Mindy: Welcome to the BiggerPockets Money podcast, where we interview Red Robin’s employee of the year, James Daynard, and talk about entrepreneurship, scaling a business, and making tough decisions during economic shifts. Guest: We look at what what is our client need that will help them grow, and then we add in that service into the mix at that point, and that’s how we’ve exponentially grown our brokerage, because once we started offering that service as a part of a listing service, which again, is way more than a normal broker will do, we caught fire. And we went from doing like one to two listings, like every couple months, to where we we had a pipeline of over 200 listings in a 24-month period.
Mindy: Hello, hello, hello. My name is Mindy Jensen, and with me as always is my fellow financial fanatic co-host, Scott Trench.
Scott: Great to be here with my uh, magic money Maven Mindy Jensen.
Mindy: Wow, I had to look up the alliteration on mine. You just come up with it. You’re so good, Scott. Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you’re starting.
Scott: That’s right. Whether you want to retire early and travel the world, go on to make big-time investments in assets like real estate, or start your own businesses, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.
Mindy: Scott, today is my favorite person, James Daynard, and a master class on how to work on your business, not in your business. He is constantly reworking and refining his business to make it the best business it can be. And he has tons of tips for our listeners. If you are a business owner or if you are thinking about starting your own business, this episode is an absolute cannot miss.
Scott: Absolutely. I really enjoyed talking to James and, you know, I think I think a lot of folks, you know, aspire to this kind of concept of, oh, I own a business, but that business could just operate indefinitely without me and it would be fine. I’m sure James’ business could operate indefinitely without him and it would be fine, but it grows much faster and operates much stronger because he’s the quarterback and um, the the the head coach of his business, and is heavily involved in it. And so I think it’s an in and on uh a approach and I think you’re going to learn a lot and it’s is a much more realistic look at I think the really successful small to medium-sized business owner, um, than maybe what what some social what what social media may lead you to believe.
Mindy: We have a new segment on the money show called The Money Moment, where we share a money hack, tip, or trick to help you on your financial journey. Today’s money moment is, a new study has found that two in three parents said shopping with their kids tends to be more expensive than just shopping by themselves. Our advice, next time you go shopping, try to leave the kids at home. Solo shopping cost an average of $133. Meanwhile, shopping with the kids cost an average of 179. Keep that $46 in your pocket. Do you have a money saving tip for us? Email us at moneymoment at biggerpockets.com. Before we bring in James, let’s take a quick break. And we’re back. James Daynard is a real estate investor and entrepreneur in the Pacific Northwest. More importantly, he’s the co-host of the newest Bigger Pockets podcast called on the market, where they cover market trends, news and data and the economy. James can also frequently be seen sharing his real estate knowledge on the Bigger Pockets YouTube channel. Today we’ve asked him to join us to talk about his journey into entrepreneurship and how he built and scaled his business. James Daynard, welcome to the Bigger Pockets Money podcast. I am so excited to talk to you today.
Guest: I’m excited to talk to you too. Mindy’s like one of my favorite you’re like one of my favorite people the energy she brings just brings it out of me. So I’m I’m stoked to be on here today.
Mindy: Well, thank you, James. Let’s jump into it because we are going to go really, really in deep today. Let’s talk about your money story. How does that look?
Guest: Um, so just like I think a lot of people, I I got started with not a whole lot. Um, so how I got into this business was I was a senior in college. Um, I was going to University of Washington at business school. And, um, I started look and I was working at Red Robin, basically. So I was a full-time waiter. I’m a firm believer that people should have jobs during college. Um, so I was working 40 hours a week when I was in college, knocking, uh, basically slaying burgers, paying for school. And in that final year of college, I started looking for a sales job for practice or internship. Um, I had taken an internship with, um, an elevator salesman, the the summer before, where I was learning how to sell elevators, and then I figured out elevators weren’t for me. Um, and and so I was starting to look into what I could do just to build a skill set. It wasn’t even about getting into an industry that I really wanted to be in. It was just like, hey, I want to learn how to deal with objection, rejection and just kind of get through the process. And then randomly my my business partner who today, um, who was also my roommate at the time, had sold a car to a local investment company because he worked at a car dealership and they were so impressed by him, they recruited him to come work, and he came back and and and what the job was was they had a list of properties that were that needed a lot of repair needed a lot of work and his job was to go knock on the doors and get them to sell to this company as a wholesaler. And he was telling me about this new job he just took. I’m like, whoa, shoot, I I like real estate. I had bought one piece of land when I was like 18 years old and then sold it. Um, and I was like, why I like real estate and I had a real estate background. I was like, well, I I want to do this. I want to practic knocking on doors. And so, uh, I took this job when I was senior in college and I, I was going to school full-time. I would work three doubles on Friday, Saturday and Sunday at Red Robin, and then I would knock doors Monday through Thursday from like 3:00 till 9:00 to 10:00 at night. Um, and it was just busy, and then I figured out the world of door knocking and wholesaling and how amazing it can be, but also how miserable it could be. Um, and I started to learn at that point.
Mindy: I love that you did this as a senior in college. I think that I think back to when I was in college, I’m like, I know everything. I should have been doing real estate when I was a senior in college, when I was in college at any time because the experiences you get, like back then if somebody told me no, I been like, whatever you’re wrong. I’ll just go to the next one. Whereas now that I’m an adult, I’m like all, you know, I I can be more self-conscious. I’m not super self-conscious, but I can be more self-conscious. Oh, they said no. Oh, maybe I won’t try it again. Um, if you’re a senior in college and you think you want to get into real estate, get your license. Go out and knock on doors like James said, that’s a really great experience. I mean, sales, way back on episode, uh, was it 32 or 35 with uh planting our pennies, Mr. Planting our Penny said, having a sales background is so amazing. You can make so much money if you can just master the art of the sale.
Guest: Yeah, and I think that’s really important for college kids and young people in general is to just take that step when when I took this job, it was just to learn and I wanted to learn about the business but also learned sales, but I I made zero dollars for that first year. I was terrible at knocking doors. Like I had no idea. I didn’t know anything about real estate. They didn’t give me any training. It was literally here’s this stack of leads, go get them to sell to us. I didn’t know what a hud was. I didn’t know what an offer was. I didn’t know any of these things. But I took the step just to learn and you know, I think it’s really important when you’re in college or you’re in your education, that you have to get out of that box of just learning and following the process and get into the real world because the real world is a lot different than than education. And you and to put it to use really helped me kind of grow as a person, but it’s not about making that money, it’s about learning that trade to help you down the road to really build your business out.
Scott: So how did this how did this uh set you up for entrepreneurship in the next stage of your career?
