“You can be whoever you want to be.” “The sky is the limit.” Yes, we’ve heard all of these before in all those seminars and investment education sessions. But this abundance mindset does not necessarily reflect the reality of the real estate business. You have to do all the hard work, learn skills, and put your money and resources in order before you can even think about succeeding in the real estate investing world. In this episode, Jason Bible and co-host Robert Orfino are joined by The Apartment Queen, Kaylee McMahon, to expose the issues about the abundance mindset and to share some of the most timely and relevant updates in real estate.
Listen to the podcast here:
The Abundance Mindset With Kaylee McMahon And Guest Host, Robert Orfino
We’re joined by our good friend, The Apartment Queen. We can pump her for some good information. I want to thank you for coming, Kaylee. I appreciate it.
Thank you for having me.
We got a Project Z. We’re going to work on with her. We have double A. Next after that is Project Z. We can talk about what we’re doing but until we have it under contract or LOI submitted and all that stuff, we don’t give all the details because we did that before and someone tried to snake us. You look at apartments. When you and I’ve been together before, we’ve talked about apartments and we’ve talked about syndication deals. We’re looking at syndication. It’s going to be 506(b). One of the things we talked about in those documents that we used to raise money, the PPM, the addendums, all the package that we put together for our investors.
All the attorneys do it.
The attorneys do it and they hope that most people should read them, but we know that most people don’t because people aren’t asking a lot of other questions. That’s okay.
When you get into a C, it’s only accredited. The guys on my deal that I’m raising for, they’re mostly accredited because the minimum is $100,000. They’re asking a lot of questions, which I don’t mind because for some of them, it’s our first deal together. They’ve been watching my stuff and talking to me, but this time they’re like, “I’m doing it.” They have a lot of questions but that’s okay because that means they’re going to be in for life because they have fully vetted me.
That’s a big part of it and it’s about relationships and building relationships all the time and making sure that you continue to grow on those relationships. That’s why it will succeed. Do you use a third party? We use Verify Investor.
If it wasn’t accredited or Reg D 506(c), we would have to use a third party. When I do Reg D 506(b), the buddy offering, no. It can be self-certified. They fill out a questionnaire.
Why don’t you give them your Facebook information?
We’re talking about working with investors and raising money. We did one on investors in general and going through all the questions that they have and what the steps are and what makes a good deal. The new tagline is 20.5% IRR targeted and I’m like, “What does that mean to me? That tells me that you’re trying to make 20% on it. How much of that 20% do I get to make?” Sometimes it’s a little deceptive when they’re out there. It has to be a D or C that they’re posting on Facebook for. When you tell your investors, “What’s the message?” When someone says, “I’ll give you $100,000, what do I get back?”
When it’s that poignant of a question, I have one investor who’s a surgeon and he’s like, “I don’t want to hear all the quarterly and bi-annually. If I put in this much at sale, what do I get?” For our projects, we do previously cashflowing deals. You get stuff quarterly and get refi end sale, but they’re like, “Just a sale if I put this in.” Our past track record has been doubling the basis. Meaning if you put $5 in, we’re leaving with $10. There’s that gain of $5, if you will.What’s fascinating about real estate is that everything is survivable on a long enough timeline. Click To Tweet
What’s the projection over time on that one?
The projection on that one is around 100% on sale.
We say 3 to 5 five years but I say under five.
Is that doubling or that also include the cashflow that they make per year?
No. He was asking, “If I put this much at sale, what do I get?” He’s simple.
If you put $100,000 and you get to $200,000 in five years, does that mean he doesn’t get the cashflow?
It’s a bonus. It’s all gravy.
When we refi cash out, whatever percentage of ownership that they have in the company or the asset, they get that percentage of return.
They could be looking at a 20% annualized return.
Yes. It’s all projected.
Twenty percent is the magic number. Remember the FTC says, “You have to have a track record of producing 20% before you can talk about 20%.”
Ours is 10%. I’ll say double digits because that’s what we target with buy and sell.
Do you have a phone number that they can reach at?
No. You can email me, Admin@TheApartmentQueen.com.
You’re in town to look at some projects. We’ll talk about what you look at and what we look at, what’s the difference and where we are going to find some common ground. If you need anything from us, it’s Mr. Texas Real Estate, MrTxRE.com, or you can text us at (281) 401-9008. If you want more information from Kaylee, text Apartment Queen, Apt Queen and we’ll make sure that we can connect you there. If you’re looking about our Mastermind or you want to do some investing, we’re going to start doing some small investor parties. We’ll talk about that too. That’s what we’ll be working on.
We’re talking about raising money for real estate deals. We were telling some war stories of raising money.
