RES 199 | Financial Freedom

 

Owning our own business is probably one of the goals we all have, alongside financial freedom and securing our future. Sharing his business ventures is Rodney Miller, a real estate investor and CEO of a chain of medical clinics. Rodney has been an entrepreneur for quite a while and splits his time between real estate and medical clinics. He talks about his mindset change from employee to entrepreneur – getting rid of the suit and tie and experiencing true freedom with being self-employed. He shares how he’s become successful in managing single-family homes and creating passive income from multi-family units. He also reveals his secrets on how to become a good seller and raise capital successfully.

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Financial Freedom Through Real Estate Investing with Rodney Miller

Our guest is Rodney Miller. Thanks for being on the show, Rodney.

Thanks for having me.

I was pleased to meet Rodney in Denver. We were able to have lunch together and learn a lot about him and what he’s doing in real estate. I was very impressed in how he’s getting into this business and I knew he’d be a great guest that can relate to me and the audience. He’s an active real estate investor with over 200 transactions since 2003. He’s a CEO of a chain of medical clinics in Oklahoma City. He owns and manages over 100 single-family homes. He’s a key principal and sponsoring 284 multifamily units. He’s also a passive investor in 305 multifamily units. Rodney, thanks for being on the show. You obviously have experience in many different parts of the real estate industry and now you’re in syndication as well and you’ve been on passive side and active aside. Give the audience a little more about yourself, background and what you’re doing in real estate.

I’ve been in real estate since 2003. I’ve been an entrepreneur for quite a while. When I was 27, I bought a medical clinic and started branching off with that and I still have the medical clinics. I split my time between real estate and the medical clinics. The medical clinics take about 20% of my time. Real estate, the other 80%. That adds up to about probably 25, 30 hours a week, so it’s a pretty good deal. I got into real estate when I was about 40 years old. I realized I didn’t have retirement and started freaking out. I had three kids and starting to get a little older. My dad retired when he was 55. I could see that age come in quick and had a little freak-out and decided I need to figure out something out. I joined the HomeVestors Franchise. We buy houses and they taught me how to buy houses.

Since that time, I’ve wholesaled deals and flipped some houses. I’m not a big fan of flipping houses. I decided that the way to wealth was to buy and hold, so I started buying and holding houses. I got about 100 houses that I’m working on getting paid off. I bought and sold notes, mortgages, loaned money and hard money lending. I’ve done it all. I learned multifamily, so I started reading books and attending seminars for multifamily and trying to get educated on the ins and outs of multi-family syndication. That’s where I’m at now, trying to figure that game out. Multifamily is a whole other animal. When you come from single-family homes, you’ve got to rethink things and shift your focus and learn a whole different aspect of real estate investing.

You’re buying that medical clinic at age 27. At a very young age, you’re becoming that entrepreneur and that entrepreneurial mindset, I like that. It’s neat to see you develop that business and obviously, it’s successful. You’ve kept it going those medical clinics and had grown that. You’re able to jump into a different business and able to make it happen as well. I felt that reiterates the importance of mindset and the mindset change from employee to entrepreneur. Would you agree?

Yes, and I’ve always known I make a terrible employee. I went to college and I worked for about five years as an insurance claims adjuster and I was terrible at my job. I didn’t want to be there. I sat in a cubicle and dreamed of ways to get out of it. One day, a buddy of mine was a chiropractor and getting out of school and he didn’t have any direction. I was like, “I know the business end of it, let’s partner up.” It was my leaping off point, getting out of the corporate world and I got rid of the suit and tie and I was happy to do it. I always knew when I was younger, I didn’t want to work and be a cog in a wheel for a big corporation. Some people know right away if that’s what they want and for some people, it takes a while to figure it out. I knew I wanted to do that. It’s a way to get started. I started in the corporate world but I wanted to get out really quickly. It’s been a great ride. I love being self-employed. It’s true freedom.

