YOUR DAILY REAL ESTATE INVESTMENT SHOW
May 14, 2022

Firsthand Real Estate Experiences with Megan Flake

In the 30th episode of Cash Flow Pro, we talk with Megan Flake of Papasan Properties Group at Keller Williams. Megan has over 14 years of real estate investing experience. Her background in operations management, business procurement, and a greenbelt...


In the 30th episode of Cash Flow Pro, we talk with Megan Flake of Papasan Properties Group at Keller Williams. Megan has over 14 years of real estate investing experience. Her background in operations management, business procurement, and a greenbelt in 6 Sigma from GE allowed her to own 13 doors in three different states (South Carolina, Florida, and Texas). Today Megan is here to tell us how she got into real estate and her experiences along the way.

 

The Papasan Properties Group at Keller Williams in Austin, Texas, was founded in 2009. The group is currently ranked 4th in Austin and has successfully negotiated more than 850 contracts and $300 million in sales.

 

In this episode we discuss:

  • House hacking and first-time property investments
  • Understanding property management firsthand
  • How to properly evaluate potential property management companies
  • Off Market strategies

 

Make sure to tune in on this episode to find out more!

 

Find your flow,  

Casey Brown

 

Resources mentioned in this podcast:

  1. https://papasanproperties.com/
  2. linkedin.com/in/megan-flake
Transcript

Unknown Speaker  0:00  
minutes an hour. Yeah. 30

Casey Brown  0:01  
minutes 3035 Whatever kind of Hey there and welcome to the cash flow pro podcast, your daily real estate investment podcast and channel. We are happy to have you here today. Today I am here with Megan flake and she is in Austin, Texas. Megan, how are you today?

Unknown Speaker  0:26  
Hi, Casey. I'm doing great. Thanks for asking, how

Casey Brown  0:29  
are you? Wonderful, doing wonderful. I tell you, what do I we're all more blessed than we probably deserve and should be. So nevertheless, everything's in good shape. So listen, we want to talk to you today. I know you had said previously that you were you have been in the real estate investing business or game or whatever some people want to call it for, say 15 years. Is that right?

Unknown Speaker  0:53  
14 years? Yeah. 14 years started in 2007. So my first deal was before the market correction in 2008 2009.

Casey Brown  1:05  
So minimalizing it a little bit market? Correction.

Unknown Speaker  1:11  
Correction. Yeah. Yep.

Casey Brown  1:14  
Think that was? That was when I started to and Moonboy. I'll tell you what it was. It was some interesting game. So tell us about your first deal. How did you What were you thinking? What were you doing? How were the butterflies in your stomach? What was your first deal that you did that really, like kind of gave you the shot in the arm to say, oh, man, I really liked this.

Unknown Speaker  1:37  
Yeah, my first deal was in Florida. And I knew I wanted to get into real estate investing. And so I did my homework, and I found the right program. And I started house hacking before was called. We have a great term for it now. Great. We've all come up with like this really cute term and you're like you don't have to explain.

Casey Brown  2:08  
And I had to find out was Yeah.

Unknown Speaker  2:10  
So I lined up my my tenants slash roommates to pay for my mortgage. Before I had even closed and you know, they they paid for it. And I was I was cash flowing.

Casey Brown  2:24  
I mean, there you go. Oh, my gosh. And that was in Flint. Whereabouts in Florida. Was that Pensacola, Florida? Oh, tough area to live. Sunshine and beaches.

Unknown Speaker  2:36  
There sugar beaches are just killer.

Casey Brown  2:39  
Do you still own that property? I do. You still own that property? 14 years later, and you still have it. It's a duplex in Pensacola, Florida. I'll tell you what, and I'm sure it's I'm sure in that amount of time, it's probably paid for itself, maybe even more than once. I mean, if you you were paying for the mortgage with your tenant, if you were paying the full mortgage with one tenant, you were living there, or most of the of the first mortgage, then I mean, I'm sure once you double it up, it just really moved on

Unknown Speaker  3:08  
it. It did okay. Um, when I moved out of that house, I met my husband and he was doing the same thing. He was also house hacking, he had his net worth in a spreadsheet. And he had read had Rich Dad Poor down the bookshelf. So we, combined households had one dedicated rental and the other one is the rental. And in 2009, we saw the direction that it was going and the real estate was going and we're like, wow, let's let's double down and take the risk and buy a foreclosure. So yeah, by the end of 2009, we had like, three properties that had mortgages, because the market hadn't finished bottoming out for sure. So we had three mortgages underwater in one city. And it was it was wild. Every time a hurricane came through that city. I was like, Man, I also physically going to be underwater too.