It’s my first deal.
People have this idea like, “If the numbers work, the money will come.” I’m like, “That’s not how it works.” You still have to deal with people and people are not exactly logical in some cases.
I have to be understanding too. They have to be understanding too. I’ve dealt with someone before that was insanely difficult and made it hard for me to fill out all the documents on those deals. I had everything set up with a trust company to move self-directed IRA and at the last minute he decided, “I’m not going to do that anymore. I’m going to change it to a trust. I’m going to go find a trustee. This trustee is who you need to talk to.” I couldn’t get a hold of him. I finally did because I’m on it and I followed up like crazy. Once we talked and figured that out, then the wire didn’t happen, then it was, “I’m going to do ACH.” I’m like, “You realize that takes 3 to 5 days. It’s not going to happen on the weekend.” He’s like, “I don’t care.” It wasn’t even the full amount that got wired in. It came in half. I was like, “Are you kidding me? That’s not what you signed.”
How many people did you have on that deal?
You got one guy that’s playing games. You got six others that are reasonable people.
One person is data-driven and analytical. I know her well. She’ll have extra questions about spreadsheets and that’s not a problem. I’m happy to explain stuff. I’ve already run the numbers. It’s right there. Sometimes people need you to paint the picture too because you look at a spreadsheet and you’re like, “Numbers are cool.” What’s the story here? “I’m going to put in a pergola and a grill and we’re going to do it this month. We’re going to charge this much for this parking. It’s going to look like this color.” People want to see the story too. That deal was the hardest thing I’ve ever done. It’s my first fourteener.
How many units was that one?
It’s 14,000-foot mountain that I climbed. I was dying.
What about the deal?
It’s 50 units. It was two buildings right next to each other. One was 26 that I was originally putting in an LOI and the other one is 24. By happenchance, my mother passed away. It’s a small town. The executor of the estate is the local accountant in town and everyone knows everything. He was like, “You’re buying that one. Would you look at ours too?” It just so happened that it made even more sense because economies of scale come into play. I have one property manager running both. I have one maintenance guy doing both. When you order supplies, you order for both complexes at the same time. We get discounts.
They’re right next to each other?
Not exactly next to each other. You go around the block and you see the other one, but yes.
It’s typical for small apartments. Is it interspersed with some other single-family around it?
No. One of them is backed up onto a road. On the other side of the road, there’s some single-family but it’s not on the same plot.
Anything else you can buy in that little submarket to continue to leverage the assets that you have there?
The only other two related things that are there, there is one property that’s section 8 but it’s not even close to being up. What I’d like would be for section 8 to run out and then for me to be able to do whatever I feel like I want to do with the rents. I can also change the tenant mix. It doesn’t have to fit certain criteria that they’re going to put in there. It’s my choice. There’s a senior living but it’s fully occupied. It’s not something that I could turn into another type of project at the moment. I got a broker’s opinion of value. We’re starting the process of putting the few things we need left into it to increase that value and then we’re going to list it and get out. I’m looking at stuff closer to Dallas like Abilene.
That experience you had on your first deal was a little bumpy. You had that one investor that’s a mess.
That was that side and the other side of it was the deal fell apart almost three times. It was the most stressful thing. My mentor, he sat me down before I even engaged in the LOI and all this because he knows it’s hard and he’s like, “You do whatever it takes to take this down.” I’m like, “Yes,” because I mean what I say. It’s like, “If you’ve got to take a HELOC out on your house or line of credit, I figured it out.” The first guarantor, his credit score wasn’t high enough. At the time, I was like, “This is the net worth, right? We have $10 million net worth. We’re good.” That didn’t make sense. It didn’t work. I then had to go out and find somebody else. The negotiation wasn’t going well. She freaked out and left and then I was like, “I can’t do this without you. What do you want? I’ll give you part of the chunk of the deal you want. I don’t care. I’ll run the whole thing. I’ll teach you everything. Come out there with me once a month.” That’s how it’s been and that’s great. Honestly, there’s always a challenge. Every week, there’s something. Our maintenance man went to jail. Stuff happens, but I don’t freak out about it. I’m like, “What do we do next?” “You hire somebody else.” “Okay, cool.”
What I think is fascinating about real estate is, everything is survivable on a long enough timeline. Rents keep going up and appreciation is going to continue to happen. Thank God for time. Time heals all wounds. That’s what the story is in real estate. How do they get in contact with you?
You can email me at Admin@TheApartmentQueen.com.
