“Whatever you want to do, take action, just start and speak it into existence”

Jimmy is a millennial house hacker turned corporate dropout. He is co-host of The Cashflow King’s podcast and owns Lyon Property Management. Lyon Property Management is responsible for the management of 500 units in Rhode Island & Southeastern Massachusetts. Jimmy is also an active investor that specializes in flipping two to four-unit multi-family properties. His ideal client is an investor who wants an agent with an investment-focused skill set to maximize the returns on their investment properties.

In this episode, Trevor and Jimmy discuss:

  • The transition timeline from being a Corporate employee to a successful real estate investor.
  • The tools and analysis you can use to determine when investing in a property.
  • Excellent advice when starting to invest in real estate; advantage of multifamily investing.
  • How to run a multifamily property.
  • The process of successful multifamily deals.

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The Wealthy Gardener

 

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Full Transcription Of Today’s Episode

Trevor Oldham  00:43

Hey, everybody, welcome back to the real estate investing exposure podcast. Today on the show we have Jimmy Murray, over the past 10 years, Jimmy’s multifamily real estate investments have blossomed into a successful property management company line Property Management Group, as an investment as an investor himself. Jimmy intimately understands the needs of an investor landlord, and that’s why land property management is tailored to the multifamily investor. He’s also an investor educator with land Property Group with their co founder, Frank pallet, probably gonna butcher the name Frank pal, Tawana, all group, Jimmy and Frank host a podcast called the cashflow kings, where they have been telling to pass out three golden nuggets of real estate wisdom, Jimmy excited to have you on the show today.

 

Jimmy Murray  01:29

Happy to be here. And it’s kind of crazy to think that it’s been 10 years, right like that. That’s like, almost a 10. But it’s crazy to think it’s been that long, seriously. So that was like a lightbulb moment. I was like holy cow.

 

Trevor Oldham  01:44

Yep, we have quite a while and you know, before  we hopped on, instead of recording this interview today, we were talking about how you had worked at Fidelity Investments in the past, and I would love for you to tell our audience, you know, fidelity, you know, great company, I interned there, I have a couple family members working there. And from the benefits, I see that they get working full time and you know, it seems like a great opportunity. And what was that jump, like making from working with, you know, it seems like a great company going into property management and to also real estate investing.

 

Jimmy Murray  02:16

Yeah, it was scary, right? Because it’s easy to get comfortable in those types of roles working for a great company. But I recognize it wasn’t, it wasn’t a great fit for me. Honestly, I probably should have been fired long before I left. Candidly, I tried my best to just, you know, have an entrepreneurial spirit in wanting to run your own company is completely different than the kind of that employee mindset. Great, great employees as an like, if you’re an entrepreneur, you run a company, great employees are going to have that entrepreneurial tilt. But to really, you know, kind of have that interbreed as an entrepreneur, it makes it difficult to stay in that role. I wouldn’t I it’s funny, because I called my dad last week, because my dad was a union carpenter. And growing up, he always told me, he said, pick up a book, go get a degree and get a job from there. And I came out of college with a degree in finance that I wanted to get into real estate. And he kind of kicked himself. And he he, you know, he said, I second guess what I told you, because imagine if you had gotten out in the trade, and you maybe could have grown this more quickly. And I actually called him last week. And I told him, I wouldn’t trade it for the world. Like I wouldn’t trade my six years of fidelity for anything. Because I learned so much that I still use today, there are so many things that I learned that have led to help me achieve success more quickly in my entrepreneurial pursuit.

 

Trevor Oldham  03:33

And while you’re working at fidelity, were you building up your business alongside working there? Or did you leave fidelity and then hop into space? I’m giving our audience some timeline on what that journey looked like.

 

