Building Multiple 7 Figure Businesses While Still Having a W2 With Sterling Chapman

Sterling Chapman: [0:00] And I was like, I just, you know, I live in South Louisiana, where we don't have the best school system, you guys send your kids to private school. So I was about to buy a house and get married. And just I pictured myself being like, in my early 40s, having dedicated my soul to this corporate monster, and have two kids in private school and two car mortgages and two car notes and a mortgage, and the corporate faucet is shutting off on me. And like, that's the kind of shit that makes people like kill themselves like that. And I was like, fuck no, I don't want to be in that spot ever. Like, I don't ever want to be in that spot. So I gotta figure something out.

Mike DeHaan: [0:37] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business. On this episode of the collecting keys podcast, we are welcomed by Sterling Chapman, who is a fellow GoBundance member with Dan and I and is crushing it in so many things. It's slightly ridiculous. So he has a high paying W-two job. On top of that, he has a multi 7 figure flipping business. He has a multi 7 figure syndication business. He has his own podcast that is doing very, very well called the Rent Roll Radio Show. So absolutely go and check that out. And overall, he's one of the few people that Dan and I have talked to that is really, I would say like in the trenches doing the off market thing, dealing with crazy sellers, dealing with crazy properties, and really just getting after it. So he has a ton of valuable insight today on exactly how to balance, you know, having a W2 and that security with these different businesses, all these different endeavors. And if you're someone that's interested in investing and wants to do some sort of scale, but maybe you don't hate your W2, Maybe you wanna, you know, keep that security. Maybe you need the benefits, all that sort of stuff. Sterling is a wealth of knowledge that can really help you out. So really hope you enjoy the show.

Mike DeHaan: [2:03] Just as a heads up, we did have a couple audio and connection issues with this podcast. Sometimes you're doing stuff remotely that just happens. We apologize for that. Our editor really tried their best to piece it together and make the sound quality as good as we possibly could with a couple issues that we faced. So bear with us. I promise the information is worth it. And, if you want some more Sterling, go ahead and check out his podcast, the Rent Roar Radio Show, and you'll be a lot of for him to hear. There will be a lot for you to hear from over there as well. So thanks, guys, and enjoy the show. What's going on, guys? Welcome to the collecting keys podcast. Today, we are joined by Sterling Chapman. He is a fellow GoBundance member with Dan and myself, and he is a savage flipper just doing really big things down in New Orleans, right?

Sterling Chapman: [2:52] Well, I'm in Baton Rouge. So we're about an hour away from

Mike DeHaan: [2:54] New Baton Rouge. That's super offensive. That's like if someone asked if I'm from Seattle. Exactly. Apologize. Different cities. Yeah. Right. Probably different cultures. Like, probably there's a little bit of rivalry in some way or another. Oh, man. So anyways, thanks for listening, guys. I'm gonna sign off after that. And

Dan Austin: [3:13] I don't know. I'm super pumped. I don't care where you're from, Sterling. I'm I'm excited to have you. This is gonna be a good show for everybody, and I've been excited all week, as I mentioned to you about about chatting with you and meeting you. So this is fun.

Sterling Chapman: [3:24] Awesome. Glad to have glad to

Mike DeHaan: [3:25] be here. So yeah. Absolutely. So maybe just give us a little bit of background about you. I know you're mostly a flipper. You're doing all this. You do a lot of volume while managing a W-two. You also have your own podcast. You're also syndicating. You're just getting after it. And the scale of things that you do is extremely impressive. And I thought it would be awesome to sort of hear your story

Sterling Chapman: [3:47] behind that. So it's weird, I never expected to be identified as a flipper. Actually, it was very bright. If you listen, like any of the podcasts I did the first couple years of investing, I was very much against flipping houses. I just kind of stumbled into is being a convenient way to get a bunch of money. So my story I started in, I wanted to be like the next CFO of the telecom company I was working at. And I just wanted to like, that's how I grew up. Like, my dad was a work for a big company, and we're a suit worker, and he always traveled and always like kind of glamorize that in my head as well as success look like. And, you know, I wanted to be one of those guys. And in 2017, I was getting my MBA, I went to LSU for finance, went back to LSU Shreveport online for my MBA years later. And I took some entrepreneurship classes and took some leadership classes. And I like, man, this is cool. I would like to, know, I'd love to do my own thing. But I didn't know how to do anything. I wasn't like, skilled in any particular like niche. Like, I didn't know how to like, you know, build cars or widgets or any I was in telecom, I barely knew how like switches worked. I was, I was a sales guy. That was it. And so around that time, was like kind of a lot of things that happened at once, I was getting promoted and moving up pretty fast, mostly just because of my sales and networking skills. And I was really already into like, a lot of the personal development stuff, the rich dad, not the rich dad, thinking real rich and all of that, you know, mindset development stuff.

Sterling Chapman: [5:19] And it was helpful along the way with the sales and the networking. So I was moving up pretty quickly. And I've gotten to this spot where I was making 6 figures for the first time ever. And I was all excited. I went to go tell my dad and I was like, he was like, Look, you just gotta figure out how to do something smart with your money. Because, you know, I've known all these guys over the years, I made a bunch of money and then lost it. And then they're dumber than somebody made in the first place. So I was like, Alright, I'll start reading personal finance books. And I started with Dave Ramsey. And I was, I wouldn't even engage the time I had a girlfriend at the time that I lived with. And I was like, Look, we're never going to get any credit card debt, we're going to pay everything with cash. And we're going to save up. And she's like, Yeah, I mean, whatever. And then a week later, I read, I read Rich Dad Poor's like, scratch that we didn't get as much debt as we can. Went on these award trips and everything. They had asked him the year before to take over like a suffering market and bring it up. And then like right kind of the middle of that project, they decided, oh, you know, they hire consultants every other year, and they say, Hey, you need to lean up, hey, you need to hire more people, hey, you need to lean up. So every time they go through this exercise, a bunch of people lose their job. So they looked some guys in corporate who had never met dude looked at a spreadsheet and go, Oh, well, he's in the bottom quartile. He no longer has a job after dedicating his entire soul to this company for all these years.

