Episode #20 – How Andrew Lucas Brings Hospitality To Real Estate Investing

You're listening to the REI Marketing Nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of Ad Words Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Alright. Hello everybody. Welcome to this week's REI Marketing Nerds podcast. As always, this is Daniel Barrett, here from Adwordsnerds.com. How are you guys? I hope you are doing awesome. I had a long week. I'll tell you what, man; it's been a really busy couple of months. We have been sprinting on a bunch of different things, you know; I've had a bunch of new clients come in. I did the Search, Click, Convert boot camp. It was a live, 3-day event, all me, kind of doing live training, helping investors set up new marketing campaigns to bring in a couple of deals. And you know, just kind of doing all these different things. Talking to investors. Talking to new students. And then, on top of that, we have been investing a lot of time into research and development and trying out some new ad channels, new marketing methods, and it's been super fun. It's been super, super fun. But, as we kind of get into the new year, you know, this time of year where things are slowing down a little bit, I just really felt like I needed to take some time to reflect on what my goals are and what I want the business to be, what I want this podcast to be. So, if you’ve got any feedback, let me know. If anything's really stuck with you about the podcast over the last couple of months, any episodes have been of a lot of value, if you are in our Facebook group, the REI Marketing Nerds Facebook Group, any posts in there that have been really valuable, let me know. Reach out. You can find me on Facebook. You can find me at AdWordsNerd.com. I would love to hear it, because I'll use that to kind of help me make my decision.

Anyway, this week, we have another really interesting interview. Like I said, I've been doing this, this series of interviews with investors that are kind of flying below the radar, and I've got Andrew Lucas. So, Andrew Lucas, he's from down in South Carolina. He's got a company called Columbia Cash Home Buyers, and he brings a really fascinating angle to investing. Andrew's background, you'll hear him talk about it, it's actually in the hospitality industry, not necessarily the real estate world, and he really brings that mindset to the investing that he's doing. Is a really fascinating person. It was a really great interview and I had a lot of fun talking with him. I think you're going to get a lot of value out of this, and hopefully take home something that's going to change, a little bit, how you think about your business and the vesting that you're doing. So, without any further ado, here is my interview with Andrew Lucas from Columbia Cash Home Buyers.

Dan: Alright, everybody. It's Dan Barrett. I'm here with Andrew Lucas. Andrew is from Columbia Cash Home Buyers. We're down in Columbia, South Carolina. Andrew, welcome to the show, man. Thanks for coming on. I appreciate it.

Andrew: Yeah. Thanks, Dan. Thanks for having me. Glad to be here.

Dan: Yeah. No problem. So, tell me a little bit about Columbia, South Carolina, like for folks who aren’t familiar with your market; that’s where you're investing. Kind of break down a little bit like what it looks like.

Andrew: Columbia, it’s the capital city and a college town, so we have a lot of people in town. Also a big Army base. It--it's a great, great city to be in. If you know South Carolina, you’ve probably heard of Charleston and maybe Greenville, and we're right in the middle. So, we're not the most famous city or and probably Myrtle Beach too. We're not the most famous city in South Carolina, but we have a good population base. It's spread out, northwest, southeast, northeast. We have lots of little pockets, not a lot of downtown living. So, a lot of suburban living, which makes it interesting, and we do drive a lot; to be able to invest here, you have to get on the highway.

Dan: Yeah. Oh, that's cool. How does like the college population kind of effect things? You get a lot of; I was going to say like transient population. That's not exactly what I mean, but… You know, I'm like most familiar with Boston, right, and Boston's one of those cities where it's like, you know, the end of every summer, basically, it becomes a completely different city.

Andrew: Yeah.

Dan: So, I'm curious like how that affects your business.

Andrew: Yeah. It's very, very high impact from the city downtown, so I used to actually manage a hotel on campus and the business was great. We needed the students, but man, parking was so much better when they were gone. It's 26,000, I believe, on campus, and that's all downtown, so they come in for the summertime, the semester--I mean, for the spring and fall semester. But in the summertime, it's almost a ghost town, so you know, it--it makes it difficult for rental portfolios. You really have to be an expert and understand how to rent to college students because if you don't get them in in time, you're not going to rent a college rental in September, because school has already started, so. It's a little barrier of entry.

