Real estate is a vast and dynamic field offering many opportunities for investors, homeowners, and businesses alike. This episode flips the script on traditional real estate journeys. Ely Randleas opens up to Ben Gaines about his transformative journey alongside his wife Cassidy in the real estate world. They began over a decade ago with Cassidy’s townhome in Lawrence, Kansas, initially renting it out despite having minimal knowledge, which became a challenging experience. Their journey reflects a blend of resilience, adaptability, and a passion for growth in the real estate business, highlighting how commitment and perseverance can ultimately lead to success and personal fulfillment.

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Flipping Forward: Overcoming Challenges In Real Estate With Ely Randleas

Introduction

Welcome to this episode of the show. I’m so excited about our guest, Ely Randleas from Wichita, Kansas.

 

 

Welcome, Ely.

Thanks for having me on.

Getting Started In Real Estate Investing

Ely is one of my favorite people. He’s a big, beautiful, bald man. He’s got a ton of personality. We’re going to talk a lot about that later. He warms up everyone around him. He’s been investing for a little over ten years there in Kansas. I’m going to turn it over to you. Tell us a little bit about your investing and how you got started.

My wife, Cassidy, and I started investing several years ago when we met. She moved to Wichita and had a townhome back in Lawrence, Kansas where she was living. That really started our journey. We rented that out for a year. We didn’t know a thing about what we were doing, so we tried it long distance. We didn’t know anything. It was a hot mess. We sold that, gathered our resources, and started investing back in Wichita after she moved here completely and we bought a new house. That kicked our journey off at that point.

You can’t throw out a hot mess without giving me a little bit of details. Everybody hears hot mess, and we as investors all have our hurdles. What exactly do you mean by hot mess?

We’ve always self-managed. We self-managed from 120 miles away. We didn’t have any processes. We were chasing rent in Wichita. Plus, her brother who lived in Lawrence was helping us chase rent and tracking down any kind of maintenance issues for us. We had 0 systems in place and 0 resources that we could tap at the time. We knew nothing.

All in all, it was okay. They honestly did more damage moving out than anything, but we always had this anxiety hanging over our heads about, “What is happening? Are we doing the right thing?” It was too much at that time. If we weren’t really invested in doing the real estate thing, it would’ve probably killed it for us. We wanted to go and invest, grow our business and the ability for us to do other things, and have some freedom in our lives. Luckily, we are either headstrong or stupid, or both, and kept going.

This fell into your lap, but you did have a sense that you wanted to be involved in real estate. Was there something you had seen? Was there something you had heard, something that inspired you, or someone in your life maybe who had had some rentals previously? How did that come about?

This is going to be the first time I’ve told this.

I like that.

When I was young, probably high school age, I would sit and daydream about stupid stuff. One of the things that was common thing was, “Wouldn’t it be cool to own a whole block of houses?” You buy one and then buy one next to it, and keep going until you have an entire block. I grew up poor. My parents would go to garage sales to get us clothes. Everything was secondhand. Having something that was mine felt like it would be such an accomplishment even at that young age. Honestly, it’s the first time I’ve told anybody that. It’s wild when I’m 48. Forty years later, I’m like, “We’re getting there.”

My dad had some rentals too for a little bit. He had 4 or 5 at one time. He got a really bad taste in his mouth and sold them all a year after having one bad altercation with some tenants. I always wanted to do that in the back of my head. I had some talks with my ex-wife about doing it and that went nowhere. She was scared of debt. It was the perfect storm once Cassie and I got together.

Cassidy was behind you on the rental thing. That’s great. Sometimes, we have these daydreams when we’re kids. I love to hear that motivated you. Many of us let that stuff go. I have a sixteen-year-old son. I try to reinforce that he can do anything. It’s so important that we know that as kids and we let our kids know that. That’s great. You talked about your dad and his five rentals, and we talked about that first one that you had. Tell me. As it progressed, what were the things that you started to do to make the process more efficient to bring in some systems and make this a successful venture for you and Cassidy?

Let’s back up. The first house was my old place. Cassie and I lived there for a little while. It was a little two-bedroom house. We moved to a larger house once we got married. We used that as our first rental here in Wichita. For the second rental, we bought another single-family house. We then bought a duplex. On my way to work, there was a For Sale By Owner here that needed some work. After we bought that, within a year, we bought 2 duplexes in a 5-unit apartment.

We got in trouble really fast. They all needed work and we didn’t know what we were doing. We were in over our heads. Two heads strong are too stupid to know any better. We kept doing it. Once we got to that point, we knew we had to stop. We didn’t know exactly what to do. We got connected to the local communities there. We went probably 3 or 4 years with 50% of our units not rented, not understanding how to get capital to do that, and not understanding a path forward to get us out of the rut we were in.