Sterling Chapman: [6:53] And I was like, I just, you know, I live in South Louisiana, where we don't have the best school system, you guys send your kids private schools. And I was about to buy a house and get married. And I just I pictured myself being like in my early 40s, having dedicated my soul to this corporate monster, and have two kids in private school and two car mortgages and two car notes and a mortgage. And the corporate faucet is shutting off on me. And like, that's the kind of shit that makes people like kill themselves like that. That is like, yeah, that's the shit they make about talk about in movies. You know what I mean? And I was like, fuck no, I don't to be in that spot ever. Like, I don't ever want to be in that spot. So I gotta figure something out. So I read Rich Dad Poor Dad. And they were like, obviously, there's not a

Mike DeHaan: [7:38] real estate book, but it's got a lot

Sterling Chapman: [7:39] of real estate stuff in it. And so I talked to a buddy who referred me on the bigger pockets. And at the time, was training for these triathlon. So I was like always running and always biking. And so I just had immense amount of time to like consume content. So I just, I must have listened to 200 episodes of bigger pockets and read listen to every audio book, you know, they came out with. Yeah, so I was, I was running and biking a lot because of the triathlon training. So I had like a ton of time to consume content. So I listened to every bigger pockets episode, I listened to every audio book they wrote. And I just for six months, I just studied, you know, real estate. And then I finally I saved up and I bought back to back to rental properties, I saved 14,000 down on the first one and like 15,000 down the second one, and then I was broke. And I was cash flowing like I don't know if you got cash flowing air quotes because we had small screens $500 a month on one and $600 a month near now that was before I really took in consideration repair and vacancies and 8,000 sewer line that I had to jackhammer the slab to get to you know, but anyway, regardless, I was out of money. And, and so it was gonna take me a year to, to save up to get another one. And so I started reading these books about creative finance and about like, burning and using other people's money and using seller financing and everything. And so my first like big project was I found these two duplexes that were side by side, one had been flooded, the other one just been trashed by tenants.

Sterling Chapman: [9:19] And I got them locked up from a wholesaler. I went to a buddy of mine who had had experienced flipping. At the time, I'd never fixed anything, couldn't hang a doorknob. And I didn't have any investors, I didn't have any track record. And I went to my buddy and said, you flip houses, you know how to manage construction, you know how to, you you got investors, use your investors money buy these duplexes I've got, and rehab them, and I will do a cash out refinance, and I'll pay your investors and their interest. And then I'll give you $50,000 He was like, Okay, and, and I didn't sleep for six months. And it worked. Yeah, right.

Mike DeHaan: [10:00] I see that's how the pressure all of this though,

Sterling Chapman: [10:02] when you're going through that,

Mike DeHaan: [10:03] I think the sleepless nights on the first deal is probably the most relatable thing to anyone that ever

Sterling Chapman: [10:07] was so bad. It was so bad because it dragged out forever. And like, his investors who I knew them to, you know, that was scary, because I didn't want to let them down. And then that still wasn't enough money. So I like taught my brother and to put in some cash in. So like, just all this like human capital risk of like losing everybody's money and everything. And it was just, it was terrible. But it all worked out perfectly. They you know, we bought them for 190. We put 60 into them, they appraised for $3.90, you know, through 12 out and paid everybody off. And I walked away with $78,000 in equity and you know, a couple grand in cash flow a month. So from there, went on buying more doubles and four plexes with seller financing and some partnerships. And then I really didn't get the courage to start rehabbing properties myself until at the beginning of twenty twenty. That was when I was like, I was taking on like, private capital, and buying houses and rehabbing them and refinancing and just repeating it. And then I did a bunch of that. And I kept everything. We bought it for 190. It appraised for $3.90. We put 60 into the rehab, I paid my buddy $50

Dan Austin: [11:25] and Awesome numbers.

Sterling Chapman: [11:27] Yeah, I walked away with $78 in equity and a couple $1,000 a month cash flow. So it was great proof of concept for me and for everybody around me, which, which is cool, because, know, that was when people wanted to start investing with me. And so I bought, I bought a series of like, duplexes and four plexes through seller financing and partnerships. And then in the beginning of twenty twenty, I started like fixing up properties like going hard on the burs. And so, you know, borrow money and fix them up and then refinance them and just keep collecting them.

Mike DeHaan: [12:02] Nice.

Sterling Chapman: [12:02] And so I did a bunch of those over the last couple of years. And then my investment thesis was always to hold everything forever. And I was never gonna, you know, I wanted financial freedom, I didn't want another job. So I didn't want to flip houses, I didn't like the risk, the short term risk associated with flipping houses, you know, I just always kind of felt like that's what got everybody burned. And then we was having all this like short term bridge debt with these like high, high value cow houses that like couldn't cash flow. So I was always like super against it. And then, you know, as I stumbled into 2022, it was, it was like, well, I have all these guys, I've had the same guys doing all of my rehab, like just doing my jobs for years now. And so, like, they can rehab fast, and they can rehab good. And then I had the deal flow as well. So I'm like, why am I passing up these other houses? Like, because, you know, the part of the story I skipped is in 2019, I got into a large multifamily space and started, you know, going after apartment complexes. And that's an expensive hobby, because you know, you got to put $100,000 $200,000 deposits down, you know, you've got all these due diligence costs, you've got all these marketing costs, and then you have to invest along with your investors. So you're writing $100,000 check every time you buy a project, even if you raise most of the money. So, you know, I was like, I'll just flip houses, and I still keep some of them. But this year, I'm flipping a bunch of houses to move that cash over to apartment complexes.

