Lee Waldrop always wanted to build an ecosystem that can revitalize the community and do something good. That is why he founded Revitalize Realty. Alongside his team, he manages Revitalize Construction, Revitalize Heating & Air, and so much more. It does get tiring but that doesn’t stop him because of his drive for revitalization. Join Don Costa as he talks to Lee Waldrop about how he grew and scaled his business. Discover how he started doing creative financing, property management, and more. Learn how to get started in real estate and really grow your business.

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Lee Waldrop: Creating A Real Estate Empire With Revitalize Realty

I’m here to drop some more content with another cool guest. In this episode, we’re going to talk about some cool stuff. Before we get into that, as always, I want to discuss a little business with you. The first thing that I want to make sure that you do is that you read this episode all the way through, and then when you’re done, you go to FlipTalk.com, and you check out what we have going on in the Flip Talk universe. All the latest episodes are there. We’ve got some free stuff as well. We have events, some mentoring and coaching, and an incredible mastermind community, and to stay in the know about what we have going on. With that said, I’ll put that aside. Lee, how are you doing?

I’m excellent.

Before we get into what you do, I’m going to tease the audience here. You have a lot of things going on, which we’ll talk about, but you are the exception to the rule of not staying in your lane and being successful. We’ll talk a little bit about that. Let’s talk about how you got started in real estate investing and what that looked like.

I started and bought my first rental house in 2011. I had always been interested in real estate. I graduated in ‘06 from grad school. I went into the corporate world for a while. I was going to have my W-2, and buy 1 or 2 rental houses a year until I finally stopped piling enough when I was in my 50s to stop my W-2. I got a little aggressive.

When I met my wife, we decided that we were both not passionate about our corporate careers. I was in the grocery industry and she was in the financial industry. We both quit our jobs at the same time and downsized. My wife held down the fort where I started investing in real estate full-time in January 2011. We started doing creative financing.

 
I left a corporate job behind for years. I was not making as much money as I was making on my W-2. A lot of times, I almost threw my hands up in the air and stopped doing this whole thing, but continue to grind on. I started back then just by myself with creative financing techniques. We can talk about some of that as well. I started trying to get established in the fix and flip later on. That’s how I got my start. I jumped in head first and did it.

At first, you won't make as much money in real estate as you would in a W2, but don't throw your hands up. Just continue grinding on. Click To Tweet

What did the first couple of deals look like?

I was stubborn and I didn’t get a mentor. I went to school of hard knocks, but I read a lot of books. My first deal was an owner-finance deal. It was 2011. I had about $10,000 in my checking account. I am an owner of a finance deal. The down payment was $8,500. The whole house needed to be painted and cosmetics. I did all the work myself and then, obviously, I was out of money. I think I was a little naïve in that first one. It was in Birmingham, Alabama.

I was not cashflowing when I rented it. I thought I was going to be able to owner-finance it to somebody else to do a wraparound mortgage. I thought right off the bat, “That didn’t work,” then I tried to rent to own it. That didn’t work. It was 2011. Nobody had that much cash that I needed to recoup my down payment so I could rinse, repeat, and do it again. I ended up renting it normally.

I was losing about $100 a month between the time I paid my owner finance, mortgage taxes, insurance, etc. I almost failed before I got into it. Years down the line though, that deal ended up making me a lot of money, but needless to say, I didn’t give up. The second one was a lease option deal. I promoted myself the next 2 to 3 deals as an all-inclusive property manager. I said, “If you lease this house to me with an option to purchase for 45 years, then I will do all the repairs necessary.” That’s not an insurance claim.

 

I would look at a house to say, “I think the fair market value for this house might be $140,000.” I’ll lease the option, buy it for $100,000 and then I will do all the repairs. It’s not heavy lifting, like fixing and flip type of stuff, but up to $10,000 of work. I would do all the work myself. That’s the only way I was able to get into my next deal with $0 in the bank account, but it’s a $500 option fee to get into the deal.

I did the work myself. I scratched my credit cards to try to buy the paint to paint the walls. I moved into a sandwich lease option or the tenant-buyer, and they paid me a couple of hundred dollars more than I was paying the owners. Their purchase price to me was $140. I kept renting and repeating that every time I’d get an option down payment for my tenant-buyer, I would find the next one and give a part of that to the new owner.