Dan: You said you used to manage a hotel on campus? So like, what was that like?

Andrew: Yeah. So, it was amazing, and actually this is one month post hotel management. That today is one month out, so I've been doing this, was managing hotels for 10 years and the last property was for 6-1/2 years, right there on campus. We enjoyed lots of good times with being on campus. Even through the downturn of the economy, college actually expanded and grew. So, businesses that cater to colleges actually do really well through all economies. So, that was really good to see from firsthand experience, but managing a hotel is awesome. I love it. Hospitality is where I'm born to be, so that’s just kind of how I transitioned into more of a customer service base into real estate investing. So that's how I approach our business.

Dan: Yeah. Well, that's like a really good segue, because I was going to ask, like kind of what was the -- what was the reason for transitioning into your current business? So your current business is Columbia Cash Home Buyers. Before we get into like why -- so, what kind of investing do you guys do? Are you like flipping? You're wholesaling? Like, what's the mix?

Andrew: A little bit of both, and we have 34 rental doors, rental properties, and we have done a couple of flips the last couple of years. Prior to -- we started about 10 years ago and we were always buying distressed properties and flipping them to hold. We were just repairing everything. We don’t want to deal with maintenance, so we would fix it completely up and then put renters in, and then 2 years ago, June of 2016, we said, "You know, this market's doing really well. Let's try to sell some of these." So we started flipping to sell and then wholesaling came in earlier this year because it was harder to find deals. We would find more people were also flipping and more investors were getting in the market. So for me, just to keep my ball rolling, I had to figure how am I going to get deals? And so, cutting out the middleman is where we figured we'd do it, so we started wholesaling.

Dan: Yeah. So what was the --- what was the impetus behind getting into real estate investing in the first place? Because I know you were saying like you were doing hotel management for like a decade, essentially. So, what made you jump from one to the other?

Andrew: So, right out of college, I went to the university of South Carolina, here in Columbia and I knew through paying rent all through college I did not want to continue that so ---

Dan: Yeah.

Andrew: --- my roommates and I, we said "You know, we're going to buy a house and we're going to rent it out." So that what was 2007. So October 2007, you know you can just walk into a loan office --- I guess, you didn’t even have to walk, if you could just breathe, you could get a mortgage, and they gave me a mortgage, which, you know I had a job at the time. I did get a job right out of college and got the mortgage, got down payment assistance and somehow walked away from the closing table with a check for $348.00. So, you ---

Dan: I feel like people, I feel like college students today, right, if anybody's like listening to this that’s in college, here's the story. They are -- it's like that --- that’s a really good indication of it, just like how much it is different. Because I don’t think anything like that is happening today. I could be wrong.

Andrew: I don’t think so. Yeah. So I had the first house and I was going to --- and I did; I rented out the rooms to my roommates and stuff
so they helped pay the mortgage and I planned to live there for a little while but got another job to open a new hotel. So I moved 10 months later and that was my first full rental. So we just, through the years, the house across the street got all --- the older guy passed away or moved to a home or something. The nephew didn’t want the house, so I bought it. You know just accumulated properties for the next 8 years or so. Well, it was probably 6 or 7 years. Then at that time when I was married, my wife and I decided that we were going to use real estate for our stuff, for gain, for you know, to set ourselves apart financially, be financially free and have, you know, cash flow coming besides our jobs.

Dan: Yeah. So are you --- you're full-time in investing right now?

Andrew: Yep. So I went full time a month ago. I just ---

Dan: Wow! Congratulations, man! I didn’t realize it was so recent.

Andrew: Yep, one month.

Dan: That is awesome. That’s super cool. And did your wife actually work with you or this was a decision like for the family?

Andrew: She -- she does work. She has a full-time job. She is still working but she does help with the business, and of course we run it kind of as a business, but obviously I'm the day-to-day ---

Dan: Yeah.

Andrew: ---but she's in it with me.

Dan: Yeah. That’s super cool, man. So like what was --- did you have the revenue before you made the jump to full time, or did you make the jump to full time in order to get the revenue?

