Scaling Big from a Single Family House with the Flying Investor
Drew Wiard, The Flying Investor, discusses his prolific success in real estate investing, scaling from single family homes to multi-million dollar syndication deals.
About Today’s Guest
Having graduated from Purdue University in 2005, Drew Wiard, PharmD, MBA, BCPS, is currently the Market Clinical Pharmacy Director and Residency Program Director at an 8-hospital health system in Fort Wayne, Indiana. In addition to pharmacy, Drew has jumped headfirst into real estate investing, in many forms ranging from single-family rentals to triple-net commercial properties to large apartment syndications in Phoenix, Arizona, where other working professionals invest alongside him. Given that in his free time, he flies “Paramotors,” Drew can be found online as “The Flying Investor.”
Episode Summary
Today’s episode of the YFP Real Estate Investing Podcast features Drew Wiard, a pharmacist and real estate investor that started small with single-family units and scaled his portfolio in a big way. Drew is now at the point where he has become a partner in apartment acquisitions worth over a hundred million dollars, all while working as a full-time pharmacist. Nate Hedrick and David Bright sit down with Drew Wiard to discuss his real estate investing philosophy using multifaceted arms, from wholesaling to single-family home investment to large multi-unit apartment acquisitions. Discover the ‘why’ that got Drew started and how he began securing increased funding. He also shares about areas where he found success as a passive investor. Drew dives into the importance of local networking, particularly with your local real estate investors association, and surrounding yourself with people whose expertise can be a resource for you. You’ll also hear the good, the bad, and the memorable parts of his transition to commercial real estate. Listen for an inspiring take on why making mistakes in real estate investing can be good and how to push through the analysis paralysis hurdle that so many pharmacists face when considering real estate investing.
Key Points From This Episode
- Jumping in with Drew Wiard’s background and real estate career.
- He shares the ‘why’ behind his prolific success.
- The stepping stones that took him from one house to multifamily syndicated deals.
- The focus of his first few years and the type of unit that became his bread and butter.
- What drew him to commercial property and what got easier (and more difficult).
- Pushing back on the fear that real estate will eclipse everything in your life.
- The differences between being a real estate operator or an investor.
- Specific areas that Drew found success in as a more passive investor.
- The importance of reaching out to your local REIA.
- Why making mistakes is good; you can adapt in real estate in ways you can’t in pharmacy.
- Syndication and Drew’s approach to this kind of collaboration.
- Hear about the 163 unit project he just finished in Phoenix.
- Drew shares how he got started with acquiring bigger funding and what to avoid.
- How Drew deals with risk management at scale.
- How buying more houses mitigates risk rather than increasing it.
- Why playing ‘feel’ estate is a recipe for disaster.
- Drew explains his persona: The Flying Investor.
- His top strategy to make investing work hand-in-hand with being a pharmacist and family man.
- Daily journaling, habit-tracking, and his top advice if you’re just starting out.
Highlights
“If you’re not getting connected with your local real estate community, you are absolutely missing out.” — Drew Wiard, PharmD, MBA, BCPS [0:09:51]
“I would encourage people to make mistakes. No one wants to lose $10,000 but, in that environment, you learn so much from missteps. That’s why you have your network around you to help you avoid some of those pitfalls.” — Drew Wiard, PharmD, MBA, BCPS [0:11:55]
“[With syndication], once you start building that track record of being able to provide the returns that you’ve underwritten for the project, people just come back. They come back, and they start bringing their friends, and it starts to snowball.” — Drew Wiard, PharmD, MBA, BCPS [0:20:06]
“Resourcefulness is probably the most important thing an investor needs. That’s tough for us as pharmacists who need to know all the answers.” — Drew Wiard, PharmD, MBA, BCPS [0:30:03]
Links Mentioned in Today’s Episode
- Clear Sky Properties
- National Real Estate Investors Association
- Drew Wiard, The Flying Investor Youtube Channel
- Connect with Drew Wiard on Facebook
- Connect with Drew Wiard on Instagram: @theflyinginvestor
- YFP Real Estate Investing
- Join the YFP Real Estate Investing Facebook Group
- Your Financial Pharmacist Disclaimer and Disclosures
Episode Transcript
[INTRODUCTION]
[00:00:08] NH: Hello, and welcome to the Your Financial Pharmacist Real Estate Investing Podcast, a show all about empowering pharmacists to achieve financial freedom through real estate investing. I’m Nate Hedrick, and each week, my co-host, David Bright and I explore stories from pharmacists all over the country who are achieving their real estate goals, while maintaining a meaningful career in pharmacy. Whether you’re a first-time investor or a seasoned pro, we’re here to provide education and inspiration about the world of real estate.
Please note, this podcast is intended for educational purposes only, and should not be considered financial or investment advice.
[EPISODE]
[00:00:42] NH: Hey, David. How’s it going?
[00:00:43] DB: Hey, good. Thanks. How you doing, man?
[00:00:45] NH: Good man. We just wrapped up an awesome interview and I don’t want to put things off any further. We brought on a pharmacist, an investor, someone that started with a simple single-family home and has grown insanely fast from there.
[00:00:57] DB: Yeah. Not just like a little bit of growth either. Just talking about like one house that he had, and then he went to a second single-family house and then he pretty quickly grew from there. Now, just in not too many years, has even become a partner in more than $100 million dollars’ worth of apartment acquisitions as a part of a team in Phoenix, even though he lives in Indiana and is a full-time pharmacist. A lot of ground that we were able to cover in the podcast today.
