Getting into real estate can be a bit tricky since there are so many places you can start investing into. One great business strategy for those who want to put money into this industry is to look for a reliable and trustworthy mentor. This is what Mark Hayes did when he first invested in real estate, and now he returns the favor by mentoring other investors in jumpstarting their own careers. He joins Andy McDowell to share how an engineer like him found success in fix and flips and eventually passive investing. Mark breaks down tips on mitigating risks in real estate investments, transitioning from an active to a passive investor, and working on your business instead of in it.
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Why Mentorship Should Be The First Step In Your Business Strategy With Mark Hayes
GROWING YOUR REAL ESTATE BUSINESS INTO AN INVESTING BUSINESS
My name is Andy McDowell, one of your co-hosts. Unfortunately, my partner in crime, Zach Levy, is not going to be able to join us due to a scheduling conflict but I’m going to welcome a gentleman that I’m excited to bring into the conversation. His name is Mark Hayes. He’s out of Nashville, Tennessee and in the real estate market. Mark Hayes has been in real estate investing since 2002. Over his career, Mark has renovated or built over 100 homes and has rental portfolios in both Nashville and Clarksville, Tennessee.
Mark Hayes has a Civil Engineering degree from Vanderbilt University. After graduation, he gained engineering experience as a project manager and was a construction consultant on many large commercial projects. Mark has been a licensed real estate agent since 2004 and is an active member of the American Association of Private Lenders as well as Real Estate Investors of Nashville. With his background in engineering and real estate experience, Mark understands the importance of acting swiftly with flawless execution so clients can succeed.
Mark,
welcome to the show.
Andy, thanks for having me.
It’s probably nice to have a fellow engineer on the show. We come from different conferences in the sports world but it’s nice to have an engineer represented. Tell me with your engineering field, do you always target going into the residential world when it came to construction when you first entered school at Vanderbilt? Was that something you fell into along the way?
What’s interesting is I was always good at Math and not so great with English in school growing up. My Algebra teacher in high school said, “You should go into engineering.” This was in ninth grade or something. As I got to be junior or senior, that came up again. I explored schools that had engineering because I realized that was something that I was interested in, having that math experience and skills.
I didn’t know what part of engineering was at first in my freshman year at Vanderbilt. I ventured toward civil and environmental engineering. Coming out of college, my whole thinking was, “I’m going to get a job in the engineering world. That’s going to be my career. I’ll move up in a company or go from there.” We did consulting on larger construction projects with the engineering job. It became boring, to be honest. The type of field I was doing was geotechnical and environmental. It was writing a lot of reports. It wasn’t necessarily the engineering I thought it was going to be like solving a problem.
Is it in the fieldwork?
You go out in the field but then you had to write a report. There were some times when there was this boiler plate report. I was falling asleep trying to write this report. This isn’t what I was cracked up to be. I read the book Rich Dad Poor Dad after a couple of years of working in engineering. I always wanted to do something and work for myself or go into business. That opened my eyes to doing something else
but you’re also learning. There might be a table topic on rental properties or someone speaking about multifamily properties or flipping homes and that sort of thing.
They integrated those two. Education and networking are important because that’s going to help you find what avenue in investing would be interesting to you. Those are the main two that I tell people. The third is to get to know an area well. The term in real estate agents is farm an area. If you’re from Alpharetta in Atlanta, you might see a real estate agent and that one agent that has signs all over the place in that one part of town. They have farmed that area. They know that area well and they have gotten clients. They become an expert in a certain area.
I wouldn’t say I was necessarily nervous or scared in the beginning because my whole thinking was, “If I fail at this, I can go back to doing engineering. I can wait tables and make some money.” I got let go in 2001 from my engineering firm. They had some growing pains. I was excited because I was like, “This is my chance to go out on my own,” but I did go and get a handful of part-time jobs that gave me the flexibility to be able to work on real estate and learn about real estate during the daytime.
When I met my wife in 2003, she said, “When I met Mark, he had five jobs.” It was all these different flexible-type seasonal jobs or part-time jobs to make ends meet but I did have a time early on when things were a little tight financially. I was laying in my bed one night almost in a fetal position, “Is this going to work?” I was scared at a point in time but I tried to be smart about it and mitigate risk. I prayed at that moment, “This is the right path for me to take.”