Andrew: I had the revenue to replace my income through cash flow rentals. Then, what it ultimately came down to is keeping the full-time job was preventing me from really capitalizing on the flips and the wholesale opportunities. I was flipping houses, you know not, obviously I wasn’t doing the work. I have contractors and things, but having a full-time job --- we also have 3 kids, all that are 5 and under. Doing all that meant my flips, they were good; they were profitable but we were probably losing you know a couple of thousand dollars every time because I wasn’t there, you know, not as hands-on as I should have been, which, you know, its just what you do when you have a full-time job. So stepping out, going full-time investing, now I can focus on getting more discount properties and then focus on those flips that are going to be a lot more efficient. So it was just costing me money to go to work, which is crazy to say.

Dan: Well not to mention, so there's like just a logistical difficulty of having to be only in one place at one time, but then you know, there's also the mental issue of you know you're trying to do so many things at once and be so many different people at once, and I really just feel like the focus unlocks a lot of capacity in people. I don’t know if you feel the same way, but even with me, it's like, you know since, you know you’ve got 3 kids; I've got 2 that are like 4 and 2 and it's like I feel like my IQ drops by 50 points every time they're in the room. You know what I mean?

Andrew: Yeah.

Dan: It's just like the way it is.

Andrew: Oh yeah. We, you know we found and I found personally I had a struggle the last six months or to a year because I wasn’t able to give 100% to my day job or to the investing job. So, you know, it, just my personality, it was hard to do that, you know. I was doing my best, but there's just not enough time and not enough brain capacity to really give 100%.
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Dan: So like what kind of marketing do you do to find deals now? So Columbia sounds like a pretty interesting town. You’ve got a lot of different populations there, right? Have different issues. So how do you typically find deals? Do you use like referrals? Do you use bandit signs? Like what's been your kind of go-to?
Andrew: So referrals have been big for me in the beginning while I was still working my full-time job because I only needed a couple of deals and that's where most of mine came from, and even the MLS was fine. I just needed one or two, but now since last couple of months preparing for me to go full-time, we started with direct mail, hired you guys to do our SEO on our website and really revamped our website to make sure it was pulling in the market we needed and doing some cold calling with some targeted audiences, you know, direct driving for dollars kind of thing.

Dan: Hmm. How's the cold calling working? This is something I've been curious about, but I honestly don’t know a ton about because actually you're like the third or fourth person in these interviews who has been doing cold callings or like --- I know that you are --- it sounds like you're --- you're not just --- like when someone says, "cold calling," I imagine just like opening up the phonebook and calling everybody, right, what it sounds like. So you're really targeting your audience upfront. You're using a specific list or houses that you have identified and then calling them there? Is that how it works?

Andrew: Yes. Yeah. And there are some people that probably will call just every number in the book, but I, that's right to do it targeted and again, bring in the customer service aspect to this business and its just my personality where I'll call specific homeowners, or specific properties and with a reason, you know, "I see the property is overgrown or vacant or whatever; can I help you?" You know that kind of thing, as opposed to just the blanket call that says, "Do you want to sell?" You know, obviously that works, but for right now, for me, I try to do it more targeted. Hopefully, you now, higher quality calls hopefully would result in more deals, per call.

Dan: Yeah or even referrals for that matter.

Andrew: Or referrals, right, which is ---

Dan: Well this was something I wanted to ask about before because you kind of mentioned this, and it's kind of come up a couple of times, right, where you sort of talk about your investing business from a customer service kind of angle and it seems like that kind of traces back to your past in the hospitality industry and then hotels. So like can you tell me a little bit more about like what does that mean to you when you talk about bringing that kind of customer service orientation to, you know, a business like wholesaling or flipping?