[00:01:25] NH: Yeah. Drew Wiard, we had the pleasure of bringing him on the show. He and I connected via Instagram, and just some of the things that he was doing with his handle, @theflyinginvestor, which you’ll get to hear about on the show today. He really has a great philosophy of investing. He has multi-faceted arms that he looks at, everything from wholesaling to single-family home investment here in the Midwest, and then all the way up to large acquisitions through apartment complexes and things like that through his business. Just an awesome story of a pharmacist who is still working full-time, doing all this stuff and having a lot of success.
[00:01:56] DB: One of things that I really like about his interview too, is even though he’s doing things that I think not a lot of people would even put on the radar that they would want to do personally, because he came from that just one house and then two houses kind of start there. He has a really relatable story about getting started and he has some just great tips about getting through that encouragement to get through that analysis paralysis that so many pharmacists face, right? We’ve been now almost 50 shows into the YFP Real Estate Investing podcast and we continue to hear that theme about how pharmacists get way into the weeds and we just lock up and don’t move forward. Drew has a really inspiring take on kind of getting through that hurdle, and accelerating and diving into real estate investing.
[00:02:42] NH: Yeah. If you’re looking for the motivation to get your own start, this is the episode to listen to. Definitely want you guys to enjoy that. Won’t hold you up any longer. Hope you enjoy the episode.
[INTERVIEW]
[00:02:50] NH: Hey, Drew. Welcome to the show.
[00:02:52] DW: Hey, guys. Thanks for having me. I appreciate it.
[00:02:54] NH: Yeah, thanks for joining us. I saw just some of the stuff that you were doing on Instagram and knew that we had to connect and so really excited to have you on today to talk about all the great stuff that you’re up to.
[00:03:04] DW: Yeah. Again, I appreciate you guys having me here. I’m excited. Again, been a pharmacist for quite a while. investor for quite a while, so hopefully we can riff on both.
[00:03:12] NH: It’s a perfect mix. So why don’t we dive right in then with the pharmacy story. Give us a little background.
[00:03:16] DW: Yeah. I graduated in ’05 from Purdue, got my doctorate there. Did residency right after. I did residency by day, my MBA at night. It was tough. We had two kids already and all that. But I’m glad I did it back then, because I don’t know that I’d go back for it now. Went straight into leadership in the hospitals. Couple years later, got BCPS and some more clinical things. So now, as it stands, I am the market clinical pharmacy director at an eight hospital system here in the Fort Wayne, Indiana area.
[00:03:50] DB: Very good. And then you mentioned the pharmacy and the real estate both, so could you take us through your real estate journey and your real estate ‘why’?
[00:03:56] DW: Yeah, absolutely. We started – we bought a house originally during residency, but then when I got my official job, we needed to move a little further out. I kept that one house as a rental for a long time, but I didn’t do any other real estate. That was just like the one little thing that I had. But over these last seven years, I’ve really jumped into real estate, lots of different types. I’ll try to make this real brief. When I look at my investment strategies, it’s kind of like sitting on a stool, and there are four legs to my stool. The first leg is the rentals that I have. We had about 50 single-family and some duplex units for my rentals and I own those myself. My partner and I have jumped into commercial properties, so mostly like double and triple net properties, industrial flex buildings, things like that.
I own and run Clear Sky Properties, which is a not necessarily a wholesaling business, but like a direct to seller kind of marketing, trying to lead generation for single-family homes business. Then we do large apartment syndications, and we can dig into that. I don’t know if your audience is real familiar with apartments syndications. But we operate in Phoenix, which is a pretty hot, exciting market to be in. Then I host the local REIA here in Fort Wayne, Indiana. That’s kind of what it looks like today.
[00:05:19] NH: That’s awesome. I wanted to make sure to dive in each of those, because I think, all great stuff that we’ve covered on the show before, but I can’t think of anybody that does everything in all four scopes. That’s really neat. To kind of take a step back, because I want to get there. But many of the pharmacists listening to this show are probably just thinking about buying their first single-family investment property. So you’re talking about huge multifamily syndicated deals. What’s the stepping stone? What’s the difference between those two? How do they pull together and then how do they stay separate as well?
[00:05:45] DW: Yeah. Again, to kind of answer the previous question, I started out simple just like everybody else. My why was because, I liked my job, I really loved what I was doing at the hospital. But my wife stayed home with the kids, we have four kids, and I just wanted to kind of supplement my insurance. If by chance the job ever went away, I wanted to have at least another form of putting food on the table. That’s kind of how I got into real estate, but just wanted to do one house, two houses, three houses and there’s absolutely nothing wrong with that. Now, my path has taken me down a journey that has really led to bigger and better things. I let people know all the time, if your goal is to own five houses, and you want them free and clear, I mean, that’s a fantastic thing to go after.
For me, I really enjoy learning, growing, picking up new things. So for me, as I jumped into real estate, I had one house, two house and then seven. I bought a package of five all at once. It was at that point, I realized, “Okay. I can’t manage this while I’m working, so I need a property manager.” It kind of led me down a path of, “Okay. Now, I really need these to be investments, because I’ve got little kids. I’ve got a big job. I’m director of residency programs, like it’s just a lot.” It took me down the path of, how do I buy something and hand it off to someone else to manage for me, so that I can be present for my family, present at church, present at work and then decide to pull something else new in. I don’t know which path we want to go down, but that’s kind of been my rinse and repeat method of discover a new tool, put it in the tool bag and then reach back for it when it’s time for new one.