Casey Brown  4:08  
Oh, my gosh, well, I'll tell you what, in a lot of people, you know, this this way this market is right now. And everything is is I always called it the attitude is, is there's never going to be another bad day. When in fact we all know that. You know, those of us that came through oh nine 2010 2011 When When a nightmare talk about it many times especially with the military presence here close to where we are, you know, you had just strings and rows of houses that were just you know, weeds two feet tall and and and it just just complete and utter. It was just disparaging to sit and watch that that whole thing play out and and when you start talking about things that were underwater and people in the Kids are I call them kids, the people that have matured since like, say 2013 to 2022. If they were, if they were, say 13 years old, they're 22. Now, so they don't really necessarily remember that. And, you know, you were like myself, when you're sitting there staring at an investment, you're going alright, what are we going to do here? How are we going to make this not be a bad deal? And, and those of those of that hung on? I mean, have have I mean, other than what it's worth today? What so it was underwater in 2009. What is it worth today, versus what it was worth in 2009?

Unknown Speaker  5:40  
It has almost doubled.

Casey Brown  5:44  
So look at that. And so it was now let me back up, was it the duplex was a foreclosure?

Unknown Speaker  5:52  
It wasn't a duplex, it was a house thing. My first time homebuyer program with the city I was using a wire bond to secure our interest rate secured by a bond with the county because I was first time homebuyer so I got a lower interest rate as well. And, you know, the city had a great program where they paid for a portion of your downpayment. And so I walked into it with very, very little money down. Yeah, like, dollars that I was responsible for. And it was great. I mean, I was happy. I was getting my mortgage paid.

Casey Brown  6:32  
Yes. I mean, that's and then how do you I mean, it's just, it's unbelievable to me that that, you know, people don't if you can try to figure this stuff out, just even as just even a minute way of figuring it out. It doesn't have to be a full duplex like me, you you again, you said you have you. How's that? You can do Plex, Zach? Yeah. How's that? So, all right. So tell us a little bit about so. So now that now everything you're married, and things are kind of shifting in a different direction. And of course, you're you're working? You were working just a steady, regular everyday job, right?

Unknown Speaker  7:06  
I sure was. Absolutely. Yep. So I transitioned into working at GE at some point. And I I was a buyer for them. I did logistics for them. So buying was fun. I mean, I read things like seriously put me turn Turn Me Loose and like a flea market. And I will really shine because I really enjoy haggling, basically. So yeah, for GE was great for me, because it was hundreds of millions of dollars to play with.

Casey Brown  7:45  
Sure. Sure. Yeah. And then it gave saving a penny here and a penny there too. Along the way. I'm sure. Absolutely. Yeah. So you turn that into now you're you're making a steady income? And are you investing your principal money that you make? Are you investing your 401k? Or how so you so you now you kind of start transitioning to saying, okay, hey, I'm working this career. But I also want to grow my investment business.

Unknown Speaker  8:13  
So most of the houses, so after we got married most of the houses that we bought, wound up being primary residence, because we wound up moving every roughly two years with

Casey Brown  8:26  
your primary residence loans as you as you move around.

Unknown Speaker  8:31  
And we'll well we'd like to call ge the general so and the general also paid for our moving expenses. too, so it worked out really well. So we were a little different about what neighborhoods we were looking to move into and how we chose houses because we wanted something that when we moved out would make a great rental to house hack but in a different way.

Casey Brown  9:02  
Yeah, and you know, you don't eat because you don't want to go buy a million dollar home that logically or on paper so you can afford because then you come in and you're like okay, now I need to rent this million dollar home and that's you you've got a really thin market at the top it's looking for a rental of that of that to that degree you know, so it makes perfect sense so So you also how many doors do you own right now?

Unknown Speaker  9:25  
Right now we own 13 and a land lease that has a billboard on it.

Casey Brown  9:30  
Oh wow. So I mean just a little bit that's an I'll tell you a lot of people don't realize what those billboards pay billboards pay like cell phone antennas. That's every day money. That's money just for what's that.

Unknown Speaker  9:44  
My favorite part about that billboard is there are no 2am calls about a leaking toilet.

Casey Brown  9:49  
Yes, there's no plunging to do there's no light bulbs to change. There's nothing maybe a little electric bill or I don't know maybe they even baby. Maybe they pay the electric bill but the people like I said cell phone towers and billboards or are they just there? They're where it's at. I mean, really, if you're looking at just truly truly passive, forget about it, pick up the mailbox money, check the billboards and stuff the way to go. So, so you're so you've transitioned. And so you've got 13 doors and how many states? Three?

