Brian Burke started flipping houses on the side while still employed full time. Over the years, he's not only built the house flipping business but amassed several hundred multi-family apartment building units.

In today's interview, you'll learn:

• How Brian got started with real estate investing by still being employed full time
• How he scaled his house flipping business
• How he got into apartment building investing by raising money from his friends, family and co-workers
• And a whole bunch of incredible advice from a successful real estate entrepreneur.

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Transcript

Here's the transcript from the Podcast:

Tell us about you and then about your business

I'm a real estate  investor in Northern CA, I started in 1989 with my first rental property with no money down and seller carry-back, and I was hooked. I was really a fix and flip guy and didn't get into buy and hold until about 8 or 10 years ago. About 3 years ago there was opportunity to buy single family house (SFH) rentals in CA. I've done residential fix and flip, buy and hold, multi-s, development, land development.

Why did you get into apartment buildings?

It was a retirement plan move for me. Rehabbing is a job, I wanted passive income.

First deal was a 16 unit using a 1031 exchange by selling two of my SFH's, seller carry and bank loan.

Next one was 3-4 years later, it was an 11 unit, but it was in NY.It was 2006, the market was red hot in CA. Tremendous bubble, I was looking for ways to generate cash flow that wasn't going to be exposed to extreme price fluctuations. I came up with Buffalo NY. I saw ads in ads in Craigstlist for 4 plexes for $40K, each rents in $450 per month. So I flew out there and then noticed that the neighborhoods were like a ghetto.

Next deal was 60 unit in Dallas TX. This was my first syndicated deal. I raised money for some small development deals, but never multi-family. We bought it just for over $1M, needed fixing up. I needed about $400K.

Think back about the early days. How did you go about raising money.

I was in law enforcement at the time. I did the business on my days off. I was flipping houses during the day. This was 2002, I was doing 12 to 24 houses in that time period. That's when I went full time house flipping. I rented a room and invited all of my co-workers and gave them a presentation and raised $500K. This was a blind pool. I wasn't expecting that, I was blown away. I was able to exceed a 20% return over the 5 years.

How did you know what to do?

I called my lawyer. I told him I'm thinking of raising money, how do I do? He sat me down for a couple of hours and helped me draft the documents.

Did you take any kind of courses or read books when you first got started?

I got a PhD from the school of hard knocks. I did read a lot of books. I did my first guru seminar until about 12 yrs into it. I wish I had done it sooner. But the timing was perfect because most of what they were teaching went right over my head. But because I had experience I could absorb it faster.

What's the best advice you ever got?

Nothing happens if you're just watching or waiting – you've got to make it happen.

What's your business like today?

I've grown this business to $30M in assets, I bought over $200M in real estate, 700 properties, most of that in the last 5 years. I have a really good fix and flip business, used to 120 fips per year, now 40-50 per year but at a higher price range. On the rental side, I have SFH rental funds. I started that in 2011 for here in CA to fund 3 pools for SFH rentals. Just started my 4th SFH buy to hold fund, opened two weeks, just taking initial subscriptions. Meanwhile doing multi's, have a few multi's in TX. But the multi's is reaching a bit of a peak in the cycle.  

How are you finding your deals now?

Almost all of our deals have come though brokers. Some off-market, but still through brokers. I haven't used the direct mail approach. As an owner myself, I get at least one call or letter from a broker, asking me about my plans to buy or sell. The point is these owners are constantly being contacted by someone, so I'm not really likely to respond to a post card. I already know every broker in the area. And these brokers do this all the time. How do you compete with that?

My buildings are in Texas.  I started in 2008, prices had fallen, in some cases 40-50% and then they fell even further. TX got flooded by CAans buying stuff in 2004 – 2006 because they had SFH that had artifiially inflated, sold them, did the 1031 exchange to properties in TX. When the recession hit, these owners couldn't figure out how to handle it and lost the properties in foreclosure.

When TX rebounded it rebounded stronger than anywhere else.

Real Estate is like a stream that meanders left and right. If you're on a boat, you have to change with the stream. You have to adapt. You can't do the same thing all the time.

How did you build your team in TX?

I used loopnet to find brokers, good for seeing demographics, the types of deals, and I started calling the brokers. I would ask them about neighborhoods, what's good, what's not. I would then ask them about the best property manager. They've had listings from all kinds of owners, and they know which property managers are good and which are not. I got all of my referrals to inspectors, lenders, insurance agents. When you hear the same name more than once you know you have a good one.

How often do you go to TX?

I don't go to TX at all anymore. I used to in the beginning. I partnered up with a new home building company, and we partnered to grow the fix and flip business. So when I had a deal, I sent my partner out there. And then he moved over there, so whenever something comes up, he looks at it. And he's kind of my asset manager out there!

What are your plans for the next 12 months?

To raise money for the 4th SFH rental fund, my goal is to get that filled this year and to acquire the properties for that fund. 2nd to locate a good multi property, which will be harder. I'll look even outside of TX, there's other areas too, midwestern states, I'd be open to buying in CA, but it would have to be pretty distressed.

Do you have any kind of success quote? Tell us a story about how you applied that to your life?

To never give up. I've had some challenges when the recession hit, I lost millions of dollars, and it was painful for me. It would have been easy for me to get a job. I perservered and came back even stronger.

A quote from Tony Robbins stands out for me: “If you want to take the island you have to burn the boats.” You have to cut the chord and become uncomfortable. You have to be able to expand your comfort zone, that's what it's all about as an entrepreneur.

Talk about a time you failed.

About 15 years ago I got involved with some personal investments in development I wanted to test out. I like to use my own money first before I put investors in it. The projects got slow, then the economic collapse happened, and wiped out a large portion of my net worth, and I questioned myself. I should have seen that coming. If you're a RE investor and you haven't lost any money, you haven't done enough deals. I'm much more cautious now.

Talk about any kind of “aha” moment you had, and how that impacted your life?

That probably relates back to what we were talking about. When everything went wrong in 2008. Suddenly it's not all going my way. But then you realize it's a teachable moment. The down turn taught me I needed to bring in partners, before I wanted to do all of it myself.

What are you most excited about right now?

A lot of things. I recently bought out my partners in the fix and flip business. I'm also excited about our buy and hold SFH rental business. I'm

What do you think sets apart successful investors from those who fail or never get started?

Courage. People like to be comfortable. Successful people embrace pushing their comfort zone. Keeping busy rather than moving forward.

What’s the Best advice you ever received?

Happy wife, happy life.

What’s a Personal habit that contributes to your success?

My thirst for knowledge, propelling myself to be better investor, more cautious. I'm trying to be more interactive with people. It's hard being a sole operator, and it can be lonely. The business has changed.

Do you have a favorite online resource you’d like to share with our listeners?

Bigger Pockets.com I use that every day, it's a great place for me to interact with people, and I can also learn from other experienced investors.

Favorite books?

Art of the Deal by Donald Trump. Of course, Rich Dad Poor Dad. The last one I read and liked was Maverick Real Estate Investing, and Maverick Real Estate Financing.

How can people find you?

Best through my profile on Bigger Pockets.