The Real Estate Locker Room Show with John Carney
JC 013: Positive thinking and flipping 100 deals a year with Geremy Heath
Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.
John Carney: Welcome back to the Real Estate Locker Room Show. I’m your host John Carney, coming at you today from Cleveland, Ohio. We are in the post season here, the Cleveland Cavaliers looking to repeat. Joining me from the great state of Texas is Geremy Heath who is the owner and director of Texas All Cash Homebuyers, which he founded with his wife Melanie in 2009. Texas All Cash’s primary focus is the redevelopment of single family homes in the San Antonio area. Since starting his business, Geremy has flipped over 250 properties and currently has a goal with his team to complete more than a hundred rehabs this year. Originally from Sydney, Australia, Geremy moved to the US in 2006. Prior to real estate he worked as a management consultant for twelve years, specializing in process improvement, and earned a bachelor of engineering, civil engineering degree, from the University of New South Wales in Australia. Welcome to the show Geremy, how are you doing today?
Geremy Heath: Yea, good. I’m doing good, thanks for having me.
John Carney: No worries buddy. Look, this is going to be great. I’m really interested to hear how you capitalize on your process of improvement for flipping and rehabbing a hundred properties this year. That’s a large number and a great goal. But we like to kick this show off with a little question to stretch out and get the conversation going. You’re from Australia. We’ve had a couple of Australia guests.
Is there a favorite athlete that you looked up to when you were growing up, watching sports? And if so, how did this person influence you in your athletic and business career?
Geremy Heath: There’s quite a few Aussie cricketers and Aussie rugby players that I looked up to, but if someone was to ask me now, “Who’s your favorite athlete of all time?” I’d probably have to say Muhammad Ali. The thing I love about him is that he was always saying affirmations: I’m the greatest, and I guess he ended up realizing that through believing in that at the beginning, so I’ve always respected that in him.
John Carney: Yea Muhammad Ali—great athlete, great champion, warrior and influencer. So, you didn’t start off your professional career in property. Will you talk to our audience a little bit about how you ended up in the United States and what drew you into real estate?
Geremy Heath: I originally came to the US in 2006 on a work transfer actually, and I’ve been bouncing around to a few different parts of the world doing my management consulting. America was a place that I really haven’t spent a couple of years, and I’d like to go deep there and really understand more about the culture and the psyche. So when I first came here my plan was to be here for a year or two with my job and then head home. But I met my wife, who’s from San Antonio. She was actually working with the same company at the time, and within less than two years we were married. So, by 2008 we were married and we’d bought a house and then I kind of realized, man, it looks like I’m staying here for a while.
John Carney: Right, the wife and the mortgage led you to believe that you might not be going anywhere soon, huh?
Geremy Heath: Yea, so that was almost ten years ago. But, after living in the U.S. for the time that I have, I’ve got nothing but love and respect for this place. I would say to people: there’s nowhere else in the world where you could come and be here such a short time and start a business and have the opportunities that I’ve had. And one thing that I really love about the American culture and the people is that through my whole process of getting started — and a big part of our business is raising capital, getting private funds to fund our deals — I never once had anybody question, like, “you’re Australian, you’re not from America, why should we do business with you?” I was always greeted with open arms and I think Australia and America are similar in a lot of ways. But the one thing where I do think America trumps Australia is probably just in the overall positivity and openness that the people have. It’s a very open place to people from all cultures all around the world.
John Carney: Right. I believe that in the American market, whether you’re in real estate or tech, if you’re in business and you’ve got a good idea and you show that you’re committed to it and you’re going to hustle a little bit and you’re willing to put in the work, the rewards soon follow. And with this show, my intention is to be able to get people who are interested in real estate, or are looking for a way to grow their asset base and cash flow outside of work. Not everybody can quit their job and become a full time real estate investor. But there are great opportunities out there for people to put their money to work for them. Other options are real estate versus shares or investing in a business. So, you have one of these businesses, and I’d love for you to share with our audience what you do and how you’ve been successful in applying systems that you would have had to use and implement in your civil engineering career into turning houses over for a profit.
