"Inspired to Invest" Podcast

Breaking Free From The 9-5 With Smart Real Estate Investing

• Serena Holmes • Episode 84

Share episode

Sometimes, life takes you by surprise – and completely rocks your world.

That’s what happened to Stephen Predmore, this week’s guest on “Inspired To Invest” who is joining us for episode 84. 

To watch rather than listen, click here.

Find out what happened to unlock the secrets to seamlessly transitioning from a full-time engineering career to thriving in real estate investment with our special guest, Stephen Predmore of Talbot Investments. 

Inspired by the likes of HGTV and Bigger Pockets, Steven shares his fascinating journey into single-family home investments in Baltimore, Maryland, and his strategic pivot to Section 8 housing during the pandemic. 

Listen to Stephen’s candid recount of overcoming challenges with low-cost, high-cash-flow properties and learn from his insights on incorporating management fees for sustainable investing, influenced by industry expert Beardy Brandon. 

Whether you're balancing a W-2 job or diving deep into the investing world, Stephen’s story is filled with practical advice for long-term success.

In our deeper discussion, we unravel the transformative power of mastermind groups and the bold steps you can take to elevate your investment journey. 

From stepping out of comfort zones with attraction marketing to harnessing the power of social media, discover strategies to amplify your growth. 

Hear firsthand experiences, including the unexpected challenge of dealing with squatters, that highlight the unpredictable nature of real estate. 

With engaging anecdotes and invaluable lessons, this episode offers a treasure trove of insights for seasoned investors and newcomers alike, providing inspiration and strategies to fuel your investment endeavors.

To connect with Stephen, go to @stephenpredmore on social or online.  

Thank you to the REI Loop for bringing us this month’s episodes. 

To find out more about this revolutionary software to help you streamline your real estate acquisitions/dispositions, manage relationships with clients, and scale your portfolio. Find out more at @thereiloop and online. 

“Inspired to Invest” is proud to support the Beyond Success Program, a not-for-profit financial literacy program for students, launched by More To Give & MAK Investments. Find out more at @more2give.ca.

Join us again on Mar. 12 for our next episode!

Thank you for tuning into “Inspired To Invest”, hosted by @serenaholmesofficial & remember, "when you invest in yourself, the sky's the limit!"

Support the show

Serena Holmes:

Yeah, hey everybody, welcome to Inspired to Invest. I have Stephen Predmore from Talbot Investments here with me. From Baltimore, Maryland, he is a full-time engineer and he started investing in single-family homes and he quickly realized their limitations and shortcomings. He pivoted to multifamily and other bigger deals by investing in other people's projects and now he helps to find, fund and manage his own. He currently has approximately 200 units, which are a short mix of joint ventures and syndications, along with self-storage units in Texas, and he balances his W-2 income and investing while giving people tips on how they can also get started. So thank you for being here today. How are you?

Stephen Predmore:

Great Thanks for having me on your podcast, Serena. Happy to be here and to share and potentially inspire some other full-time folks, maybe some other engineers that are looking to get started and figuring out how can I get started investing in real estate.

Serena Holmes:

Yeah, and I think that's one of the biggest things is that there's so many options right now it's hard to know what's best. Where do I go? What do I consider to focus on Right? So, in terms of your own journey, maybe you can take us back to the beginning, since you are, you know, not necessarily doing this full time, so you have your career. Where exactly did real estate come into the picture for you?

Stephen Predmore:

You know I think I love with a lot of people. I mean, my wife started watching HGTV on, you know, early 90s. I don't want to date myself, but you know we started this. You know, maybe we should flip a property maybe, but it was. You know, we had two young kids and just the hurdle of just that, first the first one's always so scary. It's always so scary and just never, never could do it, never could figure out a way to do it. Then I really started listening to Bigger Pockets. I want to say that's kind of my biggest, my biggest aha moment and just just kind of soaking that up. For you know, to and from work, whenever I was in the car, was bigger pockets. You and um really got some ideas on how to, how to kind of tackle that first deal and um, yeah, again, I'm a full-time engineer and I've had a couple of companies in the past. So I was able to tap into some of that retirement money. I took a loan against it and that's how I got started.