Sterling Chapman: [13:36] And also, you know, to quit my job, I want a big pile of cash. And that's just a security blanket. And I have the infrastructure in place. So I have a local meetup, I have a list of wholesalers that send, you know, houses constantly. So I might as well that so that's kind of how I evolved into being called a flipper, which I wouldn't call myself at all. Happen to be currently flipping a bunch of houses.

Dan Austin: [13:59] Yeah. Yeah, yeah.

Mike DeHaan: [14:01] Just to go back, I mean, you're buying all those deals on seller finance. I always think that's fascinating, because I think that that's going to be extremely common and a really good tactic to be buying good deals, especially going into the future here where prices are high, rates are high. Did you negotiate those? Or did you have someone that was like negotiating?

Sterling Chapman: [14:19] No. So that was actually so that was a terrible idea. Not that it's always a terrible idea for everyone for me. So it was it was actually the guy that I bought him from. And he was I don't have a bad thing to say about him, you know, he was straightforward with what it was. But you know, as a new investor, we just wanted units, and especially somebody who was like trying to build a brand around raising capital and you know, just creating a presence, like more like a long term versus like a short term like deal analysis. So I bought these duplexes, four plexes that were 80 years old, in a dilapidated area for like, some of them with nothing down some with like 10% down, you know, some of them with 20. I had a partner, but there was a ton of deferred maintenance. And so like, yeah, I didn't put anything down when I bought them in 2019. But in 2022, I probably dropped 150 just like,

Dan Austin: [15:17] right,

Sterling Chapman: [15:18] putting shit back together. You know, like, it's like, it's either gonna fall down or you're gonna put $60 in it, you know, and you know, I probably paid over the market, you know what I mean? So they cash flowed until they almost fell apart. And then and now they're cash flowing again. So I mean, I'm glad I bought them. But, but no, to question, answer he like, I want to say he brought it up.

Dan Austin: [15:44] Gotcha.

Sterling Chapman: [15:44] Like, was just people don't realize how much benefit there is to the seller on the seller finance side, you know, and he was in his 70s. He had been collecting these properties for forty years, just, you know, $10.31 in a month had this huge pending tax liability didn't have anything necessarily to do with the money because the market was topped out, he wasn't going to be going and getting any other good deals, and didn't really want to do any more work anymore either. So to give it, you know, to sell it to me at a premium, you know, and guarantee 6% on that money, and guarantee his income, and mitigate his tax burden by stretching it out. You know, it was it was his idea. I mean, I loved it. It was it was great for me being an investor, I had no money, you know, looking to make a name for myself and stack the units. But for him, was it was cold.

Dan Austin: [16:36] Yeah. That's a you made a couple of good points. One is looking to stack units or or or numbers because that is a it is a vanity metric is how many

Sterling Chapman: [16:45] units you have. Don't give me a story on the fucking thing, dude. I walk into people at conferences all the time. I'm like, yeah, get 600 units. I'm like, really? Tell me about it. And it's like, well, you know, I raised $150,000 for this guy's 400 unit and I passively invested 50 and this guy's 200 unit. I'm like, what are you talking about? Exactly.

Dan Austin: [17:08] Exactly. Yeah. But the other the other point too is the deferred maintenance issue on solar financing, because solar financing is a great deal. But you're not burning your money. If you're not burning your money, then it's tough.

Sterling Chapman: [17:20] I'll say this, I'll say this about that. At the time, the cash flow at the time, I did not have money to fix them up. And I knew they were in shitty, in bad shape. But I also knew that I would have money later on. And then later on came along, like I had money to fix them up. So it worked out. It just it wasn't fun taking the medicine that I knew I had to take that I signed up for, you know what I mean? I do that all the time. And I'm like, Oh, well, I'll just take control of the asset. And I'll, you know what I mean? I'll pay for it down the road. And then down the road gets here. And I'm like, damn it, like, I can't wait. But I mean, that's what I signed up for, you know what I mean? Yep. So it's it is what it is. But from a stacking unit from the conversation about stacking units, I have a couple of this is a hot pot issue for me. So first of all, let me say that my personal intention was to create a brand and create credibility and get attention and build up myself in the marketplace. So I wanted to have a bunch of properties to gain that experience, and to show people that I have a bunch of problems. But they were all mine. There was no you know what I mean? Like, there's no like, I'm not like, in $50 and Joe Fairless is 400 unit and going around saying I have 400 units like I was out there in the streets managing all these damn properties. So so my credibility was validated in my perception of that. But so I've got an apartment syndication world, where I'm very entrenched, there is there's this obsession with number of doors. And it's a stupid vanity metric that makes no sense.

Sterling Chapman: [18:56] Because a lot of times people do that. And I have I've had this really prominent, I'm gonna say his name is really prominent, educated guru in the community that he's been on my show twice. And I wanted to be on his show. And he's like, yeah, email me and his assistant emailed me back. And she was like, well, how many units do you have? And I was like, well, you know, I've got all these my single families, and my small multifamily is in that Ridge. And I've got a 70 unit here, I've got a 54 unit here, I've got a 45 unit here. And, you know, working on a three fifty unit. And they're like, Yeah, well, we want to see somebody with more units. So, like, you know, hit us back after you close the three fifty unit. But my ownership equity position in that 54 unit is five times what my ownership equity portion in that 3 50 unit is, you know what I mean? Yeah, I know people that have been on that show that like, yeah, I got 1,200 units, and the value of your ownership interest in that 1,200 units is like $170,000 So like, get out of here with that. Right? Right. Like, that's such garbage. And I just I mean,

Mike DeHaan: [20:06] yeah,

Sterling Chapman: [20:07] look, everybody wants to market themselves. And that's fine. But like, you gotta have some integrity about it. You know what I mean? I just don't want to be caught. I I say my worst nightmare.