Geremy Heath: Yea. In my old business career when I was doing management consulting, I studied civil engineering, but I actually specialized in supply chain management and BPO (Business Process Outsourcing) when I was working with my previous employer. So, I had a big system and process focus. Particularly in the second half of my career, in the outsourcing world, it was really about factories. We’d set up the call centers, and things like that, and it was really about having inputs that go into the factories; having the processes which can turn those inputs around and produce the outputs that are needed. So, I kind of thought of flipping houses as exactly the same thing. And I thought for me, my factory is my ability to rehab a house. The inputs or the raw materials that I’m having for that are houses that need repairs. Then my output is going to be a retail property that’s high quality, and that I’m going to be able to sell to a bank or qualified buyer. So, with that kind of mental model in my mind, the next thing that I kind of thought is: well, if that’s my factory, what are the constraints? And I boiled it down to three simple things: you’re either going to have a constraint around the flow of deals that are coming in; you’re going to have a constraint around your capacity in the factory to rehab the deals; or you’re going to have a constraint around the capital that you need to actually fund the deals. And I guess ever since I first started, it’s always been a balancing act, and it still is to this day, between those three constraints and one of them is always the constraint. So, whichever one of those three is constraining you, you need to put your focus into removing that constraint and then the next one of the three will kick in. It’s kind of an evolutionary process.
John Carney: That’s a different way of looking at the same problem all real estate investors eventually face on any level, right? The constraint that popped into my mind, the capacity, and that for me, thinking about it, goes hand in hand with capital. So, I’m a big proponent of the team, especially if you’re just starting out in real estate and you want to be an investor, and the team changes depending on the type of deal and the size of the deal. We’ll talk about that. But can you talk to me a little bit about how you started in a new country, in a new industry? You had a great background in management consulting. How did you go about recruiting your team, what did that look like initially and how has that evolved?
Geremy Heath: Yea, for sure. I think probably one of the things that a lot of people who get into real estate don’t realize is how much of a team sport it is. I know that your book has a title along those lines, and I couldn’t agree more. And one of the areas that a lot of people do get into is flipping homes—the single-family homes, because it seems like it is a little bit more accessible to people. But what they don’t realize when they get into it is that, if you want to set up a flipping business, when you get started you’re wearing all the hats, you have all of the different components of a full business to run and they all have their own complexity. So, you need to be able to be an expert at marketing to get the deals in. You need to be an expert at raising capital to have capital to do the deals. You have to be an expert at project management to be able to find the contractors and manage them. You also need to learn about the realtor side when it comes to selling the houses. And so, there’s really so many aspects to it, and when you’re trying to do it all by yourself, it’s a lot to learn and a lot to take on. But it’s definitely a passage of entry that everyone has to go through. Because before you can step up and start to hire people and build the systems for people to come and do the work, you need to really become an expert of every single one of those areas. If you don’t first master each area, there’s no way you’re going to know who to recruit, what system they need to run, how they’re going to operate and work for you, and then how you hold them accountable to a certain standard.
John Carney: So, it sounds like a familiar story that I’ve heard. You’ve really learned by doing. It’s the only real way to go from flipping that first house to flipping a hundred houses, right?
Geremy Heath: Definitely. And I think a book that, in the beginning — because I love listening to audiobooks and reading books — and one book that really had a big impact on me early, was The E-Myth Revisited. A lot of people are probably familiar with that book. But one of the big things it taught me is that you have to first be the technician in your business, and once you’ve mastered that area, you then need to be able to systemize that area so that you can then hire somebody in and have them run the system for you. And so, sometimes also people hear the word ‘systems’ and they think, “Wow what are systems, what am I going to do?” And for me, systems 90% of the time come down to having a good checklist that really defines the tasks that have to be completed and in what order. And it sounds simple, but the magic is really in those checklists and getting them right for the different parts of business.
John Carney: Right. And so with the challenges in flipping, I would imagine that every house is similar and then slightly different at the same time. What are some of the most recent challenges that have stressed your system, where you’ve had to say, “Maybe we need to rethink this,” and then you tweak it a little bit and it becomes even better? Have you experienced that recently?