Andrew: Well, you know, it has a lot to do with being able to help the homeowner or the situation, so going into it not necessarily for my gain, but going into it to see if there's an opportunity to help and you know, obviously hopefully, I would get some gain out of it in the end, but it may not be from that particular person. You know… it could come from a referral, like you said, but the goal is not to go try to make a bunch of money. The goal in customer service is to get to an outcome where everybody is happy, you know. So it goes back to in hotels, we always say, you know we're here, the hotel is there because somebody needs to have a place to sleep and they don’t need to have all the service we give, and they don’t need to have breakfast, but they need to have a bed. So we're going to give them their need, which is a bed, but on top of that we're going to layer a whole bunch of nice people, a lot of smiles and make them feel comfortable and warm, and you know, we'll have coffee in there for them. You know, that’s not a need, but that's the service.

Dan: Do you feel like the way you approach that is fundamentally different from the way that like other investors do it? Like, if you would talk to somebody, right, that’s got multiple offers, do you feel like the way you approach them is going to be pretty different from the way the next guy or girl in the door is going to do it?

Andrew: Yeah. You know, I'd like to say everybody should be doing, you know like this and looking out for everybody, but that's not the case. Of course there's going to be some folks that are just a hard sell and then there's going to be people like me that that’s just not my personality. So when I come in and if somebody's got multiple offers, they're talking to other investors, that's great. You know, that's good. Then that means they're going to get their property sold, you know, and that’s kind of how I feel because there's plenty of other properties and if that person doesn’t want to sell to me, that’s fine, you know; can I help you with something else because in the end, they're going to know somebody else or my name is still going to be attached to them. They're going to remember something about that experience and if they remember me in a good light, you know, my hope is that it would benefit me in the long run somehow. If not, hey, then at least we had a pleasant conversation. I just talked to somebody yesterday. All we did was talk about golf. He's not selling his property, but you know, he and I talked. We had a good conversation, and if somebody else wants to sell, maybe he'll remember me.

Dan: Yeah. Reminds me of this I don't know if it's like a Warren Buffet quote or a Charlie Munger quote, right, but it's something like you know a reputation takes a lifetime to build and a second to destroy and it, like one of those things where, it's like no matter how good you are at running ads or doing your SEO. No matter how good your marketing is, you can't buy goodwill, right, and that goodwill is so valuable. And you know, it's like you don’t always have the most control over it, but you know you have control over how you deal with those situations and that stuff has a long half-life. People remember that stuff. And you know it's like I always say like you know investors call these leads and they're like "Well none of my leads are picking up and you know they don’t want to talk to an investor," and I'm like, "Well there's a probably a reason." You know that didn’t come out of nowhere, you know.

Andrew: Yeah. And it's easier to sleep at night, too, when I know that everyone I talked to today, we got off the phone and everybody was smiling. It's just, you know, and it makes me want to do more. It makes me want to call more people because we're having good conversations, and you know, I might spend too much time on the phone per person compared to, you know, people that are dialing a lot faster, but you know that's fine. It works for me.

Dan: Well and you, and you like it, man. I mean, you can hear that in your voice, right? You like it and you're good at it, and I think that ability to connect with people is really powerful. You know I think it can be challenging because there are all these things in business that can be so powerful like that. Right? But they don’t have like a super clear ROI.

Andrew: Right.

Dan: Oh. Oh! Andrew, you want to hear this? I'm going to tie this back to SEO. This is going to be an incredible segue, okay?

Andrew: Yeah. Do it.

Dan: So it's like, you know, you're out there and you're building this reputation. You're helping people. It's just like you said; it's like it's not really necessarily directly tied, even to your own best interest. Right? You're doing these things. You're sort of putting these like good deeds out into the world and you're like, look, it's going to come back to you eventually, but like right now, the return on that investment of your time is not super clear. Right? And like you said, you could be, you know, theoretically more optimized if you cut down your time per person on the phone by 30% or whatever. Well, you know, SEO is very much like that, where it's like, you know, you do a lot of this activity on your website where it's like, you know, I'm building up pages. I'm writing content. I'm trying to reach out for links and like, the thing that is frustrating for a lot of people is like it doesn’t -- it's not like you know knocking on someone's door where you're going to get a response right away. Right? There is all this lag time built in like Google's got to see the changes. I've got to index the changes. It's got to be reflected in the search results. Somebody's got to actually search, then people have to click, and then they have to convert. Right? And so, people get real fed up, I think, and they kind of constantly look for these things that have an immediate return, but those things aren’t always super sustainable, and they're not always great for you in the long-term. Just because it works in the short-term, you know, like heroin is super fun in the short-term, but a regrettable decision in long-term, you know?

