Many real estate investors went belly up during the real estate stall of 2022. But others came out stronger and wiser. For real estate investor, BJ Gremillion, he was no exception. From having to lay off more than 80% of his team, to pivoting his business for future growth, BJ learned a lot of lessons that we can use ourselves. Here’s what he did!
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How Did Investor BJ Gremillion Survive The Market Stall Of 2022
I brought on a special guest here, someone that in my space, we’ve been in mastermind groups together. You’ve probably heard me say this before. Birds of a feather flock together. Many people will ask, “How do you find someone who’s got a good reputation? Someone who’s not a charlatan, somebody who’s doing good work, someone that you can trust.”
I’ve learned the best way to do that is to surround myself with people who are like me. I’m not saying that to brag and beat my chest, “I’m full of integrity.” I know that as I work on my stuff and I work on trying to be a genuine person, you tend to just gravitate towards those genuine people. You tend to avoid the charlatans. You shouldn’t avoid just the salesmen, the oil sales, whatever it is, those that smell snake oil. You get rid of those people.
BJ here is one of those guys. BJ is the Owner of Property Rush and he is the Host of Real Powerhouse. Make sure you check out his podcast there. He’s purchased and sold thousands of properties and he has tried everything. He’s done all kinds of strategies from lease options to long and short-term rentals. He is done with the wholesaling and RV storage. He’s done commercial offices, fix and flips, creative financing, land entitlements, spec building, custom new bills, you name it.
Specifically, what I know I wanted to have him on today is that he has a turnkey company that he’s been using. He’s been here for a while now and now even launching it in some new markets. I wanted to get his perspective. The best thing is to get a finger on the pulse. Everybody’s telling you real estate is a bad deal, wait for it to come down. Is that true? Do we wait for the price or the interest rates to come down? That’s what we’re going to be talking to BJ today. BJ welcome, I’m going to our show.
I appreciate it. It’s good to be on.
Give us more of your backstory. What even got you into real estate in the first place?
I started with Edward Jones, a financial advisor. I started with them because out of college, I did not know what I was going to do. I have a Psychology degree, which doesn’t do anything for you. It just got me a degree and out of college. I asked my buddy if he was going to work, and he told me about Edward Jones, I asked if they were hiring. He said, “I think so.” I got an interview and got the job. Come to find out, they’ve pretty much taken anyone with a pulse. They’ll tell you otherwise. If you have a pulse, a college degree is all that you need.
I started with them. I hated it. I did not enjoy doing that at all. Going door to door as a bond salesman is not my idea of fun or grabbing a phone book and just cold-calling every day. Talking to moms about bonds and mutual funds, that’s just not my cup of tea. My buddy was doing real estate and having way more fun at the auctions in 2008. That’s when all this occurred. I got in at a great time and never looked back from there.
We were able to buy a bunch of real estate. I started helping investors acquire real estate and I got to see the process using their money and it was an awesome education. I got to make them a lot of money and learn. It was an awesome experience. Wouldn’t trade it for anything. Eventually, figure it out and you take that leap of faith, you do one, and you get hooked. Even on that first one, I only made $1,000, but it was because I had a low appraisal and there were a lot of lessons learned that I learned from that one. If I had another whack at it, I knew I could do it again and do much better.
My second flip made $20,000 and then from there if you start going. To your point, about getting with amazing people and surrounding yourself with people that are much smarter than you, I don’t think that my career took off until I joined a mastermind. My eyes were opened because they were saying things like KPIs and SOP and I don’t know what any of those words mean. Eventually, they showed me how to scale the operation and turn it into a business, not just a hobby or a job. We did that for a long time in Arizona for about fifteen years.
The market shifted in 2022. That was another soul-searching time in my life and wanted to figure out what to do. I had a business partner for fifteen years that entire time in Arizona. We decided to part ways and time ran its course. He ended up going with the construction development side of things and I ended up staying with single-family real estate and investment real estate.
Fast forward to 2023, we decided to go ahead and make the plunge. We’ve been buying real estate in the Southeast in Tennessee and Georgia for a while because Arizona was so inflated. We couldn’t buy any properties and it was just hard to find stuff at cashflow. We found an opportunity out here and it worked so well that I was like, “I’m going to move my family out here and do this full-time now.” We’re going all in and started up a new business venture called Property Rush and it’s focused on turnkey rental properties.
If people want to visit your website, what’s your website again?