Geremy Heath: Yea, I think a common area in single-family homes when you’re flipping them that people have a lot of frustration with is when it comes to the sales side. You’ve done the hard work to do the marketing, get the deal, rehab the deal, and then you’ve got the house for sale and you’re really in the last mile of the race, but sometimes it can feel like the most frustrating. And the reason for that is that the end buyer who is going to get his inspection via a home inspector, and they’re going to give you a 30-page report of all of the deficiencies in the house, when you feel you’ve already put all your money into remodeling it. These home buyers are most of the time first home buyers. So, you’ve got to understand from their perspective that it’s a big decision and when they do get these thirty-page inspection reports it does freak them out. And so, I when I think back from the very beginning to now, we’ve really put a big focus on quality. So, our goal is to really minimize the amount of deficiencies that would come up in a report, and we’ve done that through implementing vigorous inspection processes when we sign off on a rehab. And then once we get a contract on a house, before the property inspector goes out, we have another inspection, we call it a pre-inspection, where we send one of our internal guys out to re-inspect the house before the inspector gets there because we’re trying to drive a real high level of quality. And so, the end result of that is a smaller inspection report, and a happier end buyer. And I think one of the biggest tools that we’ve used over time to continue to improve that, is our signoff checklist that we use at the end of a rehab. For example, there might be electrical issues that keep coming up in our inspection reports. Then if we see it repeating, we would put it in as an inspection item in our signoff checklist. And that checklist keeps growing and growing, but it improves the end quality over time.
John Carney: That sounds like a really good system that you’ve put in place and it makes a lot of sense to me. So, I want to continue on with Texas All Cash Homebuyers. What is your business doing for an investor—for someone who wants to invest with you. You’re buying properties with all cash. We can call them distressed, whether they’re distressed financially or distressed situationally or people just don’t want to live there for whatever reason. Is that correct? And then you’re remaking them, remodeling them, and the end user for the finished product is going to be a permanent home buyer as opposed to an investor. Is that what you see the majority of the time?
Geremy Heath: Yea, that’s 80% of our business. And I guess our value proposition is that we have cash and can close quick, so there’s no inspections and additional financing approvals or anything needed. So, if somebody’s looking to sell a house quickly, we can close in as little as three days. And then we’ll rehab them and put it onto the MLS and sell it the traditional way. But it’s a remodeled home that’s being purchased by a bank qualified buyer.
John Carney: And so your team is really servicing two groups: making your investors happy, which is important, and your end users happy, right? I mean, they go hand-in-hand. So, would you talk a little bit about how you run your team and how you can accomplish that so successfully?
Geremy Heath: Yea, absolutely. I’m down here in San Antonio, so quite often with my team I use the analogy of the San Antonio Spurs. Luckily for me they’re a great team, they’re very well coached and well managed. The thing I love about the Spurs is they’re not necessarily a team of individual superstars. It’s the collective team that makes them great. So that’s kind of why I like sharing that analogy with my team, because I feel that in real estate everybody has a different role to play. And it’s not about having a team of people that are all experts in one area, it’s about having the right skills across all the areas. But the magic only comes together when the team is working well together. And I’ll say to the team, “We need to be passing the ball and moving the ball and communicating and working together as a team.” When you see the Spurs playing at their best, that’s what makes them great—the way they move the ball and the way that they work together. When we can do that in real estate, that’s when we really can exponentially increase the results that we get. And something that I always say to my team is: if you took us all individually and we went off to create our own flipping businesses, the results that we would get combined is nothing compared to what our collective results are as a team, because that’s when the magic comes together, when we can specialize in an area and help each other to reach the end goal.
John Carney: Great analogy, that definitely resonates for me and our listeners so thank you for sharing that. What advice would you have for someone who is listening and wants to get into house flipping or wants to scale their house flipping, going from something they’re doing as a side job to a full-time job, which is a scary step. What’s the best advice that you have for taking your business to the next level or just getting into it?