Mike DeHaan: [20:17] And that is always such a funny thing, though, with how people peacock with stuff like that. I mean, you know, the units is such a big one that you see. And I mean, even like guys in GoBundance, you know, or like is like that where guys are doing well, they feel like that's where they're gonna get their credibility. You know? Or or I always laugh to you when, like, at the lower sort of tier of that, like, the financial freedom folks. They're like, oh, I replaced my income with, like, one Airbnb. It's like, yeah. But you were working part time as, a dog. Know? Income had to replace with, $1,500 a month. I was in

Sterling Chapman: [20:50] and the good run experts might have something to say about this, but the non good runners faces, you ship or know what we're talking about. I was with some, some of the good buyers in New Orleans the other week, and there's like five of us, we're just gonna love to meet up, and just one was going through the one sheet, and they took money out for a HELOC, right to invest. And they put that in their horizontal income,

Mike DeHaan: [21:13] like they get access money from the HELOC.

Sterling Chapman: [21:16] And I was like, what the fuck are doing? Like, that is not passive income. That's what we do. What are you talking about? And now that's how they told me to do. And so somebody's out there preaching that message saying like, I'm like, you know, I mean, look, this dude is a smart boy. I mean, he's a doctor who makes $600 a year. He's way better. You know what I mean? I'm not trying to knock the dude. But he was like somebody in the system had coached him into that. And I'm like, let me tell you how income statements about the sheet work. Exactly.

Mike DeHaan: [21:49] Yep. Yeah, right. I feel like people like that tend to be the most guilty of it as well. Because they're obviously highly educated, you know, and they make a lot of money. And, you know, I think that I think especially high earners like that that don't have a lot of freedom, they get they try to get that credibility with their life through things

Sterling Chapman: [22:05] like that.

Mike DeHaan: [22:06] That's weird. Really inclined to, like, fluff their numbers Like, appear more interesting to people. It's like because, you know, if you're a doctor, you're expected to be rich. But if you're like a person that, like, created this business that allows you to have a lot of money and a lot of freedom, that's way more interesting than, you know, like, oh, you're just a doctor. Get on the doctor for sure, but you're not going to be the coolest person at a party if you're just a doctor.

Sterling Chapman: [22:25] No, no, no, I look, let me be because he might listen to this. And he's an awesome dude. And I certainly do not want to suggest that I was not with him in any way. Somebody told him to do that. You know what I mean?

Mike DeHaan: [22:36] Right.

Sterling Chapman: [22:36] His doctorates in medicine not finding it. He was coached to that behavior. I don't know who told him to do that.

Mike DeHaan: [22:43] Yeah, exactly. Me

Dan Austin: [22:44] too. I want to hey, I got a question. I want to kind of go backwards. Because you you mentioned so you're working at w two job, which is impressive that I'm kind of in the same boat as you work at w two job, run this full time business, and you got you're burying and flipping, and you said you had you had guys like a crew. How did you manage? And I'm assuming they worked for you full time through this process. Like how did you manage a w two plus all the other business stuff you do? And then managing this crew? Is it just you had a great lead foreman? Or just Yeah, what were you doing? Maybe explain some of that experience you had?

Sterling Chapman: [23:17] Yeah, so the short answer to your question is I hadn't heard of it. Yeah, so I mean, I was I was really lucky early on, I had a foreman that ran on materials and kind of wrangled all the guys. So that was very helpful. And then I have some office guys here, you know, I'm real big at building systems to like kind of, you know, minimize the amount of things that I have to touch. And so when it comes to, it comes to my day job and managing the sales folks, you know what I mean? Like I have, I have the controls of like, hey, hitting between this time, this time, this is the things I'll handle and go, you know, I'll set up like, these are all the places you can go solve the problem before I'm engaged type of thing. And then on the real estate, I'm trying and this isn't always the case, but I'm trying to boil it down to where I really only spend my time doing two things. And that's deal flow on the single family side and capital raising and the multifamily side. So like with Crestwood Capital in the syndication business, I have partners with Clearway Capital that you know, and we look at me three times a week, we go over all the asset management things,

Mike DeHaan: [24:30] and they all vote, and they all

Sterling Chapman: [24:31] make those decisions. And we all, know, go back and forth. But like on the day to day, there's one guy that focuses the majority of his energies on acquisition, another guy who puts a majority of his energies on underwriting another guy who focuses the majority of his energies on asset management, and I focus majority my energies and like capital raising and building up capital, raising infrastructure, you know. And so that allows me like, I've gotten insecure about certain areas where I'd like to do better at finance, I'd like to do better at construction, I'd like do better at this. But like, when, to all the people that are going be really going forward, there's like, it's really a triple down on their strengths and build solid partnerships with that I don't, I feel like I'm going to get a lot further with these three guys with all of us like really tripling down our strengths versus any one of us would like trying to juggle all those hats. With the single family side of that, I've got third party property management, you know, that manages all the properties. I've got the foreman running the materials and organizing all the guys and scheduling all the construction. I've got my assistant, my office guy, my operations manager coordinating it all order, you know, ordering materials that they don't order the stuff that needs to be, you know, ordered long distance, getting the utilities set up, getting the dumpsters coordinated, and all that kind of stuff. I use a realtor to sell, you know what I mean? He does a more work than a regular realtor because he sells 30 houses a year

Mike DeHaan: [26:03] for me.

Sterling Chapman: [26:05] So, so, you know, really, the things that I needed myself to do, I don't care if you can outsource is, is the relationship. So like, I get so many single family houses, so you're distressed properties from wholesalers from the brand I build from the relationship I have with wholesalers, and they see me on Facebook closing every week. And so they know, like Sterling and close, he closes every week, there's no bullshit there. And so that's why they send it to me, you know, and then with the investors that I can hire people, but like, hard to train somebody to really intimately understand how, you know, everything you've been dedicated your life to studying something, you know, if I have for half a decade, you know, it's kind of hard to like, train an employee in that topic, you know, six weeks, like, to the comfort level to like, you're going to be interacting with an investor that we want to write a $200,000 check. And I don't want to I don't want to hand that over. I've got a marketing director that sends the bulk emails, you know what I mean? Does some of that stuff. But as far as like the conversations with investors, love to handle that myself.

