It’s no secret that real estate investing has become more difficult in the last year. How can you protect yourself to ensure your real estate business survives the storms in the market?
We’re joined by our special guest, Leon Barnes, with The Collective Genius mastermind group. Leon shares how some of the nation’s top investors have been able to pivot and protect their businesses in this climate.
Tune in to find out how!
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Listen to the podcast here
The ONE Thing That Will Protect Every Real Estate Investor Right Now – With Leon Barnes
Welcome to a show that’s for you, those who work so hard for your money. You want your money to start working harder for you right now. You want that freedom of cashflow today, not 30 or 40 years from now. You want it right now so you can live that life that you love with those that you love. Most importantly, it’s not about getting rich, is it? It’s about living a rich life because as you are blessed financially, you now have a greater capacity to bless the lives of those around you.
That is exactly the ripple effect I’m here to create for you. Thank you for tuning in. Thank you for binging. You have been sharing this with others. As a result, you’ve put us in the top 0.5%, 1% of shows. That’s all because of you. Thank you so much. As a reminder, if you haven’t done so already, for more information and you want to check out more stuff, check out MoneyRipples.com. We even have a Passive Income Calculator on there so that you can figure out how much passive income you could create in the next twelve months. Check that out today.
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I’m bringing on a guest that I’ve had a personal connection with. The guy is a master connector. For those of you who are active real estate investors, unless you’ve been living under a rock, there’s a great mastermind group called Collective Genius. We had Jason Medley on back in 2022. He was the number one episode downloaded of the year last year.
Now we’re bringing on his partner. We’re bringing Leon Barnes on here. Leon is the VP of Collective Genius and VP of Membership. He is the master connector. He knows everybody, which blows my mind because now this community has several hundred people. The great thing is it’s not just an exclusive community for those who only do 100 transactions a year when it comes to real estate investing. They have other levels as well. We’ll talk about that. I want to talk with Leon about what’s going on. What’s happening to real estate investors right now? What are the mistakes they’re making? What can they do to improve? That’s the thing I want to talk with him about today. Leon, welcome to our show.
Chris, thanks for having me. I know we’ve been talking about this for a while and now I’m super competitive. You have me on the show and then you tell me that Jason was the number one download. I have to tell everybody to download this to make sure that I beat my man, Jason.
You got to tell all the siblings and everybody just so that you can beat him out.
I can’t let him beat me. Come on.
The good news is we have more followers now. You got a leg up on Jason already.
Don’t tell him that.
Tell us more about your backstory. I know you used to do fix and flips. You have a very diverse background here. Tell us more about you.
I still do fix and flips. I live in Tampa. I moved here about three years ago. That’s where Collective Genius is based. We do seven events a year and of those, five are in the Tampa Bay area. I have two young kids and being on a plane all the time didn’t make total sense. Of my five years on this side with The Collective Genius, three of those are here, and two are remotely from the market in which I purchase, rehab, and sell, and purchase, rehab and hold. I have a BRRR strategy. I think we’re up to about 70 doors now and it’s been the tortoise and the hare. A lot of people do it in a very fast way and I’ve been that slow and steady, building 15 to 20 doors a year for the last 3 or 4 years.
I’ve been pretty successful at that while still doing this full-time. I’ve leveraged a good partner who loves doing that in the Midwest in Kansas, where I’m from. We have two full-time employees who manage those properties and continue to build them. My main focus has been on this membership role. It has evolved as we’ve gone. The community has as well, but I’ve been attracted to this community since the day that I joined it as a member in 2015.
We talked about this in the pre-show. Whether you’re an accountant, banker, landscaper, or roofer, whatever your profession is, there are a lot of these mastermind-type communities for those other professions as well. We just happen to focus on elite real estate investors across the US and we’ve continued. As there are levels to every profession, just because you’re one roofer may be better than the other and be at different phases of your career, that’s what The Collective Genius is for real estate investors.
It’s always focused on those that are at the highest level. Now, thirteen years in, we’ve developed our third level to make sure that we’re catching people at the right time and giving them what they need for today’s challenge. It’s not where they want to be tomorrow because sometimes you don’t know what you should have right now as an entrepreneur. You need community and you need that connection to continue to grow.
It’s that community that you have. I’ve been a part of the community for almost five years now.
We’re going on five years as well.
I know. I’m starting to become an OG in the group.
We both have gray, so we’re officially OGs at this point.
I definitely had darker hair when I joined. That’s for sure. I guess we both did. Because of the connections that you guys have, you have this big net that can be cast nationwide. You hear what’s going on in real time in the real estate world. What are you hearing right now?
I have over 300 members in our three levels of The Collective Genius. Not only do I talk to those members on a weekly basis, whether that’s through connection requests, phone calls, or our training calls that we do in between our meetings. I’m talking to a lot of high-level real estate investors. We have members in almost every market that you can think of.
There are some markets in some states that don’t have as much action that we don’t have members in. You can think of any major metro, secondary, or tertiary market, we have a member there. In addition to that, as the director of membership, I get to talk to a bunch of people looking at our community. I get to talk to them about their business and their market, whether it’s a small city or a large city.