Guest: Yeah, I think that that’s a great question because originally when I took this job, I wanted to get into medical device sales and work for a company. And, um, but I also know that I like to be in control of my own kind of destiny or I really figured this out during wholesaling because what I had learned during this time is that first year, I was banging, I probably was knocking at least 3 to 400 doors a week, and I was, you know, that was a lot of driving around, getting yelled at, getting ran off their yards and I wasn’t making any money, but I was watching these entrepreneurs in my office that were a lot older than me, kind of grow their business and making money and buying property and doing well. And then I also saw the their freedom that they were doing. Like they were in their mojo, so they weren’t working as hard as me because they didn’t really have to. They had their kind of book of business, they had their form, and these guys were going out and taking vacations, they were living off their rental properties. And I was like, I’m doing this wrong or or going to work for someone just is not, you know, the longer I worked there, which is weird. The longer I worked there, the less money I made because I was spending money on gas but the more motivated I was to stay in the business and take over my own entrepreneurship. And because when you’re a wholesaler for this company, I worked for them, but I was an independent contractor. So I got to work my own hours, got to go contact people on my own on my own accord. and I was also responsible for developing myself. and so during that year, I spent a lot of time reading up on like what foreclosure sales were, what distress sales were, what title was, what what the HUD was and really training myself. And then once I spent the time because I knew I was a person that liked to work and so I just invested in myself and really trained myself at that point. And then I put it to work. Once I graduated college, I had done like one deal by then, like in 12 months, I had got one deal done. and I remember I was graduating. I was like, okay, is this time to start applying for jobs because I was getting job offers. They were good job offers for medical device and I was like, well, I can make 200 grand a year right now or I can keep knocking on doors and getting yelled at. And it was like this, but it was a really hard choice for me and it should be a no-brainer for a kid coming out of college that had that potential to make that kind of money, especially back then. And but there’s just something kept me in this business. I was like, no, I don’t want to work for somebody. I didn’t want to do corporate life. I didn’t want to be 9 to five or 9 to six and following orders. I wanted to be in control of my own destiny because for me, my picture of what I want to be in life isn’t, yeah, I’m not going to get there by having that 9 to five, even if I do really well in that sales job. And then what happened is as I put in more effort and training, my it started all of a sudden the lights turned on. and I went from doing one deal in 12 months to doing two deals in a month, to doing three deals in a month, to doing eight deals in a month. And I created this system and it was because I was systemizing the they just gave me the opportunity and I systemized it behind there. And because I systemized it, I recruited more people to knock doors underneath me and it went from me knocking doors to having three guys underneath me and I was just running appointments all day long. And and once we, once it got systemized, it got even more enjoyable and then there was no way I was ever going to work for anybody again.
Scott: I happen to be rereading rich dad, poor dad right now. And part of the book, and you know, Mindy’s making a face, but I I I love that book. And you’re like like this is exactly the story that they bring in there, right? They kids work in the shop and they get paid very little to teach them about how working for money is is is really hard or whatever. And then they start working for nothing, which is, which is kind of your story. You’re making less and less the harder you work because there’s more and more travel. But that leads to an opportunity for them to get these, uh, these comic books or whatever, uh, that they can then rent out and create a library of passive income. And it’s like, I don’t know, I I just thought that was a really interesting parallel with your thought process and what’s kind of embodied in a lot in in in that particular book of I’m not going to work for money, I’m going to work in order to build a business here and learn the skill sets that I need to do. And I’m going to dive really deep into that, um, and use that opportunity to begin getting the snowball turning.
Guest: Yeah, and I think that’s a really important, that’s a really good parallel and I think that’s really important for for me at least or to remember is actually the most impactful times in my whole career has always been when I have not been making money. It’s not the good times. It’s the learning. When you really have to push yourself to learn through, right? Like when I started made no money. It was a grind through. When 2008 happened, was definitely not making any money and I was losing money. But those are all the times that I really, you know, took a look at what I was doing, figured out how I needed to adapt it, and it was either I had to run away and do something else or hang in there and grind through it. And those time, I mean, those are the most impactful times or like when I lose a lot of money on a property, because it still happens to this day. No one ever gets them all. That’s when I learned the most and that’s what actually pushes me forward in life, not making the money. It’s learning the lessons and a lot of times learning lessons does not mean you’re you’re creating income.
Mindy: Okay, I want to highlight something that you said a couple of minutes ago. You said, I spent a lot of time reading what foreclosure sales were. Um, I didn’t, I wasn’t able to type as fast as you were talking, so I couldn’t get the whole quote, but that right there, I spent a lot of time reading. You prepared. You didn’t just jump in with both feet and expect success. If you want to be successful in business, you have to prepare. There’s, we’re both real estate agents. There’s something called continuing education in many fields, real estate agency is one of them. You have to continually be learning. If you’re not continually learning, you are going to stagnate and then your sales are going to drop and you’re going to be like, huh, I wonder why this isn’t working anymore and you’re not going to be as successful. So the fact that you spent a lot of time in the beginning doing the education, doing the work, and now everything’s, I don’t want to say everything’s easy because like you just said, you still sometimes lose money. That’s what happens. You do a job and you’re like, oh, that didn’t work out. I really thought with all the preparation that I did, I really thought it was going to work and it didn’t and that’s you’ve set up a foundation where you could have lost so much more if you didn’t even have that foundation.
Scott: What were your expenses like during this period? How were you living?
Guest: I had to live very thrifly. Um, it was luckily, I was a really good Red Robin waiter. Um, I even was team member of the year at Red Robin for the whole nation. And so they I was, I’ve never worked normally though. Like even when I was a waiter, I would run 20 to 25 tables at a time. Like I was there to make as many three, I mean, the thing about Red Robin is your tips were like three to five bucks typically per per table, maybe 10 on a a big sized order. And so I was like, well, I got to do volume. and so I, I would, that’s why I worked those long hours on the weekend. So literally I’d get there at 9:00 a.m. on a Friday and leave at 1:00 a.m. and I would do that Friday, Saturday, Sunday. I would open the place, shut it down. And so that gave me enough money to pay for my gas, my rent and other bills that I needed to do. and you know, at that time I was paying like $500 for a room. my cell phone wasn’t very much and I had paid off my car because I am a saver too. So even when I was a waiter, I would save my money away. So I didn’t have any car payment either. And I think that’s really important. it’s by me having low cost and also not quitting my income, which wasn’t a ton of income but it was enough to get by. it allowed me to take the time to learn during the business rather than just jump in, two feet and like start flailing around trying to figure it out. And but it was it was all on on tip money. So I I I always was the guy chasing the most amount of comic cards. I actually won that contest nationwide. I got the most amount of comic cards in a week and then they gave me a letterman’s jacket. But I I think everybody should take a waiter job at some point. It teaches you how to deal with people, that you have to be of service. that you, I mean, there’s nothing more humbling than going up to a table and singing a birthday song 40 times in a day. And it’s like getting humbled, but just making yourself of service and it really did teach me really good habits for transition to being a broker later and helping people.