Mike DeHaan: [27:15] Awesome. Yeah, I think there's so much to be said with that too, of that relationship piece. And you're completely right. Like, you know, especially if that's sort of your strength of personality and role and you establish with people that you can be that closer or, like, you know, that in person, you're gonna have so many opportunities. You know? I guess because we're we're mostly wholesalers. We do some flips, but for for the most part, wholesale and and rentals. And tell you what, if there's, a strong buyer that we know they're gonna close, they're absolutely gonna get our best deals because we know they're not gonna They're gonna get the deals all the every time. Every time. You know? Dan Dan, he does our dispo, and Dan even has in his phone. He'll has a little note next to everyone if they're a pussy buyer or they're a strong buyer. Exactly. That way we know that they have to call on the deal. Is it worth answering the phone or not?

Sterling Chapman: [27:57] Dude, I never I never fully understood the importance of a strong buyer until I started flipping houses. And like, dude, that's, that's crucial. Because like there's constant, there's constant cash flow issues, right? Because you pay everybody now and then, and you don't get paid for four months. So you're like, you really need these houses to close when they're supposed to close. And if you get somebody that locks up your house and takes it off the market for forty five days, and then doesn't show up with the down payment on the last day, and you're expecting 112,000 check instead you get like another forty five day lead time, if you're lucky, because at that point, everybody wants to know why it's been on the market for forty five days. Yep. Dude, that's terrible. Totally

Dan Austin: [28:45] pain in the ass.

Mike DeHaan: [28:46] It's so terrible. It's so stressful. We've literally had periods of time where we're rolling to the first month and we're like, shit. We're not gonna make payroll.

Sterling Chapman: [28:54] Oh, yeah, dude.

Mike DeHaan: [28:56] All the time. Because, like, some stuff got delayed or things like that. All the time. Yeah. And then two weeks later, we have $304,100,000 dollars in cash.

Sterling Chapman: [29:05] It's a roller coaster. It's a roller coaster.

Dan Austin: [29:08] As you just don't know. We've tried to forecast it. But to your point, you just things fall out of escrow, you don't you can't predict something Cash to deal

Sterling Chapman: [29:16] flow forecasting is a hard concept. And it's hard for multi billion dollar businesses and people that don't run a business, and don't have payroll and don't have inventory, they don't understand like they see, they see you're doing well, they know you're worth, like on paper millions of dollars, they just assume that like, you're sitting with a big fat stack of cash in the bank. And it's like very rarely the truth. And you can't explain that to anybody like, unless you're in the thick of it, like you don't get it. And I'm

Dan Austin: [29:50] glad that you're one of the first person, well, first people we've talked to totally, yeah,

Mike DeHaan: [29:54] that we've interviewed or that Mike and I have talked

Dan Austin: [29:56] to that we have verbalized that exact same concept. Oh, man. So challenging.

Sterling Chapman: [30:00] Oh, man. I get it.

Dan Austin: [30:02] Exactly. Because you get it.

Mike DeHaan: [30:03] Yeah. Well, see, that's how we know you play the game because you're right. Most don't understand that. Yeah. That's like that's like the biggest, like, bullshit test.

Sterling Chapman: [30:10] They're full of shit. You know?

Mike DeHaan: [30:12] It's like, oh, how do you manage your cash flows? If they don't have that exact answer, then they're lying.

Dan Austin: [30:16] Like, what do you mean? They're not doing enough business. Yeah. Wow.

Mike DeHaan: [30:21] So right on. I love it. Well, if you're cool, we typically go for about 45 ish, man. I have some ending questions. But before we do that, I'd love to kind of just hear about, if you're open to sharing, some of the numbers, like what your portfolio looks like, what sort of how many flips you're doing, what your typical revenue is per flip or per year. I think it's always good context for people for someone that's doing something as large of an operation as you, like, how much can you actually make if you put that?

Sterling Chapman: [30:50] Yeah, so it's, I mean, it's hard to track. Because there's, it's moving so much and I'm paying accountants a ton of money to give me answers to those questions. I'll tell you from an equity perspective on the birds, know, I've built up about 1,000,005 in equity in the two years that I was buying undated houses. And from a cash flow perspective, cash flow has been a very difficult thing for me to understand as an investor because so when I first started out, when I had like 26 houses, and I managed in person, they were good, right? And not that I was a great manager, but like, I was I was really it was my shit. And I was like Johnny on the spot, I was showing up to get Lisa signed at 7PM on Friday or 10AM on Saturday morning. And like, they were always full. And then when I went and outsourced management, there was just this, it's kind of been tumultuous without sourcing the management. I'm on my second manager now. And what really was my fault in the situation is that I keep buying houses, and I'll rehab them to like 95% of the day done. And I'm giving them a property name, term of here, fill it. He said, Okay, well, it needs another $5 before I can fill it. And we're like, alright, we'll just take care of it. And then he puts that $5 expense, my expense line, you know what I mean? Instead of in the CapEx area where it belongs.

Sterling Chapman: [32:21] Totally. So then I get my statement, then I get my deposit from like, what the hell? Like, he said, Well, what the hell? You know what I mean? Like, did this, like, like, we're good occupancy. So the way in a perfect market, I should be collecting $56,000 a month in rent. And my principal taxes and insurance should be around 35. So, you know, that spread right there is $20,000 There's different ways you can adjust and forecast and we're up some months down and down some months, you know, there's different allotments you can pull up a 6% for property management, and I like 7% for vacancy and 7% for repairs. Like I said, it varies. But in a perfect world, when it averages out, it should be about a gain from the rental portfolio.