I don’t think this comes as a surprise. The market has changed. March of ‘22 is when we started to see change because the interest rates started to go up. Inventory was still low. We started to see that people pulled back because they were not sure where the market was going to land. Now it has leveled out a little bit. The interest rates, unfortunately, haven’t. They’ve continued to go up. What has been surprising is that buyers are still buying. If you have a good product, that product is going to sell. Some markets, you have seen come down a little bit, but the market that I’m in here in the Tampa Bay area continues to hold strong. We’ve seen a little bit of a decrease in retail recently, but it’s an interesting perspective.
It depends on where you are. If you’re tuning in to this and you’re thinking, “I’m an accountant and I’m considering buying my first rental property,” or maybe you’re considering buying a house right now, it’s maybe a good opportunity to buy because interest rates are so high that some people are saying, “I’m going to wait and see.”
That said, inventory is still super low. It’s made it hard for investors especially to find deals. We’ve seen a 30% decrease across the United States on average. In some markets, it’s more. In some markets, it’s less. We see a 30% decrease in inventory. That can only mean one thing, that the demand is going to remain high and therefore, prices in most markets are not coming down. Every investor within our group is doing everything they can to rig the game in their favor. In fact, that’s the theme of our next meeting. How do I figure out how I continue to find deals because there are fewer of them in the marketplace?
That’s an interesting point too. I recently interviewed Nathan Brooks. With him, he talked about how he had to lay off 75% of his staff or his team, but he looks back at it now because he pivoted so quickly, it was the best decision ever. Now he’s in a different line of business or a different line of work than he was before. Now he’s happy. Have you been seeing that happen quite a bit within the community as well?
I heard this stat from someone and it was Quarter 3 and Quarter 4. One of our vendors did not have one investor who was on their platform that made money in Q3 and Q4. That’s a reality for a lot of investors across the US. That’s not just CG members. That’s investors in general. Prior to that, they had a 4 or 5-year run where they should have been good stewards of their business and had enough runway to absorb that.
Everyone knew at some point that the market was going to shift. Yes, smart investors are always going to try to get out in front as much as possible and cut their losses, and that includes trimming some fat. The reality is that most investors across the United States for the last five years haven’t had to be good or complacent with looking at expenses.
The smart investors are always going to try to get out in front as much as possible and cut their losses, and that includes trimming some fat. Click To TweetThe market institutional money that came in, buying properties for exorbitant amounts that they would’ve never sold those properties for in the past. It was a perfect storm. Yes, a lot of businesses had the right size, but I don’t think that’s specific to real estate. In most businesses, if a market shifts, you have to do what’s best to keep the business afloat and trim the fact that you need to continue to work towards your goals.
On the second side of that, have I seen people switch on their goals? Not necessarily that. In this group, everyone wants to continue to scale and grow, from the largest investor to the smallest. People are in this group because they want to continue to grow and scale. Have I calibrated in regards to maybe my single-family primary focus has evolved to multifamily? Yeah, I’ve seen some of that.
Essentially, you brought up about the preparation for what’s going on right now. I remember in 2019, you guys were preparing us for our next recession. In December 2019, we even had the guy that has predicted commercial real estate. I can’t remember his name now, but he accurately predicted every boom and bust for the last several years, coming in and saying, “Get ready. We’re already moving to a recession, 2020 is going to be it.” Of course, COVID and then the Feds pumped so many trillions of dollars into the market that we created a bigger bubble than we had before. By 2022, nobody in the group should have been surprised by what happened. I know you have a leading edge.
We have been preparing since 2018 because it wasn’t an unbelievable run for 3, 4, or 5 years. We knew at some point that 2019 was so good. When COVID hit we were like, “This is it.” It was Bruce Norris, who you’re speaking of about California, who was one of the many predictors of 2008. By the way, here’s an easy way to remember him. I only remember Bruce’s name. He’s a great guy, but sometimes we have so many speakers. It’s hard to remember everyone’s name. I always think of him as Chuck Norris’s brother. That’s how I remember Bruce Norris.
A funny aside, that’s literally how I remember his name. He is a badass just like Chuck Norris, quite frankly, when it comes to knowing the market and the tendencies that come with certain things as they evolve. I went to his event in California last year and they’re big. The panel that he had was still that this is so different than what we’ve seen in the past because inventory is so low. That’s the key factor.
Inventory across the US continues, especially from the affordable sector. Affordable housing is super hard to come by, especially in cities like Tampa that continue to grow. We’ve had the third most growth of any city from people changing from one city to the next. Tampa has been third on that list for the last four years. Price is going to continue up and inventory is going to remain low.
That’s the great thing about communities and why I said what I said earlier. It doesn’t matter what profession you’re in. There are great communities like The Collective Genius that are out there that prepare you. We always say our job is not to necessarily predict a market. Our job is to help you understand where the puck is going. Not where it is today, but where it’s going.
We’re not going to be able to predict that, but we’re going to prepare you for those times that are tough. We’ve been preaching about keeping as liquid as you possibly can. Come up with unique strategies that are outside the box, like your infinite banking or other ways to protect and be able to, I don’t like to use the word pounce, but take advantage of opportunities that come your way if we do see a major change because what we’ve seen today is a little uncertainty. It’s not a dramatic change.