Shortly after, things started happening. In 2005, I was able to sell three properties. I had a couple of them for a couple of years but I was grinding it out slowly and not knowing if I was going to make any money. I sold these properties all around the same time at the beginning of 2005. That allowed me to go full-time in real estate investing where I could quit the little part-time jobs.
Do a little education for me. Imagine there are different types of real estate investors. One might be you’re buying a property and holding on to it with the hopes that it appreciates. You sell it sometime in the future and make a profit on the property. There are others like the flippers. You buy a property and you’re going to do some remodeling or some work that would increase the value of your property.
Within 3, 6, 9, or 12 months of acquiring it, you’re going to sell it so that you can use the profits from that and do it with another one somewhere else. A third might be you’re doing new construction from the beginning like a builder per se. You’re going to build some piece of real estate and then price it. You’re investigating the market. You’re going to build a certain piece of property in an area that you think you can make a profit on when it’s all said and done. When you entered the business, which type of category of investor were you?
The good thing about real estate investing is there are a lot of different ways to make money and be involved in real estate but it can also be negative because it can be so overwhelming. As a new investor, you might not know which route you want to go or which route you want to learn more about. That’s part of the reason why I’m writing a book about real estate investing, which we can talk about later.
One of the things I learned from someone is to get a mentor or someone smarter than you. I met a guy, Steve Fouche, here in the Nashville area. It was from calling. Back then, the newspaper had a little section about handyman specials and property sold as is. He had an ad in the paper and had this house cheap in this neighborhood that was okay but I didn’t know much about it. I met him over there. I didn’t end up buying that property but I could tell that Steve was very confident and knew what he was doing.
I kept calling him and asking him questions. I asked if I could shadow him for a day. What he was doing is what’s called lease options or lease purchases. He would buy property, do some work to it, and then sell it to someone on a rent-to-own basis. There are some benefits to doing that. It’s a rental property but those people have the intention to buy it. They take a little more ownership of it. They’re responsible for the maintenance. He mentored me and that’s the route and the method I was looking at in the beginning.
The first property that I purchased was a duplex. It was a single-family home with an in-law suite so I bought that as my personal residence. I was able to get an FHA loan. I lived in the in-law part and then rented out the rest of the house. That’s a great way to enter the space because after the expenses and the rent coming in, it was a break-even deal. Was keeping my living expenses low plus I was getting a little experience in property management.
What do you feel is the biggest challenge if somebody was looking to get into this type of business? If you wanted to be a mentor to somebody, you followed a mentor and they gave you advice. Between the combination of the advice you got, plus your experience, if you met somebody at a dinner party, for example, who said, “I’m interested in getting into that business,” what would be the three things you tell right off the bat that they need to do to set themselves up for success in the future?
The first chapter of the book that I’m writing is called Dipping Your Toe into Real Estate Investing. The title isn’t finalized but it’s for that type of person. They don’t necessarily want to get into real estate investing as a full-time gig or business but they would like to be involved in real estate investing in addition to investing in their 401(k) or other avenues. They don’t know where to start. The two things that I talked about in that chapter are education and networking. They go hand in hand.
For example, I’m a member of REIN, which you mentioned in my bio. It’s Real Estate Investors of Nashville. Those associations are around most major cities in the US but there are other investment groups as well, local ones or even online. You’re networking and meeting other people in the business but you’re also learning. There might be a table topic on rental properties or someone speaking about multifamily properties or flipping homes and that sort of thing.
They integrated those two. Education and networking are important because that’s going to help you find what avenue in investing would be interesting to you. Those are the main two that I tell people. The third is to get to know an area well. The term in real estate agents is farm an area. If you’re from Alpharetta in Atlanta, you might see a real estate agent and that one agent that has signs all over the place in that one part of town. They have farmed that area. They know that area well and they have gotten clients. They become an expert in a certain area.