Jimmy Murray  03:44

Yeah, for sure. So after my first year at fidelity, I was kind of bored candidly, and I know that might sound crazy, because there’s always a lot going on over there, a ton of changes, but the business that I was a part of and grew as quickly as I thought it was going to be, is going to grow. So I started studying for the CFA. So for those of you who don’t know, the CFA is a Chartered Financial Analyst exam. I had a friend that it’s studying for the CFA previously, he’s like, Hey, listen, just right off six months of your life, right? So I wrote off six months of my life, I studied night and day, I paid like $3,000 for study courses and books. And the test I think is 1200. alone. Like, it’s a huge investment. But in the financial world, if you have a CFA, you can literally go anywhere and do anything you want. That is like the acronym that you could go anywhere and people will realize how intelligent you are. So I took the CFA, I scored in the top 10% of the failures, right? So they’re like, hey, you’re really close. And I’m like, you should just not have told me how close I was. And that was kind of like an eye opening experience. So there are three levels of the CFA exam. And, you know, if you pass each level the first time it’s going to take you two years or two and a half years, right. So now I’m sitting there because levels two and three are only held in June. Level one you can test and I think June in December. So now I’m sitting in July with his failure notice, and I’m like, Well, what do I do now? And I always want to get into real estate. And I, you know, I sat back, and this is in 2011 at this point, and I didn’t realize how good the real estate market was. So rather than going chasing the CFA and taking it again, I’m like, Alright, let me take that same money and invest in real estate. And I think everybody listening knows how that worked out. Right? Um, and I think that goes back to not to go on too much of a tangent here. But I think it goes back to something I really believe in. It’s called acorn theory. So, I read a book called the soul’s code. In acorn theory, it talks about how we’re all born with these tiny acorns with the ability to grow into these giant oak trees. Right. So you know, by acorn, I was kind of always in my head that I want to invest in real estate. But it didn’t happen till I was 23 years old, which honestly, most folks still consider pretty early. But that’s when my acorn started growing into that massive oak tree.

 

Trevor Oldham  06:00

It’s funny that you mentioned the CFA because my sister’s boyfriend, He is studying for that and he’s taking it. I think this upcoming week, which is, as you mentioned, seems like a lot of studying and a lot of work. I think he’s on his, I think he’s passed the first two. And I think he’s on to his third section, because at least from what my sister has told me is that if he passes this one he’s done and, and he’ll get it. And I could, I could see like, I was over at their house a couple weekends ago, and there’s no Sunday. It was like 12pm. And he just sits in the room and studies for like five or six hours on Oh, yeah. On a nice, beautiful Sunday.

 

Jimmy Murray  06:36

I mean, level one was like everyone that everything that I learned and like my undergrad financial career. I can only imagine what level two and three are like, it’s an incredible test. So anybody that has an acronym master name, give them some street credits. They’re some of the brightest financial minds in the world for sure.

 

Trevor Oldham  06:54

Exactly. And hopping back into the real estate section. When you got started, was it a single family rental? Did you house hack? Did you start in a multifamily? Where did the sort of first investments they started look like?

 

Jimmy Murray  07:07

Yeah, so my first multifamily was a four family in Pataka Rhode Island, and it was a house hack. And I had no idea what house hacking was. But I knew that I wanted to invest in a cash flowing asset. My first four families, I purchased for 140,000. That same property appraises for about $350,000. Today, day one, when I bought it at a rent roll of roughly 1100 a month. And within six months and less than $10,000, I was able to get that rent roll up to 30 $500 per month.

 

Trevor Oldham  07:36

And going along those lines, and I know, coverage, looking into buying my first two, three, and four family and I looked in coverage on Rhode Island, which is a little who I love Cumberland. Yeah. A little north of pataka. And the issue I’d ran into when I was looking into Cumberland is that I use ways for the GPS and ways took us through some not so great parts of Connecticut, from where we’re going. So when you come into a place like that, where you know, Pathak it’s more affordable. But there’s, I can imagine that there’s some more you’re not so not so nice parts, when you’re investing in an area like that, how do you determine where you’re going to be investing in the property? Are there any tools analysis that you use that your resource to make sure that you know you’re getting an investment and just an area that’s, you know, you feel comfortable with?

 

Jimmy Murray  08:19

Definitely. So a couple things. So I go, you’ll find that I always go back to books, right? Like I am just a bookworm book nerd for a better term, I guess. So I go back to the richest man of Babylon. And they have the three themes. But that last theme that they talked about, after you learn how to save, and you, you know, you what you want to invest, and you got to find that local guide. So find somebody that knows the area, whether it be a real estate agent, a property manager, find somebody to help you out. somebody knows what you’re looking for, you just got to figure out who it is to help you. Right. The other component, and I sat down and I went through this with a client the other day, you can dig through census data. So you can literally go out to census.gov. And you can look at statistics based on city and town. And you can punch in Cumberland, Rhode Island, you can actually compare six towns at once. So Cumberland, Rhode Island to Lincoln Rhode Island to protect Rhode Island to Providence, and you can literally see population growth. So is it growing are people moving to the area so Cumberland from 2010 to 2020 was one of the towns we looked at the population has grown to 4.8%. So that moves the needle in the right direction. The second thing that our clients were looking at, was meaning medium income. So the median income in Cumberland is $70,000 a year. And then the third statistic was how many folks live in poverty, and it was less than 2%. So those are the three things that they were looking at. And you know, these guys are from outside of Boston, they don’t know anything about the market outside of what I tell them and they’re like, Alright, let’s, let’s try to get a barometer on what Jimmy’s telling me. So one, find a local guide, and then two, we can always fall back on data online and the census data is a great spot to work.

