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Real estate entrepreneurs are the best people. On Real Investor Radio, we’ll cover advanced residential real estate investing topics. We’ll discuss how what you have seen in the headlines will affect your real estate investing business. And we’ll go deep on these topics to help you make better decisions and take specific action.
Craig Fuhr (00:00.182)
That's great. Perfect.
Craig Fuhr (00:06.126)
All right, welcome back to real investor radio with Craig fewer and Jack Bevere. We're here today we just spent the last episode talking with Sean Mulhall from SMD Capital Group here in Maryland. Basically, if you haven't listened to the episode, it really, we really took about good 45 minutes to talk about how Sean went from working a W two job to very rapidly acquiring over 150 properties in Maryland.
and all of the growing pains that came along with that. And Jack and I now wanna just sort of dive into where Sean is today with his partners in the business and frankly, all of the businesses that they run. So Sean, great to have you back. Welcome back to Real Investor Radio.
Sean Mulhall (00:51.745)
Thanks for having me again, guys. Really appreciate it.
Craig Fuhr (00:53.758)
Yeah, it's been a great conversation. I really encourage people to go back and listen to the prior episodes. So Jack, why don't you go ahead and start us off.
Jack BeVier (01:01.459)
Yeah, so John brought us up to speed where he's got he and his partner Mike have about 150 properties. They've kind of brought construction halfway in house leaf, they've got a strategic partnership where they feel they've got, you know, the field generally under control. They've got the beginnings of a property management company, they've started to in house that aspect of it. But losing W to income in a building a rental portfolio phase of the business, which is kind of like, you know,
cash flow negative exercise. That's a super difficult transition to make and Shama is just telling us about how they'd started to get a little bit of fee income from doing some outside GC work and some flipping. And I really wanted to kind of dig into that transition because that's a very difficult one. You know, but I think like the theme being that using the skills that you've made skills that you've earned.
working and building your own rental portfolio and now taking those forward facing to the public and turning them into fee income, frankly, by necessity, right? Because you need to create some current income with the absence of that W2. And so, so talk to us about that. Like, um, you, you mentioned there was a couple of GC jobs that came in. You started doing some flips, obviously 2021 good timing from a flipping point of view, but how did that business evolve and how did you guys
turn that into a consistent stream of income.
Sean Mulhall (02:31.433)
Yeah, so we didn't do much as far as the original ones like you were alluding to there with the first jobs that we were able to get under our umbrella, just were opportunistic things that had popped up. But what it did teach us was that there was a pipeline of possible leads coming from real estate transactions in a traditional fashion for people selling homes and buying homes. So what we tapped into was the agents on our real estate team to start to incentivize them to bring us the buyers and the sellers that they were.
going to be interacting with on a daily basis in the retail world for us then to be able to utilize our services to make some actual profit on the actual before and afters of buying a home or selling a home. So we didn't even go to a marketing perspective from direct mail or PPC or anything like that. We just looked at the infrastructure we currently had and we found an area that we thought we could tap into that we paid the referral fee.
We gave them 10% of profits for any job that we closed, and then we would take to the finish line. So there was no guarantee, but all they were really doing was connecting either myself or Mike with the buyer or the seller, and then it was our job to close it. And so people were, a lot of the agents were very, very open to that considering that, you know, agents are up and down with income from time to time, and now they were being given an additional revenue source that really all they had to do was make a good trail.
Jack BeVier (03:52.251)
And frankly, and probably also like helping them do their core job better, right? Like, cause at that time, super low days on market, multiple offer situations everywhere have to be competitive on terms in order to even get a deal. So like you find a, but you gotta buy, get a buyer's agent who's showing a bunch of houses. If they can say, Hey, I've got a legit GC that I can vouch for that does good work and can make this into, make this house into your dream home.
that's a humongous resource for the realtor just to get that core commission much less the referral fee, right?
Craig Fuhr (04:26.122)
Not only that, but the flip side of, hey, Mr. Seller, you've got grandmom's house here. And if we just added a bit of a lift to it, we could sell it for $100,000 more. So yeah, it's brilliant.
Sean Mulhall (04:26.239)
Yeah.
Sean Mulhall (04:38.709)
Yeah, so it really worked out that that's where we tapped into it had a lot of success with that. So you obviously just and to this day, just as FYI, we still have never paid for marketing construction business, not one dollar. So, you know, we have still really utilized that space, our retail real estate team as our funnel.
And it's really been successful for us. And obviously, that can dry up any point in time. But even in today's age of low inventory, things like that, the same thing that Craig and Jack, you were just speaking to, it almost allows us to still capitalize on those because we're giving that buyer or seller an extra avenue that a lot of real estate agents either don't market or don't have the ability to market. So it works out for the retail team and helps us drive more volume there. It works out for our construction team to have us drive more volume there.
as well.
Jack BeVier (05:30.183)
Now, I have, we have done both. And I now consider it a tremendous luxury to only work for ourself like we're our own general contractor as well. And it is a tremendous luxury to just be able to own your own mistakes and not have to go like answer, you know, like, you know, we make a mistake, we pay for it, we move on as opposed to having to go to the client and you know, explain the screw up, like
both from a sales point of view and from a customer service point of view, those are not, those are not light lifts, right? To like, to add those aspects to the general contracting business, which is difficult enough in and of itself, like to add that for the retail facing side of things, like talk to me about that, because I've, I found that to be extremely difficult and, and frankly, we've built a machine that doesn't, doesn't do it. And I find it, I personally think it's a luxury to not have to go work.
for retail, but how have you guys built that out to be able to do it well?