Mike DeHaan: [33:14] Across how many units is that? I'm just curious. I'm just sort of thinking I'm thinking of like the difference in value of properties from where you're at versus where we're at because our numbers are extremely similar in terms of like gross cash flow.

Sterling Chapman: [33:26] Around 70. Yeah.

Mike DeHaan: [33:28] Around 70. 70? Yeah. Interesting. That's so crazy. So I I like because we're in an expensive market. So our portfolio is about half the size of yours. Right. And our cash flows are almost identical. So our gross, if everything's ideal, is about 53 and a half. But our, you know, we have half the number of units and then our equity is about double just because they're, you know, 300, 400,000 properties. Sure.

Dan Austin: [33:50] Right.

Sterling Chapman: [33:50] And they've, I'm sure they've skyrocketed recently as well.

Mike DeHaan: [33:53] Yeah, which has helped a lot for sure.

Sterling Chapman: [33:55] And that equity, you know, I say that that equity that million and 0.5 in equity was like, the value that was created, like upon upon my completion a year. Right? Yeah. So I mean, there's another there's another million in equity in like the houses that I'm working on this year. And then God knows how much those are, you know, those have appreciated since I bought them. So, you know, as far as the flips go, so far this year, I've sold five, and three of them were over 100 ks spread.

Mike DeHaan: [34:31] And then that's awesome.

Sterling Chapman: [34:33] Two of them, one of them was like 51 of them was 80. I do have one right now that I might end up like barely making anything off of. I was looking at the numbers and just, it just I made bad some bad decisions in it. And we went to, we had this like garage, and I was like, Oh, let's do a mother-in-law suite. And dude, it was just terrible idea. And like, I was like, looking at the numbers, the materials and we had cost stack up like, we're not gonna lose money, but we ain't gonna make shit out of this house. And that's the first time that's happened where we're like, you know, really had like, oops, nothing not come on. We've got so

Mike DeHaan: [35:16] Yeah, yeah. Welcome to show. It happens everyone after a while that means you're doing enough business. Nice.

Sterling Chapman: [35:22] I usually underwrite, you know, the ones I make 100 on, I think I'm going to make 150. And the ones I make 50 on, I think I'm going to make 75. So I'm by no means a scientist here. Just like, you know what I mean, make sure I have a big enough margin to screw up and still like, you know, man good.

Dan Austin: [35:42] That's kind of how we've picked our flips, right? Like, we're not at the scale you are on our flips. And we've never really want to be flippers. But it's like, there's some fat margins here. Like, let's take it. Let's keep our contractor busy, because he does ours Yeah,

Sterling Chapman: [35:55] I've got right now three in the market. Like I said, I've already sold five. I've got another five or six I'm working on that should be ready in the next month or so. And then I've got another two under

Mike DeHaan: [36:12] contract. Gotcha.

Sterling Chapman: [36:13] I think what is I think the last tally and add that up for me during this, I think the tally is like, based off of what I've sold and what I've got under contract, I should be like at 17 flips this year. Now, I'm assuming that I'll get another 10

Mike DeHaan: [36:33] The fat margins on them too.

Sterling Chapman: [36:34] Yeah, but I'll tell you, I'm getting nervous. The market is not like, it's not treating me like, you know, it's so funny, because in the spirit of transparency, so I'm like, I might dig in the camp of like, out there, we got supply issue, you know, we got, we got demand issue, like over demand, undersupply, and then we got supply. And I've been carrying a torch and preaching that. But I can tell you, from the streets the way it feels is not getting 10 offers on day one like I used to.

Mike DeHaan: [37:03] Exactly. It's weird. And I don't know

Dan Austin: [37:05] if that's a temporary thing is that a six month rates, rates have been going up and people are scared and they're gonna calm down. Mean, you look at jobs report as of the recording of this podcast came out super strong from what I'm hearing. And so it's like, are we in a recession?

Mike DeHaan: [37:18] Are we not? And then maybe by q four, we'll be back to where we were. Like, we may not as incredibly hot, but maybe people will be buying again. So it's all it's all about perception. Right? So a, people have been told by everyone that it's really expensive. And with the interest rates, you know, the monthly payment that people have to pick up is very high. But people are starting to game the system. And most human beings, people that aren't, like, you know, making good money, they don't have, like, these income opportunities. They have a fixed income for most of their life, whether they're, you know, salary, job, even if it's a good job, they have a ceiling. So they live their entire life off of a monthly budget. Right? Most people don't think, like, long term. They're like, can I afford this on the money that I make for my salary? And when all of a sudden to afford that same house, that monthly payment is so much higher, it reduces the pool. But where people are starting to play with this, I'm sure you guys might have seen this on some listings, where you have, like, a $450,000 house, but are saying, hey. So the seller will contribute $20,000 towards your loan cost to buy you down to a 3%

Dan Austin: [38:17] So interest they're still able to go high on the price, but then

Mike DeHaan: [38:21] Exactly.

Dan Austin: [38:22] Get what they want.

Mike DeHaan: [38:23] And that's genius because for that same house to appeal to that same buyer, instead being 450,000, it would have to be, like, 350,000. So so sure the seller is giving up $20, but they're also making a $100,000 more on the spread. So who really cares? Because they're still gonna be coming out significantly further ahead.

Sterling Chapman: [38:40] So as a seller of flips, I can pay money towards buying down there. I mean, I can pay for closing costs. Absolutely. Why not? Perfect sense. Yeah. I just never thought to dude, as soon as we hang up, I'm calling my realtor. Yeah.