You started seeing that, “I don’t have a retirement plan,” I think a lot of people that’s self-employed, they don’t because you don’t have this thing that’s already done for you. When you’re in the corporate world, you’re made to put this money aside every check. Those people rely on that or assume that’s going to be there and that it’s going to be enough to support them when they’re ready to hit that retirement age when we all think that we should retire. At 40, it hits you that, “I need to do something right. I’ve got kids.” What was it that gave you the confidence to jump into real estate?

The clinic thing went pretty well for me and I was well into that. I’ve always wanted to do real estate. I remember seeing the old Carleton Sheets, late-night TV, learn to do real estate. It’s always something in the back of my mind that I thought I could do, I thought I would be successful at. I wish I had started a lot earlier than that. I see these guys at these conferences that are in their twenties starting real estate. I would kill to be able to go back and start earlier. It’s so cool that these young kids are getting into this and they’re doing so well with it and they’re starting at a young age. It’s always something I want to do and I started reading books on it and it didn’t seem that tough type of thing to do. When you see the TV commercials, it looks very unachievable, very difficult and you wonder if it’s true if you do it. Once you start studying, this is not a big deal. You got to learn the fundamentals and go out and take action.

You jumped into the single-family homes and you said you flipped homes for a while. I’m sure you learned a lot. You educated yourself a lot through that. Then you figured out, “I’m creating another job here.” Then you went into the buy and hold, correct?

Yeah, flipping houses and then the wholesaling, which was cool because we’ve picked up the volume and we would get house and the contract and sell the contracts. It’s really easy. It’s a job, you’re working hard. You’ve got to work on your advertising, your call centers to take the phone calls, there are contracts involved, you’re buying and you’re selling. It’s a full-time job. Naturally, I want to look at something that’s a little more passive. Rentals are a little more passive but they’re still not passive. It’s like the Cashflow Quadrant. You’re always looking to get more and more passive as you get older and you want to move from working your butt off in the job to become a business owner, to eventually become an investor. Where you’re investing in other people’s deals and let them do all the heavy lifting. That’s where I’m shifting my focus.

You move from the flipping and the wholesale. You built that business and it’s neat. This entrepreneurial mindset, you built one business and you understand systems and the business side of it, so you can go right over here and learn a little bit about real estate and create a business over here. You did that but then you’re saying, “I need to hold these properties or create that passive income.” You started buying lots of single-family homes, so you have 100 single-family homes now that you’re managing.

It sounds a lot to some people, but we’ve got friends that have 600 houses. I want to be like them. I want to be a big boy. A 100 single-family homes, it’s pretty easy to manage that. I’ve got somebody that manages the outside part of it and somebody that takes the phone calls and takes the rental applications and all that. It’s a pretty business to run part-time.

You started learning about multifamily. Tell us about that process. Why you would go from this business that you already have established, all these single-family homes? Why would you then venture into the multifamily or even syndication?

RES 199 | Financial Freedom

Financial Freedom: As you get older, you want to move from working your butt off in a job to becoming a business owner, to eventually becoming an investor.

 

I always wanted to do multifamily, but it always seemed too sophisticated for me. I don’t know why. I never took a hard look at it. Because you look at 100-unit complex or 50-unit and think, “That’s millions of dollars. I don’t deal with that. I deal with $50,000 houses or $75,000. That’s way out of my league. That’s for the rich guys.” A couple of years ago I decided I was going to take a hard look at it and I read a couple of books. I was like, “No, it’s very doable.” It’s probably easier to do than the single-family business. It’s a mindset thing. You don’t know what you don’t know until you look into it. I’d say it’s 99% mindset that it looks like this big ugly monster that you don’t want to take on, it’s scary. Once you look at it, you break it down to little pieces, it’s not a big deal.

After reading a few books, I was like, “I can do this.” The next step was, “Who can help me do this?” I started looking for mentors and coaches and groups that I could start associating with. I found the Brad Sumrok group out of Dallas and I hooked up with that group. I go there every month and network and associate with folks that are in the multifamily business. It has built a good network over the last couple of years doing that. There are folks who think like I do or want to get into the business or already in the business. It’s been a great ride. I’ve learned a lot. I’m not an expert by any means, but I’m learning quickly and starting to dip my toe in the water. I had a deal in 2018 that fell through and I’ve got a deal now, so things are starting to move in the right direction.