Sean Mulhall (06:33.589)
Yeah, I mean, I couldn't agree more. I mean, obviously the situation is when you're working with somebody else compared to working for yourself, it's just a whole nother can of worms of what you have to be prepared for and how to handle it.
you know, the big thing for us was that in the beginning, we really didn't have an option because once again, or I didn't have an option because I needed to make money. So like you kind of, you kind of even if it's a square pay ground hole, you got to make it work for at least a short amount of time because I needed the revenue for me to live and for me to continue to drive the acquisitions of our properties and be able to have money to put into buying more houses, which is the overarching goal and has been for since we started this. So, you know, end of the day,
Sean Mulhall (07:13.991)
We've really tried to make it a focus that we're putting prices out for what we'll do at a price that we will make enough money to deal with the stuff that comes along with it. So we're not just jobs to get a job. We're bidding jobs that if we get the job, the full thing of what you just said, the full list of what you have to deal with, it's justified because the profit is X. And so
Craig Fuhr (07:23.342)
Sure.
Sean Mulhall (07:38.789)
for us, we've also recently, and this wasn't something historically we did, but we've recently hired a director of construction that is someone who's now taking this off of mine and Mike's plate. Historically, we were still doing it and we were just involved in that part of it because it was something that we weren't really putting a lot of, I don't want to say we weren't putting effort towards it, but it wasn't something that was like a real big time's up from the expectations that we were just, we were doing it when they came in and we were obviously had the feelers out there, but we weren't actively pursuing it on a daily, weekly basis.
So, you know, it's one of those things that in general for us, like you said, at some point in time, you know, having to be able to be your own boss when it comes to this kind of the business construction where you're only doing what you do, would be obviously a situation that would make a lot of sense from an ease. But I think the profitability of what we were doing because of the numbers we were putting out and we were getting for our jobs, it just justified the extra effort and the extra work it would take to work for someone else.
Craig Fuhr (08:36.258)
you know, Jack, it's I find it, it's really interesting, because we know rehabbers here in town and around the country, Jack, who are very good at what they do. And they team up with decent contractors. But not every contractor, Jack can work, you know, work a, you know, a flip for an investor versus a retail lift for a homeowner. And I think for you to recognize that you had that contractor.
your friend from Guatemala, that was a really great stroke of genius on your part to see that this guy could kind of bridge both worlds because working for a homeowner versus some flip in Baltimore City where you're just kind of, you know, where the place is empty, you don't have to worry about sweeping up every day. It's a whole different beast. And so, yeah.
Jack BeVier (09:28.371)
Yeah, I was gonna I was gonna ask you about that. You got this guy working on stuff off Poplar Grove and like C class neighborhoods. And then you've also got him working at like, you know, 600,000 $800,000 houses in Pikesville. Like, does, by the way, like, can he do both of those things? Could he do both those things? Well, did he have different sets of crews to do both those things? Well, because we got different trim carpenters. And even amongst a particular product class, we've got the high, high middle and low guy, right?
Craig Fuhr (09:35.986)
Montgomery County.
Jack BeVier (09:55.907)
And that's not even talking about doing homeowner work in an occupied house, which is like a completely different business, right? Like it's a completely different thing. How did you guys work those, those matchup issues?
Craig Fuhr (10:03.191)
Oh yeah.
Sean Mulhall (10:07.901)
Yeah, so I mean for what he does and for that part of our business, they are able to go both sides of the fence.
And the way that I try to think about how that's happened is I don't want to take credit for it. It's definitely him and the way he has hired, the way he's managed. You know, he has family members that work with him. He has people he's known from Guatemala work for him. They have a really, really strong work echo. They work Monday through Saturday every week. They don't ever, they work take off on Sunday, but every single week they work Monday through Saturday. They don't take off for 4th of July. Like they work consistently and they are hard workers.
that I've looked up to because the people that he has working for him are
people who that, like I said, can go both sides of the fence and do both jobs and not complain or not have issues with it. Very respectful. And I think what we've tried to do to integrate them into our world so that they understand that when they're working with us, slash for us, that it is a collective effort and we're all one big team, is we brought them into the fold with what we do as a company for events, for, you know, dinners, things like that, so that they feel like they're a part of our team and they want to do a good job because they see what they're supporting.
see that it's not just us over here, hey, go, you know, you missed this paint spot. It's that we're trying to present a product that they can feel like have some gratification on that they build that product and that they're helping build this business because they see who's on the other side of the business. We have the company events, which I think you do too, Jack, where we have everybody. We have our property management, we have our construction, we have our retail.
Sean Mulhall (11:42.913)
real estate agents, we have everybody come in and it's all the message we try to portray is that we're one big family, one of our core values is one big family and we're working together. We're not individually siloed only doing that and we see each other once a year and they don't know what's going on or why it's going on. So they bought into the culture of the organization as well, which then I think inherently makes them want to do a better job because we take care of them. We offer them things that they wouldn't have if they were just working for, you know, Joe
in Morell Park and like was getting paid X under the table and maybe made some money, but also just the conditions and the way that we treated them was it was not really necessarily what they were looking for. So I think it's a twofold approach to it, but I think that he set the bar and that I've tried to integrate in our systems processes and just culture to make them feel like they're part of something that maybe they wouldn't necessarily feel with just a regular GC doing a $30,000 renovation in Morell Park.
Craig Fuhr (12:41.406)
was the income that was coming off of that part of the business now enough to sustain you and sort of, you know, get you to a point where you felt comfortable?
Sean Mulhall (12:50.433)
Um, so I, you know, I'm always, I'm a, I'm a grinder. So I'm always in a position where I'm wanting to continue to push the envelope and continue to try to do more and so forth. So it was, it was, let me live a very comfortable lifestyle, but it was also to a point where it wasn't like, I wasn't just hanging my hat and like, okay, I got this, everything's good to go. Um, which is kind of why, while we're doing this, I also then, once I left my day job, really made the property management company of business and, and
like a, oh, we're going to manage our properties, but like an active business where we're turning a profit, where we're doing a lot of, you know, trying to buy leads, trying to incentivize people to bring us new properties, trying to work with investors and so forth so that we can build up that model. And that's kind of something that we've grown into as well to have that as another cash flowing entity that's able for me to then take like a consistent salary out of, which is what I do. I take a salary out of the property management.
