With the birth of his daughter, Pat needed a change. He didn’t want to miss out on his daughters life and with an offshore job, he would have missed 8 months per year. After weighing pros and cons, Pat took the leap, quit his job and began investing full time. Tune in to hear an inspiring story of chasing a goal, and succeeding while improving your life. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Patrick Flynn Background:
– Owner of Flynn Homes, a real estate investment company
– Launched in late May 2017 2 Beach rental properties, one cashflows $800/month, the other we house hack
-:Total revenue so far is around $750,000 since May 2017
– 5000 direct mail pieces a week along with other marketing campaigns.
– Based in Jacksonville, Florida
– Say hi to him at: www.flynnhomesjax.com
– Best Ever Book: 4 Hour Work Week
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
With us today, Pat Flynn. How are you doing, Pat?
Pat Flynn: Good, Joe. How are you?
Joe Fairless: I am doing well, and thank you for joining us. Welcome to the show. A little bit about Pat – he is the owner of Flynn Homes, which is a real estate investing company. He launched in late May 2017, and has done some wholesaling – 11, exactly – and a flip, and the total revenue so far is around $305,000. Before he got into that, he also bought some rental property; one is a beach rental property that cashflows, and another that he is house-hacking. So we’re gonna get into the launch of his company, what he’s been up to, what’s worked, what hasn’t worked, and all that good stuff.
Based in Jacksonville, Florida. With that being said, Pat, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Pat Flynn: Sure, absolutely, Joe. I graduated from the United States Maritime Academy in 2009 at King’s Point, and from 2009 to 2017(ish) I was working on merchant ships and/or drilling rigs off-shore, so I’ve spent a lot of time out there. February 27th, 2017 this year I’ve had a big life change when my daughter was born…
Joe Fairless: Congrats!
Pat Flynn: Thank you. Long story short, me and my company couldn’t come to terms with the time I wanted off after that, and I’ve always wanted to have that entrepreneurial lifestyle career, and I figured it was now or never. So that original itch for the entrepreneurial lifestyle came because Robert Kiyosaki is actually also a King’s Point graduate and rugby alumni too, which I am, and he spoke at my school when I was a senior. So that really planted the seed.
My years of shipping, that was always in the back of my head, and I finally made the decision once my daughter was born to take that jump as a real estate entrepreneur, and it’s just been awesome ever since. The best decision I ever made.
Joe Fairless: What were the reasons or reason holding you back from doing the entrepreneurial stuff prior to the birth of your daughter, and then what did you find out after that, if those were true or not?
Pat Flynn: What happened was I just got comfortable out there. I was single for most of that time period; I’d be gone eight months a year shipping, and I was making pretty good money as far as blue-collar out there working goes, so I was just comfortable. And what happened when my daughter was finally born was everything in my gut was telling me to stay out there. I had health insurance, I was making great money, but something in the back of my head just told me I had to go for it. I’ve always wanted to.
So what I did was took a page out of Tim Ferriss’ book and I sat down and I did his fear setting exercise; I wrote down everything that scared me the most about making that decision to quit, my worst nightmare, and everything terrible that was gonna happen to me if I left my secure cushy job off-shore. I also wrote down what could go right if everything worked out in the real estate world, and the cost of inaction.
So where would I be 5-10 years from now if I don’t do anything and just continue to do this job? Well, I’ll have missed at least eight months a year of my daughter growing up, so in the end it just wasn’t worth it to me, and I made the jump and I found that everything I was scared of – finding my own private health insurance, doing this and that were not really scary at all. The scary part was me stuck out there and missing my daughter growing up.
Everything has been working out awesome ever since. I actually didn’t mention it yet, but I e-mailed you, Joe, right when I quit my job; I actually e-mailed you the day after I quit my job and I told you my goal was to be on your show in six months, and look at what’s happening now, I’m on your show. It’s amazing when you set your mind to something what can happen, and it’s just been awesome ever since.
Joe Fairless: I forgot about that, and now I remember that; that’s great, congratulations! The fear of missing out on eight months of your daughter growing up, I think that’s pretty much the deal breaker, I imagine… Once you had that in the cons column of staying at your full-time job, it was “Okay, I’ve gotta make things happen.”
Financially, what did you make sure that you had, if anything, in order to float a little bit while you got your affairs in order and got some money coming in?