Scott: You know, we we had David Green here on the podcast, um, in one of our early episodes and and he also started his career as a server and had brought a very similar mentality of of thrift and hard work to that to that. How can I add value here? How can I be of service? So, yeah, I mean, what what a privilege to learn from both of you guys, um, real estate entrepreneurs and employees of the year, uh, at Red Robin. So this this is fantastic.
Guest: Was he Red Robin? I don’t know if he was a Red Robin. Yeah. I can’t see him doing the birthday song and the clapping.
Mindy: Do you want to sing the birthday song for us, James? Do you remember it? I remember all of the ones that I had to sing.
Guest: Oh, I still got the, I still remember the ingredients to every burger because you have to memorize that too.
Mindy: Well, yes, of course.
Guest: You name a burger, I’ll tell you what’s on it.
Mindy: Do you know I won a hamburger recipe contest once? There’s your fun fact about the show that has, there’s your fun fact about me that has nothing to do with the show. and we have successfully derailed this show enough. If you’re not going to sing for us, James, we’re going to move on to the next question. Your company was named one of the fastest growing companies and you’ve been on Ink 5000 like several times. How did you scale your business?
Guest: Yes, so for us, it it came down to what the biggest event that happened that allowed us to scale and grow was actually 2008. Um, we had been working in the wholesale business selling, uh, we had became like the number one off-market guys in Washington, where we were doing 20 to 30 deals a month and had a really good system. in 2008, then we actually started our own business, opened our doors, invested a lot of money into the properties we were buying, but also into our business, and then all of a sudden subprime mortgages went away and it crashed. and it it it was this time in the market where everybody was quitting and leaving. And we literally watched the broker pool go from like it shrunk by like 70% in Washington. It was a huge number of people that quit real estate because it was just, you know, real estate became that thing that was like leprosy, no one wanted it. And so, um, what that was the biggest thing because it gave us this open field to run. If everybody’s off the field, you can own that field if you do the right steps. And so, um, you know, what we we we so how we kind of scaled it and kind of grew those is we went from our wholesale shop and then when 2008, it got really hard. And it was really hard to dispo a deal. And so we were also investors where we’re flipping properties and help and and knew how to renovate homes. And so what we we we kind of figured out was like, okay, we have to get people to buy our deals. Well, how do we do that? We have to mitigate the risk. How we mitigate risk is we’re going to hand hold them through that process and give them extra service in the construction. And because we’re also doing that, that and we we we go that was a service that we would offer people if they gave us the listing and that’s actually when I became licensed and saying, hey, look, we can help we if you buy our property, we will help you through the whole process and then we will list the property for you and get a commission so now we can make two revenues on each property, but also we were going to help them mitigate risk to even buy that property because most people just did not want to touch it. And so how we’ve grown is every time we had, so we went from wholesales trying to sell properties. The next business we started was a business that would create revenue on the same transaction but also help us move this deal. so it wasn’t out of right field. It was a complimentary. And then from there, we also go, you know, to kind of grow and scale, we’re going, okay, well now money’s hard to get. And if it’s hard for people to get money, that’s going to be hard for us to sell our deals and now get this listing. And then that’s where we created a lending business, which would then finance the client in the deal too. So we’re finding the deal, we’re packaging it, we’re lending them the money and then we dispo the deal for them too, and we help them mitigate the risk all the way through that protects all of our commissions and fees. And so that’s really how we’ve scaled all of our businesses is really whatever we’re doing core inside and we look at what does our client need, and how can we help them through that process? It’s all about providing service. And so, what we started to do is we just, what does our investor need? What do our partners need? and then let’s build a business around that. That is and every time we have that issue or even with COVID, you know, we had to start, we do our own construction now. We have about 50 guys on payroll because we had to solve that problem. So every time a major issue in our ecosystem comes up, if no one else can solve it, we try to solve it ourselves.
Scott: This is that James I give us this idea of the scale of your business. Can we get some sort of like revenue, employees, transaction volume? What how how much business are we talking here?
Guest: We are deal junkies up in the Pacific Northwest. So we do, um, so it all started with wholesaling. Um, so currently right now, typically we do about 2 to 300 off-market deals a year through our wholesale company. So that has been a business that has grown steady through that way. Um, that has, uh at that business, we have five sales people and three employees. Um, at our brokerage, typically we’re doing about 150 to $200 million a year with our clients internally. Um, with is all direct to investors or disposition. So we don’t we’re not a normal brokerage. I don’t go around to show people houses. We show them math. So we sell only math. Um, and it’s so that the brokerage does about, again, typically about 2 to 300 deals a year, about 200 million in transactions, and then we have about 20 sales people for the brokerage inside of my teams, and then about 10 admin staff. Um, our lending business usually does about 100 to 150 million a year in direct loans to investors which has 10 people in it. Um, and then we have our own.
Scott: And these are hard money loans.
Guest: These are all hard money loans. So we’re not direct to consumer, we’re we’re commercial paper only, first position deeds of trust where we’ll fund investors with our company’s called interest funding. We’ll fund in as little as 24 hours for investors. So we’re true, true hard money guys. We don’t take bank appraisals, we’ll come finance at the steps.
Scott: Who provides the capital in that hard money business?
Guest: Uh, so what we’ve done is we’ve raised capital. We have our own capital in there and then we also have raised capital from our investor clients. That’s another way we’ve scaled, right? People, we by doing good business with people, they want to invest in all of your businesses, right? Like our syndicating business, they invest with that. Um, they invest in our hard money fund because some of our investors have done well and they don’t want to do the work anymore, even if we’re consulting, they just want to invest in us. and so we, we pay uh equity returns. So whatever our blended rate is, that’s the return they get. and then we have lever lines with our local bank that we’ve worked with for almost 12 years now where they give us two to one lines. So a third of our lines are private equity and then two-thirds of it is through bank financing. Um, so allows us to kind of pledge and move the loans around.
Scott: love that. And and you feel pretty confident in that debt because you’re servicing it essentially. So.
Guest: That is my favorite business. I personally have probably 50 to 60% of my own liquidity in that business because it pays me a great rate of return and I’m the one that underwrites the deals. So we know what the loan to values are. and like our average loan to value instead of our fund is like 68% and that’s a true value because uh, how we run that business is I, the only people that get to put a value on it is my business partner or myself. We don’t take appraisals, we don’t take anything and we also only lend in our backyard, which is Washington State, so we know those markets like the back of our hand. We’re not the biggest guys in town, but we’re we’re reliable in Washington.
Scott: So I just I this is a tangent here, but I I’ve been really noodling on debt as a, you know, debt debt was ignored for the last 10 years by a lot of folks looking to achieve financial freedom because rightfully so, like there’s not it’s really hard to get a good return on that unless you go into the hard money space here, which I think a couple of of savvy investors have been in, but how freeing is it to just have half your net worth in something that provides very high simple interest essentially, um on first position notes against real estate. I mean, is that is it it’s not tax efficient necessarily. You can if you do it in a retirement account, but like how freeing is that as a concept?
