On the show today we have… Ruby Davis of RAD Homes & Properties!
Show notes for Ruby Davis of RAD Homes & Properties
The Vantastic Life is…
– is in Enumclaw, WA!
Ruby Davis is one of the coolest real estate investors you’ll meet. He’s up in Skagit County Washington and runs RAD Homes & Properties. You should know him!
Thanks for listening, all of you people that are in and out of the state!
Ruby is a real estate stud, and a new full time dad. Avery Jo is 5.5 months old.
What stage is Avery Jo in right now?
She’s not quite crawling.
Are you sleeping much?
Mama not as much, but I sleep pretty well. I feel super bad about it.
Last week kicked into party mode, and there are 2-3 parties per week. Are you going to the Fixated party?
I bought tickets, but now have to go to Vegas for a deal that I’m working on.
How/where did you grow up and how did that get you to real estate investing?
I grew up in Cedro Wooly which is near Bellingham. I played every sport growing up and was super athletic.
The only bone that I broke was my elbow while testing suspension on a dirt bike.
I was a professional motor cross rider and traveling around winning a few races. I had won 3-4 pro championships in a row up here in WA.
But I decided it was the smart choice to get into real estate construction.
When was that?
When I was 22 right after I got hurt, I decided to shut it down.
I was also pretty far in debt trying to chase the dream, but I woke up one day and decided it wasn’t it. Finished the season and took on construction and real estate investing.
When was that?
I was doing construction to fund my racing dream working 40-80 hours a week.
Everyone was telling me to get out of construction when you’re young, but the money was so good. But I was away from my girlfriend and it was taking a lot of time.
Then I heard a real estate investing on the radio, and went to some meetings to see what it was about. That’s when I went to the Seattle Investors Club.
Did you have a mentor or work with someone?
No, I did it all by myself. I actually had 2 months off work from construction. During that time I had done enough networking that agents were bringing me deals.
There was a deal that was brought to me that only allowed 2 weeks to close on it.
You actually gave me some really good info about the deal. As did Tarl Yarber (at the same meeting).
Tell us more about the deal.
It was a listed REO deal with septic issues. I funded it with Eastside Funding (hard money). I only had so much cash. It was a 6 month term and we extended twice, and then refinancing into another hard money lender.
We recommend that you only get 12 month terms for your hard money deals.
We are sponsored by Certain Lending, and we recommend them because they will be 100% honest with you. Even if you shouldn’t use them.
We are curious to know how it all went down.
How did you get your contractor?
I was acting as my own GC, and had my license. It was hard to find contractors that would take on such a large job.
This wasn’t a little job. I was going to put 90k into it and make 60k. I was a 3/2 that we were turning into a 4/3.
I wanted to do the biggest deal to learn a lot.
That was probably the wrong way of doing it, but I’ve learned a lot now.
What’s the story about the house?
We didn’t over improve it. It was just my ability to estimate renovations was way off. We pretty much built a brand new house.
Did the septic get missed?
So, we purchased the property as sewer connected, as listed by the real estate agent.
Lots of agents probably just copy it from the last listing.
Now we have the sewer pipe scoped to make sure every time.
But for this one… we just rolled with it and didn’t scope the sewer.
We find we are on septic after we are 90k in.
They made us get a new design that was up to date for the new code. And that cost me 25k.
Was the parcel bigger or could you find the lid for the septic.
The lids were actually poured under the concrete of the garage.
Actually there was one lid that we found in demo. When you opened the front porch we found a tank and I thought it was the old septic system.
So I had the contractor run a hose down there. And that’s when I found out we weren’t on sewer.
This could have all been figured out for $250 for a sewer scope. Instead of 25k.
Did you have any trouble getting the sewer in?
I had to refinance once. After I’d fixed the septic and gotten everything back together. We were in Oct of 2016, and things were picking up for me.
There was a local hard money team that was able to work with me.
This deal turned into a 180k renovation.
We screwed up by listing the house for too much because I wanted to recoup some of my money.
This was a bad idea.
I see a tendency that people think my property is better than everyone else’s.
That’s why it’s always good to have a broker help you out.
You should all be involving the broker if you’re going to list your own stuff.
We have an awesome community here in Seattle. Shoot me a note at [email protected] if you need to find a community where you’re at.
We all root for each other.
Did you make money on that deal?
I made a good amount of money! We bought for 200k, we put in 180k, and sold for 500k+
You got a lift from the market! A lot of people think that it’s them. But it’s the market.