Pat Flynn: Of course. I always was pretty good with my money. I didn’t have a ton saved, but my property at the beach was cashflowing, I house-hacked my other house at the beach, so my monthly expenses were not crazy high; I kept them pretty low, and I had a piece of land up in Massachusetts that I sold during that time period… So the profit from that land and my savings was able to float me, and actually it’s still floating me now. The company is doing well, and we’re keeping that money in and reinvesting it, and actually none of my partners have taken distributions yet. So we’re just still building that up, and… Just being smart about your money and keeping your monthly expenses low is the main thing.
I’m one of those people that I have an Excel file and I keep track of every single penny I spend each month, so I knew exactly what I had in the bank, I knew what I needed to survive for six months, and it’s all self-confidence… I had the confidence that I could make this work and get it done, and it turned out great.
Joe Fairless: I can relate to that… Whenever I left, I was waiting on a refinance from a house, which is similar to you selling the piece of land in (I think you said) Massachusetts… I had to do a refi and I got $50,000 from the refinance of the house, and I used that to float me while I was making no income other than some rentals – four properties, which basically were nothing. And then my low monthly expenses were relatively low compared to New York City standards; I lived in the same apartment for nine years and had roommates from Craigslist, and just kept that as low as possible.
So I think there’s a formula there for people who are looking to leave, and that is keep your fixed monthly expenses low, and have a chunk of money or at least have money that you can get access to help keep things upright while you build the business.
On the business front, you’ve mentioned partners – who are your partners? You don’t have to name the names, but you can, I don’t care… But I’m more interested in how did you determine who your partners would be and what is your role compared to theirs?
Pat Flynn: Starting off, when I first left and e-mailed you back in March, I was a lone wolf, and I’ve always had that mentality. I’ve always been very independent, so I thought that I was gonna do everything on my own, and I found out very quickly that that was a huge mistake, so I made a big mental shift in April or so, and I started putting myself out there. I went to every single networking event in the city of Jacksonville, which can be a job in itself, actually.
I talked to everyone, I had lunch with anyone, I had coffee with anyone that would meet with me. Every single property on Craigslist in the Jacksonville area – I called the number, I made them an offer; I talked to them, I asked them what else they had.
Other than the real estate networking events I went to young professional networking events, I was active on Bigger Pockets, I did everything I could to talk to everyone I could. Finally, my fiancée is a realtor who works for a real estate group and one of their clients is an investment company; three guys here in Jacksonville, very successful, and they already have several successful companies, but were looking to ramp up their marketing… So I got through her and through her boss the opportunity to meet with them, and they didn’t really need me, so our conversation at first was — I went into the meeting with the mindset of “How can I help these guys? How can I be valuable to these guys?” and what ended up happening was they said “We’ll see how it goes, we’ll see if you’re a good fit, we’ll see if everything works”, because it’s a sensitive thing, a partnership…
What ended up happening was I worked for them for two months – no compensation, no anything, just trying to do everything I can to help them out and make money for them. I was taking phone calls, I was organizing the marketing, I was driving, knocking on foreclosure doors, doing tax deeds, options, knocking on those doors… I was doing everything I could for them. And we saw a little success, but after two months they decided it was something that was gonna work for them, and I told them my main goal is I want an equity percentage of everything I do; that’s why I did this in the first place, so that’s kind of non-negotiable for me.
So we made an entity, we negotiated the equity percentages, and it’s been awesome ever since. We got a few home runs right off the bet, and that was able to give us some marketing dollars, and we’ve really ramped up the marketing since then, and it’s been great.
Joe Fairless: What is your role, versus their role now?
Pat Flynn: Right now I control everything that happens day to day. I take all the phone calls, I make all the calls as far as what we’re doing for marketing, I write the contracts… I’m actually the one going out to the houses, walking the houses, talking to sellers and getting the contracts.
So I take care of all the acquisitions and the marketing, and they take care of the back-end, which is they have a lot of contacts for good buyers lists for the wholesales, and some huge value in the construction crews that they have available for our flips. So the flips we do – I’m so fortunate to have them, because I get the acquisition, and then it’s almost hands off for me after that.
They have a construction crew that they can pretty much point at the house and say “Go!”, and they have their cookie cutter thing they do with the house, and it looks awesome. Then my fiancée’s real estate crew sells the house after that, so we have a pretty good system in place already, and that’s why I’m so fortunate to have them, because they have added so much value with that flipping system which is already in place.
Joe Fairless: You mentioned a few home runs at the beginning – can you tell us specifics on those deals?
Pat Flynn: Absolutely. Our first very significant one was at the beach. Jacksonville has three beach towns right by [unintelligible [00:12:59].08] Atlantic Beach and Neptune Beach, and the property prices there are just going crazy right now. I got the house under contract, and it ended up being a $45,000 wholesale deal, so I’m super excited about it.