There are some key things there. You talked about you found a mentor and also a network. I see time and time again people who are successful in this business or in about any business. You’re going to have a mentor or a coach, somebody that’s helping you, give you some guidance or keep you motivated. Also, the network of friends or other investors that have been there and done that possibly or where you’re at least in the process.

As Tony Robbins says, “Success leaves clues.” Go find somebody that’s doing what you want to learn how to do or find a group of people that are doing it. Join the group, work for somebody that’s doing it or pay somebody to show you how to do it. It’s the quickest way to get from A to Z. I’ve gotten pretty good at it. If I want to take my business to the next level or I want to do something different, I find somebody who’s done it and I find a way to partner up with them. It gets you there a lot quicker.

Hitch your horse to their wagon. You mentioned a deal that fell through. Is that something we can talk about and discuss what happened with that opportunity or that deal?

Yes, I’d met some guys at one of these networking events. They had gotten an 80-unit deal in East Dallas that is a $4 million deal. We had to raise $1.5 million for it. They asked me if I’d like to be a cosponsor on it and I said, “Yes. That would be my first deal.” They brought me in to help raise capital and I think they needed some help on the net worth part of it as a KP. Everything went smooth and then the thing caught on fire a couple of weeks before we’re supposed to close on it. That was a great lesson how not to be a seller because these sellers became very difficult to work with. They saw that they could fix the issues, put it back up for sale and make a little bit more money. I don’t know if they did when it was all said and done, but they put the screws to us. They made it difficult to close. We had to eventually abandon the deal, refund all of our investors, give their money back, pay them some interests for the time we held their money. Then we’re out $30,000, $40,000 and due diligence costs and all that, which the sellers didn’t care. They already get their money. It taught me a little lesson on how to do the right thing. Don’t always go after the extra dollar, do the right thing. It’s a good experience. I learned a lot.

It’s a very small community I find in this syndication business. There are so many people that knows everybody. When I hear stories like that, which isn’t very often, thankfully, I felt that person’s not going to be in the business for a very long time. They’re not looking at definitely a long-term approach. Maybe they have been, some people manage to stay in the business for a long time and keeping people off somehow. Tell us some things that you learn there about how to be a good seller or some things that happened that you would do differently on the next one.

The quickest way to get from A to Z is to find somebody that's doing what you want to do and learn from them. Click To Tweet

I don’t think they came out any better. After our contract bust, they sold it to somebody else. I would say if you make a deal with somebody, follow through with the deal. Do what you say you’re going to do. It’s a small group of people. I can guarantee you that I wouldn’t talk in highly of the folks after that deal fell through. Their name will come up, someday they’ll want to buy themselves from somebody I’ve talked to and that person’s got in the back of their mind, “Is this person going to follow through and do what they said they were going to do?” In this business, it’s definitely a relationship business and it’s a close-knit group of people. Do the right thing with brokers. Buyers and sellers should do the right thing. You should treat everybody you deal with respect. Do what you say you’re going to do because they can come back to bite you.

This deal, you all were a little bit away from closing. Part of it burns down anyway. I’m not sure the top of the property, but the boiler gets on fire and burns part of the property down. What happened and what should have happened specifically in that process?

Most times what would happen is the seller will assign the insurance benefits to the buyers and the deal would close. Then the buyer would fix the problem with the insurance proceeds. In this case, I think the sellers determined that they could get the insurance proceeds, pocket about $100,000 or $50,000 and then sell it for more money if they fixed it themselves. They would not assign the benefits to us and then made it impossible to close. The easy thing would have been and the thing that you hear about all the time when these things happen, is the sellers do an assignment. They assigned the proceeds and they let the deal close and let the seller fix the problem. There’s also the greed factor in there. Some folks see an extra way to squeeze a little bit extra money out of the deal at somebody else’s expense. That’s what happened to us I feel like.