Serena Holmes:

Nice. Yeah, I find that that's definitely such a great resource and maybe going back 10 or 15 years ago, podcasts weren't quite what they are today, so obviously there's no shortage of information. And I had the chance to connect with Beardy Brandon on um, through my mastermind actually, so he was one of our expert speakers, so they'll come in and talk about their whole process and then you know, we've got the chance to ask questions and stuff and he really um shed light on the fact that, as they're acquiring because of how you build your management fee into it, you actually have to keep on acquiring because, you need

Serena Holmes:

that management fee to keep your team going and stuff like that. And obviously there will be opportunities to make money once the buildings are stabilized and stuff like that. But it was just interesting hearing his perspective and I think that's maybe where some people have run into issues early on is that they didn't build in that management fee appropriately. So it's like, obviously you need to be paying yourself if this is something that you're focusing on and dedicating your time, but it was really interesting just to hear about, you know, his perspective and his growth trajectory and how, at the end of it, he's like I just want to give it to charity and teach my kids to do this. It's like, yeah, imagine building up a company that has, you know, 10,000 doors or 20,000 doors and then at the end of it, it's just you get it all away, Right. So I found that really interesting.

Stephen Predmore:

Yeah, he's. He's definitely a hero and inspiration. I look up to him a lot. I still follow him. He's got a new podcast. I kind of started similar to him. I mean well, I shouldn't say that, but I started in the single family game. I'm in Baltimore, maryland, which is a very, very low price point and high cash flow.

Serena Holmes:

Yeah, so what does that look like? Because I'm in an area that's the total opposite, so it's very, very high price point and almost no cash flow.

Stephen Predmore:

So Baltimore, there's lots of properties for $50,000, $60,000. I think there's the latest estimate where there's like 17,000 boarded up houses in Baltimore.

Stephen Predmore:

So there's a lot of distress, a lot of those deals I would never touch and in fact, being in Maryland, I won't touch them ever again. I kind of learned my lesson. I ended up buying two single families here in Baltimore. Just to give you some numbers, they were around $65,000 each. I put about $40,000 of rehab into them and I ended up renting them for like $1,400, $1,500. So they definitely meet the 1% rule, but that 1% was a lot of freaking work.

Serena Holmes:

Yeah.

Stephen Predmore:

And I busted my butt and you know it was a C-class, maybe C-minus type neighborhood. It was during covid initially and, um, you know, it got rehab really quick. My, my, my, their crews were all of a sudden out of work. They, you know everybody had had, uh, canceled their contracts. So anyway, we got rehab really done. I got a tenant in there. She was great for the first six months until she lost her job and, being in a very blue state of Maryland, I couldn't evict her, I couldn't get her out, and that was a huge, you know, lesson learned. So I decided to go the Section 8 route with that same property. I just, you know, you convert that property to Section 8. And all of a sudden, you know I'm that property to Section 8.

Serena Holmes:

And all of a sudden, you know, I'm getting Uncle Sam to pay for a bulk of the rent, so I'm aware of that just because of other people I've interviewed. But for anyone that is listening, especially because we're, like I'm, in Canada, people might be like what is a Section 8? Like maybe you can just shed light on exactly what that is.

Stephen Predmore:

Sure, it's just a government backed subsidy. Typically the tenant pays 20 to 30% of the rent it's usually a function of their income and the government's portion comes on the first every month like clockwork. It's great, but then my tenant even struggled with that last $400, which was very frustrating. So even though that was their only rent, they were still falling behind.

Serena Holmes:

Well I mean, but at least you know you've got the big chunk of it that is coming in Like how did you get your property approved for something like that? Is it just something as simple as applying, or like what's the process in terms of applying for your tenant and the tenant needs?