Jack BeVier (13:47.027)
I want to dig in. I want to dig in a lot of the property management side and you guys approach to growing that business. Uh, just as a reference point though, when you, when you made the transition away from W two, did you guys back off adding units to the rental portfolio? Like did you pull that back a little bit or was I guess like, how, how did you, how did you make that transition? And if no, then how did you make that transition without how did you feel comfortable not backing that off? Um,
Craig Fuhr (13:49.454)
Mm-hmm.
Jack BeVier (14:16.767)
Or was the timing of like 2021 and like the refi rates and liquidity was like really high at the time. Was the market strong enough from the refi side of things that helped not require you to back off?
Sean Mulhall (14:34.505)
Yeah, I mean, we did a loan with you, Jack, at Dominion, you and Fred, where we took an existing portfolio, I think we had maybe like 60 or 70 homes, and we refied it with you guys to like a, to 3% with you guys. And then, like, even with that being done, we had to pay a prepayment penalty, all this kind of stuff. But even with that being done, like, that significantly changed our exposure.
Jack BeVier (14:44.137)
Oh, it took out the banks.
Jack BeVier (14:49.063)
Well played.
Sean Mulhall (15:02.285)
because we were at like seven and a half and we had, or maybe seven, I don't remember exact terms, or we had the five year, we had balloon payment five, whatever it was. And then we took it to the 30 year product with Dominion at like three and four or something, 3.4. And so, yeah. Yeah.
Jack BeVier (15:06.259)
Mm-hmm.
Jack BeVier (15:15.551)
Did you pull any cash out? Did you pull any cash out?
Sean Mulhall (15:18.885)
Even with the repayment penalty and even with all that happening, we still, because, you know, even with the increase in the market, we had gotten some extra cream on top that was able to come back after the refi, even though it wasn't even in the existing refi for that long time. So we've gotten some capital back from that transition into putting it with you guys. So that also happened.
Jack BeVier (15:28.498)
Mm-hmm.
Jack BeVier (15:37.075)
Yet top topping up to 75% 70 or 75% LTV in 2021 when rates were, you know, three handles low four handles like didn't hurt that bad, right? Your payments still went down, you know, like even though even cashing out your payments still went down. So coverage increased as you pulled proceeds out like that was just well played, sir. Well played.
Sean Mulhall (15:56.097)
Yeah, thanks. Yeah. Appreciate it. I knew a guy, I knew a guy in Baltimore at Dominion that hooked me up. So I appreciate it. Yeah, exactly. Thanks. Exactly. Next Fred Lewis. That's all about now. Yeah, exactly.
Jack BeVier (16:01.587)
Hehehehe
Craig Fuhr (16:03.098)
Now you know, now you know too.
Jack BeVier (16:07.457)
So yes, talk to your...
Craig Fuhr (16:12.494)
Fred's way too busy to talk to you, so.
Jack BeVier (16:16.439)
So talk to me about property management and growing the property management business, because that's something that we, we got to, I think we got to like 150 properties, we were using a third party. And then at 150, we were like, ah, this like, it, it too uncomfortable to not have control of it. But at 150, you can't afford, you can afford maybe one person, but like that one person is then just stressed out doing everything. And they're also an existential threat to your like,
to you making your mortgage payments, right? Which you've got personal guarantees on, so that's a problem. So how'd you guys think about that problem and then what'd you do about it?
Sean Mulhall (16:54.645)
Yeah, so when we shifted, and this was, keep in mind, I hired this person before I left my W2. So we had started to build a little bit of an infrastructure before that happened. And so I've always been in the mindset of like,
I would rather spend early and get things where it needs to be than have to try to consistently chase the carrot, like getting more and more and more. So build it up front. So we invested in some property management software. We had...
brought in this person that was handling basically the ins and outs of the property management business. And then we also had this other individual's workforce at the time that was actually being more of a property manager than what she was originally hired for, which was just like an admin. And so we had like enough of the pieces of the puzzle there. And yeah, we definitely weren't profitable right off the bat.
But what we did was we started to market and we started to buy leads and we started to try to raise awareness that we were able to help investors. And just like we did with our real estate team for construction, we started to do that with the real estate team for investors and the REOs that Mike was selling to investors a lot of times that, hey, we have a property management division. So we were tagging into the team there as well to be able to bring in good leads from people who were looking to try to get involved in the real estate, being able to have the
agent that be able to talk about the construction and the property management. Be a well-rounded machine where we can help you renovate it and then after we're done renovating it we can also manage it for you. At the same time we were in positions where we were working with investors and we had been doing this to a slow scale where we were sourcing a property for them. We were similar to I think what you guys used to do back in the day Jack with the Turnkey product. We were sourcing it for them. We were doing the construction one and then we're going to manage at the end but we never owned it. So we were just like hey here's this property. Here's what you can
Sean Mulhall (18:45.167)
So that they bought it, they handled all of it. And then we were making a rip off of it throughout the process. And then we were also gonna have that property in our management portfolio once we were done. So we started talking.
Craig Fuhr (18:53.966)
Were you helping them with tenant placement as well, Sean?
Sean Mulhall (18:56.381)
Yep, yep, we did the full nine. So then we were able to kind of build a pipeline there as well. So as that's all happening and as we're growing, we're starting to have conversations with people that are interested in being involved and having us manage because a lot of the things was we were showcasing that we know how to help build portfolios for people because we do it. We were the real estate, we're the property manager for the real estate investor by the real estate investor. Like we were a real estate investor first and foremost, and that's how we built our property management
Craig Fuhr (18:58.358)
That's great.
Sean Mulhall (19:26.275)
because similar to you Jack, we had outsourced property management, went through multiple companies, and I being a more like a tech expert kind of profile was just like, man there's so many things that we could do better, and obviously everybody says that outside looking in, but it was like they weren't really crazy groundbreaking things that I could do to kind of change the course of what you know I was lacking I felt from the other property managers that we were working with.