I want to talk to you about abundance mentality and how this gets messed up. I suck at what I do. I have the abundance mentality. This is my contention for the business that we’re in. There are real estate investors, the people who write a check and we want to meet as many of those as possible. There’s real estate investing. That’s us. We put the deals together. We do the flips. We get all the legal stuff going and we make money at the end of it. There’s real estate investing education, which has nothing to do with the other two. That whole real estate investing education world is full of the abundance mentality.Not only is the abundance mentality not true, but the only places you can hear it is in seminars. Click To Tweet
The abundance mentality is there’s unlimited amount of success for people out there. Sky’s the limit and all that stuff. It hit me where I’m like, “That’s not true.” Not only is that not true, but the only place I’ve ever heard that are in the seminars. Here’s the reality. Is there a massive amount of wealth out there? We’re creating a lot of wealth. Are there plenty of deals out there for people like us? You’re absolutely right. However, the reality is that they all get distilled down to one critical variable, and that is time. That’s the one thing there is no abundance of is time. Whether you’re hiring people, you’re outsourcing, at the end of the day, time is the most critical variable. Based off your resources, time being one of those and the most important piece, what kind of wealth, what kind of life can you create? That was the point of that email, because everyone thinks, “We’re going to be gazillionaires.” I’m like, “You could hardly fog a mirror. Now you’re going to tell me you’re going to build a $10 billion real estate portfolio.” The likelihood of that happening is naught. A good example is this is you know I run a little mastermind. What do we tell everybody? What are three things?
You need 700 FICO. You need $25,000 to $50,000 to get started. You need a six-figure W-2 income.
If they don’t have those three things, you’re going to be frustrated and the likelihood of success is almost zero. That’s the reality. The reason you and I get so much flak, you get it more than I do, because that assaults the whole abundance mindset from the onset because you have to have those three things. When Tom Perry and I were partners, one of the things we used to say is like, “If you’ve got success in certain parts of your life, we can translate that success into real estate. If you’re an individual who struggled your entire life, this is going to be tough.” That’s the reality of it. That was part of my email where I said, “You’re going to have to have time.” Depending on where your station is in life, the likelihood that you’ll be able to jump that gap is probably small.
I hate to think like that but there is a level of entry, for sure. Even mine, I spent everything I had buying those first two apartments. I wanted everyone to see on those deals that I had skin in the game. It’s all the skin I had. I was like, “That’s all I got. If these fail, okay.” For me, I have more time than other people because I’m single. I can deal with a lot of factors like fundraising and I’ll go hard because I don’t have to go home and see my kids. For example, I’ll go do all the sweat equity, then I’m able to pull funds from other people and they see the value in what I do on a daily basis.
In the beginning, there had to be some income there. I had to have something to show to other people. They’re not going to give you their money for no reason. You have to be invested in it too. Plus, sweat equity. When people ask how to make that jump, I’m like, “I don’t know if you’re going to do wholesaling or real estate retail or if you’re going to do it whatever way you do it or you have a W-2 job at Lockheed Martin and you make a good salary, but you got to put aside some money to get started. It’s not going to just come to you.”
We had an interesting question in one of our seminars. From the VIP, there were 50 people in the room and this guy says, “Jason, how do I make $10,000 in real estate in the next 30 days?” I said, “You go get another job.” Don’t get me wrong. Wholesaling, that’s fine. The reality is those are actual businesses. Can you flip a contract here or there? Sure. I got 47 people in a wholesale group.
Only seven people responded and said they’re still doing wholesaling after five months. Out of the seven, two of them were like, “I’m not counting you. You’re a sales guy for something else.”
Five out of 47 in less than six months, that’s about 10% that are in it. Whether they’re successful or not, but they’re still in it. We followed up with a bunch of folks that came to a couple of our events and we found out 80% of them were gone in six months. The reality is that if you don’t have the skillset and the resources you need to be successful, the likelihood you’re going to be successful in this business is almost zero.
One of my biggest resources is I’m a manifester. If you look at my Culture Index personality profile, I’m low detail but I am high-level visionary. I’m the person that sees what’s going to happen. I have to live my life that way.
Who put that out?
Culture Index, the company.
It’s all DISC, right?
Nope. DISC is different. There’s also, Predictive Index and there’s Culture Index. Culture Index is expensive, but you can hire and fire against it 90%. It’s spot on. I tell all my people, “This is going to happen with this person.” They don’t listen and it happens and I’m like, “I’m not putting my money. You can go for it.” It’s great. I’m someone that does have that big view, but I also have the sweat equity or the grit, if you will, to back it up. You can’t dream all day long. You have to be the one to bite in and get it done and I’m like, “I’m the one that’s going to get it done. You guys can go on vacation. I’m not.” You can dream big, but you got to follow it up.