What I did is I decided on West Nashville. There are some neighborhoods called the Nations. This is where my office is in Sylvan Park. There are 4 or 5 neighborhoods within this ZIP code. I would drive up and down the streets and get to know what things are selling for retail and then what lots are selling for. You get to know that area. That way, when you find something coming on the market, you know pretty quickly, “Is this a good deal or not?” It potentially could be a good deal. Getting deals is being able to act promptly and quickly, especially in a competitive market.
While we were talking in the green room, you made the statement that you’re a passive investor. Maybe you can educate me and the audience. I would have to imagine the other side of the coin as an active investor. What is the difference between a passive investor and an active investor?
I served my time being an active investor. I used to manage my renovations. I would go and find the deals. I would manage my properties and handle the financing. There are a lot of day-to-day things to do when you’re actively investing, especially when you’re doing flips with a lot of construction and you’re doing multiple ones. I transitioned from doing flips and buying rentals to developing and buying teardowns or lots where you could build 1 or 2 homes in 2011 or 2012.
There’s so much development going on in the Nashville area. It has been like that in Atlanta as well as other cities. There was a new construction boom that has been going on. The codes departments have followed behind on so much activity and put more things into place, which I understand. They had to put in some more stormwater regulations and then other inspections.
In Nashville, they added sidewalk coordinates. All these different things kept adding up where it went from being able to build a house in 4 to 6 months and going and pulling a permit in one day. Pulling a permit took a week or so to get all the different sign-offs. The building was taking nine-plus months. This is before COVID and the supply chain issues. I started looking at how I was running my business from a development standpoint and going from building 2 to 4 homes to 6 to 10 homes at a time.
I wasn’t making more money because things were taking longer and the expenses had gone up. I asked myself, “Why am I doing this?” The word in COVID times pivots in the business world. I pivoted before COVID in 2018 and started to transition into doing loans for other investors. At my office here on my computer, I can do loans for other investors. They apply so I can do all my research from here, build a relationship with them, and I’m able to do deals.
I’m earning interest on their construction loan or the bridge loan that we do. I’m not actively out there doing the construction. I’m more of a passive investor. Now that I’ve had the rentals for a while, I now have property managers handling those. That’s passive. There’s little time that is involved when there’s a large maintenance request or a vacancy but it’s a lot less time than when we were managing in-house for sure.
You did what I talk a lot about on the show and to my clients about the difference between working in your business or working on your business. You’ve spent time working in your business, being an active person, and managing the projects, the remodeling, and those types of things to accomplish your goals. You’ve built a business big enough that you can now be a passive one and be working on your business, instead of all of this activity on a daily basis trying to manage things in the tactics of the business.
You can now focus on bigger items and pictures. Maybe you want to get into a different area or branch of real estate. That now affords you to do it because you’ve got the time to do it. You’re not worried if the shipment of lumber got in, the crew showed up, or all those tactical things in the day-to-day of getting whatever accomplished so you can put it back on the market.
Flipping homes and building homes is not for the faint of heart. It’s hard work. A lot of people see those shows on HGTV and think, “I can do this and make all this money.” It is stressful and difficult. There are fires to put out all the time.
You have to deal with permitting, the local government, and all those things. I have a client who’s in the remodeling business. I hear horror stories about that.
Some people do it well. They can put things in place to do that but when you’re managing construction projects, it’s almost adult babysitting because you’re overseeing all these different people. If you build one house, you’re dealing with twenty-plus subcontractors. Even when I had a general contractor building them for me, I was still involved because there was a lot to do and a lot of decisions to make as well.
Make your feasibility study a feasible business.
Out of that, sometimes it has developed a relationship and a connection, which is also beneficial to both of us. It’s having an impact on the community because we all only have a certain period. We only have so much time each day. When we spread our experience and teach others that then they can go and do the same to others, our experience gets spread wide and therefore, impacts the community in our surroundings.
Philanthropy is a big thing for you. You spend time as a volunteer at Big Brothers Big Sisters, Habitat for Humanity, a number of ministries, as well as some other nonprofits. This is the second question. I was setting you up for the first one. What do you feel is your why in life? If your work in philanthropies and the communities and what you did as a career or still doing as a career and so forth are all the pieces of the puzzle together that build what your why in life is, why would you say that is?
