JF1679: Going From Part Time Flipper To Full Time Real Estate Investing with Ryan Naish

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Ryan was like many new real estate investors, had a good job and wanted to get into real estate. He started flipping houses part time, and did that for about 10 years before going full time as a real estate investor. Hear how he was able to leave his job, and how he’s scaling his flipping business in Cincinnati. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“Everything I made that was extra over the years, I just kept re-investing” – Ryan Naish

 

Ryan Naish Real Estate Background:

  • Real estate investor since 2006
  • Flipped 18 properties in Cincinnati since 2006, flipped 5 of them in 2018
  • Licensed Realtor and has handled 35 purchase and listing transactions
  • Based in Cincinnati, OH
  • Say hi to him at 513.535.648zero
  • Best Ever Book: Am I Being Too Subtle?

 


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TRANSCRIPTION

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

Ryan Naish: I’m well. How are you, Joe?

Joe Fairless: I’m doing well, and looking forward to our conversation. A little bit about Ryan – he is a real estate investor, and he has been one since 2006. He’s flipped 18 properties in Cincinnati, Ohio, and he flipped five of them last year. He’s a licensed realtor and he has handled 35 purchase and listing transactions. As I mentioned, he’s based in Cincinnati, Ohio. With that being said, Ryan, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Ryan Naish: Okay. Thanks for having me on here. Gosh, my background is actually a lot of sales. I was selling various forms of construction; I was always in outside sales, since 2006, and it wasn’t until 2016 that I quit my job, and got my real estate license, and started becoming a full-time property investor.

My current focus right now is just house flipping, while keeping an open mind for getting into rentals, maybe multi-unit buildings. I have the down payment for a multi-unit building, I’m just waiting for the right building… Kind of softly getting into that right now, just waiting for the right timing of the market.

Joe Fairless: So you were doing fix and flips for ten years, while you had a full-time job… How were you able to pull that off?

Ryan Naish: You know, a lot of it involved waking up extra early, and just kind of working it in. With sales, I could work in things in between appointments… But a lot of times I’d wake up at 6 AM, not get home till 9 PM. During the last stage of that period I was definitely working myself into exhaustion… So it was really nice when I got to quit the job, and finally built up the capital enough to just go on my own.

I would say the primary way I handled it was don’t try  and do everything yourself. Delegate as much as possible. I used to always try and get all the materials ready in there for guys, and… Eventually, I just started saying “My time is worth it. I’ll go ahead and pay them more for them to get it there.” Come up with some way of utilizing your time better… But primarily, delegation was how I got things done.

Joe Fairless: When you decided to quit your job and focus full-time on real estate, what was the milestone that you reached that gave you comfort to quit what you’d been doing for ten years plus, and then do full-time real estate?

Ryan Naish: I would say for me personally – and it’s not the same for everyone, because a lot of people really love financing – it was when I just had the cash to do it all. I just wanted to fund it all myself. I think that was the milestone. It also was combined with a really nice deal, that I’ll mention when you ask later probably… Unless you want me to mention it now.

Joe Fairless: Yeah, let’s talk about it. What was the deal where you were like “Okay, I’ve got the cash, and this is a deal that is really nice, so I’m gonna focus on this, and off I go.”

Joe Fairless: Well, essentially, I bought this house in Pleasant Ridge, right before Pleasant Ridge just completely exploded in property values… And I knew it was on the upswing, but I had no idea how fast it was gonna go up.

So I bought this deal, and I was planning to live in it, and just keep working. Then I fixed it up very nice – I put a lot of money into it – but I bought it for 90k and sold it for 283k.

Joe Fairless: Dang! How much did you put into it?

Ryan Naish: It was 90/90/90, actually. 90k rehab, 90k profit. It was the best deal I’ve ever had. It’s never that good. That one, because I lived in it, I didn’t flip it right away; I didn’t sell it right away, and it just kind of worked out, just because the market grew like crazy.

I was really not sure about selling it, because I wanted to live there, but I was like “You know what, I could just be confident in my own business plan, and feel comfortable doing it if I sell it.” So I sold it, and it just made sense to sell it, as much as I loved living in that house, and the location.