So started to make some tweaks, started to market it in that light and started to have some success, bring it in some third party management. Obviously we were paying our management company for our own properties as well. So then all of a sudden we started to build a little bit and started to get some momentum. The other thing I started to do was I started to hit the job fairs at the local colleges. So I went to University of Maryland, I went to Towson and I was basically obviously showcasing what we do as a whole entity and like, hey, why don't you come in term for us slash, you know, be involved with our organization
what you like because they don't they don't teach real estate investing. They don't people that come out of college I came out of Maryland only reason I knew about it so
Craig Fuhr (20:26.03)
Wait a minute, don't they have the Ed St. John's School of Real Estate there? They're not teaching how to buy houses on poplar.
Sean Mulhall (20:30.433)
Yeah, exactly, right. Yeah, exactly, exactly. So it's like it was intriguing to younger, you know, usually good, sharp individuals who were in these college programs. And so we started to grab some interns and obviously I don't want to.
kicked an intern, but they cheap labor. You're not really paying a lot and you're getting a high quality person who is at least somewhat enough well off to be able to handle a college and a higher end institution and be able to then transition that into a role in a company. So we started to get interns in there and started to have them kind of be our boots on the ground, legwork of doing the stuff that maybe that property manager, he said it was overworked, couldn't do at a very, very low end rate. And what also started to happen with that was that people were graduating, they wanted to stay on. So then we were getting,
again, people who we had already technically trained because they were doing this while they're interning for us in a entry-level role at an entry-level salary, but they're coming in with experience in this space and then having them evolve with us. And as we grew, they're evolving, making more money, taking more responsibility, but we're getting them at a price point that's bearable for where we're at as an organization at the time. So a transition, we started to obviously scale up with that.
Jack BeVier (21:19.168)
Mm-hmm.
Jack BeVier (21:36.927)
Mm-hmm.
Sean Mulhall (21:41.525)
That also evolved into, we now have some overseas virtual assistants that are very cost effective and very strong team members. We do bilingual Spanish and English. So also we're able to tap into the Spanish speaking tenant base that's out there and help to make them feel more comfortable running from us. And we market on Spanish speaking groups and so forth to be able to get that type of a tenant in the mix as well, which adds our...
our bubble a little bit larger to be able to grab more people into our homes. So we started to evolve into that as well and having them, the approach we've taken with property management is we've had them support the people here in the city. So what we've really had success with is we haven't hired 10 property managers. We haven't hired all these people here. We have one property manager. We have one leasing manager.
And then we have a team lead that helps out with a lot of different things, but he's not even necessarily in the property management role. And then we have four backend virtual assistants and all they do is all the things that the people here in Baltimore don't have to do in Baltimore. Right? So if there's anything that doesn't necessarily fairly boots on the ground here in Baltimore, they do it all. They fill out now that they have the new, um, eviction, uh, system here with how you can file it online. They do all the eviction stuff. Obviously the property manager has to go to court, but that's one less thing he has to do. Uh, they do all the.
Jack BeVier (22:46.172)
Mm-hmm.
Sean Mulhall (23:01.039)
delinquency touch spaces, check-ins. They do all the backend verifications for leasing. They do all the preparation and all the different things that when you put them in play is very cost efficient for the amount of effort and time they're putting in. And so that keeps us with having our head count here a little bit less from an actual personnel perspective for property management specifically, but they're not necessarily overworked. And like they do our backend.
virtual assistants do our client engagement as well. So like touching base with our clients, hey, how's things been sending out the surveys? Hey, is there anything we do to help you? And I hire very strictly on accent. So they speak very, very good English to the point of like, you might not even know that they are an overseas employee. So the client doesn't necessarily know that they're an overseas employee. They just know that somebody from our company's reaching out, which is that something that's not always happening in property management. You're developing a camaraderie
with you and then we're moving it to the next level.
Craig Fuhr (23:59.234)
Go ahead, Jack.
Jack BeVier (24:01.039)
Yeah, no, I think that's a really interesting case study. Craig, remember that Alex Hamanee that we spoke to at I am in, he's in Dallas and he has 300 and some properties and he had one person in the US and 10 virtual assistants and ran his whole property management for all pretty much his entire property management company virtually. So I think it's a really interesting model that seems to becoming more and more popular. I mean, yeah, if you're not going to get in the car, right, if your job description doesn't include getting in the car,
Craig Fuhr (24:05.942)
Yes, of course.
Jack BeVier (24:29.587)
you know, what, what's the, you know, why, you know, why not, you know, why, why not try out a virtual assistant for that position? You can get very educated, high quality people. You speak, you know, speak English. Great. You know, I just, I just speak, sorry, speak English. Well, better than me.
Craig Fuhr (24:40.905)
So one of the things that I...
Sean Mulhall (24:45.131)
Hahaha
Craig Fuhr (24:45.198)
Yeah, very good. Jack, we're all still learning, Jack. One of the things that I find really intriguing is, so you're you you're building your own portfolio. And I imagine now we're above 150 houses, like bring us up. So, you know, we're in that 2000 feels like 2223 timeframe, the construction business is obviously growing and doing well.
Now you're starting a property management business, it's growing and doing well, and this explosive growth that you're experiencing really in all three of these businesses now, with seemingly a very small staff of very competent people. Man, when does the wheel start falling off? Especially Jack, in a business of property management that I've always said was one of the most thankless businesses ever. It's just very tough. So,
is it so how many so now you're up to over 400 properties 400 doors that you're managing in just in Maryland alone plus you've got an additional 80 to 90 doors in eastern Pennsylvania you know where are you now in terms of talent and managing all of this growth
Sean Mulhall (25:58.945)
Yeah, so we've gotten really on the property. The wheels fell off in another area of the business, but in the property management, it's still been going strong. What we've done and what I've been really aggressive about is we brought in a consultant and built a tech stack that can support to keep everybody aligned with what success looks like and what, and how to hand off certain roles, responsibilities, and tasks. So we use a software called Lead Simple.
but I know there's plenty of these out there CRM software that this also has a process system structure. So what we've done is we've built in internal
task management software that is so clear because the steps when it tells you to go verify employment, it tells you the exact script to read, it tells you if they need to do a employee verification via DocuSign, how to send that out, and it's a video. And so every step of the way we've created these stop gaps that basically allow someone to at any point in time, in any role they're doing, make sure that they feel comfortable and confident they're doing it
everything is really tight. The other thing we did was we brought in a data analyst that works nights overseas and they pull all the data from the prior day and send it to me in a report the morning that I come in and then I can see if anything's out of whack immediately address it without having to know two weeks later a week later everything that we want to check have checks and balances on and have a metrics on is compiled to be in a functional report the morning I come in after the day prior and has all of yesterday's data in there.