I had 24 between owner financing and lease options in my first 3 years from 2011 or 2014. It was a hustle. It was a grind. A lot of these people did not buy, then you had to go in and get the house ready to rent for a new tenant-buyer. The market didn’t go up as fast as I thought it was going to go up. That was a little scary time as well.

The sandwich lease options, the owner financing, had one private lender foreclosed on a guy and a fix and flip guy. He was like, “I want my money back.” I said, “What about $0 interest and I’ll pay you $300 a month?” That was one of my best deals where I paid down the principal of $300 a month and rented it for $850 a month. It was creative deals like that where he didn’t make me put any money down. I was able to scratch by until I could sell a few of these things and get enough money to start looking at more traditional options of investing.

What was the catalyst for getting momentum? What was the deal? The best way to ask is what puts you over the edge? Was it the amount of deals you got to put together or was it 1 big deal or 2 that put you over to, “I can look at this as a real business and start getting some momentum?”

It wasn’t like a big moment where I hit a home run deal. We decided to move from Birmingham to Gulf Coast because we loved being by the water. It was about a four-hour drive. I still self-managing my 24 rentals, my lease option tenants up in Birmingham, four hours North and I decided to become a realtor. I was born and raised there. I knew realtors I could have MLS access, go to any house I wanted to do, have relationships to make offers and all that.

On the Gulf Coast, there are zero relationships like that. I studied to be a licensed realtor, and there were no big cash-out events from Birmingham for a couple of years when I moved down here. It was more about making commissions. I hooked up with the local builder, represented a neighborhood, and did some real estate sales traditionally while I learned the market.

I was able to make relationships and investment clubs down on the Gulf Coast. A couple of years after living here, some of these lease option events started cashing. It would be $10,000 to $15,000 at a time. Finally, when the market started turning a little bit, I started selling these off. If a tenant decided not to exercise their option to purchase, I would put it on MLS and sell it. The very first house I bought, I ended up selling for about $40,000-something of profit. By the time I paid the mortgage down, that was truly about $60,000 or $70,000 in the bank. If you have to say what one event it was, it was probably the first deal I bought in 2011. 5 or 6 years later, I put $60,000 in the bank after I was already still putting along then started growing my business down here on the Gulf Coast.

What were some of the things you did to start growing your business at that point in time? What decisions did you make? How did you position yourself? What kind of marketing did you do?

It helped that I had the experience. I started building a reputation down here based on some of the stuff I was doing in Birmingham. People knew, “You already owned 24 houses. You’ve done some creative financing, this and that.” I set up with hard money, a couple of private money people down here on mobile based on all my real estate. My realtor network was great because I clinged onto the guys that were realtors but also investors. I hung around in that sphere of network for a while and started buying rentals here. I thought I was going to go with the property management company. I tried it out. I fired both of them after a few months because I come from self-managing for 5 or 6 years.

If you want to grow your business, you have to build your reputation and relationships first. Click To Tweet

I was probably the worst customer for a property management company because I had such high expectations. I was already a realtor for a couple of years. I was eligible to become my own broker. I ended up having a commercial building that was zoned residential and commercial that I was renting out. A renter moved out of it. I decided, “I’m going to move in here by myself.” I moved into the office and became my own broker.

I’m buying rentals. Renters would come up here and pay rent. I would try to do realtor deals and investment deals. It started compounding after that, hired an assistant and a project manager and it seemed like month after month. The stuff that I hated doing, I would hire for it. My wife and I started fixing and flipping.

Let me back up for a minute. When we moved to the Gulf Coast, my wife left her W-2 job for good. We were bringing in a little bit of money from my realtor sales and all that. She finally decided to quit her job. We went into fixing flipping houses exclusively. I would buy some rentals on the side, which she didn’t care about at all then we would also 2 to 3 flips ongoing at any time and that was probably our life for a few years before the business started taking off and we started hiring people.

The question I always get is, what should your first hire be? I’m curious. I’m going to ask you that question, but I’m going to ask you what your first hire was.