Stephen Predmore:

So yes, I applied and you know they're totally looking for. I think there's a backlog of like 10,000 people or something like that. I know my tenant had been waiting for 11 years to get a Section 8 thing.

Stephen Predmore:

So she was very. You know, the first day I listed it I probably got like 30 hits, so it was just a matter of kind of going through those and finding the best, the best one. A lot of single, single families with, or single parents with with kids, so that that's how they did it. And then there, yes, there was a just there was additional inspection, just some rules that they have.

Serena Holmes:

Yeah. So then how did you kind of parlay over then into multifamily, like what was your steps involved in that? I know that in your bio you talked about joint ventures and syndications and stuff like that and I can see why that's popular for people that have the money but maybe not the time that they want to go into those situations as limited partners or whatever that is but for your own deals. Like how have you found that process?

Stephen Predmore:

How did I find it? So I joined a mastermind. After my two single families I said you know, there's got to be a better way. I'm just killing myself, you know. We had somebody leave. So there was another turn and it was more damage and I was just like there's got to be a better way.

Stephen Predmore:

I joined a multifamily mastermind and just started being around other people that had kind of been through the steps that I had been through. They'd all done the single family game and kind of taken their bruises and said you know, let's do this smarter. And said you know, let's do this smarter. And yeah, it's been mind shattering like how great it is to be around other people that see that. And now that I'm in these masterminds there's lots of deals, there's lots of people that have deals and bigger deals mean more people involved. So you don't just need to be the guy finding it or you know there's, there's others asset management, there's capital raising, there's there's lots of things to do for these bigger deals. So I've found a lot of people that that that I've hooked up with and we've done several, like you said, jv deals. I've done some LP syndications, done some COG, cogp deals deals as well.

Serena Holmes:

Yeah, yeah, and I find that that's within my mastermind, my community as well. There's a lot of people that you know. I think some of them have the bigger regret that they just didn't go bigger sooner, because you know one person had explained it a great way is just when you have a single family home, you know, think about all your different expenses but you're relying on one source of income and with multifamily there's less leaks because you could have 12 units or 100 units or something like that. And if somebody's moving out or doesn't pay rent for a little while, it's a non-event because you're able to cover yourself with all of the other, maybe more dependable tenants, right, and just even covering larger expenses and stuff like that.

Serena Holmes:

But it obviously comes with a different level of expertise because then you're involving securities lawyers. At least for us here in Canada there's very strict parameters around how many limited partners that are generally acceptable. I think our limit's typically 50 on a deal before you have to get an exempt market dealer involved. So I don't know what that's like necessarily in the United States. But obviously there are just some things you've got to be very careful of here so you don't run in any hot water with the securities commission.

Stephen Predmore:

That's correct, yeah, we have. We have 506B deals where you can have up to 35 sophisticated investors. But yeah, again that would that would. All all that talk would have scared the Jesus out of me, you know, two years ago. But now it's just being around other people and it's like, oh, we have security slurs, we have people just higher this guy the scale. So these things don't scare me anymore, which is great.

Serena Holmes:

Yeah, yeah, I think it's always scary the first time, right.

Stephen Predmore:

Sure.

Serena Holmes:

You know, when you look back at your portfolio and where it is today, what would you say is something that you feel like you're most proud of.

Stephen Predmore:

Most proud of I want to say the most proud of it was getting into the mastermind, honestly, because the deal flow is nonstop. I've met some great folks that have unlimited deals. I would say so that in itself it's more of now, it's more of a matter of like do I have money or do I have time? The deals are there, especially now there's a lot of distress in the market, and so I mean, my first deal was a JV deal in Anchorage, alaska. Again, I'm in Maryland, so that tells you the power of the mastermind. Again, I was looking for smaller deals and I was looking for red states. Being in Maryland, I really got burned and I wanted to invest in red states.

Serena Holmes:

So by red states you mean more landlord friendly.

Stephen Predmore:

Landlord friendly. Yeah, they vote red. So, alaska, I'm in Texas, I'm in Florida, I'm in North Carolina, indiana, ohio, those types of things.