[00:07:27] DB: Well, I think there’s something really powerful there about your goals and your why. I want to dig into that too for a minute, because you mentioned kind of that security and flexibility of the additional income stream and how that can help, but doing it in a way that doesn’t take over your world. I think that there’s this common phenomenon that people assume if you buy a rental property, like you’re answering the phone at two in the morning, you’re getting calls, interrupt you at work, you can’t be a good pharmacist, all this stuff. What would you say to kind of push back on that idea that being a real estate investor must eclipse everything else in your world and must be a distraction?
[00:07:59] DW: Well, that’s kind of the classic question, right? That’s the fear that keeps everyone from jumping into it. We use the term real estate investor kind of loosely because, do you want to be a real estate investor or do you want to be a real estate operator? Those really can be two very, very different things. There’s nothing wrong with being an operator where you’re managing your rentals, you’re getting new tenants, you’re working through evictions, you’re dealing with maintenance. Nothing wrong with that. For me, though, it was prohibitive. It wasn’t in alignment with my desire to be an investor and had it be much more – I don’t want to say cruise control, because nothing’s ever 100% on cruise control, but I want it to be passive. I want to be an investor. I had to learn kind of the hard way through the first couple, and we did a few flips early on. The money was good, but I had to find a way to farm it out to someone else, or I never ever would have been able to scale.
[00:08:55] DB: No, I agree completely that making it passive is the only way to do that without feeling like it’s getting in the way of everything else. Because there’s only so many hours in the day, and then a lot of those hours, you want to be doing other things than flipping a house on top of being a full-time pharmacist. I’m curious then with all the different strategies of real estate investing that you’re involved in, clearly you found a way to make those all relatively passive as you still are a full-time pharmacist. What are kind of those areas that you have found helped you to be successful as a more passive investor, as a more cruise control investor?
[00:09:28] DW: Sure. I think probably for the first three years of the last seven, I was really focused on just buying those single-family rentals. They work really, really well here in the Midwest. For me, it was more about just building a team, interviewing local property managers who were referred to me by other investors. I think the other super essential thing is, if you’re not getting connected with your local real estate community, you are absolutely missing out. When we talk about the local REIA or the local Real Estate Investors Association. Everyone’s a little bit different. Some are real salesy, some might require memberships and things like that.
For ours, it’s just free, and we get together and everyone hangs out. Now, it’s really grown to be 80 people at a meeting, maybe 100 people, so it’s really gotten big. Networking is everything. Through those networks, I have found bankers, my insurance people, people to help me rehab houses, plumbers. I mean, all these people where if I don’t have a guy or a gal to help me with this aspect, I know someone who does. I think that’s been really instrumental with helping me progress.
[00:10:38] NH: It’s so important, because I feel like so many people look at that process of, I got to build a team, I got to find a deal, I got to figure out funding. It just gets overwhelming when you think of all the different aspects that go into it. But instead of just going out there and learning one next thing, or networking with one more person. It’s a great reminder that you should definitely reach out to those local REIAs and try to find a way to just start making connections, and you’d be surprised with how many people you know in a short period of time.
[00:11:03] DW: Yeah. I think kind of in line with that, not that all pharmacists are exactly the same. But I’ve managed enough of them to know that as pharmacists, like we want the black and white answer. We want it to be right every single time. When it comes to insulin, you’ve got to get it right every single time. When it comes to investing, I see a lot of people just get bogged down, and overanalyzing or thinking that they’ve got to have the whole thing laid out. It’s not that you have to have all the answers, you just have to be resourceful. If you can find the people to help feed you some of those answers, as time goes on, that makes up for not knowing all the answers, because you’re never going to know it all.
[00:11:42] NH: That’s a really great point. We’re so used to working behind the counter and every mistake is super costly. Whereas, like you said, you can pivot. You can adapt in real estate in ways you can’t in pharmacy.
[00:11:54] DW: Yeah. Well, on the real estate side, I would encourage people to make mistakes. No one wants to lose $10,000 or anything like that. But in that environment, you learn so much from missteps, and that’s why you have your network around you to help you avoid some of those pitfalls. But if you do make a mistake, or you hire a bad contractor, you got a buddy, or a wingman, or someone else that you can say, “Okay, kind of goofed up here. Can you help me get back on track?”
[00:12:19] NH: All right. I want to circle back. You went from one, to two, to seven to 150, or what was the next step and how did you keep going?
[00:12:27] DW: Sure. I worked really hard to start accumulating rentals. To me, it was super obvious that as a high W-2 earner, yes, I wanted cashflow. But I started understanding how much principle paydown I was making. Then after a couple of years, what really hit me is, now that I’ve got all these properties, and I have leverage on them or loans against them, they can be depreciated in a way where now I’m saving a staggering amount on my taxes every month. While I got into it for cash flow, I wound up learning that I’m making a third on cashflow, a third on principle paydown and a third on my tax savings. In the end, these are investments for me. Do I need it all to come from cashflow? No, absolutely not. I mean, if I can make 30 grand in cash flow and $30,000 on principle, pay down and save $30,000 on taxes, it just wound up being super powerful. I really leaned into buying kind of high quality, but middle of the road type of rentals. Not the super old stuff that’s falling down, and not the high-end luxury stuff. But your average, blue collar, kind of three bedroom, two bath houses and then nice duplexes. I just went one right after the other. Being that I have a nice W-2, getting the financing for these was not difficult at all. There’s some creative financing involved there, and we can talk about that if you want to, but we racked up quite a few in those first three to four years.