I’m walking in [unintelligible [00:13:14].11] with my partner and he doesn’t really care; his first question to me is “What other leads have come in today?” [laughter] Him asking me that – I think that’s what true mentorship is. He’s pushing what he thinks is possible, pushing what you think is expected of you, and the fact that all capacity is just the mindset. So with him saying that just completely changed my mindset.
When I sat down and recalibrated my goals for the company and what I thought was good as far as profits go, and since I’ve done that, it’s just been unbelievable. I’m always thinking about what’s next rather than focusing on the deal that closed yesterday, and because of that we’re four or five months into the entity and we’re over 700k in profit right now, just focusing on what’s next.
Joe Fairless: $700,000 in profit?
Pat Flynn: Yup.
Joe Fairless: That factors in marketing expenses to get the deals?
Pat Flynn: No, [unintelligible [00:14:12].02] so it doesn’t factor in marketing. We’re at 750k right now in revenue.
Joe Fairless: Okay, I’m with you. So yeah, 750k in revenue in a very short amount of time… And is what I read earlier correct – 11 wholesales and 1 flip?
Pat Flynn: Yes, that was back in May. We did those wholesales right off the bat, just because the cost of money we pay on our hard money here in Jacksonville for the most part, 12% and two points… So towards the beginning I wanted to move everything as quickly as possible; me and my partners were just trying to get in and out. Even if there was more profit in flipping it, we just wanted to build our nest egg so we have some money in the bank to do deals to where we didn’t have to get hard money.
So that’s why we wholesaled most of this stuff right off the bat, but now our focus has shifted to flipping most everything.
Joe Fairless: Okay. And how many flips have you all done?
Pat Flynn: At this point we’ve sold retails two of them. Right now we have three that are in process, under construction, and we have five that are under contract, waiting to close, so we haven’t started the construction or anything on them yet.
Joe Fairless: And as a business, do you make more money on the flips than the wholesales?
Pat Flynn: So far we’ve made more money on the wholesales, but I’ve found that it just all depends on the situation. Like I said, when we hit a few home runs right off the bat… It was an older woman looking to liquidate her rental portfolio, they were all in rough shape, and we made almost 30k on several of her different properties, wholesaling. I’m not sure what we could have made flipping them, but I’ve found that it all depends on how many of our buyers are looking for places at that time, the different comps in that area… If my partner thinks some of the comps are way too high and we wouldn’t be able to sell it for that, but we can sell it to another flipper that goes in and actually picks out the finishes in his house so he can get that high number… A number that we can’t get doing a generic flip. So it all depends on the area, I think.
Joe Fairless: You’re doing some direct mail… What has that resulted in?
Pat Flynn: Direct mail – we started off at about 1,500 a week I wanna say, and now we’re at 5,000 direct mail pieces a week, so 20,000 a month. Each 5,000 that goes out, I probably get about a hundred phone calls from each 5,000 that go out, and I’ve found that we close at least two for each 5,000 that comes out.
The reason we have a pretty good closing percentage on that is because we’re partners with the people that also sell our houses on the back-end, so we’re able to offer them cash for their house, we’re able to offer creative financing, and we also offer them our real estate services. So having three different options allows you to close more deals and convert more leads, which has worked out good for us, too.
We’ve recently started the creative financing thing, and it’s been taking off pretty good, as well.
Joe Fairless: You’ve got a solution, no matter which direction they wanna go… Unless they want some crazy price, and even listing it on the MLS wouldn’t generate that, but eventually they would come back down to earth. That’s great, I love that approach.
With your direct mail, where do you buy the list from, and what do you filter it for?
Pat Flynn: The direct mail company that does — I’m not sure exactly what software they use; I was originally using a program called List Source, and if anyone listening is using list source and you’re paying for those lists, make sure you call them and try to negotiate down, because they’ll go down much lower than you think they would on their prices for these lists. But they do a good job making lists, and I’ve found that it took up a lot of my time, so for a pretty low fee the direct mail companies – almost any of them, really – will generate the list for you.
What we do on our list – equity percentages is the main thing. So our lists are generated with people that have 30% to 100% equity in their house. So we’re not looking for people that are underwater. 30% to 80% equity, single-family homes, no corporate [unintelligible [00:18:50].11] is our list, and homeowners only. So if someone’s renting, it’s gonna go to the homeowner.