Geremy Heath: I think a huge element that’s helped me with my success is to have the right coaches and mentors. Think of it with the sports analogy. Popovich for the Spurs is arguably one of the greatest basketball coaches of all time. They’ve had sustained success over the last fifteen years or more and he’s a huge part of that. And so, when we look at sports, all great sports, whether it’s an individual or a team, there’s always great coaches that are involved with the athletes. So, when it comes to your personal life and your business life, I think I’d put a huge amount of weight on having good coaches and mentors around you to really help guide you in the right direction and help you find where you need to build skills, and maybe also where you’re strong.
Real estate can be a lonely game if you’re just out there sitting in your home trying to put a business together. So, get connected with the right coaches. And also, something else that I’ve consistently done is I’ve connected into good mastermind groups where I’m actually with others that are like me. So rather than being like a coach that’s maybe coaching me, it’s more a group of peers, and we end up coaching each other. That’s been a huge thing that’s helped me to accelerate my success.
John Carney: Did you actively seek a mentor when you made the decision with your wife that you were going to pursue this as a career? How did that unfold?
Geremy Heath: Actually, it started like it does for a lot of people. It just started with a few books, an interest, and a few books in real estate. And then there was one book that I’d read and it talked about the importance of a mentor. The light bulb went off in my head, and I’m like, “Man, I got to go find a mentor to help me with this, somebody that’s already done this before.” And I came across a guy who flipped more than 300 homes and now he was a professional coach. I probably dumped 10 or 12 grand to get started with him, but it was money well spent. And since then I’ve spent tens of thousands, it could even be in the hundreds of thousands now. It actually is, on coaching and mentoring, but it is the best money that I’ve spent, because it’s really the one thing that has helped me to grow quickly. Much quicker than I would have if I’d just been by myself.
John Carney: Thank you for sharing that. I agree and think that’s an important message which I’m happy that you’re echoing. We can stress again that you have to invest in yourself, right? That is a capital commitment, but the results speak for themselves, don’t they? You don’t become an overnight success in the real estate game, but if you just keep plugging away, you get there. Awesome stuff.
Well I’ve got a few questions here that we call the fourth quarter questions that I’d like to throw at you. What sports did you love playing when you were growing up, or that you still play today?
Geremy Heath: When I was a kid, my brother and I used to love dirt bike riding back in Australia. I now do the milder form of that, now that I’m an adult, and I’m into mountain bike riding. Probably a little safer. Arguably it’s a little safer, but maybe not.
John Carney: I don’t know. I mean, I’ve fallen off both. So if you like speed, you’re going to eventually go over the handlebars. Maye that’s just me. We talked about books. I think this is an important message, that we’re coming up with a great book list here by conducting these interviews and producing this show.
What is your all-time favorite business book or sports book that you’d like to share with our audience?
Geremy Heath: My all-time favorite book by a long way is a book called “The Law of Success” by Napoleon Hill. And everyone’s familiar, or most people are familiar with his book, “Think and Grow Rich”, but actually not as many people are familiar with the book “The Law of Success” which was the precursor to “Think and Grow Rich.” The specific book that I really love is the original edition. I think it’s from 1925, and that was really the starting point of his philosophy. The way that book is structured is that there’s 15 lessons to go through, or 15 laws. I’ve read that book probably 10 times, and it’s very foundational in a lot of the ways that I think and act.
John Carney: Ok. Perfect. We’ll have that linked and listed in the post-game report. Can you tell us about a success habit or a practice? You’re a very analytical and systems oriented businessman. Is there something before you step foot in the office, or after you leave the office for the day that you do to kind of help you along in this journey of being a successful real estate person?
