sure a lot of people can relate to when you first began your real estate journey with a full-time job and thought you could balance it, and then you went all into real estate, and were not able to spend much time on your job and eventually got fired pretty quickly. And then you were able to leverage the network that you had created from the mentor or the guru class you took to find your first deal, to get the money for the first deal… So I guess that’s one lesson there, is the network that you’re going to get money for your deal from.

And then you talked about the first fix and flip which you did, which was a ranch that you chopped off the top and added in another level. Obviously a very bold first deal, but you said the numbers worked, and there’s actually less competition in those types of deals, as opposed to the kind of light cosmetic work.

You talked about the importance of your contractors and the boots on the ground, your real estate agent when you’re doing fix and flips out of states… And that you actually had to go to the deal to realize that the trim was really bad and that’s why it wasn’t selling.

You said about your transition into multi-family, you did it because of the scalability as well as getting passive income from that physical, tangible asset. And you talked about how your time as an LP actually helped you establish a track record with a broker, but also allowed you to have a network that allowed you to do your own syndication deal. with the example of the GP on one of the deals you had invested in was a sponsor on your deal.

And then you gave your Best Ever advice, which was to focus on one thing at a time. You mentioned how you think you’d be a lot further in your multi-family business if you were focusing on the wholesaling first, and then a multi-family second. I guess that can also apply to your job situation as well.

So thanks again for joining us, I really appreciate it. Congratulations again on your child.

Adam Balsinger: Thank you. We’re very much looking forward to it.

Theo Hicks: Best Ever listener as always, thank you for listening. Have a Best Ever day and we’ll talk to you tomorrow.

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