 

Trevor Oldham  09:53

Yeah, I think those are excellent, and vice for anyone that’s listening. That’s definitely something that I would want to be checking out because I’ve actually shifted my strategy a little bit from being in Massachusetts and, uh, you know, and but even looking in North Attleboro and the Plainville area for those who are listening who are familiar with the area, and even looking around Shrewsbury, where I am now the prices are, the numbers don’t make a whole lot of sense, at least of the properties that I’m looking at. So when I’ve been taking a look at properties, where my fiance lives in upstate New York, right outside of Albany, they just put up like a massive Amazon warehouse, you know, a couple 1000 jobs. There, the numbers just make a whole a whole lot more sense. Like I was looking at one property there, it was 295,000, there’s five units, the mortgage with everything was about 2100 a month, and they were collecting $4,000 a month in rent. And it’s crazy, just how much like, yeah, it might not be more of an area in the middle of nowhere, but numbers just make a whole lot more sense. So definitely appreciate that advice for our audience.

 

Jimmy Murray  10:50

5000 a month on a 290,000 purchase, and honestly, or sorry, 4000 a month. Um, if you divide 4000 by five, the rents are probably pretty low, right? I would have lost the rents across the country. That sounds like a hell of an opportunity, for sure.

 

Trevor Oldham  11:05

And out of curiosity is as I’ve been looking through properties, I find that a lot of these properties that I’ve been looking at at least going towards upstate New York that the landlords aren’t, they’re not like real estate investors, like my mindset is going and I want to do a house hack where you’ll have someone cover the mortgage. And to give you an example, I’m looking at a property this Saturday, the property, I believe it’s about 190,000, the mortgage on it would be about 11 $100 a month, and it’s a three bedroom, two bedroom comps in the area three bedroom would be about 1500 a month and we’re living in a two bedroom. And I find that when I was talking to this specific owner, that he never rented out the second part of the to the to family, and I don’t know if that’s something that you come across when you’re dealing with mom and pop landlords, or is that just a standard in the industry cuz I’m just finding out the more landlords I talk about that aren’t a typical investor that aren’t trying to drive a lot of income and, and the properties that are in the family, they don’t know their numbers as well. And I don’t want to feel like I’m taking advantage of them. But it almost feels like the more knowledge that you have the better deals that you can get.

 

Jimmy Murray  12:08

Yeah, no, honestly, I feel that wholeheartedly. A lot of people just aren’t business savvy, they don’t know how to run multifamily property. So the biggest thing is, you have to run it like a business. But also what it sounds like they get a little bit complacent. Right, so they bought that property for a steal a long time ago, and they got a decent amount of rent on the first floor and they were comfortable with where they’re at, they probably just stopped in this is kind of something I go back and forth on all the time with with clients and you know, up and coming real estate investors is that more units can be more headaches, but more units is also a higher margin of safety. Because think about it, you have that single family rental, that tenant leaves, you have $0 in rental income. If you have a four unit property, one tenant leaves, you still have three streams of rental income, I always hear that, Oh, I’d rather buy a three than a four because that one extra tenant I’m kind of freaked out about it’s like it that one extra Denon is a hell of a lot more financial security. Now, you do have to pay closer attention to the kind of demographic and the building, that the larger buildings that you get on because if people have dramatically different lifestyles, then you’re gonna have more headaches, but more units equals more safety, typically, financial safety, at least.

 

Trevor Oldham  13:19

That’s excellent, excellent advice. And now when I’m talking to when you’re finding these properties in these areas, and you let’s say that it’s a property, you get it from a wholesaler, the property needs work, and how do you go about rehabbing it? How do you put it out? put a team together? Do you use a 203 k loan? Do you mind just walking our audience through that process?