The very first hire was a project manager. I don’t know if that’s the right answer or not, but I was sick and tired of going to every job site every day because that’s what you have to do to manage or cats all these contractors especially, we’re trying to cheap it out and go subs the whole way instead of a GC. It wear me out. Every time the drama on every job site, the paying everybody in the driveway on Fridays, my own lack of organization. I hired a project manager and I didn’t want to do that mess anymore. That way, I could make higher-level decisions, look at budgets, look at a reputation of a subcontractor and let the project manager go to the job site and walk room by room with each sub. That was my very first hire.

 

You said you don’t know if that’s the right answer or not. There isn’t a right answer in the grand scheme of things. It’s what’s right for you. The answer you used to give people is there is something you hate or you suck at. That should be your first hire. If that was what you hated to do and that’s what took time out of your day from making money, then that should have been your first hire.

I relied on some more 1099 people as well. When I was fixing and flipping and working long hours every single day for a couple of years, I would on weekends be a realtor and then do open houses. You’re in your own house that you fix and then you’re cussing the painter on a Sunday because you’re seeing all the lines because you have nothing to do but sitting in a vacant house and looking at the walls. I was like, “I’m a realtor. I’m going to take a 25% referral fee. Don’t mess with me. A realtor handles it all.” That was the second thing I did, which was outsourced to somebody else, but it was like a weight off my shoulders when I did that. I was like, “I can still make a 25% referral for selling my own stuff, but do not have to deal with it.”

Some people will try to jump over dollars and bigger pennies and, “What’s the value of your time with your wife and with family?” Sometimes it’s better to pay somebody else to do it you can relax and then recharge and refocus.

You don’t have the choice because it’s like, “I need that commission. We have to have that to eat.” In the beginning, you might not have a choice, but know that it’s a means to an end if that’s your goal. Suck it up for a little while and then scale out of it.

What does your business look like nowadays?

We got a little over 40 employees, 9 revitalized companies, and a couple of other side companies. We’ve got an apartment complex and storage units, but our bread and butter are fixing and flipping rentals and selling them in the turnkey model to passive investors. We run an operation. We’ve got three offices in mobile. Wholesaling is the beginning of the supply chain then we have our property management.

We have our construction company that remodels all of our properties and also has a division that does all the make-ready turnover stuff that’s above and beyond our maintenance hourly guys in the property management company. We do construction work for our property management company and also our fix and flips. We have a property management company where we mostly manage single families and small multifamilies in Mississippi and Alabama.

We have heating, air, and lawn care that feeds off that process, but also we have outside clients and more traditional standalone businesses. We have a disposition company that all the hotels that we do, the slow value add when I buy something, raise the rent at lease expiration, etc. All those go to MLS. We have a disposition entity that provides education for investors whether you want a cheap cash deal and creates your own equity similar to a wholesaler hotel deal, whether it’s a reliable rental. It’s a normal rental house. It’s got an average age of systems or whatever. You’re probably getting into it at the 1.5% rule.

You’re looking at turnkey, which we usually sell for about the 1% rule to where it is fully renovated with warranties and all that. That’s a little ecosystem. We’re trying to hold together to all accomplish the same things, buy a distressed property and run it through our revitalized system and sell it or keep it as a forever company asset. If we get a tranche of 8 or 10 of these that somehow don’t sell throughout the process but are still good assets or whatever, we’ll look to put them on permanent financing.

 

We’ve chosen to name Revitalize because we want to revitalize the community here, on the Gulf Coast and in every neighborhood we work in. That’s the main goal out of all of our business entities, no matter if it’s long care or if it is wholesaling. We try to make sure that all these houses we touch or revitalize in some shape or form and add value to our community.

Do you have a manager in charge of the HVAC or are you trying to be the CEO of everything?

I do not want to be that. I’m still sitting in that seat a little more than I want to be. We try to have an integrator in each company. Todd is the integrator and co-owner of our wholesaling company. He works greatly more in that entity than I do. We have different models, like in our heating and air, I have a profit-sharing plan with the guy that has his license and that is a general manager that runs our four guys. I oversee the bigger picture of it, the strategy of the marketing and all that. I have somebody that sits in that general manager integrator, co-owner type of role in each entity to take it off my plate.