Unknown Speaker  10:19  
Three different states? Yeah. And what states are those? We are in South Carolina, Florida and Texas. So I really like South Carolina and Florida because they cashflow really well. I'm currently a real estate agent, I deal primarily with investors like myself, because after 14 years of experience in investing, I like to help people not make the same mistakes that I did. Absolutely. I assimilate it to this, I've got my cash flow markets, which are, which are like my dividend paying stocks. And then I have my appreciating market, which are like my, my quick growing tech stocks that appreciate really quickly, but don't necessarily pay out dividends. So you know, every three to four years, I can do a cash out refi, and one of my appreciating properties in Texas, I can take out 40 $50,000 and go, that's a down payment for another $200,000 house in South Carolina, and that'll cashflow five to $700 a month. So in a way I get to be my own bank,

Casey Brown  11:27  
man. And then yeah, see, and that's what we that's what we talk about. And that's what where we go so far with, like, making people aware that this is like this is available. I mean, this is just look, you really haven't done much of anything except move around now. Do you have property managers in each area? I assume different property managers?

Unknown Speaker  11:51  
We do. Yes. So I stopped working with GE for for a while after I had kids and I managed our rental properties. And so I have been the landlady and I highly encourage people to manage your own property, the first one for a year, at least, I mean, really understand what you're looking for. Because when you have been in that position, I think it makes you much smarter. When you when it comes to hiring those property managers, it's an invaluable experience. And if you're, if you're looking to hustle and get that sweat equity, I mean, it's a great way to save in expenses. But managing your own rental property, I think is I highly recommend at least the first one for the first year. And but

Casey Brown  12:41  
it's gonna save you if you only have one, there's the likelihood of you get a discount of management right at the management company is likely not so. So most of the time will be 10% of the gross rent, you might get an 8% If you shop around, but then again, it kind of comes back to you, you get what you pay for. But so yeah, but if you if you only have 1234 could potentially pay out to do that as long as you somebody calls you and says, Hey, we need somebody to come fix the heating and air unit. You know, you just pick up a phone, call a local heating and air company and then go from there. How does what do you do? What did you do there just have a list of people you knew to call?

Unknown Speaker  13:26  
Yes, I had, I had the big ones in the cities that I was in. And then when I didn't find someone I had, you know, the real estate agent that I bought the property with, if I find it, it was something more obscure came to I don't have any properties that have a septic tank on them. But I don't know a septic company in every city. However, when I have like a really great ally and a real estate agent, I can go back and ask like their their secretaries or admin assistant and say, hey, you know, do you have any names free? And you know, oftentimes, that that's it, having that professional that has those resources? And has that available to you is just everything. I mean, it's been very helpful when I was self managing.

Casey Brown  14:17  
Definitely, definitely. I mean, that was the resources, a lot of times people forget that they, they look at the capital expense of the house and look at the capital expense, or even the interest expense or whatever, but, but they always forget that that, you know, when you're moving to the town, and you have a real estate agent, that that real estate agent is almost like a, you know, their connection to every trade that there is that you might possibly need because they use them or they refer them or they know which ones are good and which ones are not and so on and so forth. So So what's uh, what is a couple of maybe one maybe two different things that now did you interview property managers in the area when you finally decided to go that route? And if so, did you What were a couple of different questions that you I really, really wanted to see where they stood at.

Unknown Speaker  15:03  
Absolutely. So I do a couple of different things. I give a scenario, because I have a mentor who owns several rental properties. And this happened to her. So I give them a scenario. And I'm like, what do you do when someone's looking to move in with pets? When someone is looking to move out with pets, and how does that change your lease? And if they don't quite give me like a clear enough answer, and I get something vague, like, Well, what do you want to do? I go through scenario play. I'm like, well, let's say a family just moved out of the house. And they moved out with their dogs and new families moving in. And there's new tenants call you on day two, and they're like, my baby's been crawling in the floor and is eaten up with fleas. I mean, covered in fleas, because the baby's crawling, and there's fleas in

Casey Brown  16:01  
the car. Yep. Mom.