[00:13:59] NH: Yeah, and especially out here in the Midwest, like that type of house you’re describing – all three of us, Midwest boys, and you’re like – can’t describe. That’s the bread and butter out here for sure.
[00:14:06] DW: Yeah, it definitely is.
[00:14:08] DB: Yeah. I think a lot of people rag on the Midwest for not having a lot of appreciation. But even in the past few years, you didn’t mention appreciation, but I think we’ve seen that too. There’s even some kind of bonus value in the investment there. But that’s just the three-to-four-year story. What came next? What’s the next piece of the puzzle?
[00:14:25] DW: Sure. I think I got to a place where –and the following will sound like I’m getting down on single-family or smaller rentals and I’m not at all. But as I got further into the game, it became apparent to me that there were ways to create and generate wealth that commercial real estate will allow you to do that single families never will.
I’ll try to dial that into, like a really quick summary. When you buy a single-family house, and it’s worth $150,000, it’s worth $150,000 because the house across the street, and down the street, and next door, they’re all worth about $150,000, right? You use comps to come up with that value. If you buy a commercial property, and maybe that’s a 24-unit apartment complex, or maybe that’s a industrial flex building or a retail center, the value of that is not beholden to comps or the buildings across the street or next door. It’s based almost purely on, how does that asset perform?
For example, we just bought a building in South Bend six months ago, and we have installed new thermostats, we have changed the lights to all LED lights, we’ve installed a new cooling tower that’s going to be much more efficient. There’s a lot of savings there. That building is performing better, and so the value of it has gone up by almost half a million dollars just from creating efficiencies. Again, the contrast is, when you buy commercial, you’re focusing on making it perform better, as opposed to hoping that the neighborhood goes up in value. I don’t know if that helps to resonate, but that’s really why we started looking in buying some of our own local commercial stuff kind of here in the Midwest. Then if we want to talk about the apartment syndications in Phoenix, that was kind of the next iteration after that.
[00:16:19] NH: Yeah, definitely want to get there. I also want to know too, when you made that switch from the residential to the commercial side, the larger multifamily, what things got easier for you because of that experience you had? What things got harder that you felt like you weren’t prepared for?
[00:16:32] DW: Yeah, really good question. When I started going into both the syndication and the commercial deals, I started to partner up with people. Because at this point, I was networking heavily and I saw some opportunities to find some synergies, where one plus one equals three. Smart people who know things that I don’t know, and I had some skills that they didn’t know, and so we came together to collaborate. I think that’s been super, super helpful for at least our local stuff here in the Midwest on those commercial deals. I think deal analysis is a completely different thing. It’s not harder, but it takes some study, and you kind of have to – for me, I had to go back to the beginning and say, “Okay. Well, I’m going to learn this whole new skill.”
I also do a lot of fundraising and raising private money, and investor funds and things like that. That was a skill I had to learn from scratch. The SEC has a lot of regulations around that. You have to be very careful. Because as much as I want to be a big time investor, I don’t want to go to SEC jail, which is a real thing. It’s not that any of it was necessarily hard, but I needed to just grow my skill set. It required me to get in into a different room of different people who were a lot smarter than me that I kind of had to humble myself and say, “Okay. I’m starting with a new set of skills. Let’s see if we can grow into it.”
[00:17:52] DB: Yeah. One of the things that I like about what you said, it’s just that collaboration piece. I think a lot of investors jump into the single-family house, they try to do it themselves and go it alone. There is something about you can go fast when you go alone, but that phrase, “If you want to go fast, go alone. If you want to go far, go together.” Bringing people alongside can not only help you go further, but it can also help with that kind of security and risk aversion kind of piece that a lot of pharmacist face. I think that kind of collaboration potential makes a lot of sense.
We’ve talked a few times on different episodes about syndication, but just in general, syndication feels like another one of those opportunities where you can get together with a bunch of people and work on a larger deal as a team rather than a single-family house alone. Since the syndication and that kind of group approach is another piece of the puzzle here, can you explain that a little bit for someone that may be unfamiliar with the term or unfamiliar with the approach of collaboration in that way?
[00:18:52] DW: Sure. In the real estate world, syndication in its most simple form just means a bunch of us coming together to fund one giant deal. We’re probably going to have one LLC, but everyone’s going to have just a very tiny slice of the pie. For example, in Phoenix, we buy large apartments, and we’ve been doing that about four years now, three or four years. They started relatively small. I say, relatively small, 80 units, then it was 120 and then they’re getting bigger and bigger. At the beginning, we’re acquiring buildings at about maybe $15 million, then it was $25, and so on and so forth. The one we just closed last month was a $72 million building, but we had to raise $25 million to get there.
Now, again, for most of our pharmacists, we’re probably just knocking our socks off. I don’t mean to boast, but my intent with that is to say, it is a progression and it takes a while to get there. But that’s the power of syndication when you learn how to raise those funds and you learn how to start providing returns for other investors. I have lots of pharmacists involved, I have lots of physicians involved, local lawyers, other investors, things like that. Once you start building that track record of being able to provide the returns that you’ve underwritten for the project, people just come back, and they come back and they start bringing their friends and it starts to snowball into this thing. That’s kind of where we’re at today where we can raise significant funds. But all those fund come together, we buy the big asset, and then we will own that for – we underwrite it for about a five-year hold, but we’ve been able to move very, very quickly and reposition out about every two or three years out of those deals.