Guest: Yeah, and that is a negative, that’s a good point, is it’s a high income bracket. you know, so you’re typically getting taxed pretty heavy on it, but it is extremely freeing because it’s not, you know, and I diversify my own investing. So we own, you know, I actually invest in syndications, I invest in my own rental properties, I invest in other operators, we put money in our own deals and then a lot and, uh, private money. and private money is the easiest one to have. It pays me a steady check every month and the other thing I like about it is committed for a one-year term. so whereas if I’m putting it in the real estate holdings, you’re you’re subject to market conditions, which is okay, but you if you want that liquidity, you might have to wait two to three years or you might have to get clipped and take a little bit of a loss to get your cash back out. This protects my balance and I have access to the liquidity and it is extremely freeing because, you know, that’s where a lot of investors get hung up on on passive income. They’re like, why, I don’t want to put it in a syndication deal. That’s a five-year commitment and they just can’t think past 12 months. And for me, I’m the same way because I do want access to that capital if I need to pull it out and go buy another apartment building or something that’s going to do well. and so it it is one of the best ways. It actually pays, I almost make more money passively through my lending business than I make at my other businesses now. And so anytime I make money, I save it, I shove it in there and then it’s just paying me a high high yield. It’s just like save your nick, if you save enough money together and you build that pot big enough, that passive income is real. It is a real thing. Like I moved to Newport Beach, California, uh, three years ago, as not a cheap place to live. it is 100% paid for by my investments on my passive income with my hard money space. It is very underrated. I get a, I average out at 11.2% on my money every year. It’s a monthly payment and the one negative is is a high high tax. So you got to put your tax in a different account because that tax bill gets you at the end of the year.
Scott: Or just pay the tax bill and enjoy the freedom with the first chunk of that passive income and then get tax efficient. I I I’m I’m all about the hard money and and and this kind of stuff. I think it’s I think it has uh not been given enough attention in the personal finance space and like what a what a like just make it a third of your portfolio potentially and you’re you can be done years in advance of whether you have a stock portfolio from a passive income perspective. So I’m I’m really, uh I’ve been getting interested in this and I’m glad to hear that that’s a a big part of your portfolio.
Guest: It is it is definitely my passion to keep growing that. The more private lending I can do, the more I’m all over it. It’s it it it’s less stress too because you don’t have to operate as much. You just have to underwrite well and as long as you underwrite well, you are protected.
Scott: And if you do have to operate, then you have luckily you have a whole business that that, uh, can actually operate that asset directly, uh, and deal with the problem, uh, in the unlikely event you did have to foreclose. So, that’s probably also fairly freeing. Um, walk us through the can’t I’m sorry, I want to take a huge tangent. Walk us through the business of the hard money. So we we got through your, your, uh, flipping business. We got through your, or your listing business. We got through your wholesale business. We have not got through your flipping business and we have not gone actually through the actual, um, structure of this hard money business yet.
Guest: Yeah, so ’cause the hard money business is structured, it’s actually fairly simple to run, too. We have four employees at that company. That’s all we need to run that business. We have our operations manager who has been with us for 12 years. She knows loan doc. She can protect our docs. Like I would, I would trust her with my own money. She knows how to read titles, go through, so she does the quality control and making sure the collateral is safe to lend money on. That’s really important. Then we have our head underwriter who underwrites all of our loans that are submitted in and then we do final approval. So that kind of kicks out loans that we don’t want to look at. And then we just have two sales people full-time that work with our clients, uh generating the loans. and it’s actually so it’s one of the simplest businesses to run and one of the most profitable. Um, which is a a win in all buckets to me. Um, and then we have our investment side. So we have our so those are all of our fee businesses. So we have the wholesale business, the brokerage service that does buying and selling. um, and then uh which also does multifamily acquisition as well. our lending business and those are our fee and service businesses. Then we have our investment businesses. and those combined of, we develop and build about 30 to 50 town homes a year ourselves. we fix and flip about 50 to 70 homes a year, uh, which is, uh, and and now we’ve switched from doing general contractors to we self-manage everything. So all of our employees are in house. So that has actually exponentially grown our employment, uh, and how many people are in our office now. We just had to actually lease another 5,000 square feet. We’re like bursting at the seams. Um, and the reason we had to do that, that wasn’t actually something we ever wanted to do because now we have an additional 50 employees. So we have about 100 employees total in all of our businesses. Our construction component in our investment arm actually take up about 50% of that because it’s just more labor and and kind of hands-on responsibilities. But the reason we had to do that is we had to pivot from about two years ago with because of COVID is the the labor market just got thrashed. It was really hard to control cost, right? Labor was costing a lot, bids were costing a lot. And so for us to reduce that cost, the only solution was to bring it in house and control it ourselves. It was either we’re going to have to sit out this crazy market because it was a little too risky to us or how do we fix the problem? and that was bringing them in house. And those construction teams work on our fix and flip, our development and then we also do apartment syndicating up in in Washington where we’re like right now we’re we’re renovating about 300 apartment doors as well. and that’s all in house. And what we found is in house, we reduced our cost by about 20 to 30% and we control the schedule to where we know things are getting done on time, not waiting for theirs and that is detrimental in this market right now with the cost of money. So or it’s it’s very important. And then we have our leasing team that leases and stabilizes up everything as well.
Mindy: So, are you keeping your guys, your construction guys busy all the time or are you actually, do they ever have any downtime? Because I have long said that a million dollar, billion dollar idea is just to have a company where you answer the phone when it rings. You have some person dedicated to answering the construction company phone when it rings and just booking people out. And you have your calendar. Oh, my electrician can come in 13 Fridays from now. Oh, I can’t wait that long. You’re like, okay, well, uh, let me know if you want me to pencil you in. Otherwise when you call back in an hour because nobody else will answer their phone, it’ll be 15 Fridays from now. Like there’s no contractors out there that are answering their phone and coming out for uh, coming out for, you know, giving quotes and things like that. So are you keeping your guys busy or have you considered starting your own business to help other people who are also uh not able to find contractors.
Guest: You know, we’re not going to consumers. So we don’t do any work for a consumer. That is not our business. Um, you know, we keep them so busy. We’re constantly hiring. like we just hired another superintendent, a bunch more labor staff too. Um, you know, because for us, the goal is to build our investments out, not that I I don’t really want to run, like we don’t do any, I I stay away from dealing, the only consumers I deal with are investors. and outside of that, like I like we won’t do a design build. If we’re building a house, someone’s like, can I pay you more money and change things up? We say no. We just stick to our process because that’s what we do really well. And I’m not saying that that’s how everyone should do it, but that’s how our whole business is set up is to build a certain product on production because we do a lot of volume. So if you throw that random mix in there, it adds in a lot more personalities. personalities can mean problems. and so that’s why we’ve stayed away from that consumer side, but our guys stay very, very busy. Um, you know, and if they’re not, we have to make changes at our you know, a lot of times, we can move our town home guys over to this section or or our renovation guy, like if we’re short on syndicate, if we have, we’re short on, like right now our fix and flip inventory is a little bit lower because we’re reloading. But we have a lot of apartments we’re turning. So we’ll move our fix and flip guys over to that to help with labor. And so we can, by we have so many businesses going, we can kind of play chess with our people. Um, but it it’s, for me, I try to stay out of the consumer space. I’m a broker, which is enough consumer interaction and I’m I’m good with that amount. I if I don’t have to take anymore on, I’m I’m perfectly good with that.