We then plugged into some of the local investing community, which led us to Don Costa and that group. A couple of months ago is when we really flipped the script and started turning the dials on our business. We bought a couple more duplexes between there and we had to stop. It took getting in the room with the right people to know that we had to stop.

Challenges In Real Estate Investing

I’m going to touch on that. We all have a little bit of a sense of what that feels like. Describe that feeling of what it was like for your rentals to be 50% vacant and then to be on the hook for those mortgages. Tell us about that.

It sucked. I knew what my break-even was. I knew if one person moved out, we were going to have to pay out of our pocket. That was always in the back of my head that as people moved out and we had turnover, we had to ensure that things were re-rented. We had units that were truly not able to be lived in, so it wasn’t an option to plug someone in some of these units. They needed work. It was super stressful. I don’t think Cassie understands the amount of stress I had on that, but day in and day out, I knew we needed at least 5 units rented or maybe 6. We’d make a little bit of money. We never took any money out of our business for ten years. This is the first year that we have.

This is a long-term play for most of us with rentals, so I get that. One of the advantages that you have that a lot of investors don’t have is you still work from 9:00 to 5:00. Cassidy and I talked earlier. You’re still the program manager for a machine shop, so you’re still running a lot of projects over there and still working a full-time job.

Every day, from 6:30 to about 4:00, I’m sitting in an office and doing the thing with everybody else. Luckily, I’ve got some flexibility, so I can step out, take calls, and deal with some of the other issues that come up from a business perspective. It’s a grind.

Positive Aspects

Forget 9:00 to 5:00. You’re 6:30 to 4:00. That is that Midwestern time. It’s a little later out there. I don’t know what that looks like. I’m learning. That’s hard. It’s hard to have to step out and be accountable for another job, but what are the advantages of 9:00 to 5:00 while you’re building this and amassing? I used the word amassing for you. I’m so proud of Ely. There’s that movie, Old School. Will Ferrell goes, “That’s my boy, Blue,” or, “You’re my boy, Blue.” That’s what I feel like with Ely. He’s an amazing guy. While he’s amassing this portfolio, tell us about the positive things about working that job and what it enables you to do.

Honestly, the biggest thing it enables me to do is to walk into a bank at any given time and any day and get a loan. I have zero issues getting a loan at any time for any rental property I want to go buy. That’s probably the best thing about it.

There’s that point at which you start making the same amount of money that you made in your day job. They say, “Do that for a couple of years.” There are all sorts of different things on how they advise people to get out of their jobs. Many investors, even after two years of solid income investing, quit their jobs, and then they expect to be able to go to the bank and get a loan. That’s so hard to do without a steady income until your business has shown success over many years, in my experience. That’s a great advantage for you.

Having a steady paycheck is nice for security. It’s also stressful though. It’s a different kind of stress, especially trying to run a real estate business at the same time. It is going into the bank and knowing that typically without any issue, we can get a loan.

While a steady paycheck offers security, it can also be stressful, particularly when trying to run a real estate business simultaneously. Click To Tweet

Financing, Equity, And Procurement Of Deals

Describe that to the audience. You’ve built this portfolio. I know a lot of guys are out there doing the BRRRR a lot more in the previous years than they are now, but what type of financing are you procuring? How much equity do you potentially have in deals when you buy these things? How quickly do you recover, and how quickly does the bank reset with you?

There are a lot of questions there.

I know. You’re a smart guy though. You got it.

From an equity position, we try to be in the 70% levered when we do a BRRRR. A lot of guys try to get up to 80%. Typically, when I go to the bank, I want to be at 70% or less. I’ve always had a fear of being over-levered. I watch that as we go through the process and make sure that we don’t have too much leverage on the portfolio. As things change in the market, if you’ve got variable loans, and some of ours are variable, that can affect you greatly.

Most of our loans are commercial loans with local community banks. That was our bread and butter when we started. We’re buying a property, doing a DSCR on a 30-year fixed for some cashflow. That has so far been a pretty positive experience. Being able to cashflow more with a lower rate than I can get inside of Wichita at some of the local banks is pretty cool.

That’s pretty amazing. What an asset the local banks can be, especially when those relationships are formed. You guys are reinforcing the thought that they’re willing to give you guys these loans by continuing to pay down the other loans and go get more. You guys are regular customers in the bank. I’m sure they smile when you come in. I’m sure that they love your business. When you started, you had that one rental that fell into your lap. How have you procured deals since that point?