[00:20:39] NH: You recently just did – I know we’ve talked a little about this, or alluded to a little bit, but you recently just finished up a big project in Phoenix, 163 units, right?
[00:20:45] DW: We acquired it. Ours are all value-add type of opportunities, meaning maybe there’s no pool on site, and we’ll add that, or dog parks, or barbecue areas, or maybe there’s no washer and dryers in the unit or things like that. There’s this big set of work when you’re trying to find the deal, and then you have to structure and fund the deal. Then you have to actually close on it. That’s kind of the phase that we’re at, we just closed on this one. Now, we have an in-house construction company now, because we have enough work to keep them busy and then some. But they’ll go to work on repositioning new floors, and granite countertops and stainless steel and all that sort of stuff. We’ll start the repositioning process over the next two to three years.
[00:21:30] DB: For a project like that, where do you find a deal like that? I think most people are familiar with jumping on Zillow, and finding a single-family house in their neighborhood, but this sounds a little different. I don’t see a lot of $72 million apartment complexes on Zillow. I see in my area $72,000 houses. That’s a very, very big difference. Where do you find properties like this and what do you look for those kinds of value-add opportunities?
[00:21:54] DW: Yeah. Fantastic question. We started out looking for much more accessible multifamily deals in 10 million, 15 million. Again, that’s a massive number compared to what most people invest in. But when you talk about apartment complexes, that’s kind of where you start out if you’re 60 units, 80 units, something like that. For us, our path was through brokers, building relationships directly with commercial real estate brokers who focus in this niche, and just building rapport with them and saying, “This is who we are. This is what we’ve done in the past. This is what we’re looking to achieve. If and when that deal comes up that meets these criteria, and for us, it was built newer than 1990, and a value add opportunity and all these sets of criteria. Then please let us know and I think we’ll be able to perform on that.
Since we’ve been able to perform time, and time and time again. Now, at the upper end, the brokers will bring us deals before they ever hit the market. They would be very difficult to find the deals that we’re finding in the Phoenix market now. To answer your question, though, about like, what are you looking for or like what sort of improvements, I kind of hinted at some of them before. There are apartment complexes out there, they’ve just been on cruise control for years and years, and maybe they haven’t updated any of the paint, or the countertops, or parking surfaces or things like that. The opportunity is to find the right asset, and create the desirability, make it really a draw that people want to be there. Then that’s kind of been our niche.
[00:23:30] NH: You mentioned, obviously that funding. When you’re talking about these bigger numbers, the funding starts to just blow my mind. Talk to me a little bit about getting started in terms of getting that funding and starting to bring on other investors and just some of the basics there, just so our audience can comprehend or start to wrap their head around what that looks like.
[00:23:47] DW: Yeah. Let me answer it like this, and you can kind of steer me back on track. I think there’s a lot of people who, they’ll start to invest in their own properties, and maybe they want to grow bigger, or they want to go buy a 12-plex, or a 24-plex or something like that. Those are all wonderful things. Sometimes to get that done, though, they might need private money. I see a lot of people right now going out there and just saying, “Hey! I have an investment deal. If you’d like to invest with me, let me know.” That’s a big flag to the SEC. You cannot openly solicit for funds. Now, you can tell your story of what you’re doing, and your track record and all of that, but you can’t just put it on Facebook or Instagram and say, “Hey! I’m looking for money if you want to jump in.”
Now, if you and I have a relationship that I can demonstrate, years of email, or a family member or something like that. You can have all those conversations all day long. Not a big deal, but you can’t put a billboard out on the highway and say, “We’re raising money.” Unless you’re going to have an SEC lawyer draft up a certain type of offering and it’s 506(b), 506(c) and we can dig into that. But those are the kind of pools that you would need to have to start raising funds from multiple people.
For example, on this deal that we just closed, it was a 506(c) offering, which lets us put it on Facebook, which lets us put it everywhere and say, “Hey, anyone and everyone, you’re welcome to come as long as you’re an accredited investor and then we’d go from there.”
I still use a lot of private money locally for my small deals, like our commercial deals here in the Midwest. The South Bend building, I think was $1.3 million, and we raised $300,000 half of which came from a pharmacist that I used to work with, and then just other investors. You can totally do that, but I had a relationship with them and I could go talk to them about that.
[00:25:42] NH: Then quickly to like to wrap this up. You’re talking about a $70 million deal just for round numbers, $25 million or so in investor capital from outside investors. There’s another $45 or $50 million that you’re presumably financing through a bank, or what does that piece look like?
[00:25:56] DW: Yeah. It can get very complicated, but to make it very simple, usually, what people are going to do is they’re going to get the loan from Fannie or Freddie, a government bank type of loan, or you can get it from other lending institution. It’s not going to be a traditional bank, but it would be a lending institution that will offer what they call bridge debt, which is something where – it’s a loan for three years, maybe four, maybe five, but you’re going to work on the property, make it better, create the value, and then refinance with Fannie or Freddie for a long-term loan after that.