Somebody texted me the Europe vacation and I’m like, “Who’s working here?”
Not me. That changed my whole perspective. I came back and everything in life is about people. I have to learn how to slow myself down because I’m goal-oriented and I live far in the future sometimes. I need to enjoy the present and the people that have been there for me. There are three of them, but they love me unconditionally no matter what. I pour my energy into those people and everything else will come.
I am the opposite of him because that’s how I got through it. It’s a mantra. I’m not sure it’s reality. I can think about one hand clapping all day long. The mantra of the abundance mentality is important. We’ll expand on that a little bit more. We’re filled within the industry that will absolutely push this stuff on stage and it will do good for some and fool others and push others away.
I don’t think its abundance mindset. Its outcome independence, which is a completely different thing. If you guys want to get in contact with us, it’s (281) 401-9008.
We’re talking about the abundance mentality and some of the flaws in it. I certainly believe in having a positive attitude. I want the best. I always think about the best outcomes and prepare for the worst, that type of thing. What happens in our world, we’re inundated by people who are showing all the fake success, which then makes us feel like we’re somehow deficient because we haven’t achieved that yet. “I was in that class with that guy. He’s on stage talking about Airbnb. Why aren’t I doing that? Why am I such a failure? What happened? I better get the abundance mentality.” No. That dude up there is marketing. Let’s call them what they are. They’re marketing. Sometimes we get confused with that. We get wrapped up in that and thinking, “I need to have this abundance mentality because I need a Bentley.” That’s not what it’s about. The three secrets to success are: be positive, have a lifelong relationship with learning and don’t stop.
Treat other people how you want to be treated.
That’s the golden rule.
The number one word for all of this is discipline.
I love the term outcome independence because it’s, “I’m going to continue to do this.” Don’t get me wrong, you need track your metrics and all other stuff. However, I do know if I do this long enough, this is a classic Jim Rohn thing, a ratio will appear. At some point, I’m going to win here. One of my favorite shows is Billions.
The guy who that’s based off of is Steve Cohen. He is going to buy the New York Mets. There are only three things outside of real estate that matter: New York Giants, Mets and Disney World.
Outcome independence, we’re marching towards this one particular goal here. One of the things that they say in Billions, if you guys have watched the show, there’s a character in there that’s running for office. He runs for a couple different offices, that whole convoluted deal. In any case, there’s a point at which his father tells him like, “Be the last man standing.” Keep getting the beatings, but at least you’re the one that’s still standing up and you look around you go, “This is going to work out.” I don’t think people put enough stock in that. That’s almost more important than a lot of these other things. It’s not abundance mindset. It’s not run to the back of the room. It’s like, “Be the last guy standing when those deals are coming in.”
That’s part of our problem in our industry with our Facebook world. We want that gratification. We want to present ourselves in a better life than we actually live. The bigger problem is there are real estate investors, people that do the real estate investing, the active folks that are terrified to tell the truth. We get as naked as possible.
My maintenance guy went to jail. What’s cool is he lives in the building and paid his rent before he went to jail. They’re like, “He must have known.” There’s just a bunch of fines he never paid.In real estate investing, time is the most critical variable, and there is no abundance of time. Click To Tweet
What happens is because a lot of people in our world don’t tell the truth, there are a lot of investors, grandma and grandpa who got their retirement money who then become skittish. It’s like, “What’s going on?” How many times are you on a panel with a whole bunch of broke people?
It happens all the time. I look at these guys and everybody’s got a nice suit on and they got Mercedes and BMW and all that nonsense in the parking lot. I’m like, “I know these guys are broke.” I know because I see their deal transactions, their deal volume. A lot of these guys straight up told me. I lost $1 million on this one. I’m like, “That’s fine, but why continue to lie?”
It’s one of the first things I do when I’m on stage. Within the first five minutes, I’m like, “I lost this. I went into debt. This is bad. I’ve yet to default on any loans. I’m still getting out of the hole. This is who I am. If you want to stay here, great. If you want to leave, go right ahead.”
Anyone that says, “We’ve never done anything wrong.”
There was a guru in California who always would say, “I’ve never lost any money on a deal.” We’re walking in one of his houses and I’m doing the math and I’m like, “You’re going to lose $250,000 on this deal. The math doesn’t work. You bought it for $800,000. You put $400,000 in. You got it sold for $1.25 million. You’re not going to make any money out of this.” It’s that nonsense out there.
He may not lose any money.
He’s not going to lose any money. His students and his investors are going to lose money.