There have been a multitude of ways. Some of them have been driving by. Signing the front yard For Sale By Owner is a little harder to do now than it was several years ago because everyone’s trying to go get rentals here in Wichita. We do some direct-to-seller marketing either via cold calling or direct mail. We’re trying to get some constant deal flow at this point through our marketing channels where before, we were word of mouth or, “This guy’s got a place to sell when we’re starting.” As we’ve grown our business and have a new vision for where we want to be, going out and marketing is the only way we’re going to find the type of deals and the discounts that we need in order to be viable.

 

I’m correct in that you guys are flipping some too as well, aren’t you? You’re not keeping every single one. You are letting some go. Is that right?

Yes. As we’ve gone down this whole path here of our business and what we do, I’ve tightened up my buy box for what I want to hold. I’ve got a buy box that we have for flips that’s a little bit broader. Anything that doesn’t fit those two boxes, we will wholesale. As we do our marketing, we look at three things. It’s, “Is this a house we want to keep? Is it the size and age that we want to have in our portfolio? If it’s not, is it in a neighborhood that we think is up-and-coming or is it a neighborhood where we can add some value that’s not a D Class neighborhood?” If it doesn’t fit those two, then we’re going to kick it out to the local investors here and see if we can make some connections and get a deal done for everybody where everybody can benefit.

What does that look like, your relationships with those local investors? You guys are somewhat involved with your local REIA. Is that right?

Yes. This January 2024, Jake Henderson, who you know, I met him. He and I took over the Wichita area Real Estate Investors Association from the previous management team. He was ready to move on and do some other things. He’d been doing it for about fifteen years and decided that it was time to turn it over to some other guys.

With our connections, what we’re doing, and the kinds of things we’re learning, it was nice to bring a new perspective and some new energy into that group. We have connections to that. There are a couple of other meetups that happen here in the local area. We probably do 4 or 5 meetups a month. We go and network and talk to other investors.

That gives you an opportunity to meet some people who are buying some of those deals that you guys are wholesaling. I’m guessing you’re getting some of those folks from those meetups.

We do. We’re not doing a large volume. I’m not a heavy marketing guy. I’m not a heavy flipper. I’m not a heavy wholesaler, but as deals come through and we can lock them up and get them moved, that’s what we’re going to do.

I also know that like the banks that come to rely on the fact that you’re going to pay them back, some of the local realtors have come to rely on the fact that you guys do close on deals and get some deals directly on the market. I know you were telling me about one that either you found or an agent brought to you. Is that correct?

Yes. We had a house at the end of 2023. We had an agent bring it to us, a friend of ours, through another agent. We closed on that and did a wholetail. We then sold that off to another investor who did a beautiful rehab on it and put a large family in there in place. The house we’re flipping was on the market, but it got pulled off. Through our friends’ connections, we got that one as well. That was an on-market deal that we were able to secure. We’re honestly getting ready to put that back on the market here soon.

I’m guessing Jake will get that listing.

Jake has that listing. I always take care of my guys.

That’s the point. That’s exactly where I’m going with this. Realtors do bring value. My partner, Tiffany, would stress that. There’s a way that a lot of investors have a negative outlook on some realtors. You play both sides. Not only are you negotiating a fair percentage on the list side, but you’re using them to buy some stuff and also getting some deals directly from realtors. You’re creating value in that relationship.

Jake brought us our first flip that we did here a few years ago. It was something he didn’t want to do because he was also an investor. He brought it to us and we listed it with him. Anytime we put an offer in on something, whether it’s on or off-market, I’ve got a pretty decent ability to go out and do comps, but I always run it by Jake and say, “Validate where we are. Does this look right?” He’s a little more conservative than I am, which is nice because I run my numbers off of his conservation. It really helps. We know that if we close on it and run our numbers on a conservative basis, then we’re going to be good. That’s what I love about Jake. He’s never going to tell us something that’s way out of whack.

Ely’s Vision

I’m going to interview Jake soon. I have a lot of respect for the guy. He has grown so quickly, and he’s so good at what he does. It’s confirmed through different relationships that I have. I love hearing you say it. Many of you know I own a real estate firm. I do feel like real estate agents do bring value, but I also understand the investor side of the coin as well since that’s my primary source of income like many folks who are reading. We’re not quite there yet with you, but I want to talk about your vision. What does success look like to you? What’s the life of real estate? What’s it going to afford you later on?

What has changed so far with us is we’ve been able to take two-plus weeks a year, step away from Wichita, take a vacation, unplug, and Cassie and I do our own thing. Several years ago, we couldn’t do that. We didn’t do it. Within the last few years, we really had a focus on getting away, unplugging, and rejuvenating ourselves.