Scott: Awesome. So, so we we we any any other businesses before I move on to the my next question here around scaling a business. We have the we have the we have the flipping business, we have the investment business. We have the hard money business, we have the brokerage business, and we have the wholesaling business. That’s five. I’m counting so far.
Guest: Yeah, and then we do have a property management. We do offer, we have property management through our brokerage that manages our client’s rentals that we sell off to because that was that was actually something I did not want to start because it’s not the business that I like, but our clients were like, can you please do this? So we ended up doing that and that’s actually been growing rapidly right now. And then we have our property management company in house that manages all of our 1500 doors in Seattle because you know, we we don’t want to outsource that. We have about, yeah, we’re we’re trying to get to 2,000 doors by the end of the year. And so that is its own separate business. And then lastly, I have my own kind of investment company that does JV deals where I’m investing in operators in numerous different states or in Washington where I’m just coming up with the money and they’re running the project and we do, we do equity splits at that point. And that’s another, just like the lending business, I like that business best. It’s uh, people people do the hard work and I just put the money up.
Scott: So you recently crossed $1 billion in personal net worth. Is that right?
Guest: Yeah right. That was, if I can get to 10% of that, I’m out. I’m out. I’m going to become a full-time podcaster hopefully on Bigger Pockets.
Scott: Awesome. So so look, I I I’m listening to this and I’m I’m trying to start building my real estate business. This is an inconceivably large business to me. How how, but I maybe I have a few rentals and I’m trying to get I’m trying to move my business along. What would how would you recommend someone starts or or thinks about it when it’s time to start scaling and putting together a real business, maybe transitioning out of their job. Like, what what were your thought process there? Was it linear? Was it was it lumpy? Did it come in fits and starts? How does someone go about recreating some of the things that you’ve you’ve built here?
Guest: So the first thing is like if you’re looking at leaving your nine to five, take it in steps. I saw a lot of people over the last 24 months just go, I’m quitting my great job at tech to go do this full-time. And good for you. You have you guys got, I mean, I’m I’m actually really happy people are making these steps, but at the same time, there’s there’s certain things that help you transition over. One is access to money. Like when you have a W2 job, you can get loans a lot easier. Now that will help you scale faster. That will help get you to financial freedom faster. So you can kind of layer it in as you’re going from a nine to five into an entrepreneur. Once you get to be an entrepreneur, you want to really, for me, I always want to dig down is what is my passion and what am I really good at? I don’t go to the hype on the internet. If people are crushing doing something, I’ll look at that plan to see if it works inside of mine, but I’m never going to go chase the shiny because that’s the problem is there’s shiny object syndrome where every, you know, like it’s like an it’s like short-term rentals were a huge thing for a while, where everybody was going after that because it was like this shiny object, right? And it and it was great. It was getting high yields, it was working really well with the pandemic, but then once it slows down, it’s not so shiny. And the problem with chasing a shiny object is by the time you actually get it, it was shiny for a reason. It’s already hit its accelerator a lot of times. And so by the time you put it in plan, it’s starting to it you’ve missed it, you’ve missed it. and so for me, it’s always about building off of what am I passionate about? what am I really good at? and I stick to what I’m good at. And then from and how I scale is how do I add in the complimentaryes to what I’m really good at? For me, I am good at underwriting properties, looking at investments, looking at spreadsheets and figuring out how to maximize an ROI on a deal. That is my bread and butter. So all the businesses that we’ve scaled out are all built around that general principle. and it’s I’m never chasing, I’ve done one VRBO before and it did not fit in any my process and it’s not for me. It’s just not in my plan, even though it’s it works for a lot of different people because they’re good at it. like Tony’s awesome at it, right? From the rookie’s channel. And that’s how he’s built it. but the easiest way to scale is stick to what you know and and also make sure before you take that step, like before we went to being brokers and selling for investors on our market, we were the best off-market guys in our market or doing really well.
Scott: That that seems like the unifying theme, that sounds like the unifying theme of your business is we’re really, really good and and I have an incredible amount of experience and deeply understand what a good deal looks like in a very specific region of the country, a specific area and everything else from your business seems to be built around that fundamental concept. Is that a fair statement?
Guest: It is, because it’s a way for us to provide the best service. If we know, I’m a firm believer, we don’t sell anything out of our shop if I haven’t personally done it myself. Because we want to be, we want to educate our clients, we want to make sure we’re mitigating the risk correctly. and and by knowing where we are, when we are, we can, we don’t need to go, you know, a lot of operators too, they go into these other markets because they’re chasing what everyone else is chasing. I’d rather master my market and then and build all of our business inside of this market because we’re not the biggest brokers, we’re not the biggest lenders, we’re not the biggest developers and we’re not the biggest syndicators in in Washington. But all of these combined make a very good income for us and so we stick to what we know. We like to stay in our sandbo and you know, like for us in lending, we could have gone nationwide in the last two years. But then we’re lending on assets we don’t know. We don’t know if if we had to take that back, I don’t know how to renovate that property in, let’s say it’s in Colorado. If I lend something there, I don’t have any resources, I don’t know the market as well and so it it also puts my investors at risk. And so sticking to what we know has allowed us to, because we know it so well, it it allows us to grow rapidly.
Scott: Well, let me ask you this. So a lot of folks say, no, no, don’t, don’t do what you just said, what what James has done here. Hire somebody who knows what they’re doing to do that for you. You seem to have taken an approach of, no, no, no, I’m going to actually get hands on and swing a hammer and knock on a door and find a deal and become an agent and flip a house, and then I’m going to build a business around something that I have deep expertise in. What would you say to folks that that kind of have the opposite tack of, no, no, no, hire that expertise and bring it in and have them do it for you?
Mindy: I’m going to answer for him. I’m going to say they’re wrong and James is right. And the reason is, you’re not going to know what you don’t know until you get in there and you do it. And all the people who are like, oh, just hire somebody. Those are the people that have been paid, they paid way too much. Those are the people who are paying $3,000 for a water heater installation.