You’ve got to learn from it and do better on the next one. Thankfully you all didn’t get too caught up with that seller. I was at a mastermind and there was a guy who is a high-level investor. He owns thousands of units. He was in a similar process that you’re talking about. He had a property where something caught on fire or went out. They were about ready to close as well, but since this boiler went down, it wasn’t an insurance matter. It didn’t cause damage, but it did go out. They were in the process of selling and he replaced it. He said it was a couple of hundred thousand to get all this done or at least $100,000 but out of his pocket, they fixed it. He didn’t know the buyer at the time. Then a year later, he’s in this mastermind and the buyer of that property is also in the mastermind that he’s in. It’s a small world. He did the right thing and he fixed it. It was regular maintenance. He would have had to fix it anyway and it was on his watch.

The chances of you running into somebody you deal with on a transaction, your chances of running into them again on a deal or in the future is very likely. Do the right thing.

I know you’re in the middle of a deal now that you’re raising for. Maybe elaborate a little bit on the capital-raising process that you’ve learned and some ways that you’ve been successful with that.

I have two partners. We’re purchasing a deal in a Pryor, Oklahoma, which is a small town East of Tulsa by about 40 miles. Normally, we wouldn’t look in a market that small because it’s about 20,000 people. It’s 100-unit complex but Google is putting a large data facility out there, so the town is going crazy. There’s a ton of activity there. Google’s building out infrastructure all around that area. Everything’s 100% occupied there. They’re not building C-class apartments there anymore. We feel good about where we’re at on the rents and then that we could slowly raise the rents. It’s more of a yield play. It’s going to make money from day one. It’s not a huge value ad. We’re not going to put a ton of money into it. We’re below the market rent, so we’re going to raise the rents over time and then we have a plan to sell it in about three to five years. We raised is about $1.5 million. We’ve over-raised. That’s a problem that we might have to address. We’ve got more money than we need. We’ll probably have to give some back or take some $100,000 investments and cut them in half and give some of these folks back half their money or something. The money came in so quick. We all assume we knew we had a couple of hundred thousand. That’s a problem I wasn’t expecting. The raise was smooth.

RES 199 | Financial Freedom

Financial Freedom: Do the right thing. Your chance of running into somebody you had a deal or a transaction with again in the future is very likely.

 

One thing I did learn on this is it is a group effort. You want partners in these deals. It’s so much work getting these things off the ground. We’ve got a partner that’s working with the brokers. I’m handling legal. I’m handling all the money coming in from the investors. That’s a full-time job. Somebody is dealing with the property management company. There are so many aspects to get these deals closed. I can’t even imagine trying to do one of these on my own. It’s a lot of work. I’m sure people do it and maybe after I have more experience, I can do it but it seems this is team teamwork. Teamwork makes the dream work because you can all assign duties and everybody takes a little area of the process of getting this thing closed and take it over and you know it’s going to get done correctly. My partners have been great. Everybody’s carrying their weight. It seemed like they’re going to close on time. This looks to be a very smooth transaction.

What are a couple of ways that you were prepared for the capital raise to make it so successful? Being over-raised that quickly is great. That’s a great problem to have. What are a couple of things that you did to be this good at capital raising that fast?

I got a little taste of capital raising on that first deal that caught on fire. This one seemed to go a little bit smoother. I can’t say that we did a whole lot. I didn’t go out and work people beforehand. I didn’t take people to lunch and go, “I’m going to find a deal. If I do, would you be interested in it?” It was none of that. It’s like we found a deal, we together an email. We shot the email out to everybody we knew. We followed it up with a webinar and we had our money. $1.5 million is not a huge raise. Our minimum investment was $35,000. When you start getting checks in for $50,000 to $100,000, I think we had one $200,000 investment, that fills up pretty quick.

What’s been the hardest part of the syndication business for you so far?