PropertyRush.com and they can sign up to get any of our alerts. Anytime we get a new property, we send it out to our list of investors. There’s not a huge list right now and we do that on purpose. I don’t like to have churn through investors. I’ve gotten to that point where I want to work with people that I enjoy working with, people that are a good fit for me, and vice versa. Now we’re at the point where most of the investors that I work with are looking to acquire real estate and not just one here and there. Whenever they have some cash, they have a system in place where they want to acquire at least 2 to 3 properties per year.
Right now, it’s just worked out great because once we give them one, it’s a great experience and then they come back anytime they have funds available and get another one. It’s been working great. You have to take care of investors to get that repeat business. I’ve learned that lesson over the years as well. That’s what we’re doing though right now. I just work with people that I enjoy working with and buying real estate. That’s what I’m pretty good at and it’s a good fit.You have to take care of your investors to get that repeat business. Click To Tweet
I wanted to come back to your experience in the last year with real estate, but before we do, I know that some of our longtime audience were probably chuckling to themselves thinking that I just invited my twin onto the show. I went to college, I was a Psychology major for one semester and switched back to Sociology with a triple minor in Psychology, ballroom dancing in Japanese. Before I got my degrees, you’re like, “I’m not sure if they take people without degrees.” I can tell you in the financial industry, they will take you without finance or any college degree.
I dropped out to go start a business and then got into financial advising only to get out because I had a friend who was doing real estate that said, “This is better.” A different friend got me in. I was trying to get an interview and try to impress them. It was another friend that I hired in the industry that got me out because he went to do flipping and things like that. Made way more money than anybody I knew was making inside of mutual funds. That’s what got me out.
That’s crazy. I did not know that about you.
It might’ve been just a few years earlier before you, but still, that’s a pretty crazy story you had there.
We went to the same school for a bit too.
You’re in Idaho too. Small world. You said 2022 was an interesting year. What happened then?
Everything hit the fan. Everyone has to experience that. I don’t know if you’ve gone through that experience maybe even multiple times. Every entrepreneur, you’re going to hit that moment. It’s funny because for a long time, we’ve been doing it for over 10 years and we hit that 12, 13-year mark, and most businesses fail after 10 years and we’ve made it. I honestly thought I would be there forever and I would just have this business forever. We’d run off into the sunset and make all this money.
2022 was this wake-up call. At the time, you don’t enjoy anything about suffering and trials. Looking back, it was a great wake-up call because it’s so funny. The market in Arizona has steadily been going up every single year, 2021 especially, after COVID just exploded and it did everywhere else in the nation. It’s one of those things where we were doing new construction or flips and you were blessed if you took an extra six months to finish something.
In no world, in no business, should that ever be the case where if you don’t have your operations in place and you’re doing a horrible job of managing your employees and those things and you just let stuff slide, it’s so rare that you get blessed because the market went up 10% during that time. That was one of those things where it keeps working. You’re not going to change the behavior because it’s working.
I’ve never experienced anything like it and it was one of those crazy moments. When the Fed started doing their interest rate hikes, it spooked everyone. It was different because I would go back and forth. I would go from Arizona to Tennessee. In Tennessee, there’s a little bit of change but it doesn’t seem too bad. It was business as usual. Arizona, it was no joke. Every wholesaler investor, flipper, you name it, especially Opendoor, OfferPad, all those guys, everyone shut their doors and said, “We are not touching real estate and we’re not going to touch it with a 10-foot pole. I don’t care if you offer it to us at 30% less than what you bought it for. I’m still not buying it.”
It was the craziest thing. We went from multiple offers every single time I would throw a property on the MLS or wholesale to crickets and I could not pay people. I was honestly trying to pay people because we were losing money on them to take these deals. They wouldn’t do them. It took a while to realize we had to change some things up. We went from 40 employees down to about 6 or 7 employees all in about 3 month period of time. We went from a $60,000 marketing budget every month to $0. You get to that point where you cut everything, all expenses are gone. It was sad. It was one of those, “I can’t believe this happened.”
That’s all it took. Within about four months, the whole thing crumbled for the most part. It fell apart because you realized there were a lot of things that were covered up by the market. We weren’t great operators necessarily. The market just covered up a bunch of stuff. It was a wake-up call. That’s when I started reflecting on, “Who in our mastermind group is not stressed out?” Anyone that was wholesaling, scaling, flipping, all of that, doing hundreds of deals or whatever. Those guys were losing it. It was like, “Where did so-and-so go? I saw him last quarter, he was doing great. Where did he go?” Everyone’s like, “He’s bankrupt or he’s out of business. They’re done.” You’re like, “What?”