Geremy Heath: Absolutely. I would say probably one of the most critical habits that I’ve developed over the years has been my morning ritual. And there’s actually another book that I model a lot of what I do in the morning. It’s called “The Miracle Morning.” And for me, I spend about an hour, at least an hour every morning going through a series of exercises. I start with some meditation and then I’ll do some visualization. I’ll review my goals. I’ll go over some affirmations. I’ll do some reading and then I’ll finish it off with some exercise. Including the exercise, it’s normally at least an hour and a half. But what I’ve learned is that if you make the time, that morning routine really sets up your whole day and sets up your whole life when you compound it. You keep doing it continually. It’s so important that you just have to set the clock as early as you need to make time for it. For me, I like to get up at [4:30]. I don’t always do it, I’ve got to admit, but I like to try to get up by [4:30] so I can knock out that hour or hour and a half before everyone gets up and I start the day off right.
John Carney: So, do you have children in the house with you?
Geremy Heath: No, that makes it a bit easier maybe.
John Carney: Ok, I got you. Because we have a one-and-a-half-year-old, actually her half birthday is today, it is easy to be up. Having kids trained me to get up earlier. And then as a result of that I found myself waking up earlier to get the exercise and the other things in. So, the morning ritual, I would imagine, puts you in a pretty good flow state or zone and prepares you to start your day. Correct?
Geremy Heath: Yea, absolutely. And if I ever have times where I get out of that routine, the first person to tell me to get back into it is my wife, because she can definitely see the difference.
John Carney: That’s great. You’ve got a business partner who knows you well and can help keep you on track. So, with all this being said, we’re getting ready to wrap this up. Is there a quote that you ever fall back to that keeps you motivated? There’s a lot of motivational quotes out there these days on Instagram, I kind of like the athlete struggle quotes myself, but is there anything that you think about when things aren’t going your way, you’ve got to get something done, there’s a time crunch and all these things that happen when you’re flipping a hundred homes?
Geremy Heath: I think probably one by Henry Ford, which is a pretty famous one. “Whether you believe you can do it or not, you are right.”
John Carney: That’s a good one. How does that resonate with you?
Geremy Heath: I’m huge on mindset, which is a big reason why I invest so much time on that morning ritual, but it’s really something that was taught to me from my first mentor in real estate. He was really big in that area, and I guess what I’ve learned with 100% certainty, I’d even say one million percent certainty, is that your thoughts are your future. And so, when I think back to when I first started in real estate, every milestone that I’ve hit with the growth of my business when it was all started is that it was a thought in my mind. So probably a couple of years into the process of building my business, I’ve started to realize how powerful my thoughts were, and so I started to set bigger goals and try and have bigger thoughts. Because I started to understand if you can believe it and you take the action and you have full faith that it will be realized. Then it’s only a matter of time until that happens. And that’s why I like that quote from Henry Ford, because if you think it’s going to be hard, then it’ll be hard. If you think you can do it and it’ll be easy, well then, it’ll be easy.
John Carney. Thank you for diving into that one a little bit deeper for us and thank you for taking your time out to join me in the locker room today. Where can the audience find you to carry on the conversation? Are you on social media? We definitely want them to check out www.texasallcash.com. And where else do you live online where people might be able to reach you directly?
Geremy Heath: You could also check out our company Facebook page which is @texasallcashhomebuyers and then my email address is: firstname.lastname@example.org
John Carney: Cool. Well there you have it folks. I truly hope that you picked up some actionable advice today from Geremy Heath. He is the director and founder of Texas All Cash Homebuyers. Make sure to check out the Real Estate Locker Room Show on iTunes, Stitcher or Google Play and hit the subscribe button to ensure that you never miss out on the pro-tips from our guests. The mission here is to help you elevate your real estate game. If you like what this show is all about I’d be grateful if you would leave us a five-star review on iTunes, or your preferred podcast platform so that other like-minded real estate investors can find us online wherever they look for their podcasts. The post-game report show notes, links and additional content related to today’s show will be available on my website: johncarneyonline.com/podcast. And while you are there, feel free to drop your email into the newsletter sign-up form to receive more real estate investing insights, tips, tricks, hacks and other great stuff. Remember to stay focused on your goals, have fun and stay in the game. I’m your host John Carney and until next week, work hard, play hard and profit hard. Thank you one more time from Texas All Cash Home Buyers. Thank you Geremy.
Geremy Heath: Thanks a lot, thanks for having us John.