Dan Austin: [38:57] And hey, there's there's just so you know, there's some talk to your realtor and your lenders your lender that you use because there's some limits depending on the loans and the size

Sterling Chapman: [39:04] of down payment. But you

Mike DeHaan: [39:05] can totally totally like, to me,

Dan Austin: [39:09] it's another way of creative financing. But it's also to keep your momentum going. Because like, we're in a we're in a

Sterling Chapman: [39:14] It's nothing revolutionary. It's just a spin on the common practice. I'm already putting money towards closing costs. But if we market it that way,

Mike DeHaan: [39:23] Yeah. And so now if you bring them down, you got to think about your your customer, right? Your customer is a buyer, and the average customer, they live their entire life off of their monthly income and their monthly expenses. And so you just gotta position your product to meet that need that they have because those people do not have any upside. They are never gonna be able to afford a house with these interest rates. Exactly. So just basically make it so they can afford your house, but they can't afford it before them on their monthly budget. You know?

Dan Austin: [39:50] Yeah. It it's always about the monthly budget.

Mike DeHaan: [39:53] Yeah. So, you know, especially because, know, it used to be like a down payment was a limiter, but now you can buy a house with 3% down. So you can buy a million dollar house with $30.

Sterling Chapman: [40:01] You know?

Mike DeHaan: [40:02] And if they contribute $55,000 to your loan cost to bring your monthly payment under what it needs to be

Dan Austin: [40:07] That's fascinating.

Mike DeHaan: [40:08] Who cares? They still made a million bucks on their house. Cool. That's awesome. Yeah. So you got all that. And then you got syndications too, if you wanted to touch on those really quick. I'd love to to hear what you have going on there.

Sterling Chapman: [40:18] On the syndications, so that was, you know, in late twenty nineteen. I was managing at the time I had 26 properties. And I had a newborn baby, and I had a day job. And I was like running around collecting rent and like trying to fix shit. I don't know how to fix shit. I get in fights with tenants and then fight with my wife about getting fights with tenants and going to fix shit. And I was like, this is just miserable. Like, you know, I'd rather sell Internet. You know what I mean? Like, what am I doing here? And and it's not scalable.

Dan Austin: [40:51] Yep. Dude, you're you're my soulmate on this. They like babies and freaking wives, stress and everything, dude.

Sterling Chapman: [40:58] It's just not scalable. So that's when I read Joe Farris's book on apartment syndication, I was an entire thought leadership platform, and all of that. And that's when I started my podcast, which you're just doing right. And so I just, know, but it's hard. It's been between 2019 and 2022 is just a hard time to buy anything that was a top of the market boom of competition. So we didn't get our first project under contract until the end of twenty twenty. And we closed on a 5,040 unit and then in Georgia, and 2020, February 2021. And then a 70 unit in Rock Hill, South Carolina, which is like the Charlotte MSA in February 2022. And then I just helped work with another group elevate on a three fifty unit in Houston and then my core group is doing another deal that we're closing on next month as well. So it's going good. It's just it's one of those, it's one of those things that is like a long, long game, right? You don't get a huge I've seen back to our kind of bullshit meter earlier. I've seen these syndicators that syndicate syndication educators, I saw one of the conferences, like you can quit your job from buying apartment complex. That's weird because I bought a bunch of apartment complexes and didn't find that to be the case. And here's like, here's I know when you buy them, he charges acquisition fee and that acquisition fee can replace your income.

Sterling Chapman: [42:36] And I'm like, well, not really. If that acquisition fee can replace your income like this year, you know, like, what if you don't get another deal? Like, let's stop calling shit passive income, it's not passive income. It's like flipping out, I never wanted to I never wanted to quit my job to flip house, like I wanted passive income to replace my job. Like, what if I don't get another deal? What if the market shares, and then I gave up my job. And the problem I have with living off of acquisition fees is it incentivizes you to buy a bad deal. Because you're just chasing an acquisition fee, like I don't need an acquisition fee. I don't even know what our acquisition fees are. They're very small, and we usually just roll them into the private. But you're out there, like training an army of people to like live off of their acquisition fees, you're training them to find bad deals that were going to hurt their investors, because you just need to a next acquisition. So Yeah.

Dan Austin: [43:36] And they've they've those acquisition fees have also there's like acquisition fee. There's I feel like they used to be 1%. Now they're 2% and 3%. Yeah. 3%. Exactly. And it's like three percent to buy like an okay deal from a what and they picked up the phone and talked to a broker that had a deal. Like, there's no worker effort in that to earn that.

Sterling Chapman: [43:54] Well, there's a lot that goes into putting together a project. But, you know, I mean, there's a lot there is, like I said, we spent it took us two years to get

Mike DeHaan: [44:04] our first year, and it took us

Sterling Chapman: [44:05] a year to get another one. And there's a ton of marketing and you know what I mean, time and energy to get a good deal. Right? And I think your example is of like, any Yahoo who's going to buy any deal. Yeah. You know what I mean? And in charge of acquisition fees, we're we're ultra conservative. So like, you know, it takes a long time to find a good deal. You know, you can go buy and there's a million deals change. Right.

Dan Austin: [44:30] Which would justify a

Sterling Chapman: [44:31] fee. Right.

Mike DeHaan: [44:31] The thing is to the uninitiated, like, a fat check is just so unbearably sexy. You know? Like like, to someone that makes a $100,000 a year, the thought of being able to get that all at once is such an incredible draw to people. I mean, even when we started wholesaling, always remember the first check that we got over $20,000. I chose to not get it wired

Dan Austin: [44:51] Yeah. See see

Sterling Chapman: [44:52] it. Yeah. Yeah.

Mike DeHaan: [44:53] Went and picked up the check just so I could hold it. You know? Right? That's just stupid. Right? But, like, when you're we've never had that before. It's it's crazy. And then, you know, I I I think the perfect way that that sort of represents current market that I view with syndication is multifamily. Ken McElroy was on a podcast not too long ago. He talked about how they finished up the stabilization of a property. Like, it was fully, you know, fixed up, ready to sell. They listed it to sell. They found a buyer, and then he ended up getting an email from the buyer for raising money for a

Dan Austin: [45:28] value add that he was selling to.