Serena Holmes:

Yeah, yeah, I always find that really interesting and we've got the same thing here. Like my province is not only very, very expensive, like the average single family home and it is depressed a little bit now but I'm going to say like around a million is the average just for a single family home, like nothing crazy, could even be a townhouse. And then you're also looking at very, very strict landlord tenant laws, so it's very challenging to get people out. It could take anywhere from eight months to two years depending on the circumstances. So you can imagine having a non-payment of rent situation where there are other provinces like New Brunswick tends to be really popular for us here where you could buy, you know, say, a sixplex for a couple hundred thousand dollars but you could have your tenants out pretty quickly, like within a week or something like that, and Alberta's typically pretty landlord friendly as well. So you got to know where you're investing and just not be afraid to go where you need to go right.

Serena Holmes:

Yep, so you got to know where you're investing and just not be afraid to go where you need to go right.

Stephen Predmore:

Yep.

Serena Holmes:

So, in terms of challenges, what would you say are some of the biggest obstacles that you've faced as you continue to grow and scale and diversify?

Stephen Predmore:

Again, my biggest challenge was when my tenants stopped paying rent and I kind of wanted to learn the process. Like you know, like Bearded Brandon always says, like you want to be the property manager initially, wanted to learn the process. Like you know, like Bearded Brandon always says, like you want to be the property manager initially, just to learn the ropes. And I kind of took that advice and I did so. I went down to the courthouse, I tried to evict them, I did the posting and it was just so frustrating, Like whatever technicality, things get delayed a month or two months.

Serena Holmes:

And.

Stephen Predmore:

I realized that you know there's better people because I saw other landlords had hired, you know, professional people to handle these things, because who wants to be sitting at a courthouse at one o'clock in the afternoon on a workday? You know I got to take time off, so that was my biggest learning experience was just trying to go through the eviction process and just getting burned so badly.

Serena Holmes:

Yeah, and that's what I've heard here that sometimes people could wait 10 months for their hearing and then something could be wrong, like a date or something like very insignificant and literally they have to start the whole process over again, right?

Serena Holmes:

So I think there is. Even if it costs money like you're waiting on that money but at the same time, hiring a paralegal or hiring someone that specializes in, that, knows the ropes, probably knows the people at the courthouse can get things done quicker and more efficiently for you so that you can put it behind you. Now, in terms of lessons, obviously, being part of a mastermind, I'm sure you're surrounded by lots of people doing lots of interesting things. What would you say are some of the best takeaways or lessons that you've learned going through that experience?

Stephen Predmore:

Just get on the phone, call in brokers, get out of your comfort zone, stop thinking that it's a big deal. Just, you know, we have mastermind meetups and literally it's just like OK, open up your phone, look at your contacts and start calling and just kind of getting over that. That's. That's the inspiration that I need as an engineer, maybe not wanting to do that. So just calling brokers, contacting brokers, always being touched.

Stephen Predmore:

Also, the bigger thing, that biggest thing, one of the biggest things that I learned from the mastermind was being out there on social media and attraction marketing and kind of just posting what you're doing, what you're, what you're investing in. Maybe you're looking at a deal that didn't go so good or pan out Document that. Why didn't it work out? So people are interested in these types of things. So that's another huge bonus that comes out of a mastermind is resources for social media enhancement, those types of things. I recently hired a VA. That was purely because the mastermind said why are you wasting your time posting on Facebook? There's people that you can hire that are much better at this. You're still working your W-2. Hire somebody to do that.

Serena Holmes:

Yeah, I was talking to someone recently that I met her in April or May. She actually didn't even have an Instagram account. She started one but she hired someone that really specializes in it and she kind of gone you know a particular route with it. But I think she's grown to like 30,000 followers just in the last six months. But it's a combination of just how she's kind of putting out that contact.

Serena Holmes:

It's all like very short lessons like three ways to stay broke, or five things rich people do and like just these really tight. You know short clips as if you're talking to a friend and give it getting advice and stuff like that.