Guest: There isn’t anything wrong with that. It’s just not how I do it. Like if you look at some of the biggest builders in the nation, they’re really good at expanding through different markets, setting up systems, acquiring dirt building it and making money. They’re they’re phenomenal at it. but they stuck to what they’re really good at, which was finding plats of land, evaluating it, getting long closes, hiring their teams and then building a certain type of product. That was what they initially had started with in their current market. We didn’t start that way and so we built everything off of our success and because of where we started, it kind of naturally went this way. I don’t think there’s a right and wrong answer to that at all. I think if you are going to dig into a different market or expand out, you need to be very careful and take your time and scale accordingly. But it really comes down to what is that core thing that you are doing originally that you’re trying to build out and brand through that way and and try to, you know, and try to expand out. Um I’ve seen a lot of companies, we work with a lot of hedge funds too and sell them property. They’ve done really well, like we’ve sold many hedge funds that were buying rental properties and in numerous markets and they had their teams and it worked out fine for them. Um, but for what I was really, really good at, if if my passion is about underwriting investments and knowing them like the back of my hand and selling really good packages and making sure and also my other passion is is making sure people are doing well. Like I, I as a broker and an investor, you know, with this last market correction, some people took some haircuts including myself. That’s just the way it went. That does not sit well with me as a broker. It it gives me anxiety. And so for me, it’s also about what am I trying to accomplish in life? Yes, we could do more in other states, like I had the opportunity to do quite a bit of business in Arizona, but I don’t really want to. I want to stick to what I’m good at because I don’t want to be the biggest, I just want to live a good life and do well. and the more I know it, it it’s just protects me and protects my investors. But again, I don’t think there’s a a right and wrong way. Some people say I’m doing it wrong because I’m too hands-on on my business. And they might not be wrong there. I put in a lot of hours, but for what, it works for me and I build my business for what works for me, not what other people are doing.
Scott: Awesome. So, so we, any, any other businesses before I move on to my next question here around, uh, sorry, but what what’s your leadership team look like? Do you have one for each business unit? Do you have one for the conglomerate? How how do you think about your business and manage it on a day-to-day basis?
Guest: And that is a good question because we have so many transactions going on, it can be a title wave sometimes. Um, the first thing is, I have a really amazing business partner. We’ve been partners now for 18 years. and we do divide and conquer. So I run a set of businesses, he runs a set of businesses and we have full control of those businesses and not only that, we trust each other that we are making the right calls. Even if one of the businesses isn’t doing well, we know that that’s just that the partner is fixing that at that point. Um, and so how it works is I run the brokerage, the off-market, the fix and flip, um, and and then we both kind of work he runs more the management of interest funding, the lending business. I generate a lot of loans with our clients and so we both kind of work on that. And then he runs the he operates the syndications and our rental units and our town homes. So we have, they’re split down the middle at that point. Um, each company has their own managing, uh, either managing partner in there. So like our off-market company, we took our one of our top producing reps and we made him a partner in it. So he runs more the day-to-day and I work with him. And so he’s he’s like our sales manager at that point. So every company has their own sales manager or operation manager and then they report directly to myself or my business partner will.
Scott: Awesome. And then from a cadence standpoint, how do you meet with these folks? You have one-on-one with them every week, every month? Do you have a a leadership team meeting? How how do those, how do those parts just a glimpse into the the week-to-week life of James?
Guest: Yeah, so we are, we stay busy with meetings. that’s for sure. So I and I always look at there’s two different types of owners. There’s like the coach owner who’s really on the sidelines, then there’s the quarterback, uh, owner who’s more on the field with the employees. I’m definitely a, I would say my my business partner is a coach. I’m the quarterback because I I’m in the mix. And so I, I keep really busy with meetings. So I meet with every team, so we have five different, uh, we have we have six different sales teams between the brokers and the off-market. We meet every week in uh, or no, half remote, half in person, but we are meeting every week. Um, and and those are going to be hour-long sales meetings. We meet in teams, so we can talk about what people are, we want everybody talking to each other, what’s going on, what’s working, what’s not working. And then I kind of give more directive on how we’re we’re trying to accomplish these goals. Um, and so I I meet and then typically we meet individually. I usually meet with a salesperson or a team member at least once one-on-one a month because I really want to dig into A, what do they like about the job, what’s going on, how do we fix these issues, but also really finding out what their goals are. Um, our employees have been with us a very long time on average. They’re either they’re either here for a very short time because they can’t quite keep up or they’re here for 5 to 10 years. So our average employee that’s on payroll has been with me for over seven, eight years. And so, but and and that makes our business function and run really well. And so putting that extra time in with people and finding out what their goals are, and then positioning them in the company with what their goals are around has really kept people in. And so I like to have that in-person communication. But we do our sales meetings and then everything funnels up. our teams all communicate off. We built a really big robust Salesforce platform and it’s all done through Salesforce. So I I’m talking to my team all day long, whether it’s underwriting a deal, a construction issue, a an offer issue, uh, just a request and it’s all fed through Salesforce. So I can kind of log in, go through all the fires or or opportunities and then get them all back with quick information.
Scott: How how how you’re given this investment you’ve made, I I am envisioning a really strong team that has been outputted from this over over time. Is that how you would kind of assess your your organization right now?
Guest: Yeah, we definitely have a a strong team. and having a strong team and for business owners, one thing you got to remember is you got to pay these people well. So we have a very well-paid strong team and the longer they’re with you, it does eat into your margins, but it allows you to scale. So it’s okay to give away profit and margin as long as it’s giving you the ability to scale. Um, and so that’s that that is really important to us. And also, for us, we’re in a technical business. I can’t have these people better be good because they’re also reping my brand. and I don’t want my brand and my name attached to somebody that’s not selling good investments. Like what as a broker, I take this very serious. We are taking people’s money.
Scott: Has has this happened? Have you had to restructure or make big changes at in in various in various business lines over the years for for given that organizations were not repping your brand appropriately?
Guest: Yeah, we’ve had to do that numerous times. It’s it, you know, because eventually, and sometimes you hire people and then they start going, you know, I mean they are sales people, so they they can they can sell and you have to, you have to keep a lit on them. And yeah, no, I mean, at one point, I remember in 2017, I I actually let the whole off-market team go at the same time. I was, I I, uh, it was actually my other partner was managing it with our sales rep and it wasn’t going well and the teams were kind of fighting with each other because in we have very good synergy in our office. No one fights over money. It’s everyone gets along, they perform well. but there were there was a lot of friction and there was so much friction. I was like, this isn’t curable. And so we start clean and now the business is doing 10 times better than it was when we let everybody go. So sometimes you have to look at it and go, is my core employee group good? Is and and not good, are they trainable and teachable? And do they have the same core values? That is the most important thing for me. I can train whatever, but they have to have core values. Every everyCEO, every business owner goes through that at some point and it is an anxiety, nerve-wracking, it probably kept you up at a while for a long time prior to making that decision, I would imagine or at least the first time that this this had to happen. And and there’s a situation where I think, uh, you know, if you have if you have a leadership problem there, the leader of this group, that can sometimes be hey, the whole this whole group is going to be an issue for us and we have to start over. So, um, I’ve talked we’ve talked to a lot a lot of of entrepreneurs and business owners and and uh, you’re not alone there, but I think that’s a that’s an interesting, it’s interesting that you did the whole thing at once in one go.