Andrew: Yeah.

Dan: I really like your approach, man. I think it's really powerful.

Andrew: Yeah. You know; it's funny. The segue to SEO, it's, that's exactly how I envisioned it back, I think we started in July with SEO for the website, knowing in my mind, is I wanted a foundation on the website that would support the money we'll spend on Adwords here in the future, and the money that we'll spend on other, you know, click things. But I didn’t want to go out there and try to get these quick hits without a good, solid foundation of, you know, the website and the content and all that. And we started well before I knew I'd be, you know, quitting my daytime job.

Dan: Uh-huh. Yeah, it's one of those things. It's like the saying that always comes up for me for SEO is, you know, it's like, well, when's the best time to plant a tree? Well it's 20 years ago and then today. You know what I mean? It's like the sooner you do it, the sooner you get the return and it's like the return is massive. So to bring this back to kind of like your hospitality point of view or your customer service point of view, the eventual return on those things is way higher than if you were just like "I'm going to save 5 minutes by being a jerk to this person." Right? Like you know, you can get a 10 or 20 times ROI on the work you do that's just kind of like long-term, sort of long time horizon work, and ironically, there's way less competition. Right? So you know taking your approach of just really trying to reach out and help these people, almost nobody does that because we, just as human beings, like we don't see the immediate feedback in terms of revenue or whatever we're trying to do, and so we just don’t stick to it. We don’t do it. Its like this -- you can kind of exploit this weird human shortcoming by just saying like, hey like, if I can delay my own gratification for a little bit, not only am I going to be way better off for it, but so is everybody else. You know, I think that’s a pretty powerful idea.

Andrew: Mhh hhm.

Dan: Well, hey man; that was really cool. If people want to find you or look up Columbia Cash Home Buyers online, where would they go to do that?

Andrew: So it's ColumbiaCashHomeBuyers.com spelled out, easy, and my website's Andrew@andrewrlucas.com.

Dan: Okay. That's your email?

Andrew: Yeah. My email is Andrew ---

Dan: Uh-huh.

Andrew: Actually, take that back. It'll be info@columbiacashhomebuyers.com

Dan: Okay. Alright. Cool.

Andrew: And feel free to reach out, yeah, you know. I enjoy you know talking to people and learning more, or you know talking to new
folks because I think we can all benefit from connecting, so.

Dan: Yeah. Absolutely, man. And yeah, I highly recommend; you guys, if you're listening to this and you want to reach out to Andrew, let him know. Really, really interesting guy. And again, that’s ColumbiaCashHomeBuyers.com is the website if you want to go see what they're doing down in Columbia, South Carolina.

Hey, Andrew, thank you so much, man! This was a great, great opportunity to get to know you a little better and learn more about your approach. I think it's really, really cool and I'm very much excited about working with you in the future.

Andrew: Alright. Thanks, Dan: . I appreciate it.

Dan: Alright. Cheers,

Andrew: Cheers.

Dan: That's it. We are done with the interview. Thank you so much for listening to this episode. As always, you can find all the show notes; anything we talked about during the episode, you can find it at adwordsnerds.com/podcast. That's adwordsnerds.com/podcast. You can find all the episodes that we post and all our show notes, free tools, all sorts of cool stuff, and if you are not in our Facebook group, I got to tell you, you are missing out on some pretty awesome content. I'm in there every single week. Just this week, we posted an email that we sent really just to our paying monthly clients on what to expect for the end of the year, all sorts of cool stuff like that. So if you want to join, it's totally free. You can go to adwordsnerds.com/group. That's adwordsnerds.com/group and you will find us there. Hey, sorry if my voice is a little hoarse. I'm still a little sick, just a little raspy, but hopefully I will be back to normal next week, and I hope you are having an awesome, awesome, awesome week; the rest of your week goes incredibly smoothly. You get that deal. You kiss the girl or guy, and you generally have an awesome time. I will talk to you guys next week. Thank you so much for listening, and cheers.