We can go at least two weeks a year. Once in the spring and once in late summer and early fall, we make sure we get away. That’s been the biggest change for us in this journey. This has afforded us the ability to have some freedom in our time and finances to be able to step away, not worry about anything, and have the ability to do those things and connect with each other and back with ourselves.

This journey has afforded us the ability to have some freedom in our time and finances to step away and not worry about anything. Click To Tweet

How about long-term vision? I know you. I’m afraid to ask this question. You’re like me. You have big dreams, but you’re realistic as well. Do you have a long-term vision? Is there a stopping point? Is there a point at which you say, “I’ve got enough rentals. We’re going to hang out at the beach,” or whatever? There are no beaches in Kansas, but you know what I mean.

I had a vision that we needed to be at this certain market cap rate. $2 million was where I needed to be. I have a $2 million property. Once I had $2 million, I was like, “I’ve made it.”

You’re going to kill that goal. Are you already past it? You’re already well past it.

That was way stupid. There’s a goal in mind where I think we should be. I know that I’m going to get there and I’m going to say, “That’s not enough. Now I’m bored.” That’s where we are. We’ve got everything in rehab. We had somebody move out of one of our units. We’re going to go back and do a really light rehabbing there. It’s going to give me something to do.

I jokingly said in the last couple of months, “I need to do something. We have to find something to buy because I’m bored.” We bought this flip not long ago. It’s wrapping up right now. We did a flip in four weeks, which is amazing for us. I couldn’t have done it without everybody in my network and the people close to me and having these conversations like, “You got to go fast. We got to do these things.” That has really invigorated me to look at this business a little bit differently.

What I thought I wanted a couple of months ago is different. What I thought I wanted a couple of years ago is different from what I want now. Having some conversations with some of our community is shaping what my vision is going forward. I don’t have it defined because what I thought was where I wanted to be is not where I wanted to be. I know that in the next 6 months to 1 year, it’s probably going to change again.

I can guarantee you need to add a handful of zeros behind that number, for sure. I was talking about this. These opportunities present themselves to us. We become more efficient at what we do. People begin to trust us more. Maybe some avenues that we didn’t even think about approaching or working towards open up for us. We have to seize the day. I know you’re doing some of that.

You did touch on the speed of rehab. You and I had a conversation about this. When I did my first flip, a wise contractor who had done a lot of flips himself said he tried to do $1,000 a day on a residential flip as an investor. What that looks like is a $28,000 rehab back on the market in 28 to 30 days. That’s pretty phenomenal. Folks who have their own crews are doing that kind of stuff, but that’s a pretty phenomenal pace. There are some guys who do it faster, but some take a year to do a $28,000 rehab. You said this last one you got in under a month. What was that budget?

We went in with a budget of $30,000. I thought we’d be a little bit under that, but we always bake in a little contingency. We went in with $30,000 and were about right on with that.

That’s a good feeling and a good pace. Even with that pace, you’re putting in HVAC systems that could be $8,000 to $10,000 depending on if you’re adding ductwork or not. Maybe you put on a roof. Those are big days. Those are $8,000 to $10,000 days. There are then all the little days where you feel like you only get $300 worth of work done because you’re doing touch-ups or whatever in the punch list. I know you have some experience with that and can relate.

We had a couple of big days. We had upwards of 4 or 5 contractors on-site at one time. Those are some big spend days. The cleaner is over there cleaning and doing the thing. We’re wrapping up for pictures. We’re down to the light days.

Being An Improv Guy

I had one. It took us 30 days to clean after the rehab and do the punch list. Those are the frustrating ones that seem to go slow at the end. It seems like nobody’s schedule works out. That’s where there are inefficiencies in the business the systems certainly help with. There are a couple of personal things here. Cassidy told me earlier you are an improv guy. We can tell a little bit with the banter, but tell us about that. What does that look like to you?

Improv is a hot mess. I got started on that when my youngest son was seventeen. He had to be eighteen to be in there, but we went with it because he looks like he’s about 30. He’s bigger than me. He makes me look small, for sure. He and I did that as something to do together. He was wrapping up high school. He’s witty. We have some banter back and forth. We always played this yes and game at home. We are always agreeing with whatever and taking it a little step further.

We started doing some classes here. There’s a little improv house down the street from me. He and I did one class, and then I did another class. The lady that runs it asked me to troupe audition. I auditioned, which was probably one of the most stressful things I’ve ever done. I do not have an acting background. That theater thing is not in my repertoire.