[00:26:33] NH: Great. That helps a lot. Again, I think these are great to clarify, because if someone jumps on in and checks out your Instagram and sees like, “Hey! We’re putting this deal together, we’re advertising for it.” They might go out and think they can do the same thing. “I’m buying a house on the street. I’d like to advertise for that.” It doesn’t quite work that way. I think it’s important for the audience to understand, there’s a lot of machinations that go into this. It’s not as simple as a lot of people out there are trying to make it sound. I think it’s, clearly, you really know the ins and outs of how that works, so it’s important to bring up.
[00:26:59] DW: Yeah. Again, it goes back to what we mentioned earlier, is the importance of the circle and the people that you associate with. I’m not one to necessarily tell folks to sign up for every guru that wants to teach you something, but there is some value in saying, “Okay. I want to learn this niche, so I might pay 10 grand for a mastermind that’s going to teach me this aspect.” I’ve done that several times. Those are some of the tables that I get to sit around where I learned this stuff. Now, if you’re just starting out, I would say get involved locally, get all the free education that you can in podcasts, and books and networking in your local area. But when you find, “Okay. Here’s the tool I want to learn.” There are ways to dig in deeper and that’s where you learn how to kind of avoid some of those landmines that you might step on when you start to scale up and operate at a bigger level.
[00:27:49] DB: I think one of those other landmines that scares a lot of investors is when you talk about the value add, you’re making substantial renovations to the property. Renovations can scare a lot of people, especially if they’re not sure how to think about what’s that roof is going to cost, what’s that heating, cooling unit going to cost, those kinds of things. That sounds particularly scary, and a $72 million building where it’s not just one roof. How do you process through some of those kinds of things? Again, with your kind of safety-oriented pharmacist’s hat on, how do you protect yourself from getting burnt and getting burnt at huge scale also?
[00:28:21] DW: Sure. On the small scale, honestly, the small scale is not wildly different from the large scale. If you’re going to have a roof that needs done, or say you’re considering buying a house, and it’s going to need the roof in the next five years, you can call two or three roofers and ask him for an estimate and see what it’s going to look like. Or you go to the local REIA and say, “Okay. Who here has put on a roof in the last six months? Can you tell me what did that involve?” That information is pretty accessible.
On the large scale, when we’re talking about big commercial deals, generally, what you’ll do is, let’s say, you go under contract to purchase it. You generally have 30 to 60, maybe even 90 days’ worth of due diligence time. In Phoenix, it’s quick, it’s such a hot market, you don’t have a lot of time. But we’re going to bring in multiple contractors, someone who’s a specialist on the pool, someone who knows these roofs, someone who knows heavy duty air conditioning, and they’re going to tell us what state it’s in and roughly what it would cost to repair over the next couple of years. A lot of that, we try to do on the front end before we get any surprises on the back end. Small scale, big scale, those are always good pieces of homework that are not difficult to figure out, but it’s good to be mindful of for sure.
[00:29:35] NH: What I really like about your answer, Drew is that, at no point did you say, “Oh! I get out there and I have a tape measure, and I know what a pool looks like and I just do it myself.” Like no, you’re bringing in experts on all this stuff, and that applies whether you’re doing a small single-family home down your street or something huge like this. I think that’s something that everybody can relate to is you don’t have to know everything. You just have to know the people that do. If you have that team around you, and the people that you can bring in, you have a lot of success doing this without actually having the knowledge yourself.
[00:30:02] DW: Yeah, 100%. Again, resourcefulness is probably the most important thing I think an investor needs. That’s tough for us as pharmacists who need to know all the answers. But that first deal, the second deal, like the first one’s always the toughest, right? But after you get through your third or fourth one, you’ll know how to place a tenant. You’ll know what it costs to put new floors down. You’ll learn that, okay, it’s $3.5 dollars per square foot installed, and then you just roll with it. Your knowledge will just increase exponentially if you can convince yourself to take action and start moving forward.
[00:30:35] NH: I love it. Drew, you’ve done quite a few deals I can tell, and just the different aspects we’ve talked about the different places we’ve spoken about. Any good story, like you got to have like one over-a-beer story that you’d love to share with our audience about a memorable experience you’ve had.
[00:30:48] DW: That’s a good one. I would like to tell you that I have some of these crazy stories. If you’re looking for one that kind of came as a surprise, I’ll give you a lesson learned for me. For a while, I was buying single-family homes locally at the sheriff sale. Okay. This is a house where someone lives in it, and they have fallen behind on payments and the bank forecloses on them. So they send it to the courthouse steps, and all the locals or whoever shows up at the courthouse can start bidding on it. The trick with those houses is, even though you could get them at a pretty significant discount, you don’t get to walk through them, you don’t get to inspect them, you’re buying them as is. I bought six or seven of them. This was probably 2018. 2019, something like that. They were all great, except for one where we wound up having a sewer failure, that wound up being about a $20,000 expenditure that I was not ready for.
Now, I bought it $50,000 under market. I wasn’t in the red, I wasn’t losing money, but I was not prepared to pay $20,000 either. Now, I always try to keep about six months’ worth of expenses on hold for big rainy days like that. That’s far and the way the worst one I’ve ever had. Every now and then, you’ll get something that pops up like a water heater dies and it’s $1,200, or the furnace dies and it’s $2600 to put it back in place. All of those are very survivable. $20,000 all at once, that one kind of hurt, that just about depleted my six months, but we got it taken care of and you start building again. The moral of the story there was, if you’re going to buy sight unseen, which is a very risky way to do it, make sure you get enough discount so that you’re not upside down in it if something goes sideways.