I know with your group Collective Genius, you guys are bar none. You’re amazing with the caliber of people you have, and the trainings that you have as well. I know even as a person, the thing that surprised me is how I felt like I became a better person by associating with you guys and up-leveling because you tend to rise up with everybody else. Right now, with people reaching out, what are the main questions or concerns they have? Obviously, it’s always been scaling. They want to make more in the real estate business, but are you seeing it a little differently today? Has the tune changed at all?
What’s interesting is that we grew a lot when times were good. I think that had to do with people saying, “I’m doing 100 transactions a year. I want to do more because more is available right now. Generally, we see the uptick of applications when times are uncertain or unknown or bad because you need to know what other people are doing to be successful so you can remain obviously in business.
The biggest challenge right now, as you can imagine from my answer earlier about the marketplace, is inventory is low. You can imagine, to scale, the number one challenge that people are having is leads. How do I find deals? I’m doing my traditional marketing and networking strategies. What else are other people doing to maintain the revenue they may have had in the past? Not to do more, just to maintain.
Just to survive, even.
First and foremost, that’s why people needed to trim the fat. You have to survive first and then recalibrate. To your point earlier, when people come to this community, they want to scale their business, but they also want to scale as human beings. It’s a group for real estate investors, but more than anything, the right fit for us are people who are willing to share and want to continue to get better as leaders, as men, as women, as fathers, as brothers, as sister, sons, daughters, you name it. That’s what we look for.
One of the challenges has been in the past is that we have restrictions in regards to you having to do X amount of deals in order to qualify. That’s why we’ve continued to open this up for different levels. Mainly because we know there are a lot of good people who can help other people who maybe don’t do 100 deals but are in that growth mode and want to give back and help and at the same time, be around like-minded individuals.
Leads are probably number one. As you always know, the best way to scale is sales, marketing, and then operations. You have to have leads and you have to convert those leads. Once you get enough leads, you have enough money to bring on talented people to help you continue to grow and scale. Those are usually numbers 1, 2, and 3.
My whole team has been built on the connections I’ve made through your group. I’m not even a flipper. I’m not even a wholesaler. I’m a service provider in that sense. You’re right. With connections, the knowledge and expertise you get, that’s invaluable.
What you said is exactly what I try to get across to every business owner. Not investors but business owners that apply to this community. Most of our presentations are not necessarily real estate-specific. There are some real estate-specific presentations, but generally, most presentations that you watch or are part of could relate to any business. We just happen to drive a vehicle that’s called real estate.
If people want to learn more, if they’re a wholesaler flipper or whatever, if they want to learn more about Collective Genius, who do they reach out to?
We are going to make it very easy for them. They can reach out to me. First and foremost, check out our website at The Collective Genius. That’s the key. It’s The Collective Genius. Someone already had the Collective Genius, imagine that. Thirteen years strong and somebody already had the Collective Genius, but they can reach out to me directly. It’s Leon@TheCollectiveGenius.com. Once they check out the website and understand that there are levels that we have, they have to do a certain amount of deals and all those types of things. If they’re interested, they can reach out to me directly via social media or by email.
The final question for you is, what’s the big advice you would give somebody tuning in today? Whether they’re passive investors or even if they’re an active investor, what would you say to them?
It depends on where they are. Let’s assume that they’re newer and they’re wanting to continue to grow. If we’re making that assumption, my best advice is always to surround yourself with the highest and best caliber of human beings, and those that are doing what you want to do. It’s the easiest cheat code to get to where you want to go. Even if that is helping that individual for free, buying them coffee, lunch, or what have you, and at the same time, giving value to them so you’re not wasting their time or feel like you’re taking from their time.
Mentors are so important. I think about my entire life. We don’t get to where we’re going by ourselves. I’m 46 years old. I wish I would’ve figured that out sooner, but if I’m in your shoes and I’m looking to continue to grow, no matter what level you are, surround yourself with the people who are doing what you want to do. Usually, through osmosis, they’ll raise you up along with them.
Leon, I appreciate your time today. It’s so awesome. The Collective Genius Mastermind is definitely worthwhile. I know one of our listeners, I’ve already referred over because he was saying, “What do I do in this market?” I said, “Talk to these guys.”
Chris, you’re a great example of a member who is not necessarily a real estate investor and gives a ton of value to this organization. I’ve asked you to speak many times to our community because what you do is important and you also understand the power of connection and the importance of continuing to bring on like-minded individuals so you can grow as well.
I appreciate that.
Thanks for having me. I appreciate it.
Same here. Everybody else, if this is something you’re saying, “This is what I need. I need this community. I need the support. I need a higher caliber of people in my life,” reach out to Leon. It’s one thing to be a hearer of the word. It’s another to be a doer of the word. Be a doer. Be somebody who gets results. Make it a wonderful and prosperous week. We’ll see you later.
Important Links
- Passive Income Calculator
- Collective Genius
- Jason Medley – Past episode
- Nathan Brooks – Past episode
- Leon@TheCollectiveGenius.com