But I’ll tell you what… What’s been even more effective than direct mail – there’s a local magazine, kind of like a Money Pages, a coupon magazine… We’ve been running ads in that, and it’s pretty cheap for that. You can get in front of more eyes for cheaper, but you don’t have that specific equity looking at it, but you can get in front of more people. We’ve found that that has been very effective for us too, and almost just as effective as direct mail for a lower cost.
Joe Fairless: What do you have in the magazine?
Pat Flynn: It’s an ad, and the magazine also offers for six cents a house to cover that sort of thing. So it’s just a little piece of paper that goes in front of the magazine. So even if you take the magazine and throw it in the garbage, you’re still seeing us. You’re still seeing the logo, you’re still seeing a huge phone number, and it’s been very effective, and for six cents a household, cost-effective also.
Joe Fairless: Yeah, [unintelligible [00:19:59].21] What’s the name of that magazine?
Pat Flynn: It’s called Money Pages. I think they’re all over the states, but it’s pretty big in Jacksonville.
Joe Fairless: Okay. Based on your experience, what is your best real estate investing advice ever?
Pat Flynn: I think the cookie cutter answer to this is just to be consistent; consistent action and self-discipline. I’m a firm believer that it’s all in your mindset. You paint a picture of the person you wanna be and just don’t give up on it for anybody. I think you’ll find – the listeners and myself have found that coming up there’s just so many haters and negative people out there, especially in the beginning when all you’re doing is making mistakes, and every deal seems to be slipping through your fingers. It’s easy to get caught up in that negative thinking, but just don’t listen to anybody.
It was an eye-opening day in my life when I realized that nothing anybody says matters, so just be true to yourself and work your ass off for whatever goals you’re looking to get at. Now that my eyes are open to this kind of success, I see it in other people every day. I’m a huge sports fan and I’ll just bring up that — remember when Tom Brady was drafted by the Patriots he said to Robert Kraft the day he was drafted that he’s the best decision this franchise ever made. He saw it in his head before it happened, and this stuff happens every day, but once you open your eyes to it and you see that other successful people believe in what they can be… That’s my best advice – get your mindset right.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Pat Flynn: I’m ready.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:21:32].27] to [00:22:30].26]
Joe Fairless: Best ever book you’ve read?
Pat Flynn: The standard one everyone says is Rich Dad, Poor Dad – you need to read that to get your mindset right on what an asset and a liability is. That was a life-changing mindset book to me. I wanna say The 4-Hour Workweek, too. If you don’t read the whole book, read the chapter on fear-setting. It just puts everything in perspective on life… Fear-setting in The 4-Hour Workweek was a life-changing chapter for me.
I wanna say one more – Rebirth: A Fable Of Love, Forgiveness And Following Your Heart by Kamal Ravikant. It was a book I read when I left my job; it’s a fiction book, but it just got me through some tough times right off the bat, when everything seemed like it was at its lowest, trying to start this business. It’s just a great book.
Joe Fairless: And if you’re not a reader, but you wanna learn more about the fear-setting, the Tim Ferriss approach, he did a TED talk recently. Just search “TED talk Tim Ferriss fear-setting” and he will entertain you in about ten minutes and tell you what that’s all about.
What is the best ever deal you’ve done so far?
Pat Flynn: I’d say it was the older woman looking to off-load her rental portfolio. She wasn’t able to get out and take care of these properties anymore, so they were all in terrible shape. There were kids living in some of them, like little babies and little kids and families, and the roofs were leaking, so there was mold in the walls, and it just wasn’t safe for anyone. There were about seven houses, and we bought the entire portfolio from her. We flipped a couple, we’re in the process of flipping a couple, and wholesaled the rest. We’ve probably profited around 100k from that whole deal. It was a good deal.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Pat Flynn: I think your mistakes come when you get too desperate. Right off the bat, when things weren’t going well for me, I made some bad decisions on houses just because I was too desperate, just looking at the numbers and not the big picture. Along those same lines I just wanted to mention this, too – I actually purchased a house this morning, and… Joe, your interview was kind of my main focus all day today, so I wasn’t really focused on the house. I went in and I talked to the seller, I finally didn’t really care… It was like, “If they’ll give me a good price, I’ll buy it. If they don’t, they don’t. It doesn’t really matter to me. Our crews are busy now anyway”, and I think they saw that in my mannerisms. She wanted way too much for it right off the bat, but I kind of just said, “You know, this is what I can pay.” I didn’t push her, I wasn’t desperate, and she immediately came right down. I was like, “Okay, let’s get it done”, and that’s gonna be a $30,000 flip right there, just on being calm, not being desperate. I think when you’re desperate you make bad decisions, so just stay calm whenever talking to sellers or in anything you’re doing.