Guest: it required a full restart. But we had a good business that needed a full restart. and but the thing about real estate is we are subject, you can build out the best business in the world but you are subject to market conditions and that business may work really, really well for two to three years, but once that market changes, you have to pivot and you have to rebuild it. How I run my brokerage today is completely different than it ran three years ago, six years ago, and nine years ago. It’s we have to make those changes. like in this last when rates got increased at the highest we’ve ever seen or uh at that pace, that caused market conditions to change. We have rebuilt every one of these businesses to work inside of our new market conditions, not how we were doing it last year. And that’s really important in the operator side is you have to forecast this, look at it, and if you wait too long to make that change, that whole thing can sink you. and so you have to go, what is the business today? It’s the same name, it’s the same service, but how you do the business might be completely different.
Mindy: I think what so many employers overlook or maybe just completely don’t even think about is that your employees are assets. And when they’re no longer assets, when they are not generating income for you, when they are not pulling their weight anymore, then they become a liability. But until that point, they are assets. And James, you just said, pay them well because they’re the ones that are generating the income for you. So, yeah, absolutely. You have to take care of your employees because this market right now, I don’t care what the Fed says, everybody I know that has recently left a job has left it because of pay or because of work conditions and they’ve gone to another job that pays them significantly more. They’re not leaving for $1,000 raise. They’re leaving for a $20,000 raise, a $50,000 raise, or a $50,000 raise plus a signing bonus. They’re leaving for substantial money. How long does it take you to train a new employee, James?
Guest: Six months to a year.
Mindy: Five minutes? No, it takes a long time. What does that cost you in lost revenue versus what you could have given the new employee, the existing employee to stay?
Scott: And and along this line, you know, one thing that I I’m starting to learn, I have much less experience than James as as a CEO here, but is when there’s an issue, it’s usually you can almost always be boiled into one one of three things. It’s a, uh, a strategy issue, it’s an operational issue, or it’s an individual issue with that. And parsing that out can be really difficult to figure out actually in each case, what is the issue? Is it is it with me? Is it with the process? Is it with the person, um, and and and and and those things. So how how would you advise and and that’s daunting, I think for a lot of people. That’s why a lot of people don’t go into business is because how do you know what good looks like from a strategy? How do you know what good looks like for an operational process? How do you know what good looks like for an employee? on something that’s brand new. Like there is no other business like yours in your region. You have to invent all of it piece by piece and parse that out. What what is the advice you’d give to somebody trying to to go through that and build up the courage to become an entrepreneur and handle these types of issues that involve not just assets of your business, but people with lives.
Guest: Yeah, and that’s it is very daunting, especially in a, you know, it’s like one thing if you’re, you know, if you have the same business that operates, there’s always going to be a little bit of economy, like if you’re run a restaurant, you know, if you do a certain amount of market or marketing, you run a good service, you have a good product, people will come and if it’s in the right location. and that sales will go up and down, but you just kind of have to constantly improve the service. with investing or any time you’re running a business, I always look at what are we doing first, what’s the strategy? because if I know I have a good team and a capable team and it’s not working well, that means the strategy is off and that’s coming from me as a leader. and and a good example of that, we have a prime one, is our sales dropped dramatically from from June to August. The reason being is my sales people were only chasing a couple types of product because it’s what everybody wante They wanted a cash flowing rental property or a fix and flip opportunity. That was what everyone wanted and that was when the market was really goo and so everybody wants high-yield investments when the market’s doing well. But when the when the market stops doing well, high yield becomes very risky and the appetite drops dramatically. And then what was happening is our transactions fell by probably 70% during that time and the reason being is there was no demand for and but my sales team was on this clock of just like, we need to find this kind of product. and so I had to slow everyone down and say you’re not allowed to sell anything for a couple of weeks. and then we spent two weeks training on where the biggest opportunities in the market are. And so I as a as an operator, I had to direct them. and that’s why it’s really important for me to be hands-on because investment appetites change, the type of investments available change. and so we had to do a lot of training on what the actual opportunity is because we need to provide value to our clients which is good investments. Fix and flip right now, there’s only so much of it that’s a safer investment right now. The margins are a little off, it’s the cost of debt’s up, the market’s still shaky, so there’s not a lot of demand, not a lot of inventory, that’s going to mean low transactions. So either we wait for the market or we change our plan and buy differently. So what we started targeting was other investments that actually worked really well, like land and development because the market cooled down had dropped 50% of value. So that’s an opportunity there and we put together packages for our clients now where they could buy, rent and build a Datu in the backyard and do very, very well for returns, better returns than they were able to get for the last two years. But I had to bring the team in and train them on that. From there, now that I’ve done the training and the right message, if the sales people that worked really well for the last two, three years don’t keep performing, that means I have a I have a, uh, a personnel problem. Because we know our investors want to buy this kind of product. we’ve taught them now, we’ve we’ve shifted their mindset and if they can’t pivot, that’s typically when we do have to kind of we know it’s a person problem. So you really have to look at what’s your business is doing, is it offering the right product to what is in current demand? And if it’s not as a business owner, I have to fix that and then train your employees thoroughly on that. and if it’s they can’t adapt at that point, then it’s a personnel problem.
Scott: Awesome. I I love it and I think I think that’s a really eloquent explanation of a really hard skill to master, right? And it it takes a humility and something to figure out, do I have the wrong strategy? right? Um, because I’ve been wrong. I’ve thought, oh, oh, this isn’t working because we’re not doing a good job over here, but it’s really with me in the strategy there. And and other other times, you know, probably been a little too slow to to deal with a performance issue in the past. And this is hard and it’s and it’s a and it’s difficult um and it and it’s a um and it involves really good interpersonal skills, building a high degree of trust and being convicted in your market and your strategy. But James, I want to I want to ask about uh a few things here related to themes that I think I’ve picked up from this this journey so far. So first, I want to point out the frugality. Um, that, you know, we we didn’t really dive too much into that, but we talked about it for a minute like you were super thrifty to get started on this and that’s how you accumulated your capital. Um, hard work and dedication to your your your current job, employee of the year nationwide at Red Robin while also spending as much free time as possible learning something that could serve you and build your asset column long-term. Maybe you wouldn’t have articulated that way, but that that was the theme that seemed to pop out to me. Then a very hands-on approach to building every aspect of your business. I imagine with some degree of perfectionism as you went through this um over many years and and building up these businesses and obsessing about the customer and the strategy and building up teams and developing these skills over over a number of years. Um, what else would you say are some themes that we should pick up? Do you agree with those?