We also use EOS, which I know Jack uses, and it's an entrepreneur operating system of book traction. So we use that, so we're real clear on our rocks, on accountability, on the path forward to get to the end result of what we need to do. So I wouldn't say the wheels can't fall off, but we've made it pretty hard for it to fall off without us knowing about it, so we're able to quickly address it if it does get into a position where we're going in the wrong direction.
Craig Fuhr (28:03.575)
Yeah.
Jack BeVier (28:05.195)
Do you have any middle management yet? Or is everyone reporting to you?
Sean Mulhall (28:08.045)
Wow. Still everybody to me, one way or the other. And yeah, I've been looking for someone to come in on the property management specifically. I had someone that I thought was gonna be moved forward that it didn't end up happening, that I had been prepping to have this person basically take over what my role is, is like almost like a director of ops with it and be able to then step back and have them report to me. But yeah, in the current dynamic, it's still everybody rolling up to me.
Jack BeVier (28:38.955)
If someone quits, does it ruin your week?
Sean Mulhall (28:41.385)
you
No, I don't think it would ruin my week. The way that I've hired currently is we almost have too many overseas employees so that in case that does happen, because I'm sure you're aware too that sometimes they just stop working. You can't really do much about it and it might have come out of left field. So I've got backups that are basically able to step in so that it wouldn't completely derail. But from that perspective, when I do, and I have a good relationship with the company that sources these.
employees for me so I can usually get people pretty quickly if I need to because I have had what you just said happen.
And the big thing I have is that once they do kind of potentially leave, the way that we built the Lead Simple software with us is that the next person that moves in, they just walk right into it and they're told exactly what to do and everything they need to do because we've already built those training tutorials for each task that lives in the task. So even if somebody new comes in, there's no confusion about thinking you're going to do it a different way, but not understanding it because it's really crystal clear when they step into a role of what task they're going to be responsible for and what success looks like because they're watching a video of it.
the big time.
Craig Fuhr (29:51.594)
With all, go ahead Jack.
Jack BeVier (29:53.171)
Does strategically is property, do you guys consider property management, a core business that you expect to be in 10 years from now for third parties? Or is it something that you guys are doing because you want to afford this better system to manage your own properties or are they, you know, or is it like, Hey, you know, as long as a, an owner is not blowing me up, you know, at nine o'clock at night and making my life hell like, yeah, we'll keep doing it.
Sean Mulhall (30:23.293)
Yeah, so it started out as just a means to an end to manage our properties more efficiently, but it's evolved into we look at this as a core business now because I don't.
Craig Fuhr (30:32.086)
Nah.
Sean Mulhall (30:32.837)
speak with the owners anymore. We have a salesperson that talks to the inbound ones that come in. We have a virtual assistant who is a client manager for owners. So the calls don't actually impact me and don't take away from what I'm able to do during the day. So yes, there are a lot of them. You know the game of having third party owners who might have one house and want an hour of your time every day to discuss that one house. And so we've evolved because that was the case
Sean Mulhall (31:02.751)
team is set up to be able to handle that so I don't have to pull away from our more strategic stuff and I can still kind of be marching without having to be too diverted. So yes it does it has evolved to a core business.
Craig Fuhr (31:14.89)
in terms of maintenance on those properties, are you using the same contractor that you've been referring to all along? Or do you have an additional staff of people for that?
Sean Mulhall (31:25.077)
We have additional staff. We have a maintenance team that works directly just for the property management company that handles any maintenance requests on the properties that we're managing that do just our light turnovers, they do our repair calls, et cetera. And then we have a virtual assistant who's our maintenance coordinator, who is the one that coordinates all the communication through our property management portal to dispatch, to coordinate with tenants, to make sure that we're troubleshooting before we get to the point of actually sending a tech out that handles that back end process.
Jack BeVier (31:55.339)
How do you find that labor? Because that labor is, my experience is that labor is increasingly, that labor reliably, like finding those people who are reliable is increasingly difficult. And I mean, we're paying rates that I never thought we would be paying, but people are making a good living doing maintenance work now.
Sean Mulhall (32:13.409)
Yeah. I mean, we've been lucky. So we've had the same people since we've never had anyone leave on the maintenance side. And I think it's I don't want to echo what I said before about the construction, but they don't just feel like they're on an island doing some BS work. They see what the goal is. They're in here once a week for a meeting. I also what I've done culture wise with our with our team members is I we don't just do, you know,
goal setting and so forth for the business. I take a personal interest in them and we do goal setting for them outside of work. And we have conversations bi-weekly about where they're at with what they wanna do outside of what they have in their own place of appointment.
We give them all, anybody in the company, and they can take two days off a week, an hour and a half earlier, one day off a week, three hours off early, to be able to go do something if it's to better themselves. So if they were trying to lose weight, they want to go to the gym. If they want to spend more time with their kids and they have a swimming, anything like that. So each employee, maintenance in their office, et cetera, even the virtual employees overseas, if they have something that's going to help them better themselves outside of just the workplace, because we are in such a hustle bustle kind of industry that sometimes you can lose focus on
outside of your day-to-day. We give them the opportunity to still know that that's important to us and that's important to them.