 

Jimmy Murray  13:38

Yeah, absolutely. So my niche in the local market, and honestly, I’m not sure if Trevor was familiar with this, but it’s flipping two to four unit multifamily properties. And the reason is because there are so many folks out house hacking is like the coolest thing, right? So it allows us to flip properties, the folks that are less educated and may not know as much so there’s a revenue generating opportunity there. But we’ll come in, we purchase a multifamily property, we increase all the rents to market. So some folks are thankful. Right, so we bought a two-family Krantz, Rhode Island couple weeks back. We increased one woman’s rent from 700 to 1400, to bring it to market and she said, Thank you, I appreciate that I still have a place to live. Now, other circumstances like the second floor ended up moving out. But now that’s our owner occupied units to sell back. How we tackle these now is that we use hard money. So we’ve been able because we have the street cred via the property management company, we’re now able to go to hard money lenders and negotiate which sounds a little bit crazy, right? Because you always hear that it’s like 30% down and to get rehab funds is insanely difficult. And it’s going to be like four points and 14%. I mean, we have one deal right now where we’re funded two points at closing and 10% interest and the 10% interest is not due until we sell the property on the back end, and they funded 100% of purchase and we just got to fund the rehab, which has been awesome. So Get creative. But don’t try to get too cute up front with negotiating with hard money lenders like Ernie street credit first. Because if you go in and try throttle them on, you know, getting the down or whatever else, it may not work in your favor. So find someone you want to work with, accept the terms, and then show them how good you are, and then try to go negotiate from there in the field.

 

Trevor Oldham  15:18

Good here, feel free to go ahead and continue on.

 

Jimmy Murray  15:22

Oh, sorry, I was gonna dive into the rehab side, too. So on the rehab side, we leveraged the team that we have Alliance. So it’s a natural transition into the flipping business, particularly multi families, because that’s what we do every day, we have, you know, an in-house staff of six folks that go out and make the properties amazing. And then we have a staple of study vendors. So we just leverage those relationships. And honestly, the vendors have way more fun going out to a rehab and fixing things than going to tenants units. So they like to be involved in the process, too.

 

Trevor Oldham  15:53

Yeah, that’s perfect. And while you mentioned your property management company, I want to hop over to that. And for those of you listen, that’s aligned Property Management Group and and I’d love for you to go into how you came about starting the company, because you know, sometimes you get investors that they just do investing in them, they outsource the the property management to you know, let’s say a third party where you have your own properties, plus you have your own property management company. So what was that process like of building that up and also building the team?

 

Jimmy Murray  16:20

Yeah, so honestly, I caught a bad review at fidelity. I still remember her to this day, she was an incredibly difficult manager, we just had a personality conflict. But I had a year-long interview where literally, she told me she couldn’t believe how I’ll use the polite term for how freaking average I was. But that was not the word she used, you guys can fill in the blank there repeatedly and would not let me get an award for 20 minutes, and then sent me back to my cube and literally walked back to my cube, set my partner texts, and said, we’re gonna launch a property management company said, Let’s get a beer first. Now, what kind of cause I was when I’m a fidelity, you know, I was making a good good income, I sold some student loans, which I’ve been fortunate to pay off, but the goal was to buy enough multifamily to have passive income that I could leave, right and then essentially be retired at a young age, I realized that I enjoyed the property management game, in terms of redirecting assets, for myself and for other folks. So when I caught that bad review, I was like, why am I here? Right? I can go build this as a side hustle and then take my tunnel out of Shawshank because I used to joke. So I did it. You know, I worked full time during the day and then nights and weekends, I was in the property management business just trying to pick that tunnel out. And honestly, it was an amazing process where I’ve learned a ton about myself. And I’m fortunate to have had that experience.

 

Trevor Oldham  17:42

That’s excellent. I think it’s great for the audience and for those of the auditor who may be listening in. And let’s say they’re in a W two job, and they enjoy it. But they don’t want to do it forever. They want to eventually go into real estate investing, what would you recommend to that person that wants to continue on, they don’t have the portfolio built up at the moment, or they still have to continue on the job, but they also do want to build up this portfolio. So how did you manage your time there? Do you ever feel burnt out? You know, how did you just that whole grind of working, you know, eight, and then plus whatever you put on your real estate business.

 

Jimmy Murray  18:13

My dad used to tell me like you work way too much. I was like, Hey, man, I’m gonna be retired and on the beach in my 40’s. So I’ll be good. I’ll be good. He’s like, I hope so. Um, but honestly, just start. Everybody talks about a big game. They don’t start. Gary Vaynerchuk says all the time like execution. Sorry, ideas are shit execution is a game. That’s God’s honest truth. So just start. The second thing is that I’m a huge fan of Conor McGregor. I know that he’s notorious. But if you guys follow me on Instagram on the notorious cfk for cashflow King, you get to speak it into existence. I’m a huge believer in the universe. So Conor McGregor says, you know, if you can see it here, and you have the courage to speak it, it will happen. And that’s the biggest thing like when people ask you, Hey, what’s up? What are you doing? Tell them? Right. So 2019 I didn’t flip any multifamily properties. In 2020 during a pandemic, I made six figures flipping multifamily properties, because the end of 2018, early 2020. Jimmy, what are you doing? I’m flipping owner occupied multifamily properties, and then the deal starts coming to me. I’m speaking into the universe and it comes back. So whatever you want to do, take action, just start and speak it into existence.