There were so many guys that you think they got it figured out and that’s all it took. It wiped so many people out. The people that were doing great are people like yourself. There are several that did turnkey investing and they had property management businesses that were fairly large and bringing in revenue and they had a business model that was more or less recession-proof because they had that passive income coming in. They were getting up there smiling, having a good time while the rest of us were stressed out of our minds. That was my lesson, “I need to be more like these guys. I need to model my business after them. I need to start this whole thing over.”
I look back and I did thousands of deals. I flipped all these homes and development projects construction and I had nothing to show for it. I only had a couple of rental properties and I was like, “This is not smart.” I’ve not been taking the advice that I’ve been giving everyone else. It hit me. I’m going to build this completely differently and it’s going to be built off of a recession-proof model, which I feel real estate can be a recession-proof model if you’re doing it the right way. We’ve built it where we’re doing affordable rental properties, that cashflow day one, and then working with other investors, helping them do the same. We’re all growing together. We’re starting organic and small and then hopefully, we’ll build it the right way so that doesn’t happen again.
That’s what’s impressive about your story. Some people were like a flash in the pan, and some of them didn’t have a lot of experience. Some of them had only come on the scene in the last few years. They were just really hard workers, hustlers. I noticed with your situations that you guys saw what was happening in real-time where some of those guys weren’t paying attention. They were just driving revenue. They weren’t watching their bottom line. You guys saw it happen pretty quickly. I noticed you pivoted, even though you did have to lay off some employees, at least you knew how to pivot and make it work so that things were still staying solvent. That’s impressive.
I did learn from those experiences. Everyone always says cash is king and cash is never more of a king than in a recession. When things like that happen, you got to know that you got to burn rate. Luckily, we had saved up some cash. We had some reserves. We also had a lot of partners and investors that we could turn to because a lot of the lenders were saying, “We’re not going to renew this if it’s a construction loan or development. Those are high-risk.” Luckily, we had those relationships, we could go to these people and say, “This shouldn’t last very long but I don’t know how long it’s going to last. Can you help us out?” We got some loans in place because that was the other thing.
I felt like I was on the phone about every other day talking to our lenders. I’ve never once had to extend anything. Most of our loans were bridge loans at six months. I had to make those calls and they understood. They were very great partners of ours because we had never missed a payment in eight years of working with them. They knew we were good for it. They knew the market was the issue. It wasn’t us. It was not something we could have controlled necessarily.
They understood. They didn’t want the properties back either. We’re able to negotiate with them quite a bit. It was a matter of shuffling things around, making sure that we could last and then we were able to get through it. If we didn’t have those reserves and those relationships, then without a doubt, we would’ve been history. The crazy thing still to me is just how fast that happened. It’s just crazy to think how fragile everything is. When you’re running a business and you got a small business and COVID for let’s say a restaurant owner, that was their moment where they’re like, “That’s all it took. One month of no revenue and I was out of business.” Got to look at that and lots of lessons learned.
Now you’ve moved into this turnkey space. I know a lot of people when they see the numbers from turnkey real estate investments and rentals in general, they’ll see things where there’s barely a profit. That’s a risky big gamble. You don’t want to be buying a property where say you put $50,000 down, you only have $100 a month coming in. That’s not much wiggle room for any maintenance issues, vacancies, or anything like that. How have you been able to find a way to make it work despite the interest rates to where you still have healthy cashflow in the properties that you offer?
I know that some people would advocate that it’s okay to not have the cashflow on day one because you’re going to build up equity.
That’s a rookie mistake.
It’s terrifying. We’re more conservative now than we have been in the past. Before, we were pretty conservative but now there still are properties. My sales reps probably get frustrated because we do not want to get into any property that has any risk. You’ve got to have a cushion and you have to build in. Typically, what we’re finding is if people are putting down 20% or 25% down payment on let’s say a $200,000 property, the average right now is about $250 a month. Cashflow is what we’re seeing on our end for properties out here in Tennessee and Georgia.We do not want to get into any property that has any risk. You got to have a cushion. Click To Tweet
I don’t like to squeeze out every dollar whenever I sell these to our investment partners. I always make sure there’s equity there as well. To your point, if something happens and they need to get that money back, it would be very easy for them to turn around and sell it. I feel like these are properties at that price point where they will always be in demand. First-time home buyers are going to be a big FHA, VA, and all that stuff. We fix them up nicer for that reason as well because I want to always make sure that there are multiple strategies. If you ever get in a bind, you’ve got equity, you’ll be able to sell it. Even after the cost of selling it in year one, you would still be able to walk away with a profit.
Those are all just things that I do. The best offense is good defense so you got to go into it. You make money when you buy it. You’ve got to make sure you’re buying it at the right price to leave the cushion. Factor in all those things because you never know. I don’t know how many times the economy has to teach us this lesson, but some people like to live on those edges with small margins and that’s just not me.