[00:32:32] NH: What we really like about that is that even though you were buying risky, everything else you’re doing was very risk-averse, right? You had the emergency fund behind it, everything else was – you were buying under market value. It didn’t have to go perfectly for you to be successful and I think that’s the real lesson of what I’m hearing there, which is important.
[00:32:48] DW: Yeah. If I can add one thing, this was really counterintuitive for me at the beginning. I learned it once I had multiple houses. Someone asked me the other day, like we bought, I don’t know, our 48th door or 51st door, I forget what it was. But they said, “I can’t believe you’re still buying more houses. Like every one you buy, doesn’t that just get riskier, and riskier and riskier?” The reality is, is in my opinion, it’s the exact opposite. Because when I had that $20,000 failure, at that point, I’m going to – I don’t remember how many houses I had. But let’s say I had 15, right? Well, they help to mitigate the risk of that one, either coming vacant, or flooding, or having that sewer failure. Right? What I learned when I went from one house, to two house to seven. When I had one or two, if I had a vacancy, I struggled to pay my bills. But when I went to seven, “Well, now. the risk is spread across seven houses.” If I have one or two vacancies, I can still pay all the bills. Now that we have 50 doors, I mean, I can have 30% vacancy, and still pay all of the mortgages and all the maintenance and all of that. That’s why I continue to buy even though I’m doing bigger deals somewhere else, locally they work so well, that I’m mitigating my risk by adding more and more.
[00:34:02] DB: One thing I think is really important off of that too is that also shows that you’re doing your homework on the front end, you’re doing your math really well because you’re making sure that each one of those properties cash flow that you are counting that at some point the property will go vacant, at some point the furnace will go out. You’re preparing yourself for that, you’re counting the cost going in, rather than just saying like, “That’s a good-looking house, I should buy that. Someone will rent that for sure.” That math, and that intelligence is going in on the front end, which I think really helps to sleep at night when you know that the math is going to work out for those vacancies and things.
[00:34:33] DW: Yeah. I’m pretty big on my spreadsheets and knowing my numbers. I think a lot of people at the beginning, they don’t go by the numbers or they rent something that they would want to live in or something that’s relatable. If that’s what you’re doing, you’re playing feel estate, that’s not real estate. It feels good. It looks good, right? Well, we don’t play ‘feel estate’, that’s a recipe for disaster. We’re going to look at this rental property and we’re going to analyze it and say, “I’m going to use the 50% rule and I’m going to set 10% aside for taxes, and insurance, and vacancy, and maintenance, and management and all these things.” Then if there’s some cash flow at the end, okay, now we’re talking, right? But some of my ugliest houses are my best investments. You have to figure out how to take the emotion out of it and start playing field estate and really analyze.
[00:35:22] DB: Yeah. I think that’s one thing that pharmacists can do well, as a lot of pharmacists, they can enjoy the spreadsheet side of things, right? So yes, if you can peel the emotion back from that, and work through the numbers, that really helps. At the same time, on social media you don’t go by “the spreadsheet investor”, I’ve seen you as “the flying investor.” Can you explain “the flying investor” real fast?
[00:35:42] DW: Yeah, I absolutely can. Let me give you a little context on it. We talked about raising money, and social media, if you do it legally and appropriately can be just an incredibly powerful tool for doing such things. It has also helped me just grow my network, and meet more people and just be more resourceful like we talked about. I was trying to find a way to kind of brand myself and lean into something specific. In my spare time, which I don’t have a lot of, but I make time for flying, so I fly paramotors. For people who don’t know what that is, that’s basically where you strap a large fan to your back, and you’ve got a parachute above you, and you run up into the sky, and you fly all over the place, which sounds crazy. But for me, it’s magic.
It was kind of the thing I needed at a certain phase in life where I needed something recreational, and just something for me. That’s kind of what that has been, but I’ve leaned into that. All of my marketing, and my branding, and everything is all The Flying Investor. Like I’ll send out a monthly newsletter, you’ll see that branding. My company is Clear Sky Properties, and we have Clear Sky Commercial.
It’s funny now that that persona is starting to grow a little bit more and a little bit more. I’ll have random people, they’ll come across and say, “Oh, the flying investor, blah, blah, blah,” and they kind of make that connection. It’s kind of cheesy, or it feels like it at the beginning, but Drew’s just a common name, right? It could be another – there’s a million Drews out there, but there’s only one Flying Investor. That’s kind of the story.
[00:37:11] NH: I love it, man, keep leaning. I think that’s the way to do it. Like you said, it sounds weird on your own tongue when you first start it. But then all of a sudden, someone comes up to you and go, “Oh, the flying investor. I love your stuff.” That’s when it becomes real. I think that’s a really cool moment. Keep it up.
[00:37:24] DW: Yep, for sure.
[00:37:25] NH: Good. Well, I want to switch over. Drew, this has been awesome. We have one last segment. It’s our final infusion. This is three questions we ask every guest on the show, want to get your take. Question one is what’s one tangible strategy that you can use to make sure that you’re investing works hand in hand with your career as a pharmacist?