My why, first of all, is to be a great husband and a great father. I’ve been married to my lovely wife, Dawn, for many years. We have four kids. We develop their character for them to become adults in this world. That’s first and foremost. From there, my why is impact. That would be the word if I was to narrow it down to one word because I feel like if I don’t, then it’s selfish. That’s not just giving up my time and experience but also financially as well.
When we pass on from this life, we’re not able to take any of the money with us. It stays here so we want to make an impact financially. I’m fortunate to be able to do that now with the different ministries that my wife and I believe in and in my time mentoring others as well in the business world, especially. My wife and I have a bigger goal financially of setting up a charitable foundation. In that way, we can make an even bigger impact.
As I look at the clock, unfortunately, our time is coming to a close. I want to greatly thank you for coming on to the show. As I informed you in the green room, we always end up our episodes with the same question for our guests. There’s no right or wrong answer to the questions about what’s in your heart. Mark, what do the words, “Generate your value,” mean to you?
It’s to make the best out of the time that you have. There are a lot of distractions and ways to waste time. Be impactful in your life. We all need some downtime and vacation. I’m not saying do any of that because I need to unwind and play pickleball as I like to do and golf and go on vacations with the family and all. Making the best use of your time while you’re on this Earth is a way to generate value.
Make the best out of the time you have. There are a lot of distractions out there, so focus on being impactful in your life.
If somebody was interested in what you’re doing in Nashville, real estate investing, or anything of that nature, what would be the best way for somebody to find you or get ahold of you?
I have a website, MarkHayesInvestor.com. That has my bio and more information about me and how to contact me. My company website is BridgeSouthInvestments.com.
Once again, Mark, thanks for coming to the show. You certainly educated me. I haven’t spent a whole lot of time in real estate investment other than to be able to put a roof over my head from that perspective.
I’m sure you could teach me a lot about aerospace engineering one day.
I’m sure. We all have our specialties but for the audience, I hope you got some golden nuggets out of this conversation, particularly when it revolves around how important it is as you grow your business to do it in such a way that you can pull yourself out of it, get out of the day-to-day work in your business, and start working on it. That’s when you truly become an entrepreneur. You can start looking around as Mark did. He decided to invest in other ways by investing in startups and other businesses. He’s truly concentrating on the word investor.
It doesn’t matter now, whether it’s real estate. It’s about where he feels like he can get his best return on the money and the wealth that he’s acquired in his business. I hope you take that away from it. I greatly appreciate you reading this. We always like to hope and think that we’re generating value in your life to tune in and get to meet another great individual and entrepreneur in this world. We hope to see you when we release the next episode. Have a great day. Keep generating your value in this life. We will see you next time. Take care.
IMPORTANT LINKS
- Mark Hayes
- American Association of Private Lenders
- Real Estate Investors of Nashville
- Rich Dad Poor Dad
ABOUT MARK HAYES
Mark has been a licensed real estate agent since 2004, and is an active member of American Association of Private Lenders (AAPL) as well as Real Estate Investors of Nashville (REIN). With his background of engineering and real estate experience, Mark understands the importance of acting swiftly with flawless execution so clients can succeed.
Mark has authored many blogs over the years and is currently writing his first book. “My goal is to help other investors act quickly to get a deal, complete the project and transaction to close the deal, so they can continue to do more deals.”
Mark Hayes is an active philanthropist, both with his time and financially, and is dedicated to his community. Mark has spent much time as a volunteer with organizations such as Big Brothers, Big Sisters of Middle Tennessee, Habitat for Humanity, Charis Ministries, and Preston Taylor Ministries. He has also contributed to numerous non-profits, such as Vanderbilt Children’s Hospital, Nashville Rescue Mission, Metro Nashville Police Youth Camp, Nashville Fire Fighters, Mission to the World, and Samaritan’s Purse to name a few.
When Mark is not working, he can be found shuttling one of his 4 children to hockey practice, spending quality time with his wife, on the golf course, or playing pickleball. You can learn more about Mark here: www.markhayesinvestor.com