I find that impressive and shows a lot and a lot of integrity. Most turnkey companies I know will sell it to you at full retail, full appraised value pretty much like there’s no equity going in. There might be some strong cashflow potentially, but lately even those companies, their cashflow is probably right around what yours is. You’re seeing a 6% or 7% cash on cash, not including any appreciation tax benefits.
If you buy it with equity in the property, that gives you a little bit more buffer in case something does go wrong. You can sell that property more easily than if you bought it at full price. You say, “Maybe I have to take it on the chin now because I might take a little bit of a loss from that down payment because now, by the time I pay sales fees and everything, I can’t break even.” That’s a rare thing you don’t see in the market right now.
The only way we can offer that is if we buy it at a deep discount. It does put some more pressure on our sales reps where I don’t want to risk it. I want to make sure that I have multiple options when it comes time to sell it because I went through it. It’s very fresh in my mind. I also want to protect investors who work with us too. Most of them are good friends who have worked with me now for fifteen years.
You have to build up that trust and all it takes is one bad deal and one slip-up where you tell them you inflate the numbers, it ends up being lower, and it just leaves a bad taste in their mouth and they tell others. I’m very careful with my reputation because I know that one of the few things that you can control is what people say about me behind my back and to others.
It took me a while to realize how incredibly vital that relationship piece of it is. It wasn’t until 2022 that I also realized who are my friends. When things were bad and I didn’t have a whole lot to offer, who was still there and supporting me? You just learn a lot through those trials and it’s not something I wish for by any means. It is a blessing now but at the time, I was pretty stressed.
I’m glad to see you’re coming back out on top again.
Working on it. Slowly but surely. One brick at a time.
If somebody wanted to see the properties you offer, do they go to PropertyRush.com or is there another place that we go to see that?
PropertyRush.com has pretty much everything on the website as far as what turnkeys we have. It’ll show you what was under construction and what’s available. It’s funny, I never have had to market any of our properties, to be honest with you. We have the website. I do a weekly email to be top of mind. Generally speaking, whenever I talk to someone, they call me. At that time, it’s like, “I got one more that’s coming up in the pipeline.” Fortunately for us, that’s never been an issue. It’s so hard to find right now.
When people find a turnkey provider that will handle property management, the construction, all the things that we know are hard to find when you go to a different market especially if you don’t live there. If you don’t have those contacts, we had to go through that. That’s what I tell people too. I had to go through two bad property management companies and lose tens of thousands of dollars with them.
Same thing with contractors. I had to go through 3 or 4 bad contractors until we landed on the right people. I went through all of the junk myself just to sift through it. Now I feel like we have our process people in place and I’m comfortable enough to say, “We’re in a good spot. Come on over. Let’s do some investing together.” I didn’t want to do that until I had gone through all of those challenges myself.
You wanted to be your lab rat before you let everybody else come out.
I would much rather lose money myself. I have no problem risking my own money, but other people’s money is just a different thing. That honestly was a big reason why I stopped financial advising because I couldn’t control the market. I had zero control. I don’t want to tell you to invest in this if I don’t know the CEO, I don’t know what he is going to do. I got out of it. I didn’t like it. Real estate is different. I feel like I have a lot more control.
BJ, this has been awesome. I appreciate it. Go to PropertyRush.com and check it out. This is so good. We probably should just pull this episode and not even let anybody read it just because you said that probably you have so much demand already. Probably shouldn’t have anybody reach out to you, but we’ll put it there. Maybe the three people who tuned in to this episode will see it and check it out.
Hopefully, we’re getting to a point where we have a lot more inventory. You’re right, right now it’s a challenge for everyone for sure. I appreciate it, Chris. This has been fun. I appreciate you having me on.
Everybody else, if you don’t feel like checking out Property Rush, don’t do it. For those of you who are interested in properties, go check out PropertyRush.com for the few properties that are going to be left there. BJ’s a great guy. Somebody that apparently as we’re finding out more every day, he’s like my twin that I never knew about. Appreciate having him on. Remember this only works when you work. This only becomes something real when you start to take action on it. Don’t just be a hearer of the word, but be a doer as well. Go and make it a wonderful process week. We’ll see you later.
About BJ Gremillion
BJ, the owner Property Rush and Host of Real Powerhouse, has purchased and sold thousands of properties with multiple exit strategies including lease options, long term & short term rentals, wholesaling, RV storage, commercial offices, fix and flipping, creative financing, land developments & entitlements, spec building, custom new builds.