And so what I think it does is it makes them be a better version of themselves and then it gives us a better employee Selfishly as well. But on top of that, it also lets them see something that they're not getting a lot of other places So once they get involved in our culture It almost feels like they want to be a part of it because they're getting things that an attritional property management company They're not getting and they've and a lot of these guys have been in maintenance work, right? I mean, you don't just start being a maintenance tech You usually work for a bigger organization and that you get tired the hours or the role or the pay and then you look for something else
Sean Mulhall (34:02.363)
And being that we are still somewhat a small shop, I feel that has really helped us grow. And then obviously then they have usually a maintenance guy knows another maintenance guy. So then the referral game is important. And the same thing in construction is that once they see how they're treated and how they feel and the way that we are kind of pushing towards goals and handle them as a person, not just as an employee, they talk about it. And then you have people who want to come involved and be a part of that as well. So the labor, you know, it started, our first
our property manager. And then he brought another guy in from his organization. He was at another big company around here, Jack, that wasn't happy there. The other one was a cousin of somebody on the construction company who didn't want to do like the upfront construction more was rather do the maintenance that came in that worked from there. So we actually haven't even had to like, quote, unquote, hire like we haven't had to put job postings up. We haven't had to put
anything up to get those individuals in the right seats. And then they have been in a position where they've been able to help us across the board with pretty much anything maintenance related to the capacity that we need.
Craig Fuhr (35:04.942)
Sean.
Jack BeVier (35:04.987)
You mentioned that you mentioned the wheels fell off in another side of the business. What, what, what's that about? I gotta ask.
Sean Mulhall (35:07.745)
Yes.
Craig Fuhr (35:09.439)
Jack, Jack's like reading Jack. You're reading my mind today.
Sean Mulhall (35:12.273)
Yeah, yeah. So the wheels did fall off in the Holdings Company side of business and for a little bit and we had to we had to make a pivot. So originally, I think I alluded to this in the first episode was we were buying homes.
in a lipstick on a pig type of fashion, right? So unfortunately, we were then refining those homes in that same time, and I just alluded to the fact that we got some of our homes in 30 year debt with three point X interest. So when those turnovers are coming up, and all of a sudden that like lipstick on a pig job has been exposed to what it is, and we need to put 15K into a turnover, where's that money coming from? Because we're not getting the refining back end. And when you're doing that with legacy properties,
you know, 70, 80 strong, that's not a couple dollars anymore. That's a significant amount of money that you're gonna have to outlay that's not getting refied back afterwards because you don't wanna refi out of these 3% interest rates. And you also, there might not be as much meat on the bone to refi this time. So it's something that we didn't really recognize until we did a few of the turnovers and we're like, what is going on with our capital?
like it's like it's crazy because you're not anticipating that but then you look back to how
Jack BeVier (36:25.584)
We do the same thing. We do the exact same thing.
Craig Fuhr (36:26.787)
I love when Jack gets that reminiscent look on his face, like, yeah, I've been there.
Sean Mulhall (36:31.638)
Yeah. That's good.
Jack BeVier (36:31.743)
We did the exact same thing. We were like, where is all the freaking money going? And we were just like, turnovers are just murdering us. And it was like all stuff that we hadn't done the first time. And it was like really deferred capex, but we didn't realize, you know, like we didn't spend all the money we should have the first time and there was no free lunch. It was just bills all come due.
Sean Mulhall (36:35.799)
Yeah.
Yeah, yep.
Sean Mulhall (36:45.033)
Yep.
Sean Mulhall (36:50.049)
Yep, and that's what happened. And so I identified the way that we were doing turnovers prior to the wheels falling off. So we had shifted course, but I didn't really look into what it was gonna be when the ones that we didn't do correctly came due for being done correctly.
Craig Fuhr (37:09.122)
So we can just, if we could just slow it down. So the initial, the way that you guys approached a rental rehab was let's just get it in there. We'll get the thing operable, stick a tenant in it. It may not be as bulletproof as we'd like. And now you're realizing that, wait a minute here, when we go to set these rentals up, we need to rehab them in a way that they're going, that there will be no capex in the future, right? Like, or at least for a while, correct?
Sean Mulhall (37:36.489)
Yeah, yeah, so like in general.
We were in the time 2017, 18 where like we didn't have to do much in our refi, like our appraisals were high as anything. So we learned that. So we're like, okay, we can just quickly do this, get our higher refi or higher appraisal and then refi it. And then we're thinking about if we're not changing and putting in a new water heater, even though the water heater looks like it needs to be done, that we're not anticipating now there's going to be X amount of charge in a year or two years or we didn't replumb it or we didn't rewire it. And now we've got issues.
all the pipes and now we need to reply. Just those things. So yes, and then to today and to where we started to shift once I started to be more involved in the business from a everyday perspective was we do everything brand new every time. The more beat up the house, the better for us because we get a better buy on the front end because we're gonna do the same thing, whether it's like.
a decent house where it's a really crappy house. Like it doesn't matter because we need to, we've gotten to a point now where we're spending the money upfront, we're doing it correctly, we're able to underwrite it to us doing it correctly in front every time and then we're able to capture the refi but then at least if we're capturing the refi at this point in time, we know for the next X amount of time we're not gonna have these things because it's all brand new. And so then we've changed our philosophy pretty much entirely from where we started.
Craig Fuhr (38:56.054)
how does that not how does that knowledge and experience guide you? When you go to sit down with a potential investor owner who wants to who wants to use your company as property management? Are you guys selective? You know, like if a guy wants to call up SMD and say, hey, we'd love for you to manage our portfolio. Are you taking just anyone? Are you really examining the portfolio first to make sure that it's going to be one that you can successfully manage?
Jack BeVier (38:56.513)
So where did the... Go ahead, okay.