Serena Holmes:

But however he's doing it and it's, you know, might even have a one sentence caption or something like that, but it's really crazy engagement. Some of her posts have gone viral or six or 700,000 views and stuff like that, where she started on her own. Like you know, it can obviously take a lot longer. So that's something that she's investing in and I think maybe it's around a $1,200 per month spend, but it's obviously going to add very significant credibility.

Serena Holmes:

So when she does start presenting deals and stuff like that, you know, she's already built up this audience that knows, likes and trusts her Right, so I think it's a very smart strategy, depending on what your focus is.

Stephen Predmore:

Yeah, and you certainly can do it less than $1,200 a month. I mean, I'm hiring somebody that's $4 an hour, so just it's. You know you can take it as much as you want it. I'm kind of just, I think, just scratching the surface with just some postings, but yes, I could see where you could start spending more on video production and that type of stuff and so.

Serena Holmes:

I think that's. It doesn't have to be huge yeah, it doesn't have to be maybe that but again, just for the growth trajectory that she has had and the success with her engagement and stuff like that has been really significant. So yeah, it's. It's interesting to see, like, the way that things have evolved in that space.

Serena Holmes:

But on that note we're just going to take a really brief break for a word from our sponsors and we'll be right back. Hey everybody, welcome back to Inspire to Invest. I've got Stephen Predmore with me today from Talbot Investments and we're talking about how he started out with an engineering career and he's still working hard in that space. But he also started dedicating some of his additional funds to single family homes and now moving into multifamily as well as storage space. And before the break we talked a lot about some of those challenges and successes that you've experienced so far. But one thing I always like to ask is what's the craziest thing that you've ever experienced? And maybe that could be different from the tenant that you run into some issues with.

Stephen Predmore:

Oh boy, I was going to go there trying to think of another crazy story. Oh, same house. Yeah, same house the day one when I again, this is March of 2020, right when COVID started. So I went there. I was a brand new owner and I had my keys and I opened the door and I started walking around this vacant house and I realized I had a squatter in the house.

Serena Holmes:

Oh great.

Stephen Predmore:

And it scared the bejesus out of me, and so I immediately called the police. This is day one of owning a house.

Serena Holmes:

I'm calling the police, waiting in my car, just praying that this works out, but what would you have said, like when you walk in.

Stephen Predmore:

I just heard somebody, like they were upstairs sleeping. I heard them wrestling around and I looked in the kitchen and somebody had been cooking in the kitchen, and so, luckily, the police were able to get them out, which I was happy about because, you know, squatters certainly can have rights. You know, I didn't know anything about anything, so I was just praying that they would get them out, and they did. So that was a pretty scary day one.

Serena Holmes:

That's scary. I had someone actually that reached out to me to do a CMA and they wanted me to go by the house, but then they're like you can't go by the house because I showed up and there's squatters everywhere, and she sent me some pictures, and this is really just probably a month or two ago, and this is like five minutes from my house, so it's something that I can't even imagine happening.

Serena Holmes:

Where I live, like I'm in a suburb, it seems kind of quiet and safe, but I guess this has been vacant for a little while and a few people came in and took over. So it definitely happens. Yeah, did you have problems getting them out? Do you have to call the police? Yeah, I didn't have to worry about it.

Serena Holmes:

I was just going to go in and do a comparative market analysis for them because they needed somebody else to do it, like they have their real estate license also, but because it was for family, they needed someone third party to come in and do it. But yeah, I didn't and I'm going in, so yeah, so I assume hopefully she got it resolved, but yeah, you just never know. Now, in terms of advice, I know that you have talked at length about this mastermind. Would you say that there's any advice that you've really taken a heart, that maybe you wish you knew sooner or you feel like is really powerful for somebody? That's new, that's just getting started in this space?