Joe Fairless: What’s the best ever way you like to give back?
Pat Flynn: Right when I quit my job back in March, I obviously did this, but I wanted to volunteer too, because I was spending so much time off-shore doing the drilling thing –I thought it’s be better to give back and take some time with myself. So I volunteered at the animal shelter and at hospice, and I still do it now. It feels great to do that. Flynn Homes – we’re still very new, but I have plans in the future to give back as far as education goes to local high schools in the area, teach kids about the way money works and get them on board to learn about flipping, and learn about the industry and learn that what they’re learning in school just puts you in a job and isn’t the only option. What I was taught in school – that was the only option; go to school, get a job. I’d like to spread the word, once we get a little more established, to the younger generations that there’s so many options out there and real estate is a great way to go about being free and making your own rules in life.
Joe Fairless: You got me curious when you mentioned some mistakes in the early transactions. What was the result of those mistakes monetarily?
Pat Flynn: Well, we still own them now… [laughs] There’s two houses that are sitting in the books that have hard money loans on them, and I overpaid for them. Right now they’re still sitting on the books, and I talked about it just the other day with my partner that he’s gonna be more excited when we lose ten grand selling that house than he will making 45k at the one on the beach.
So it’s currently still sitting… We’re deciding how much of a loss we’re willing to take on it; it won’t be crazy significant, but both of them didn’t turn out well. Like I said, desperation, just trying to get a deal done… That’s what happens.
Joe Fairless: It sounds like you need to find a good wholesaler so you can unload those things.
Pat Flynn: And you know what? People reach out to me all the time – “Can I wholesale your properties?” and for these ones I say “Absolutely! Send it to everyone you’ve got” and it still is sitting there… Like, wow, how did I buy that for that price?
Joe Fairless: Well, you do enough volume like you all have done, as quickly as you’ve done it, and that’s gonna happen. Fortunately, it’s turned out better across the board, generally, than just these couple deals, so that’s great to hear.
How can the Best Ever listeners get in touch with you?
Pat Flynn: My website, FlynnHomesJacks.com. I was being really active on the blog… Things got a little busy and I slowed down with the blog, but that’s my main passion – mindset blog posts on that website. I love writing about that stuff, so check out the website. On the website, the phone number is directly to my cell phone, so you can reach me on that. My e-mail is also on the website. We’re not big to this point to where I can’t respond to people, so anyone that’s thinking about this life-change, feel free to call, feel free to e-mail me, tell me your story… I love hearing about them, and I just love talking about mindset, and that’s my real passion – being happy with what you’re doing.
Joe Fairless: Well, I know that you gave some tips that will help others be prepared for going full-time as a real estate investor, and I’m very grateful for that.
The things that I wrote down – I actually wrote down six items or six steps to set yourself up to go full-time as a real estate investor… As you were talking, I was taking notes – one is have low fixed monthly expenses, so that you’re not having to extend yourself. Two is to have some access to a (relatively) large chunk of money, whether you sell a property, refinance a property, sell a piece of land… Have a line of credit – that would be more of the worst-case scenario, but still if it’s a line of credit then you don’t pay the interest until you actually use the line of credit, so at least there’s that…
Three is that you were incredibly active. As you said, you were making offers on every property in Jacksonville, you went to every meetup, you were active on Bigger Pockets… So three is just to be active.
Four is to work for free or work with a group that has more experience than you and realize that it’s a long-term investment in yourself, and I know you will appreciate that, and that’s why you did it.
Five is when you make some money, reinvest it back into the company and continue to grow.
Six is to have a mindset help with a mentor, like you had with that $45,000 wholesale deal, and he was like “Great. What else came in today?” It’s like, “Oh… What? Wait!” [laughs]
Thanks for talking through this stuff, and then talking with us about the different approaches you take. You have three different options – one is cash for a house, two is creative financing, and three is to just sell at retail through your real estate services.
I hope you have a best ever day, I’m glad you made it to this show, and I’m honored to have investors like you to be guests on the show, because you’re in there, you’re on the ground, you’re doing it, you’re getting your hands dirty and you’re making it happen, and you’re helping others along the way… So I appreciate it, I hope you have a best ever day, and we’ll talk to you soon.
Pat Flynn: Thanks a lot, Joe. I appreciate everything you’re doing too, honestly. I used to listen to your show on my drive to Alabama to get on the rig every time, and it changed my life. There’s so much great information you put out there with the people you talk to, so thank you so much also.