Sean Mulhall (39:25.833)
We have a pretty candid conversation with them where even if they haven't been doing it, we let them know what we have. We don't hide the fact that we made mistakes in the beginning and that we were in a tough spot and we had to figure out ways to get out of it because of the fact that we were maybe not aware enough that that...
is something we need to be paying attention to. So we have candid conversations. If they historically haven't done it, we're not gonna say no, if they have an open mind to move it forward, that if they're adding more properties, it's done in the correct way. And then obviously if they hadn't historically done it, we're there to do it for them when they are ready for them to change over the course of what they're doing. So yeah, we will not manage for salt lards, like we won't. If my granddad came to me today, he's not around anymore, if he came to me, he'd be like, hey man, I love you, but it ain't happening, but.
Craig Fuhr (40:11.096)
I was going to say you learned the original lessons from pop up.
Sean Mulhall (40:11.271)
We do take it. Yeah, yeah, he told me a lot. So it's one of those things where, you know, we don't manage for slumlords. We will not manage any property that, you know, like you said, the owner's not committed to how to be a good rental owner. And if they've made mistakes in the past, but they're willing to change course, we're all about helping people get back on track, but we're not going to sit there and continue to be along for the ride when they go down the tubes.
Jack BeVier (40:36.811)
So where'd the cash come from though? Cause that's a lot of cash.
Sean Mulhall (40:40.445)
Yeah, so we had to sell, we had to self fund a decent amount. And then when that got to a point where we couldn't do it, we took in an outside partner.
Basically, we went to somebody who we knew was looking to get into this space and we sold some equity into the existing portfolio. Not anything new down the line, but the existing portfolio we had, we sold a chunk of it percentage wise so that we were able to recuperate that with the info that came in. So I'd said originally, I think the first episode, we never took outside money. We had to take it. And so from us owning everything without having any investor be involved and everything is ours, that changed. And going forward, he's not involved in anything going forward because we are doing it historically
but we're moving forward in the right direction, even though we didn't do it historically correct, but anything in the past, he's now a partner and we have to give up that, own everything ourselves.
Jack BeVier (41:29.355)
So I have this theory that I'm sure it's right, but no one talks about it. That there was a lot of guys who bought all over the country, who built rental portfolios very quickly, 1920, particularly 2021, early part of 2022, right? Cause DSCR rates are incredibly low. Every rental property made sense. And so it was very easy to like, just if you're a hustler,
Like it was very easy to just, if you were good at acquisitions, Oh, that's all you needed. Right? Like just be good at acquisitions. The refi took care of itself and like just pay a GC to do whatever, right? Just get to get, to get it rent ready and then put somebody in there. Like tenants, you know, needed places to live, like everything rented immediately, right? Like nothing was on the rental list and the refi was really fast. So like those aspects of operations were easy, easy. And so if you're an acquisitions guy,
building a rental portfolio super fast. You were able to. And I see, I saw all of a sudden like all these young guys, like, fuck it, like just, you know, going from zero to a hundred units in like two years. And I'm like, dude, I'm, I'm horrified. I'm mortified because I'm like, cause they, I know they don't have any other income and I know that those turnovers are going to murder them. And it, and I'm like, and it's, you know, and if you get like three, four years of tendency duration and a, you know, in a decent situation,
Like it's starting to happen. Like it's going to start to happen this year and next year is going to be freaking rough as like they get these like $15,000, $20,000 turnovers, um, that they didn't budget for, right? Cause they took out 75% LTV. They use the excess proceeds above their cost basis to go buy more houses and they didn't do the renovation right. The first round. And I'm really, I think that there's like going to be a bunch of like
Craig Fuhr (43:09.11)
Mm.
Jack BeVier (43:26.003)
Shake out over the course of the next couple of years as that exact issue that you just talked about Which exactly happened to us and put us in a cash flow freaking crunch It happened to us ten years ago, but it was a problem like it was a it was a problem ten years ago And it's gonna happen to these guys who like built really quickly and don't have other sources of income to Pay those bills as they start to come do because you don't you don't see turnover costs until
you know, three, four years after you buy the first house, right? Like it's a delayed thing from a cashflow management point of view. I just think that there's a chicken that's going to come home to roost like all over the place and there's going to be a bunch and maybe, Hey, maybe they just, the unit gets turned over and they just flip it right. Cause like, hopefully they bought it well enough that they can just sell some equity, but, um, they're either going to be bringing in equity investors, like you're talking about to help manage cashflow, or they're going to be forced to liquidate. Um, but
That's, I feel like that's a common experience that, that we've heard from, you know, guys building portfolios that, you know, that, that realization is a painful one and not, not an intuitive one necessarily, right? Like it seems fine, but anyway.
Sean Mulhall (44:33.911)
Yeah.
Craig Fuhr (44:34.558)
Hey, Sean, we have just a few minutes left with you and can't thank you enough for your time. Give us sort of the horizon. What's on the horizon for you guys? What are the goals over the next few years and what appears to be sort of a challenging economic time right now? And tell us where you guys are going.
Sean Mulhall (44:56.105)
Yeah, I can't thank you enough for letting me be on the podcast. And I think the big thing for me is that we're going to continue to buy. Depending on what we do with them after we buy, that's what's going to change with the climate of the industry is, but we're buying.
I've been bullish and as you can tell from as young as five years old, I went on real estate and that's been my goal setting into these different businesses is that the overarching goal is to buy houses to add to a portfolio for the next level generational wealth for my kids.
family. So we're going to continue to buy. We've been buying six, seven a month over the last few months. We are going to continue to be opportunistic with what we do with those. So we're flipping, we're wholesaling, we're whole tailing. We're not going to just be head down, buy by buy, portfolio, which we have been for historically since we've been started doing this. We're not turning off the... We're not putting our foot off the gas with how we go forward.
Craig Fuhr (45:50.9)
Mm-hmm.