Mike DeHaan: [45:30] He had already finished adding the value to. And so yeah. He was selling it to them. And he got he was on the email list for the guy that was raising the money. Anyway, cool. Well, I know you wanted to you need to bounce here really quick. Really quick, I just have one question that I wanted to ask you that I always like to ask people if you have time for it. What is your craziest real estate investing story that you're willing to willing to share on this podcast? And this can be anything like, you know, like, we have friends that have found bags full of homemade sex toys. Like, you know, we found we found a coffin that was full of old porn, you know, that had a dead cat at the bottom of it, how things are related. I have no idea. Like, what's the crazy story you got about a tenant property project?

Sterling Chapman: [46:14] I got out of property management as soon as I could. So I don't have a ton of them. Did. I mean, tenant the tenant that got me out of property management, I'd say that I should have known this was it should have a red flag. She paid me three months in advance in cash. So I should have known she's like, she's either a regular. But so immediately it turns out she was like super nice at the lease time. And then like just totally coincidentally, it was

Mike DeHaan: [46:46] in a fourplex and she

Sterling Chapman: [46:46] was upstairs. The next day I get like text messages from this other lady. And it was those is a summer finance properties that were older than we were that I just you know, in early days, I didn't quarter, I didn't know any better. But the lady below me texted me for dinner, I go and water's dripping on my ceiling. So I go in and we try and go in through, it's like seven in the morning, I'll ask over there. And I knocked on the door upstairs to see like why water is dripping down below it. And the lady wouldn't come to the door. She like I opened it and knocked my head maintenance. And she started screaming and cussing and chasing me out. So it took like two days to be able to get into me and she cussed out me and my maintenance guy and chased us off and everything. Call us everything in the book. We finally got in it was her hot water heater was rusted out and it was dripping, it was going so we're literally just going there trying to replace our hot water heater. And she would notice because she'd been running this enterprise. Know what I mean?

Dan Austin: [47:48] Ruffle out of here. Fourplex.

Sterling Chapman: [47:52] So we finally, I mean, cut water off, but we tried everything. We We finally got it all fixed. And then I had to like grovel and day that dude, I told this lady was gonna Victor. And she was in COVID. And she laughed. And she said, you know, evict shit. Man, like stuff that I'm not gonna say out loud, but she said, but I mean, it rings in my ears forever. And, basically, she's right, couldn't evict it, because of the COVID. So she called me so I had to beg and grovel this woman that I wanted to strangle and please me. Yeah. So then at like 09:00 at night after we replaced the hot water heater, I'm laying in bed and she calls me and she goes my hot water heater and it sprays air. And I was like, well, I'll send the plumber in the morning. I knew what it was. It just the pipe just didn't fill the shut because we drained the water. But I was so fed up with it. She said, you're not gonna send somebody to the next. And I said, no, I really should have been saying doing shit to help you.

Dan Austin: [48:59] Exactly.

Sterling Chapman: [48:59] She goes, okay, I'll show you. It was still like the after we replaced our water heater that was dripping on the sheet rock through the unit below, we cut a hole in the sheet rock to stop the water from spreading when we go back the next day and replace it. So there's a hole between her and the unit below. And she took the sink hose and just started spraying water down in the unit below. So she was, I'll show you and she hung up. And then the lady below started calling me freaking out. It's the lady below is like Honduran. She didn't speak English. She called me young and being Spanish. I'm like, wait, what? What? So was so mad. I was like, went in, I went back into my bedroom, because I had a little baby at home. Like the baby is like a little thing right next to bed, know, and so I walked out of the bedroom to take this phone call and get the inside unit. And I walked up and tell my wife, I'm going over there. She don't go over there. They're just gonna shoot you. Said, you're right.

Mike DeHaan: [49:56] I'm gonna get my gun. She's like, don't bring your gun. You're gonna shoot her. I'm The

Sterling Chapman: [50:05] next day, the next day at like 5AM, I

Mike DeHaan: [50:07] woke my buddy here at the managed properties up.

Sterling Chapman: [50:10] Was like, you take him or somebody else? He bust out laughing. He's like, you didn't sleep much last night. So that was that was how I got out of pocket.

Mike DeHaan: [50:19] That's a pretty good story.

Sterling Chapman: [50:23] You really can't.

Mike DeHaan: [50:24] That's a great story. Man, you can't make that stuff up. Like, who even thinks of that? Just gonna start dumping water. Oh my god. What a malicious person. Awesome. Well well, thanks so much, Sterling. I really appreciate you coming on, and thanks so much for being patient with the technical issues. Sure. Sure. Where can people find you? And I guess, do you want people to reach out to you? And if so, what's what's going on to find you feel free to plug your podcast as well?

Sterling Chapman: [50:47] Yeah, come check me out on the Rent Roll Radio Show on all your podcast place or YouTube or or Facebook, you can find me Sterling R Chapman. You can email me Sterling@presswordcapital.com. So my email is my website's pressword capital dot com.

Mike DeHaan: [51:04] Perfect. Right on. And I'll get all those from you. We'll add all those to the show notes too. Awesome. And thanks for listening, everybody.

Sterling Chapman: [51:10] Appreciate it.

Dan Austin: [51:11] And we'll talk

Mike DeHaan: [51:12] to you guys next week. Thanks for listening, guys. We apologize for all the sort of audio disruptions on this episode. Sometimes things go a little bit weird when you're doing stuff remotely. Anyway, if you enjoyed this episode and you wanna check out Sterling, go ahead and look up all his info in the show notes below. Besides that, guys, please go subscribe to this show and leave us a five star review. It really helps us out more than you know. Also too, if you wanna keep up with Dan and myself, you can follow us. I am at Mike underscore Invest on Instagram. Dan is at investor man Dan. You can also check out our website at collectingkeyspodcast.com. If you go on there, we actually have a free ebook for you guys. It is the five step process to start generating off market leads. So go and check that out. Besides that, guys, thanks for listening, and we'll talk to you soon. Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts. And check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.