The hardest part for me is I’ve been flying solo for so long. I’ve been a one-man show. I’ve got employees. I’m the guy at the top and I have meetings. I tell people what to do. I’m more of a top line CEO manager. I handle strategy and I handle where we are taking this business and we’re going to open a location. I’m getting my hands dirty again. I’m taking investor money. I’m filling out spreadsheets. It’s a lot of work that I’m happy to get involved with. Someday, it would be cool to build a team around that but right now, I feel I need to learn the business. I’m accountable with my partners. I’m accountable to the folks we’re raising money from and our investors. It’s that accountability. I haven’t had that in a long time. Probably since I had a job when I was 26 years old, I haven’t felt like I was accountable to anybody. Working in a team again and being accountable is humbling.

What’s a way that you’ve improved your business that we could apply to ours?

I’m so new to the multifamily. I would say, I’m building spreadsheets, I’m building processes. Everything I do, I’m trying to do it and trying to document how it went down and how I can do it better next time. It’s like any other business. You do it yourself a few times. You learn to build processes around of what you did so at some point, you could build a team to take over a lot of those duties that you feel you need to get away from at some point. My goal is to look for deals and raise capital and build strategic partnerships. That’s where the rubber meets the road. The faster I can do that, the faster I can do $15 million, $20 million, $30 million deals. This first deal is $4 million, $4.5 million. I expect the next deal to be over $10 million, but the goal is to get to $30 million deal in the next few years. That’s the play if we were going to get there. We’re going to have processes in place and we’re going to start building a team. Hopefully, we’ll bring on an acquisition specialist at some point. Administration person that does all the admin and somebody that deals with the investors. I would say that’s it, just processes.

Treat everybody you deal with respect and do what you say you're going to do so they can't come back to bite you. Click To Tweet

What’s the number one thing that’s contributed to your success?

I don’t quit. I keep going. When I started in real estate, on my first three deals, I lost money on. For anybody that’s going to go into business for themselves, you’re going to get kicked in the groin several times. You’re going to have setbacks. I see a lot of people quit and give up and throw in the towel. You’ve got to keep going. You’re going to learn from your mistakes. If they don’t wipe you out, learn from them. You’ve got to keep going. If they wipe you out, regroup and come back.

A sure way to fail is to quit.

You don’t fail until you quit.

Rodney, you’ve been a great guest. I appreciate your time and the value you’ve provided to the audience. How do you like to give back?

I have an autistic son. Every little spare bit of change and effort me and my wife have aside from raising our kids and running these businesses, it goes to autism. I’ve invested in the autistic community called 29 Acres, which is outside of Denton, Texas. They’re building adult living facilities for adults with autism. We’re invested in that. We’re trying to help grow that. It’s going to be something special. I don’t think there’s going to be anything like it in the country. Hopefully, we’re building a model for the rest of the country. There are a lot of kids with autism that is going to be adults and they’re going to need a place to live someday. A lot of them can’t live on their own. That’s a passion and that’s how I like to give back.

Thank you for sharing that. That’s incredible. Is there a website?

RES 199 | Financial Freedom

Financial Freedom: When you start going into business, you’re going to have setbacks. Just keep going and learn from your mistakes.

 

29Acres.org.

How can the audience get in touch with you, Rodney, and learn more about your business?

They can email me at RodneyMiller@POBox.com, it’s the best way to reach me. I love to hear from people. If anybody ever needs help with anything, please reach out.

Rodney, thank you for extending that offer up. I hope the audience will connect with you. I hope they’ll also go to Life Bridge Capital and connect with me and also go to our Facebook group, The Real Estate Syndication Show so we can all learn from experts like Rodney and ask questions and support each other and grow our businesses together. We will talk to you soon.

Thanks, Whitney.

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About Rodney Miller

RES 199 | Financial Freedom

  • Active Real Estate investor with over 200 transactions since 2003
  • CEO of a chain of medical clinics in Oklahoma City
  • Own and manage over 100 single family homes
  • Key Principle and Sponsor in 284 Multifamily Units
  • Passive investor in 305 Multifamily units
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