Sean Mulhall (45:58.101)
just going to be creative with what we need to do to make sure that the machine keeps getting fed to be able to continue to grow. You know we we've really made a big focus historically on holding properties. We brought in the structure construction recently to help us with managing the prospects of the different jobs, the third party, the internal jobs and then
Obviously what we're doing with the process, we've also brought in a CFO to help us with deciding what the right move is, whether we're going to flip it, whether we're going to hold tail it, whether we're going to do a hold based on where our cash flow is at, because we are realizing this is a different time like we've been chatting about. So if we got a couple of projects out right now and we've extended ourselves and then there's a really good opportunity, but we need some cash flow before historically where we're kind of doing that stuff on the fly where now we have somebody in a position that's literally, that's all they're doing is making sure that we're on track with what we have
out compared to what we have coming in to make sure there's no overlaps. Yeah, we're going to continue to grow the different businesses. We've had some new ones that really didn't go into the staging design one, but that one's really been ramping up recently and having a lot of success with that. And we're going to continue to look for opportunities where we can to try to continue to develop this Baltimore C-Class neighborhood, just kind of a landscape that's out here.
Craig Fuhr (47:08.91)
Jack, as I've watched you and Fred over the years, we've talked so much about the word pivot over the last several episodes. It's always been apparent to me that, amongst all the businesses that you and Fred have, you guys were always able to pivot within those businesses to create income, create equity during.
you know, the last 15 or so years and Sean, your story is so similar really. And strikingly similar, actually.
Sean Mulhall (47:40.745)
Yeah, it's pretty crazy because I honestly, you know, I met Fred and Jack at IMN. I was in a room and I think Fred said something to the effect of like, he said something and somebody called him Mr. Baltimore. At this point, this was, I don't remember what year it was, but I was like, just starting out. I'm like, who's this guy, Mr. Baltimore? And so like chatting with him, met Jack, and then, you know, with what we were doing.
I always looked at like, we were just, I was trying to progress into a role to be in line with how they had built their businesses because I saw what it had given both of them from a cap, like a top end of far as what they own, what they had involvement in and how they had grown.
their portfolios and so forth. So yeah, it's definitely something that, you know, from a top line perspective is very aligned with where we want to go is where they are at and where they're continuing to go. So it's definitely something that has been a fun ride to be on and to have Jack and Fred to be able to tap into sometimes when I'm in a position where I'm like, man, I don't know what's going on. They're like, oh yeah, we do. Like, we know exactly what's going on. We know where you've been at and we know how we can try to help you get through it. So, you know, been a part of the RIR.
Sean Mulhall (48:47.733)
group there, which is the mastermind. And that's been a huge benefit to not just having Jack and Fred to be able to tap into, but also the other investors in that room from other places throughout the country. So anybody that's not involved in a mastermind, definitely look into it because it really takes you outside of your day to day and get you outside and get some perspective from not just your market, but other people doing different things and where things are going. So yeah, it's been a lot of helpful help, a lot of help from them and really appreciate it and being have the opportunity to chat here on the podcast
Craig Fuhr (49:17.634)
We had the mastermind in town last week, Jack. And I have to say, if there's any more folks coming in, you better get a bigger room because the place was packed.
Jack BeVier (49:24.655)
Yeah, it's been really great. We've got, we're getting about 30 folks who are showing up every four months. And everyone's like, you know, really, really strong operators like usually have at least 100 units at least doing 50 deals a year, combination of different business models, some folks doing like small commercial lot of resi is like a consistent theme throughout the throughout the entire room.
Um, but, uh, I really enjoy those meetings because the, the conversation is super high level. You're able to compare notes with folks across business models, across markets, um, so you can get a sense of like, you know, is, is it just me? Like, is this, is this just my pain or is this being shared and what are, what are other folks sentiment? Um, so it's been a really great, uh, really great group and thrilled to have Sean, uh, join us a couple of years ago.
Um, by the way, if anyone who's interested in that, we're always recruiting, we don't, we're trying to keep it a pretty small group, but we, we usually invite three or four new folks each time to, to present and get a sense of them and frankly, see if we think they're a good fit. So if anyone's interested in that, we're going to be recruiting, we're actually going to be recruiting at the I M N single family conferences in Miami in May.
Uh, and then in Scottsdale in December, we've resolved that we're going to have a booth at that conference because we find there's a lot of high level operators that go to that conference. But, uh, for anyone who's interested in, in that group, just shoot me an email. It's jack at the dominion group.com. Um, and you just, you know, let me know that you're interested in we'll hop on a call. Um, but, um, yeah, Sean really appreciate you having on the call today. I mean, the, the challenges are the same, the works are the same, and it's a lot of both, um, operating.
you know, operating a single growing or a single family portfolio. And, uh, just been really impressed, obviously with, with you and Mike and Dave and the platform that you guys have built. And I think, you know, really, that's really the approach, right? Is that you're actually building a platform, not just executing a thing that you saw work and then just doing it over and over until you hit a brick wall. So, um, uh, you know, really impressed with you guys as operators and, uh, and friends. And so thanks for, uh, for joining us today. Really enjoyed the conversation.
Craig Fuhr (51:37.026)
Sean, I can think of any number of people that might be listening to this podcast who would want to reach out in terms of property management or any number of things. Why don't you go ahead and tell folks how they can get in touch.
Sean Mulhall (51:50.249)
Yeah, so we have a direct link on our website that shows you a little bit about us and our property management business, as well as our overarching theme of what we do at www. That's Shawn Michael David, capitalgroup.com. And then we also have our construction business is Exclusive Home Group. You can reach out there, www. as well as on Instagram. We have SMD Management, SMD Capital, and Exclusive Home Group with their own Instagram handles just as you started there.
Craig Fuhr (52:20.77)
Great conversation. Can't thank you enough for taking an entire morning to spend with Jack and I. Really look forward to meeting you in person one day and continued success, my friend. You are one busy man. So yeah, it's been a great conversation.
Sean Mulhall (52:33.087)
Yeah.
Thanks a lot guys, really appreciate you having me on.
Jack BeVier (52:38.027)
Thanks, Sean.
Craig Fuhr (52:38.806)
Hope you enjoyed this episode and the last episode was Sean. Tune in next time. This is Craig Fewer and Jack Bevere with Real Investor Radio. We'll see you next time.