Joe Fairless: With the financing of the future deals, are you buying them with your own cash, or are you using a group to help you get the initial financing for them?

Ryan Naish: My very house I paid cash for, in 2006. I spent $16,000. I had a pretty good sales job and I did well that year, so I just paid cash for it.

Joe Fairless: $16,000 was the purchase price?

Ryan Naish: Yeah. [laughter] And then I just fixed it up and rented it out and got an equity line, which as you know, an equity line is a revolving credit line on a house, so you can continue to use it. It turns you into a cash buyer, because you can borrow against it whenever you want, and then pay it back down to zero, and do it again. And I did that with flips, slowly, over time, while working full-time. So I was a cash buyer because of that strategy my entire time.

I just kept using my cash only. Everything I made that was extra, I reinvested, over the years. I just kept reinvesting, reinvesting, growing the capital.

Joe Fairless: You were using your cash initially, and then you would just recycle that; you’d use a line of credit, but then you’d pay it down and then you’d just keep on using cash, or the line of credit.

Ryan Naish: Yeah. Eventually, I didn’t need that line of credit anymore; it was just on that one property. Because I just kept paying it back down to zero, and then I’d buy another house, flip that one,  pay it back down to zero, buy another house, flip that one… And that’s why it happened slowly at first… But I just wanted to grow it and see where it went.

Joe Fairless: It sounds like it went up.

Ryan Naish: It did. [laughter] I flipped five properties last year and I didn’t ask for financing from anyone. I funded it myself, and it’s just kind of nice.

Joe Fairless: And why not use funding from someone else, or a group that can provide that to you?

Ryan Naish: I’m not large enough yet… For what I can get done right now, I can do it with the cash. I definitely wanna keep an open mind for financing, especially when I start getting into bigger deals… Because that’s one of my real estate goals – one, I wanna do it at the right timing. I wanna wait for another correction. So I’m slowly flipping to keep building capital right now, and waiting for the next correction, whatever it may be; it might be small, it might be large, but I’d like to wait for another correction and start getting into buy and hold.

Will that be a commercial building, or a mixed-use building, or a 60-unit…? I’ll put a down payment down. I have the down payment for a relatively large deal right now. I wouldn’t say it’s huge, but you know… I have the down payment, and there’s financers out there that will finance a commercial loan as long as the building cash-flows; that’s really what they’re loaning on, is what I’m told… They want you to have the down payment and a building that has good numbers. [unintelligible [00:08:39].16]

Joe Fairless: That $16,000 purchase price house, the thing that started this – how much did you put into it?

Ryan Naish: Hah! I was a rookie, for sure. I put in about $60,000. [laughter]

Joe Fairless: And how did you get that money back out?

Ryan Naish: That one was a rental property that I just held on to for a long time… But it opened a lot of doors because of that credit line. It made up for itself. I didn’t make a whole heck of a lot of money on that one, but it opened doors because of that equity line and cashflow.

Joe Fairless: You were able to get a line of credit with that house as collateral?

Ryan Naish: Yeah… Essentially, you have to wait a year, because they’re always gonna use the purchase price until a year has gone by… But I slowly fixed it up over that first year, and then I got it rented… And then after that first year, the equity line – the bank said “It’s worth $64,000. We’ll give you 80%.” So they gave me a revolving credit line, basically, of $43,000, something like that. So I had access to that $43,000 at that time. And as you know, everything was cheaper right after that market crash, so you could start getting some stuff done… And plus the money I had in savings, from the sales jobs.

Joe Fairless: Yup.

Ryan Naish: So that’s what started it all.

Joe Fairless: Where did you get the line of credit from?

Ryan Naish: [unintelligible [00:09:55].06] Just who I banked with. It was really straightforward and simple for me.

Joe Fairless: You’ve done 18 flips over the last 12 years, and five of them just last year, because now relatively recently you’re full-time… Give us a horror story. Clearly, you’ve got some horror stories from all these flips.

Ryan Naish: Okay. [laughs] Some of these flips were rentals for a time, and then sold them… But I bought a house on auction once in Blue Ash, and it was just crazy; everybody was there, the owners had stuff all over in the basement… Everything was stowed away in the basement. And you can’t really get that inspected… I don’t do inspections anymore. I haven’t done inspections on houses in years. I would for different situations later, but right now for house flips I don’t do inspections; I just — cash, no inspections.