 

Trevor Oldham  19:26

That’s excellent advice. And it’s funny that you mentioned Conor McGregor. I think one of the regrets I have in my life, you know, not too many. But I think one of them is that when he came to Boston, I think, four or five years ago and fought at the TD Garden. I forget who I forget, I think it was it might have been destined for a who he who he fought against, but one of my biggest regrets is not going to that fight because now if you try to, as you try to go out to fly out to Vegas, quite a bit more money than

 

Jimmy Murray  19:53

Boston. So I’ll give you a hack, because I actually went up to the garden to see an MMA event or the UFC event. There’s an app called gametime. And I know that this is not related to real estate. But literally check out the gametime app. I mean, I’ve gone to Bruins games where we let the puck drop and the ticket prices drop in half. So I’ve sat at the club level for like 40 or 50% of what it normally costs. And the same thing with MMA events. I think it was eight rows from the octagon, it was like 100 bucks because I waited until you know, the main card started. So checkout gametime, and hopefully Vegas becomes a little bit cheaper.

 

Trevor Oldham  20:26

Yeah, yeah, yeah, no, I’ll definitely check this out. But Jimmy, I want to be respectful of your time. And I enjoyed it. And I just have a couple of final questions that I want to ask you. And he’s like, what questions the first question is, you know, there’s no right or wrong answer. But I’m curious to see, you know, especially coming from a market that I know a little bit about routed love to get your insight on, where do you think the real estate market is going in 2021? And beyond?

 

Jimmy Murray  20:50

Yeah, it’s still moving up? Honestly, um, I don’t have a crystal ball. Right. So what I tell investors where they can protect themselves is rather than looking at those two to four units, multi families look at commercial multi families, because the banks of the commercial side are tightening their belts where they’re requiring larger down payments. But they have to be underwritten to a debt service coverage ratio. So I think the market is going to continue to move up. But on the commercial side, in order to flex on that debt service, coverage ratio, rents have to increase. So it fundamentally works for investors. Sure, you’re not going to see that market run up like you do on the retail side.

 

Trevor Oldham  21:26

That’s, that’s perfect. And then the other question I wanted to ask you is do you happen to have a favorite real estate or business book they recommend for the audience to read?

 

Jimmy Murray  21:34

Hell yeah. Hell yeah. So let’s see if you’ve heard of this one. It’s called the wealthy gardener.

 

Trevor Oldham  21:39

I love that one.

 

Jimmy Murray  21:40

That is, I literally stumbled across that book, like by accident on a Kindle. And I read, I couldn’t put it down that that book brings together so many powerful, powerful lessons. And it’s cool. I’ve gotten a couple folks that are close to me to read it. And they’ve had the same feedback. So the wealthy gardener is absolutely my go to.

 

Trevor Oldham  22:00

That’s an excellent book recommendation. I think that is probably my favorite book that I read. I remember I was following Brandon Turner on Instagram, and he put that book on there. And I went on Amazon and bought it. I think when I bought it, it had like 20 reviews on Amazon. So it’s still relatively new. No, I, you know, I’m always trying to read new books and didn’t know what to expect. And then I started reading it. And I was like, Oh, my God, this book. This book is amazing. And then I gave it to my brother and my dad to read as well. And they both said the same things. It’s crazy. It’s just I love it because it’s just such a simple person on how he built wealth through real estate where he seriously raised it all out there right in front of you know what to expect it took them 20 years to build up his portfolio is just crazy. It’s definitely a great book recommendation.

 

Jimmy Murray  22:40

So along that same line, not to take up too much time. But one of my close friends always talks about how real estate is the best get rich, slow scheme there is. Yeah.

 

Trevor Oldham  22:53

Exactly. But Jimmy, the last question I wanted to ask you is where can our audience find you?

 

Jimmy Murray  22:58

Yeah, definitely. So feel free to find me on Facebook. My name on Facebook is Jimmy Murray. m You are a why or check me down on Instagram under the handle of the notorious cfk.

 

Trevor Oldham  23:09

I’ll make sure to include those in the show notes of today’s episode. And I just want to say thank you for your time today, and I know our audience will enjoy the episode.

 

Jimmy Murray  23:17

Awesome. Thanks, man.