Our remodel company? I do not have that person. I’m sitting in that seat. That’s one thing that I’m working on now in trying to figure out what’s going to be the right organizational chart for me to eventually step out of being the visionary and the integrator for this whole thing, whether to hire a COO that oversees the whole thing and I talked to that person. That is a working process, a twelve-month goal type of deal to see where that shakes out. Between property management and construction, those are the two ugliest businesses. Renovations on remodels and managing tenants, contractors and renters.

That’s overwhelmingly more time than every other business. I spend about 80% of my week in those two entities. Making sure that the core of this group of companies stays intact and organized. What we’re trying to do is develop systems and processes to work my way out of always making a lot of those decisions and being in all those meetings because it is a glue that holds it together. How much money do heating and air make off of property management and construction being a well-oiled machine? They feed off that, but it’s easy. I don’t have to run that. They take the jobs we give them. That’s where I would like to evolve out of spending my time.

Todd, who is the COO of your wholesale company, does he have a piece of the company?

He did it for a few years, but commission only. I owned 100% of the business and all that. It was a bold move that was a gut feeling. I was like, “This thing wouldn’t be anything if it weren’t for him because I don’t spend any time on it. I might talk about a marketing session and budget meeting in terms of what we’re going to do in that arena, but I don’t do anything in that.”

After about two and a half years and building that strong relationship with Todd, I decided to give him half the company, basically, sweat equity earned. Now he’s got way more incentive and authority to do things. I know what type of character and person he is in terms of not abusing that. It’s a risk for me, but it’s something I felt that owning 100% of all these companies was not fathomable for me to be that person for every single entity.

Is he contained to the wholesale business then, or does he have pieces of other businesses?

Just wholesaling. It’s Revitalized Home Buyers. It’s the first step and then it works its way up through the chain. We’re growing that business and trying to do a lot more wholesale deals so we can take all because, in a lot of it, we were buying every single wholesale deal he had. We’re growing that. He is a realtor and we have different incentives, which is cool with our organization that Todd, any of the other co-owners or employees can make commissions in every single arena. Our maintenance guys wear shirts with, “We buy houses,” and they can make a commission from home buyers.

They can make a commission by referring a house to buy and a management house for an owner for us to manage. For a heating and air install, they get a commission. For a twelve-month lawn care contract, they can get an incentive. We’ve got this commission sheet where a lot of our guys can ride around town and try to make some extra cash. We’ve got all those guys on DealMachine and doing stuff to where it’s a little bit of incentive to bring some stuff into our organization.

For those of you who don’t know what DealMachine is, it is an app that allows you to do driving for dollars and track your progress and has a bunch of other cool bells and whistles. This is coming from personal experience, do you find having to switch hats between businesses? They all feed each other, but they’re all different businesses. Do you find that that can be challenging personally sometimes?

That’s something that I never know what could have been. I think about it daily in terms of, “What if I kept my blinders on and focused in one arena?” Every time I make a little bit of money, it’s like I look at a shiny new object. It’s almost been a curse and a blessing. You get stretched so wide. It is messy. You can’t control everybody and everybody working. It’s been very challenging. Now I wouldn’t change it, but I think it’s created a lot of growing pains and stress and definitely prevented a lot of revenue from going into my pocket by starting new entities.

Running multiple businesses can be both, a blessing and a curse. You will be stretched so far and wide that it will be messy. Click To Tweet

What I envisioned when I first started this thing many years ago was like, “I don’t want to have some rental houses. If that’s what you want to do, that’s fine, but I wanted an ecosystem that could change the community and do something good.” 2023 is a year of not starting all these new companies. We have to get good at what we’re doing.

We have enough in our ecosystem right now. It comes in waves for me. I was in huge growth mode and I’m still in growth mode, but now it’s developing and defining what we do. I would love nothing more than our group of companies now to be able to pick those up and put them in another city and change a few things according to that city, but still operate how we do things. It’s refining the systems in 2023, for sure.

What advice would you give somebody just starting out?