Stephen Predmore:

Yes, I do, and you know I have. I have two kids and one son just finished college and he's kind of trying to find his way and I'm really trying to get him involved in real estate. You know, the earlier the better. And one quote that I love it's don't wait to buy real estate, buy real estate and wait. And you know he's 23 years old and if you know if I could have done that and just just bought a duplex and house hacked and just started so early. You know, time is on your side, and so that's one quote that I'd love to share.

Serena Holmes:

Yeah, no, that's a powerful one as well. I think there's so many things that if I knew now what I knew then like there was just things that I would have done very differently. Like I remember going to an event in 2018 and standing up and my one question to the owner in front of you know, 5,000 people is, like you know, I'm mortgage free. I actually have quite a lot of a decent amount of money in the bank, but it's very hard to qualify for financing, and the answer should have been multifamily or commercial, because the property qualifies, not you. And I think he was like you know, just talk to your coach or something. And I ended up going and buying like two pre-construction properties, like a condo that I sold on assignment and then a single family home that I long term tenanted, but I think back.

Serena Holmes:

had I known then more about multifamily, if it had been maybe a little bit more widely discussed back then, like I would probably still have that and be building upon that now. But because I made other decisions, like I'm kind of in a different space at this point in time and I'm like, ah, you can't go back and change it. But there's just so many things that I think you know, especially starting out young and being able to instill that in your children or to people around you is just going to change their life. So right.

Serena Holmes:

Yeah, in terms of what's next for you. So you obviously have these 200 plus units. Your self-storage, what would you say is an area that you're focusing on and where do you hope to continue to take things to?

Stephen Predmore:

I like smaller JV deals. I like to be a little bit closer to the action than a typical syndication would give you. I like the thrill of the hunt would give you. I like the thrill of the hunt. I like you know, finding the deals and negotiating and figuring out how we can take this down, how we're going to structure the debt. That's really what I want to do. Not saying I'm not going to continue to do LP syndications as well, just with some other partners, but that's really where I want to go. Smaller JV deals, like 20 to 50 units in red states, that we can do value add. I'm not looking for new development. That's a little too risky for me at this point. I like the existing property. I just want to make it better. Bump the rents, that's my plan.

Serena Holmes:

Yeah, no, that's smart. Now, in terms of how real estate investing has changed your life, what does that look like for you in terms of time and freedom, or is it something that's still a work in progress?

Stephen Predmore:

as far as straight from my W-2 to the rental. Now that I'm more focused on bigger deals, it's more just kind of calling brokers and following up people, following up investors, more social media posting. So that's kind of how I've shifted and I'm happy for that, because I don't want to do single families anymore. I'm done with that. I feel like I've graduated. Yeah yeah, no that's smart.

Serena Holmes:

Now, do you have any other you know parting wisdom that you'd like to leave for anyone that's tuning in, either watching or listening, right now?

Stephen Predmore:

Sure, I'll quote one of my, one of my favorite guys, jim Rohn. I heard this many years ago and I still think it's very valuable. It's don't wish it was easier, wish you were better. Don't wish for less problems, wish for more skills. Don't wish for less challenge, wish for more wisdom.

Serena Holmes:

Yeah, I love that. Thank you for sharing that and, of course, thank you for being here today. For anyone that wants to get in touch to learn more about your opportunities or just maybe pass along some wisdom, what's the best way for them to get in touch?

Stephen Predmore:

Sure, thanks for asking. Talbot Investments is my website. You can reach out to me there. I'm also available and active on LinkedIn. Lots of content there podcasts, episodes, blogs and deals that we're working on and you can sign up for our list. There's a free download for anybody interested in learning how to get into the passive investing game and maybe wanted to figure out how to do that. There's a download for you there.

Serena Holmes:

Awesome. Well, thanks again for spending your time with us today and, of course, for anyone that is watching or listening, we appreciate your time as well, and if you have enjoyed this episode, make sure that you like, comment and subscribe below. You can also follow along on social at Inspired to Invest podcast. And remember, when you invest in yourself, the sky's the limit. Thanks again. Oh, I'm just gonna hit stop on our recording.