It was super stressful, like, “I need you to do 10 different emotions in 60 seconds.” You’re like, “I’m sorry. What? I have one emotion. That isn’t happening.” It was fun. That has evolved over the last couple of months. I’ve been taking more classes and doing shows once or twice a month. It’s fun because I can say whatever. Whatever comes to mind, you go. It doesn’t matter how crazy it is. You go with it.

Our fearless leader, Don Costa, came out to a meetup. You pulled him on stage, right?

I did pull him on stage. I had a different game in mind. We were wrapping up in his show. It was a weird show because it was the fifth year, so we were doing a little different lineup. Jessie, who runs it, said, “What do we want to do next?” I was like, “We’re going to do pillars. We’re going to bring Don up here. I’m going to make Don one of the pillars.”

In the pillars, you tap the person, they say something, and you have to use that phrase. Jessie had a different idea. We were going to do the Spelling Bee. She goes, “Let’s do a Spelling Bee.” In the Spelling Bee, we bring two people up, one on either side and then we spell words one letter at a time. Done was so pissed at me. He’s still mad at me.

Importance Of Mentorship

He deserves to be called out. That’s okay. I almost forgot. You talked about joining Don’s mastermind. How long ago?

A few years ago.

Not specifically about that mastermind, but for folks out there who are teetering on the edge of getting a coach, joining a mastermind, or even attending REIA meetings where there are other investors, how much has that mentorship meant to you?

When we attended our first meeting, we were stressed to the max. I don’t know if you remember. We were beaten down. We had been in a flip for six months at the time. We didn’t know any better than what we were doing. We were working on a lot of stuff ourselves, dragging it out. Attending that meeting, sitting in front of everyone, and saying, “Here’s where we are. Here’s our biggest stress point,” and allowing ourselves to be open and honest to a group of people we didn’t know for some feedback that sucked at the time was super hard, but I got permission to do things I’d never done. I walked out of there and Don said, “You can’t work on your shit anymore.” I was like, “I have permission to not do that? Are you kidding me?” I walked out of there with permission to change how we lived our lives and how we attacked our business. It was a game-changer.

You were the one driving all the nails at that point. You were out there doing all the physical labor. After working a full-time job, you were out there renovating these properties, getting them ready, and doing all the work that comes along with having rentals. You were doing that all yourself prior to a few months ago.

I have a pretty broad background in construction. I framed houses. I was a licensed plumber. I worked with HVAC guys doing installs and running ductwork. We did some panel swaps for some people back then. I got a wide breadth of knowledge to my own detriment at that point in time. What I knew was that old work ethic from my father. You go out there, work your but off, and get it done. We go to this meeting with people who are far more advanced than we are and they say, “Stop. You’re doing it wrong.”

One of the greatest gifts I gave myself a few years ago was that I stopped mowing my own yard, as silly as that is. We can hire people who are typically better than we are at these things. This is what they do every day. I know you have some skills, but there are people who do this stuff, who lay tile every day, who put on roofs, who service rentals, and do all these things. They’re certainly better at it than me.

I know this has opened you up to grow. I want you to give yourself a little bit of grace because you managed all that growth that you did prior a few years ago by doing all the work yourself and working that full-time job. To inspire the people out there who are working and want to quit their jobs, I’m not telling you not to leave your jobs after you become a successful real estate investor, but what I am telling you is that Ely has proven here on this show that it does carry some merit and some weight and helps with financing and sometimes through the cashflow crunches. You should be very proud of yourself for that.

Thank you.

Conclusion

We’ve been on long enough. I could talk to you all day. What is the Seymore alter ego?

How did that come up? I got to know about this.

Me and your wife are friends. She hit me up.

Seymore is the guy who calls you out, checks out everything, and has some commentary about what’s going on in the flip. When Seymore sees some crap, Seymour makes a video. Seymour was born out of some fun times we had at our first flip. We were commenting on some stupid stuff that was done by the previous owner who tried to flip it and gave up. There are a couple of TikToks out there. There are a couple of videos. I know some people have asked me to do some more. At some point, I’m going to have to don the yellow hard hat and the safety glasses and knock another video out.

I love it. You should be posting this stuff on social media. I love you. I thank you for getting on with me. Good luck with what you’re doing. You should be proud of the portfolio that you’ve built and the things that you have coming in the future. We are going to see great things out of you.

Thanks.

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I want to thank Ely for joining us on the show. You can go to FlipTalk.com to see everything we’re doing. If you want to reach me, you can reach me at Ben@FlipTalk.com. I’d love to answer any of your questions that you might have or maybe give you a little inspiration by sharing some stories of my own. Everybody, have a great day. I look forward to seeing you next time.

 

Important Links

• Ely Randleas
• Ben@FlipTalk.com
• TikTok – Seymore