Guest: Yeah, no, I I completely agree. Like make sure you’re really good at what you do and then, you know, your passion about it and then and it it will it will go from there. And the frugality, save your money. We didn’t just do that when we started. when 2008, that was a restart for us too. I I got annihilated. I lost all my cash really quickly. We rolled, we barely we didn’t start making money until like 14-15 because we’re or seeing that we were making money, but we weren’t seeing it. We were reinvesting all every flip we do that would go into a run or another flip. It was just if you don’t put your hands on it, you can reinvest it, you will grow exponentially, which will help your business too. So be frugal, just because you know, short-term pain equals long-term gain. Take the, take a portion out, reinvest it, reinvest it, reinvest it. That’s also how we really exponentially grow. I mean, if you have liquidity, you can grow faster. The more you save and the more you invest, it grows faster, so that’s more liquidity. And so don’t make don’t that I’m a huge believer on don’t overextend, uh don’t take out too much debt and save your money.
Mindy: Yes, yes, yes. Everything you say is right, James.
Guest: Not always. Not always.
Scott: James, I’d like I’d like to wrap up with one one final point. You are just telling me over dinner a few months back, um, might have been almost a year ago now, um, about how your door knocking past has served you well in um, let’s call it part of your luxury living down in in Newport Beach, California. Would you mind would you mind sharing that story and and giving folks an idea of what all this builds up to from a lifestyle perspective?
Guest: Yeah, that’s it you know, door knocking can stay with you for life. Um, and don’t get me wrong. I still door knock to this day. I’ll go knock a door if I’m at a house. Uh, I I like doing it. I enjoy it. I like talking to people even if they’re not happy to talk to me. I just like diffusing them. But yes, uh, I’m not afraid to door knock. So I was telling Scott, I had bought a boat and we were shipping it out to Newport Beach and in Newport Beach Boat. Which boats I already know what people are thinking, terrible investment. It’s because it’s not an investment. It is an investment in my happiness. It’s like the one place that I calm down is on the water. If I’m in the woods skiing now, that’s like my new hobby I picked up, uh, again, and then on the water.
Scott: More than a boat, but yeah.
Guest: It’s yeah, it’s uh it’s it’s an office for me, too. If you check out the on the market podcast, sometimes I’m filming in there. Um, but what I had to do is is supply and demand in Newport Beach, there’s only so many boat slips and so I had this boat on the way out and I’m like, oh I can’t find a slip. This is ridiculous. I couldn’t find any. So I literally for I had to door knock every waterfront home in Newport Beach leaving them flyers and asking if I could rent their dock. Um, which it actually worked out well. I the slip I actually ended up getting by door knocking, I was paying 70% lower than market. So, putting in that extra effort knocking on a door can save you money and make money. Like my my, uh yeah, is right, it it was 65% less than market rate. So knock that door, you never know what’s going to happen.
Mindy: He always ask the question. No is okay, but ask the question.
Scott: Does that count as off market real estate if it’s on the water?
Mindy: It is, it is crazy what renting boat slips can it is serious cash flow in Newport and if you can get the right deals.
Guest: And so and so I was looking for one slip, right? I had I had my own boat at the time, which does nothing for me financially, for joy. And then a guy and another guy’s like, well, I have another one down the street if you want that one too. So I did rent more out, I just rented them out to other people to and then the boat that I use for my office now, I call it, two of my neighbors pay for it entirely.
Scott: Wow. James, before we go, how long you been in business?
Guest: Uh, we’ve been in business, uh, since 2005, I’ve been in real estate.
Scott: All right, so 16 years of grinding, hustling, hard work, sweat, and tears and you can have problems like James, uh, and and finding a place to to to dock your boat.
Guest: Save your money.
Scott: Uh, James, phenomenal story. We really appreciate you coming on here. You’re you’re obviously a master at what you do. Um, you’ve served a lot of investors, built an incredible business and I really I really admire and like your approach. I love the I love the fact that you’re hands-on, um, entrepreneurial and you’re going to be the quarterback and you’re not shy about it. Um, your business is not passive and you seem to love it and and build it and it’s and it’s a an incredible success. So congratulations and thank you so much for sharing, um, your your your journey with us today.
Guest: I appreciate it. I will come back any time to hang out with you too. This is like, this is the highlight of my week.
Mindy: Awesome. Okay, thank you, James. This was fabulous. I loved talking to you. so yes, I will have you back. Uh, maybe someday we’ll kick Scott off and you can come join me. Okay, James, thank you again and we’ll talk to you soon.
Guest: Thanks guys.
Mindy: All right, Scott, that was James Daynard. He was fantastic. Did you hear him near the end where he said, I build my business for what works for me, not what others are doing. That right there is like the solid gold quote. It doesn’t matter what anybody else is doing. It matters what you want to do, what you can comfortably do, what you can handle. Don’t try to be the biggest and the best. Do what you can do easily, what you can do comfortably. I love James.
Scott: Yeah, I I I think this is an example of a 15, 16-year snowball of hard work, thrift, frugality, really relentless drive to understand and broaden his expertise and perfect systems in one specific area. and I think that’s a that’s a blueprint for success for a lot of folks. and there’s nothing like, um, there’s nothing sexy about it, right? It was just one hard, probably week at a time, one frugal decision, one extra extra effort at Red Robin, one extra effort knocking on the door that that extra door, getting yelled at or whatever, building up cumulatively 1% a week to this empire that he has built today. and the incredible, you know, first world problems of needing a reasonable priced place to park your yacht. Um, this is the, this is like, this is the story and is it, is it, is it going to be overnight? No. But is it, is it something that is achievable for more folks if they’re going to adopt that mentality? Absolutely. This is, you know, you can succeed in this. This is not a business that required a college degree in the first place. He could have done this right out of high school potentially, uh, and built something similar, um, and and I just think it’s really impressive and it’s a, uh, um, really good American success story.
Mindy: Yeah, if you want to be successful in real estate, you absolutely can. You don’t need to have any special skills. You need to have person I guess perseverance, would you call that a skill, Scott?
Scott: Yeah, it’s a habit, a mentality, a train, yeah, it’s it’s perseverance and and sure, you need to be you need to be you have the confidence to feel like you can generally be competent at every aspect of your business, which is what I am sure James is.
Mindy: Yes, I’m sure he is. But you don’t need to have a college degree, you just need to be knowledgeable, be educated, be persistent, and be good. Be a good salesman or saleswoman. Sorry to be so sexist. I always get in trouble with that. Okay, Scott, should we get out of here?
Scott: Let’s do it.
Mindy: That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench and I am Mindy Jensen saying, keep on bobbing, Red Robin.
Scott: If you enjoyed today’s episode, please give us a five star review on Spotify or Apple. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpockets money.
Mindy: Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Calen Bennett, editing by Exodus Media, copywriting by Nate Wineb. Lastly, a big thank you to the Bigger Pockets team for making this show possible.