People are skittish. My girlfriend, her and her partner, they have a house flipping business. They do well because Danielle is an engineer. She does all the engineering for everything. Yalitza is the creative one and they’re like, “We have $50,000 over here. We want to put into deals we’re not sure.” I’ve done house note partials. I bought a whole life insurance with a cash value. I’ve done flip houses or flip house apartments. She’s like, “We don’t know where to do it. When you look at someone’s deal, how do you know that the stuff they put out there isn’t made up?” I go, “A couple of things.” That’s why this credit guy is vetting me hard. I’m like, “I gave him a BOV, Broker’s Opinion Value, and that’s from the broker. You can call the broker. It’s got the apartment and addresses, the pictures of it, everything on there is a real tangible asset. If you want to see my track record, I can send you some selling statements from buying it.” Ask for the real transaction. It’s sad people get skittish.
Jenna asked, “How do you weed those people out?”
I had an experience in Denver. There was one guy, he’s on education, books, podcasts. I do have a podcast but I’m like, “That’s the last thing I’m going to do that everybody else is doing because I have a bigger message to get out there.” I ended up realizing, after doing some due diligence, that the assets under management that person had is less than I have and I’m just getting started. I don’t tout those numbers. I don’t want to because I’m a target for a lawsuit because someone’s like, “You have assets I can take from you.” I don’t talk about it. I don’t want to. I was amazed that this person is training 600 people in a room and this person doesn’t actively invest.
I’d be okay with that if they said, “I own 1,000 doors. I haven’t bought anything in five years but let me tell you how this works.” I’m like, “I’d be okay with a guy that does that.”
My buddy, Kent, he’s the one who stands up in front of the room and says, “I haven’t done wholesaling for fifteen years. Why would I do that?”
I have a skip tracer. I skip trace these people so you can see if they have any felonies, bankruptcies or any major things like that. I do that for partners to see like, “We’re going to have issues with our loan.” They’re going to do it again.To be successful, you have to be positive, have a lifelong relationship with learning, and treat other people how you want to be treated. Click To Tweet
You should run criminal background checks on some of these people. You should run how many felons are on stage.
“Our net worth is public. I own this LLC. We own this stuff here.” It’s not hard to figure out if they’re doing it or not. Ask them, “What LLCs do you close in?”
Thank you very much, Apartment Queen.
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About Kaylee McMahon
- Founder of The Apartment Queen
- Founder of ReByKaylee LLC Residential Real Estate Brokerage
- General partner/Key Principle of a 51.1 MM ASsets Under Management Texas, 17.1 MM Assets Under Management Phoenix Arizona
- Owner and Principal for Quail Run Apartments
- Owner and Principal for Lantana Apartments
- General partner in The Meadows Apartments
- General partner in Village East Apartments Denton Texas
- General Partner in Los Parados Apartments Houston Texas
- General Partner in The The Flats at 2030 in Phx AZEducation
- Bachelor’s Degree in Molecular and Experimental Nutrition Texas A&M University
- Licensed Real Estate Broker in the State of Texas – 3 Years
Kaylee has purchased over 68.2 million in real estate as General partner and principle. She sold over 3 million dollars in residential real estate before transitioning into her current full time syndication role. Originally from Portland Oregon, host of InvestHER Dallas. She has started a podcast called #1 leading ladies where she interviews kick-ass women who are disrupting their industry and the REAL story of how they got where they are. She is developing technology to help make it easy and convenient for women to learn how to make passive income through apartment investing.
Kaylee has done home flipping, as she feels that to be truly confident in giving advice to clients about buying/selling/flipping/investing in Real Estate one should NEVER take advice from someone who has never gone through these things themselves.
Kaylee has completed continuing education in home comparables, appraisals, real estate investor representation, investment and wealth creation, legal 1&2, broker responsibility, property management, marketing and web development for real estate companies. She continues to learn for fun constantly. Some of her completed subjects/courses have been apartment value add strategies, syndication methods with Joe Fairless, apartment mastery boot camps with Rod Khleif, Rat-race to retirement seminars with the Sumrok group, she’s constantly reading on negotiation tactics (Chris Voss never split the difference), how to buy and flip business’ which are sick and much more. She has completed GRI Marketing for sellers, GRI is the graduate institute for realtors and is a distinction that shows Kaylee is committed to the success of getting you top dollar on your investments.
The entire backbone of what gets Kaylee out of bed everyday is her “why”. This is something she will share when asked personally about it, but at a 30,000 foot view it is to create independence and space for those experiencing codependency and toxic relationships which hamper their ability to visualize and then manifest what their amazing reality truly could be. Her company culture models this why and is “Changing the face of multifamily” to bring more women into the light as powerhouse operators, key principles, and commercial brokers.