I would probably get a mentor because I read a ton of books. I thought that I knew everything, and I knew nothing. I would ask questions and try to get a mentor, even if the mentor’s free, some type of a person who has done what you want to do. I would define what it is that you’re passionate about. My passion for stuff organically grew. When I first bought my first rental house in 2011, I never even thought that I would want to do a heating and air company. I never even thought I’d want a property management company. I wanted to be passive.

 

I wanted to give that to somebody else once I could afford it. I would define what you want to do and how far you want to take it. I want to take it far and I’ve been aggressive. I’ve put a lot of risks out there. For a lot of risks, there are, hopefully, a lot of rewards. I would take it slow as well, for the most part. I know you can get ramped up quickly with wholesaling. I’d also be humble. That’s one thing I was not when I started out. I’d go to these real estate clubs and say, “I got 24 houses. I’m the greatest gift of mankind.” It killed me. There’s always going to be somebody more successful than you as well.

As much as it paying somebody like myself to take it slow, if I didn’t get 24 houses in 3 years and I only got 10, I guaranteed my family life and my stress level, the profit per deal would’ve been better instead of getting into every deal that I could get into because somebody’s going to let this young kid newbie control their house. I would make sure you do not have analysis paralysis, but you have to jump in.

If you know the basics, first of all, do it, but then methodically make sure that you have a game plan for what you’re doing and not get into too many lanes as I did. That’s what I see some of these guys do all the time. I’ve seen new guys coming up on the Gulf Coast that it’s like, “I’m wholesaling.” Through that venture, they know hard money lenders, title agents and etc., and then they start getting all these rentals. Those are snowballs. Now they can’t afford all these junky rentals they bought. They might get into some commercial deal or this or that or like, “I’m renovating some house. I’m fixing and flipping. Now I’m going to develop a neighborhood and build.” I’ve seen some horror stories around here. Be careful.

Readers, mark my words. Everybody is great and wonderful at what they do as long as we’re in a hot market. When the music stops, there are going to be some rude awakenings. That’s something that I learned the hard way and I noticed from experience. This has been a great interview. Tell everybody how to get ahold of you if they want to reach out to you.

LinkedIn and Facebook at Lee Waldrop, and Revitalize.company has a little rundown of all our companies and links to all of our individual companies. You can email me at Lee@Revitalize.company or find me on social media.

You’re part of our ICE Community. You’ve been to a couple of meetings. What would you say to anybody considering being part of a mastermind or feel like it’s time to be part of it in general? How do you feel about the ICE Community?

I’ve been contemplating joining a mastermind for years because most of the people that I run around with in circles down here are part of some mastermind. It’s usually like Investor Fuel, CG, one of these Carrot masterminds or something. I’ve thought about it for a long time. I feel like you go, sit in this huge room of people and then it’s like, “I’m paying $30,000 for this thing?” I didn’t pull the trigger on it because I didn’t think that my ROI was going to be there. As I’ve grown in business, it’s all about networking.

My day is from swinging a hammer and doing everything to meetings and network. It’s a whole shift. If I had done that earlier and joined a mastermind, I think opening the doors to education, private money or sharing deals. It could have looked a lot different. My trajectory on growth could have been a lot quicker. I would highly suggest a mastermind. I should have done it years ago. I was stubborn. I had my head down working and didn’t look up to do something like that. Especially if you’re coming from a position where maybe you do have some money, you want to learn and be part of an experienced community, it can avoid a lot of pitfalls.

There’s been plenty of stuff, fix and flips. I’ve lost $20,000 or $30,000. My worst one was I lost $81,000. I made some basic dumb mistakes. If I had done a part of a community, I could have paid for itself for 5, 6, or 7 years if I had a colleague say, “Don’t buy that deal.” The intangibles you get out of it are well worth it.

If you’re getting value from this show, make sure you like and subscribe. You can find me, @TheRealDonCosta on Instagram, and make sure you check out FlipTalk.com for all the amazing things we have going on in the Flip Talk universe. Lee, thank you for being with me.

My pleasure. Thank you. See you later.

 

Important Links

• Lee Waldrop
• LinkedIn – Lee Waldrop
• Facebook – Lee Waldrop
• Revitalize.company
• Lee@Revitalize.company
• ICE Community
• @TheRealDonCosta – Instagram