But it was this property in Blue Ash… The whole basement was filled with stuff; I went through it. We were all there, and we’re literally bidding with this auctioneer… And I was younger, and I don’t know, man — I just got carried away and I didn’t wanna lose that house. [laughter] So I completely overpaid for it… And then to top that off, when I went and acquired the property after closing, the basement was cleared, there was nothing in there, and there was structural work that needed to be done… And it was hidden by all that stuff. I was like, “Oh, man… You’ve gotta be kidding me.” Not only did I get carried away, because I wanted to win this dumb auction, I ended up having to pay a little extra for the structural work.

I fixed it up, and I got a structural engineer in there… And usually, I run for the hills when it comes to structural; but I got a structural engineer in there, and he gave me  a simple fix… And then I was very upfront and honest to people about it. I found these buyers, and of course they inspected it again, and they asked for some money off… And I broke even.

Joe Fairless: That’s good!

Ryan Naish: I was so happy that I was breakeven on that. And then another quick horror story – one of my tenants, their child was playing with a lighter and lit the place on fire.

Joe Fairless: Everyone okay?

Ryan Naish: Everyone was okay. That was the greatest thing about it, was no one was hurt. That was on Thanksgiving.

Joe Fairless: Oh, my gosh…

Ryan Naish: Yeah. All my family was in town, and I had to leave. Everybody ended up being okay; the insurance company took care of it. The tenants — I said “You guys can break lease, whatever you need to do… Just go find a place to live, because I don’t want you guys to be homeless.” So they found a place to live right away. Everybody was okay, everything worked out, the insurance company paid for it… But that was when I was working 80 hours a week with this one sales job that was pretty intense.

Joe Fairless: Wow. Yeah, any lessons from working with an insurance company when your house burns down?

Ryan Naish: [laughs] The biggest thing I would say is you have restoration companies that the immediate thing they wanna do is take control. Literally, they’ll come in and they’ll say “Oh, give me the keys. We’ll board up the house etc.” And what they’re doing is they’re taking control of your project… And what happens is you pay their markup. So what you can do is as long as you talk with your insurance adjuster — in my case, I was able to become the contractor in that scenario. So because I had experience in all that, I was like “There’s no way I’m gonna pay another contractor to do that.”

Joe Fairless: But why does it matter, if the insurance company is paying for it?

Ryan Naish: Well, what happens is these guys just kind of mark it up extra-high, because it’s insurance work… And sometimes it might not all be covered. You risk getting into a fight with the insurance company.

Joe Fairless: Okay, got it. Switching gears a little bit – you said your background is doing sales, and selling various forms of construction equipment… Did I hear that correctly?

Ryan Naish: Actually, it’s residential construction. I worked for Bath Fitter, I worked for Granite Transformations, and I worked for Kaiser Siding & Roofing.

Joe Fairless: Okay, so clearly very relevant to fixing and flipping… So perhaps my question is gonna be a bit obvious, but I’m still gonna ask what I was gonna ask – what are some things that you took away from your sales experience, that you’ve applied to what you do now?

Ryan Naish: I would say with sales you have to be adaptable, you always have to be available… It also helps with your networking, just being in sales. In sales you’re always talking to people, you’re always in front of people, so you’re constantly networking… Which I think helps in anything that you do.

Networking has been important in this business too, whether it’s for contractors, for labor, or finding deals, or being an agent for someone. I made extra money being an agent for clients; I didn’t see that coming. I mean, I did kind of see it coming, but what I meant was I never got the license to be a  full-time agent; I just got it to handle my own transactions and save money there. It turns out a lot of friends and family, when I said I became an agent, they asked me to be their realtor, so it was a nice extra income that I wasn’t planning for.

So the networking, and just being willing to talk to people really helps in many ways, in any entrepreneurial business.

Joe Fairless: What’s your best real estate investing advice ever?

Ryan Naish: I would say be adaptable and aware… I guess because it doesn’t always happen the way you think it will. You have a plan, which is good, but sometimes you can get one-track-minded and get yourself deeper in a hole… And sometimes it’s just better to move on, or find a different way.