[00:37:41] DW: It’s a fantastic question. Because clearly, I tend to be incredibly driven. I really enjoy learning new things and all of that. But I have blind spots sometimes with, “Okay, make time for church, make time for family, all of that kind of stuff.” In the last couple of years, what I’ve had to do is rather than sneaking real estate in whenever I can, I’ve really gone to time blocking. Meaning, for example, at home, it can get contentious, right? Because I’m building this thing, but I also need to be present for my family. I always thought it was better if I just did like an hour here, an hour there, multiple nights of the week, just when I thought like I had some spare time, talking to my wife, talking to family. They would rather that I take Monday nights, Thursday nights. Like those are my nights, and I’ll go from 6:00 pm to 10:00 pm just back, to back, to back, to back meetings, ripping them all off. But then on Tuesdays, Wednesdays, Friday, Saturday, Sunday, I am 100% available to them. For any emergency that pops up or whatever. It’s not perfect, but it’s been a better system. I think for me, specifically, trying to juggle all the things that we juggle. Time blocking has been a really essential piece.
[00:38:49] DB: Yeah, that’s really good. What’s one resource that’s been most helpful to you in your real estate journey, whether it’s a book, podcast, person, author, website, whatever that would be?
[00:38:58] DW: For me, I guess I’ll give you the most recent example, because it’s probably been the most impactful. Over the last year, I’ve really gotten into using a daily journal. Some people just write freehand, other people like the structure. I like having the structure. I know Bigger Pockets puts out the intention journal or Brandon’s intention journal, and it’s one of those where you use a new journal every 90 days for new goals and all of that. But the most impactful thing within that is, I look at it two times a day. Early in the morning where I rewrite all my goals and I say, “Okay. For today to be successful, I need to do this, this and this.” But there’s a little chart in there where you can do some habit tracking. It can be as difficult as you want or as simple as you want. Drink 100 ounces a day, or get out of bed at this time or make sure that you make it to the gym five days a week.
I build my grid every single week, and then I score myself. Just being mindful about that that has hands down been the most impactful thing. I’m just looking at your goals every day looking at what is success for today look like and maybe that’s just going out to dinner with my wife. That’s a successful day. Sometimes it can be just that simple. But I’m not always as mindful as I should be, unless I take time to prioritize it beginning of the day and end of the day. It’s been magic for me.
[00:40:15] NH: That physical reminder is huge. I love that. That’s great example. All right. Our last one, what’s one piece of advice that you’d give to a pharmacist that’s contemplating a start in real estate investing?
[00:40:24] DW: Okay. If we’re talking pharmacists specifically, I would tell you, don’t get caught on analysis paralysis, because we tend to be just, again, we need all the answers, we dig in deep, we find four different primary literature articles to support our argument. That’s not what this is. That’s not what investing is. That’s why a lot of pharmacists hire it out to financial planners, and all of that, and there’s nothing wrong with that. But if you’re going to jump into it, surround yourself with a lot of good people, so that you can be resourceful when you need to. But at some point, you’re just going to have to rip the band aid off and go, especially if you’re doing your own deals.
Now, if you’re looking to do syndications, or partnerships and things like that, like we do, then you’ve got someone who’s an expert who can walk you through it and explain it and all that. That’s not a bad way to go either, but take action. I mean, there’s a lot in there to unpack, but take action one way or another. If you just sit and analyze the whole time, years are going to pass and five years from now, you will be disappointed that you didn’t take action.
[00:41:25] DB: Absolutely. I love the taking action, particularly for pharmacists that might be a little slower to jump into things, just being a little more risk averse than the average person, so I love it. Where can people find you and connect with you if they want to learn more?
[00:41:38] DW: Yeah, sure. Honestly, on social is probably the way to do it. I tend to be on Facebook a little bit more than I am on Instagram. But if you want to find me on Instagram, it’s @theflyinginvestor. There’s also a YouTube channel. I’ve only posted just a couple of videos. But I think in months and years to come, basically, I go flying and while I’m flying, I pick a topic to talk about, and maybe it’s how I got started in real estate, or lower in rentals or raising private money. I’ve got 20 ideas stacked up. I’ve only made three or four videos. But if we get some good weather this summer, I’m planning to rip off a bunch. That’s another way to follow along.
[00:42:12] NH: That’s awesome. Drew, really appreciate you coming on the show today. It’s been just an awesome ride. There are so many different things we could dive deep on you with. But I think just this great overview and some of the insight and wisdom that you’ve gained over the years of doing this, it’s just really helpful. Thanks for sharing that with our audience.
[00:42:26] DW: Yeah. Thanks again for having me. If I can ever be of help or support to anyone else, you want to know more about syndications, if I can help you in your own journey, don’t hesitate to reach out. I’m always happy to help if I can.
[00:42:37] DB: Sounds wonderful. Thanks so much.
[OUTRO]
[00:42:40] ANNOUNCER: Thanks for listening to the YFP Real Estate Investing Podcast. If you liked what you heard on today’s show, please leave us a review and subscribe to the show, so you never miss an episode. If you have a question, know someone who would make a good guest or want to connect with Nate or David, head over to yfprealestate.com and join the growing YFP Real Estate Investing Facebook group.
As we conclude this week’s episode of the YFP Real Estate Investing Podcast, an important reminder that the content in this podcast is provided to you for your informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding material should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.
Furthermore, the information contained in our archived newsletters, blog posts and podcast is not updated and may not be accurate at the time you listen to it on this podcast. Opinions and analyses expressed herein are solely those of your financial pharmacist, unless otherwise noted and constitute judgments as of the dates publish. Such information may contain forward-looking statements which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.
Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.
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