RG 140 – Top 5 Signs We are Heading For a Real Estate Recession with Lee Kearney

About Lee

• Lee is from Ireland
• Lee moved to the US for college
• Lee is one of the most successful investors in the US

Nuts and Bolts

Lee is one of the nations most successful and active single family investors. He has flipped over 7000 houses in the last decade and made over $500 million in profit. His company is called Spin Real Estate, he also works to inspire and educate new real estate investors on the Flip Your Income Programme. Lee made his first Pound in Ireland as a child mowing lawns and helping around the house, he’s originally from Wicklow outside Dublin. Lee moved to the US for college and got a BA in Business and Marketing. He then went to do a masters but didn’t enjoy it so moved back to Ireland to help in his fathers company. He didn’t mix well with his fathers business partners as they wanted to keep things the same and never change – they thought he was a young upstart with an expensive education.

Lee moved back to the US in 2004 and settled in Tampa where he found a mentor at church who was rehabbing houses. His mentor showed him how to do it and what to buy, Lee took a further 4 months to find his first flip in a probate deal. He bought it for $130,000 but made the mistake of trying to rehab and live in the house at the same time. In the end he made $35,000 on the deal which he rolled into the next one and rehabbed it remotely. This was his second mistake because he was too far away from the rehab, Lee recommends that you always start in your back yard. His third big mistake was asking a friend to do the rehabbing as it took 9 months to complete. At this point he found a second mentor who taught him about finding property on the court house steps. He turned up at his first auction and asked a lot of questions, he wore rubbish clothes and no one took him seriously. This way he was able to really learn without arousing suspicions and within a year he was the biggest buyer at the auction.

Lee feels that the current market is on a downward trend as the FED is increasing interest rates. There are two things that are constant in real estate; there’s always money to be had, but you have to be on the right side of the trade. This is why Lee has sold most of his single family rentals that he originally bought for $30,000 and he’s selling them for $130,000. He says that he’ll be able to buy them back in 36 months time for $50,000 when the market downturns. He bought these houses 7 years ago on the right side of the trade and now he’s selling to stay on the right side of the trade. It’s not just Lee doing this, many landlords of single family homes are dumping their portfolios which indicates a shift in the market.

Lee is also stopping the hard rehab side of his business as well and so now he only does paint and carpet at lower price points. To recap, these are the changes he’s making to his business in response to market changes; liquidating his rental portfolio, reducing debt, reducing leverage, changing to easier rehabs, more wholesaling and lower price points.

Top tips

• Most important habit – Being organised
• Most influential person – Father and mentor JR
• Most important tool – Calculator – his own version so he knows how much to pay for each property
• Most important failure –  The complete opposite of the ‘should do’ list above – did all of them wrong
• Contact – flipyourincome.com education platform

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