The market is always changing, so what you do now isn’t always going to work. Switching gears. In my case, I used to do more involved projects; and I still will do them, the ones where you’re taking out walls, and changing floor plans, getting permits, and hiring the architects that help with the permits… I’ve done those projects, but you’ve gotta be aware of the market. Right now, labor is expensive and tough to find, so right now I’m doing the quicker flips.

You’ve just gotta be kind of aware what’s happening. You’re never gonna be perfectly right about anything that’s just nice to get. Networking. Networking helps you figure out what the word on the street is, what is everybody else experiencing. So that’s why I say be adaptable and aware… And a way to be aware is reading books, educating yourself, or being networked with other people, and then adapting to that awareness – what is the market telling you to do?

One of the ways I did that is I had a property that luckily I bought it very cheap, I bought it right, and I could not get guys to show up. I would even take whatever price they gave me, and I said “Sure, I’ll do it.” They’ll say “Okay, I’ll get started Monday”, and then the next thing you know, four tries later they’re still not starting. And it’s just dragging out, and dragging out… I was like, “You know what, I bought it decently enough; I’m just gonna mark it up and sell it to a bigger investor, who has cheaper labor and more access to labor.” And that’s what I did. I made a quick profit, and then I didn’t have the headaches to try to get all these guys to show up.

Joe Fairless: Yup. Makes sense.

Ryan Naish: I had to adapt to that, because for whatever reason — maybe it was the house being a big project, I don’t know; I could not get people to show up… So I just said, “Alright…” The group that I sold it to, they’re gonna do great with it; they’re gonna make killer numbers on it. They have everything in place to crank out a big project like that – because it was pretty big – and then everything worked out. So they were happy, I was happy, and I moved on from it.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Ryan Naish: I sure am.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:17:56].29] to [00:19:18].27]

Joe Fairless: Best ever book you’ve recently read?

Ryan Naish: Sam Zell’s “Am I Being Too Subtle?”

Joe Fairless: That’s a great book. Very entertaining.

Ryan Naish: Yeah, it is.

Joe Fairless: What’s the best ever deal you’ve done?

Ryan Naish: That Pleasant Ridge deal.

Joe Fairless: What’s a mistake on a transaction we haven’t talked about already?

Ryan Naish: I’ll come back to that. What’s next?

Joe Fairless: Best ever way you like to give back?

Ryan Naish: I like to make myself available for coffees and lunches, just for anybody interested in getting into this, and picking my brain if they want. I’m no genius in this, and there’s always more to learn, but if I can help somebody, I will. I’ve already had quite a few lunches with various investors that are trying to get into it.

At one point, earlier in my twenties, there were these older investors that I played soccer with – they had no problems talking to me about things, and I found that really helpful… So I hate to say it again, but it just ties back into networking. So that’s kind of the way I like to give back – just do what people did for me when I was younger.

Joe Fairless: What’s an area you’re working on to improve right now?

Ryan Naish: The way I’d like to improve is getting into financing more. I’ve not used it for so long; I feel like my knowledge base is not very strong there right now, and I’d like to figure out how to fund larger deals… So I think that’s an area where I need to grow.

Joe Fairless: And if you didn’t notice, I replaced the mistake on a transaction with that one; I just rephrased it for you, but with a slightly different angle. How can the Best Ever listeners learn more about you and what you’ve got going on?

Ryan Naish: Feel free to contact me. I can give out my cell phone number.

Joe Fairless: Sure, of course.

Ryan Naish: 513-535-6480.

Joe Fairless: Well, Ryan, thank you so much for being on the show, talking about your fix and flips, the stories of deals that did not go according to plan, but all is well that ends well, with the auction breaking even, and the house that burned down, and no one being injured, plus the insurance company paying for it, plus working on the GC stuff yourself… And your approach for that one house in Pleasant Ridge, which is an area within Cincinnati; you bought it for 90k, you put in 90k, and sold it for 283k, 90k profit(ish).

Thanks again for being on the show and talking about your experiences. I hope you have a best ever day, and we’ll talk to you soon.

Ryan Naish: Alright, thanks a lot, Joe.

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