We aren’t in that market anymore. But who knows.
That is spectacular!
You crushed it.
How did you get your money to fund the equity portion?
I drained my 401k, and took the hit on taxes. Lots of rookie mistakes. All I knew was that I had a deal.
I’m not giving tax advise here. You did that and took a tax hit, and it gave you the life that you have now.
There is no right answer. It’s all individual. You need a mentor and coach that you can sit down with that will help you with your business.
That is a good story!
All it took was one deal like that to help me figure out what this business is all about.
We can do base hits that will make up for the bigger deals.
Now I don’t focus on that large deals and focus on what the market wants.
You know I had someone send me a deal recently that had a 3 month hold time on it. I was like… no way.
This was a regular easy looking flip, but still. You need the stars to align to make that work.
What did you do after that?
As I was doing the crazy one…. I had other deals going on at the same time. I had another large deal going on.
I rebuilt a 3/2, added square footage, and sold that one to a guy that was walking by. Off market.
Where did you get the funds for that one?
I did a second on my house with the hard money lender.
Guys that is totally available for you with a company called Flynn Family Lending. We did a podcast with them at https://seattleinvestorsclub.com/88.
You need to sit down and really analyze it. Just because you can doesn’t mean you should.
We crushed that one.
From there I took a break from flipping. I wanted to real estate invest, but hated flipping. I didn’t do a flip for a year and a half. I switched my gears to wholesaling and wholesaling only. We had falling outs with the contractors.
I needed a break, but still needed to make money.
Justin at Open Letter Marketing. I used him, and his letters worked good for us. And we were making money at wholesaling.
How many wholesales did you do at that time?
I only did deals that made sense for me. Meaning that I would buy the deal if I couldn’t find a buyer. I only took down wholesales that would make 60-100k if you rehabbed it.
The money was quicker.
And I still wholesale today.
In that time that I took a break from flips. I only did 9, but averaged 23k per deal.
I make a connection with someone at the auction block, and they became my number 1 buyer. And now, they’ve made a lot of money from me and I’ve make a lot of money from them.
That’s what we are talking about! I’m not sure how the auctions are doing these days…
I’ve bought 1 deal from auction, and actually broke even. It was when I was getting back into flipping.
How are auctions doing everyone?
What else happened?
After I flipped that house and broke even, I was going to focus on wholesaling. But since then I’ve focused on building relationship with lenders, contractors, etc.
I created new partner with other people like Kekoa from Hawaii.
I thought that creating partnerships with people to learn from them, and its more fun.
What do you think it was that caused you to suck at flipping?
I think community equals confidence.
Trying to be the contractors friend, rather than a business relationship. I would do things with the contractors outside of work.
I thought this would get me deals.
Because of this I couldn’t penalize them. When a bill came in that was too large, I couldn’t hold them to it.
I found that I was better with networking, and creating deals with people.
Totally awesome! We 100% agree! Look at what Joe and I independently said about you.
Very very valid, where do you fit in, what skills do you have to partner with people who have different skill sets.
I think of it like black jack. I was in Vegas a few months ago, and I wanted to do something nice for people. So I gave everyone $100, and in a few mins we made $300-400, and then we stood up and it paid for all of our night out on the town.
I think you are teaching everyone something here today.
What are you working on now?
Like I said in the beginning, I have to fly out to Vegas for a few deals that I have going down there with Kekoa.
I struggle with contractors so I found some to partner with. There are 3 of us that are buying up properties to do the BURRR strategy. Up in Skagit.
How did you get the financing?
All private money and seller financing. I learned the power of seller financing and they became private lenders as well.
Would you be up to giving a presentation at my house To my smartest friends.
We have someone in Vegas that I should intro you to!
That would be awesome!
I’m super stoked to catch up and hear how great you’re doing.
What’s the capital think Kekoa and those guys are doing?
Yeah, so, I know a little. Kako capital. Cory, Alex, Kekoa, and Scott have a lending company. We’ve done some deals with them. They do a good job.
Hopefully you’ve all seen why we love our buddy Ruby here, and why partnering up is a good idea.
Hey, if you guys want to come meet other investors, you should join us at our weekly mastermind and coaching sessions on Tuesday in Burien from 12pm to 2pm at Angelo’s. No topic, everyone contributes, you don’t have to RSVP. No experience level necessary.
We also have one in Redmond at the Pancake house every Thursday from 10am to 12pm.
And we have one up in Skagit county. Checkout our Meetup page!