Unknown Speaker  16:05  
Exactly. So I'm a I go into like more specific role playing, if I can't quite get the question that I want answered, I do know exactly how they how quick and dynamic they are, and how much they're going to pull me in. Because beginning I really wanted to be pulled in. And especially when I have a new property manager and a new territory that I'm expanding to, I do want to see what's going on for that first year. And then after that, I want to have the trust that

Casey Brown  16:38  
you want them to lead with the value of of you knowing that they know what they're talking about. I mean, and especially in different markets, because because, you know, when you're in a market that changes, so why, you know, wildly like Florida, you know, you you might be asking $1,000 a month for it this month, and then when you know, for their on a month to month term, and then all of a sudden, you know, rent, that rent value could double like in 90 days, I mean, now, obviously it could come down and that quick as well. But you really want somebody that knows the market that that can tell you and advise you say hey, I think this we need to go up on this or whatever. And although it's not very fun for the tenant at times, and it's just unfortunately, part of renting is your your your you're ultimately open to that possibility.

Unknown Speaker  17:33  
Absolutely. So

Casey Brown  17:35  
but so you go through a little role playing with the with the tenants and see we do the same, so 3000 capital, we're what's called a fund of funds. And so what we do the same type of scenario, but with with many managers of the multifamily properties that we look to invest in, and so you want to make sure it's basically the same scenario where you're like, Okay, what do you do when you start having vacancies? Because, like I said, I've said many times on this show, that, you know, there was a time back in, you know, those years, we were talking about where you saw multifamily property, multifamily property, multifamily property, and they had big signs draped over the side that said, Sign a one year lease and get a free LCD or plasma screen TV or whatever. And, and you know, though, there were those times as well. So essentially, what you have to do is continue to make your rent match your market. And nobody wants, the tenants never want the upside. But if you went to him and said, Hey, man, or we're gonna lower your rent by $200 a month, obviously, they're gonna be ecstatic. But nevertheless, those property managers can be as valuable as the real estate agent involved if you play your cards, right. But So like you said, you want to be pulled in, you want somebody that wants to lead with the value of, hey, I know what I'm talking about. And so again, it's the same scenario when we start talking about, you know, multifamily, big multifamily projects and funds and so on, so forth. So now, you transitioned, you said about a year ago into real estate sales, what made you and again, my listeners know that that's my background? I'm real estate sales, but what so so I'm always open to talk about that. But what what drew you into saying, hey, this could potentially be a profession that I want to pursue.

Unknown Speaker  19:27  
Oh, I mean, it's definitely something that I've been interested in for a while. I'm very lucky to be on a team. So I'm on the papacy and properties team here in Austin, Texas. So

Casey Brown  19:42  
Austin, Austin, Texas.

Unknown Speaker  19:45  
Yes. That's right. Here the

Casey Brown  19:47  
fire from here. It's hot. It's hot in Austin.

Unknown Speaker  19:51  
Yes. Yep. About 40% appreciation last year.

Casey Brown  19:55  
She saw a mighty I remember when I was a kid. Awesome. then was just, I mean, it was always a capital, but just I mean, just wasn't. It wasn't the hot hip, new place to move to. But now it's like, yeah, Lee, people can get to that desert fast enough.

Unknown Speaker  20:15  
Yeah. I know, our first property. So my husband's from Austin, so all of his family's here. We bought our first property here almost nine years ago. And we bought it for 180,000. And it's now worth 480,000. And it is, it's great. It's

Casey Brown  20:36  
probably could get multiple offers at that, I'm sure.

Unknown Speaker  20:39  
Absolutely. I we're we're definitely in a multiple offer situation market.

Casey Brown  20:44  
Yeah. And that's so so from a sales standpoint, you have how many multiple offer situations Have you have you dealt with very many of those in your first year?

Unknown Speaker  20:53  
Yes, yes, I have, I probably have Hoh, dozens that I've made, that are multiple offer situations. And, you know, I have I have investors, so they're happy to go ahead and make offers on like three different houses in the same weekend and be whichever one executes, we dropped, the other two offers really fast. But you know, about half of my half of my properties that I that I get are actually off market. So

Casey Brown  21:26  
well, that's, that's what I experienced

Unknown Speaker  21:29  
bird dogging like, like anything. And the off market is just really, really great for, for my investor clients,

Casey Brown  21:39  
I experienced that 2021 The off market stuff was just, that's where it's at. And that's, and that's what one of the things that when we when we vet a property operator, or or a sponsor or sponsor manager, whatever it is, have a fund or have a specific property. You know, hunting for off market stuff is something that that's kind of it's kind of a it's kind of a specialty, I guess, because you know, not every not everybody can just pick up the phone and call spies. Hey, you wanna sell your house? And they have no, you know, and we've had some people say, yes, we've had some people say, slam the phone down and say things that are, you know, you don't want to hear. And so, but the off market stuff it commercially and investor wise, is, is so hot right now down there. But at the same time, that's got to even step the challenge. That's like another two or three rungs up the challenge ladder. It's one thing to deal with a homeowner, because hey, maybe they're moving for a job. Maybe they're moving for this, maybe they're moved for that. But when you start dealing with investment properties, those people are like, Yeah, I can I can cash out right now. And now you got to take a guy that wants a deal against the lady that wants to cash out. And now all the sudden you're like you, you know, you kind of get caught between two bowls real quick. But so what's your off market strategy? Just obviously, you don't have to tell any proprietary information. But are you do you just pick up phone just start calling?

