212 – Investing In Rural Real Estate Using Other People’s Money with Michael Tucker

Synopsis

Coming out of a $20,000 loss is a hard experience to learn for Michael Tucker. But this South Central Kentucky-based real estate investor made the choice to commit and conquer real estate investing. We learn from Michael today what it took for him to rise up and make money flipping in rural areas.

Key points

The Beginning Of His Real Estate Journey

Michael comes from an entrepreneurial family and grew up trying to find the thing that he would do. He dabbled in a lot of things for a few months at a time. But nothing seemed to work.

That is until a mentor he met while doing network marketing suggested teaching him how to invest in real estate. But it didn’t immediately lead to success as Michael only half-listened to what his mentor taught him and ended up losing a lot of money from the 2 houses he bought.

He failed to do the due diligence and it led to him taking a $20,000 loss.

Committing To The Process

Being financially and mentally depressed, he resolved to finally commit to the process. He realized that merely dabbling and moving to the next thing wasn’t helping him.

So he started listening to his mentor carefully. And he took massive action.

But most importantly, he learned from his past mistakes.

The Two Mistakes That Changed Him

While real estate investing offered the chance for him to invest with minimal money involved, he had gone from having no money to taking a $20,000 loss. He needed to get his act together to get himself out of the hole.

Looking back, he realized the mistakes he made. First, he had bought a house that was too expensive. He neglected to include realtor fees and merely looked at the high after-repair value (ARV)

Second, he tried doing the renovation himself when he didn’t have the experience. A 1-month project ended up extending up to 6 months.

Michael knew that in order to get past a certain level, he had to keep on it.

Making The Changes

Michael now is ultra-conservative when buying a property. He tends to look at the low end of an estimate for how much they can sell a property for.

He also got the right team behind him to do the renovation. By letting go of control, he had more time to go out and find more deals.

Outsourcing also allowed for things to work faster. By putting systems in place and getting rid of the little things that he used to do, he was able to free up more of his time.

Earning People’s Trust

Michael has some advice for people worried that failing previously means they won’t gain the trust of others.

Failure doesn’t automatically mean that people won’t trust you or want to work with you. As bad as it sounds, most people are too busy with their lives to know that you’ve messed up before.

But it’s important to be transparent. Don’t claim to have the experience or credentials you don’t want. What people want to see is someone who is committed to the process. Someone who is hungry. Someone who is willing to learn from their mistakes.

So don’t get discouraged. Just continue your education and keep going out there.

Admit that you’ve failed, but get the ball rolling, and do what you say you’ll do.

Finding Deals In A Small Town

Michael focuses mainly on investing in rural areas. Being a small town, there are usually no wholesalers. Where Michael invests, there is usually only a population of 20,000-30,000 people.

So social media is big in a small town. Using social media such as Facebook Marketplace is enough for him to get the word out.

The Pros & Cons To Investing In Rural Areas

There are risks involved in investing in rural areas and smaller towns. Houses usually take a lot longer to sell. To counteract this, Michael makes sure his ARV is super conservative and priced on the lower end.

Plus, he would always budget his time frame to be a little bit longer. For flip projects, he usually estimates for them to take 1 month to renovate and another 1 month before he could get an offer. So make sure your criteria are set and met, then put in a longer holding time.

A big city is a lot more volatile than a rural area. But in big cities, you can make profits between $100,000-300,000. In rural areas, he typically makes $30,000 per deal.

But the houses in Kentucky are a lot cheaper than those in the Bay Area. He could get one for $50,000, put in $40,000-50,000 in rehab, then sell it for $130,000-200,000.

Financing Rural Deals

A hard money loan is an option for those wanting to invest in real estate. But since Michael has built very good relationships with local banks, he is able to just make a 20% down payment and leave the rest to be financed by the bank who will even cover the entire renovation.

His Reason For Starting A Podcast

Michael started his podcast, Real Estate Success Strategies, initially to document his journey. So that he could look back one day. But he was inconsistent and would upload only one episode a month.

Now, he has shifted and brings in guests to his show. He gets other successful real estate investors and asks them to share how they make money in real estate.

He would still document his journey every once in a while, but getting real estate investors who make millions a year has some benefits to him as well.

First, it is similar to getting free consulting and it allows him to build a network for future deals.

What’s Next

Michael plans to buy multifamily apartments and mobile home parks, primarily in his state, in  Indianapolis, Tennessee, or Kentucky. He also wants to learn how to do syndications.

He also wants to get to the point where flipping houses is so systemized that he can focus on the rental side to build up a passive income for himself and his wife

Last Tips

If you want to conquer your space, commit to the process.

Don’t just dabble in it. If you never fully immerse yourself, you’re never going to be a professional.

So, become a professional in your field. That’s when everything is going to work for you

References

More from our guest

• You can reach Michael through his Instagram or Facebook.
• Check out his podcast, Real Estate Success Strategies
• Join his Real Estate Success Group on Facebook.