Unknown Speaker  23:05  
Well, actually, I wrote an article in Silicon Valley investor club about this very topic last month. So I'm quite fast. So I send out letters to people who are looking for those sorts of things. I also network really well with once again, I mean, a real estate agents network is everything. So

Casey Brown  23:25  
you are doing this podcast of real estate syndicators and investors and, you know, the thing is, is that you could you could just about put anything together, honestly, if you're doing things like this, because there's not agents doing this stuff. Yeah, sorry.

Unknown Speaker  23:40  
What? Right, what Alright, um, you know, I had a property today that client made an offer on and it's off market, it has two other offers on it as well. So I mean, just because it's off market doesn't mean that it's a slam dunk. It's just yes, there's distressed sellers in every market there. There are people who just need to sell the house. Because,

Casey Brown  24:02  
you know, the difference in the markets is the amount of distressed sellers, whether you have a bunch or very few, and it can be difficult, but so what's your strategy is you send letters and you just network and maybe get referrals and things like that.

Unknown Speaker  24:16  
Yes. And then of course, other investors, so some investors who were selling, if you're selling in a 1031, timing is everything for you. Like you definitely want to make your money back. But if you can sell to a buyer who's going to be really flexible for you on a closing date, that's worth a lot of money and save taxes. So other investors as well, you know, trying to do a buyer seller matchup.

Casey Brown  24:44  
Yep, yeah. And you just try to put the Yeah, you just you try to you tried to just find the square peg for the square hole and or via a round peg into a round hole and then get it put together. So yeah, well, that's I mean, that's, that's awesome. And then it's great this You wrote you wrote a a article for the silicone you said the Silicon Valley

Unknown Speaker  25:05  
Silicon Valley investor club Yes and it's off market talk for days yeah. So perfect

Casey Brown  25:14  
those guys have some have some money to invest in, you could definitely could could take the venture capital angle on because even venture capitalists want want something solid on your on the solid ground such as real estate. So it's, it's always always fun to see different strategies and different strategies especially play out from the real estate agents standpoint yourself of saying hey, you know, I'm out working and doing these things for my investors. So so, you know, with that we're kind of pushing up against our 30 minute timeline. I'd like to I'd like to get a little information on maybe how you know if there's investors out there that are potentially looking at stepping into the Austin market or potentially thinking about saying, hey, I want to I want to make a move to to to Texas town that used to be a desert what what how would somebody go about getting a hold of you?

Unknown Speaker  26:09  
Excellent. Um, I am with the papists and Properties group with Keller Williams My email address is Meghan m e g a n at Pappas and properties that's P A P A as in papa alpha pop alpha SANPROPRT i e s.com. You can also get through me through to me on our website at pepper sand Properties group. And that's I'm also on Facebook and LinkedIn as

Casey Brown  26:46  
well Megan, I know with as much stuff as you've got going on down there and I'll tell you if there's any real estate agents listening today you know take note here on she's she's been in the business a year guys she's been in the business one year sell in the sales business she's been in the real estate investing business forever so she so she knows the term she knows the lingo she knows how to how to haggle how to talk how to make that but but making those connections and it's exactly what she said that can you know, your network is everything what did I even forget who said Your network is your net worth? And I've heard that probably exactly 1 million times your network is your net worth. And there she is just like that right there. She's in she's on this podcast she's making making waves when you know, everybody else is kind of sitting around wondering and trying to figure it out. So Meghan, congratulations, I mean I'm glad to hear you're doing great with with the sales business. I hope the investment business continues to pay dividends as well. And and good luck to you all in the future. And again, I can't thank you enough for taking just I know it's only 30 minutes but I know in the in that business 30 minutes can be can mean the difference and a sale and no sales. So thank you so much for your time. Thank you, Casey. I appreciate it. Yes, ma'am. I hope you have a good rest of the day and to the cashflow pro podcast listeners and channel watchers. We appreciate you sticking with us today. And we hope everybody has a wonderful rest of the day.

Transcribed by https://otter.ai

Megan Flake Profile Photo

Megan Flake

Papasan Properties Group at Keller Williams