From Ambition to Empire (How Luke Andrews Built a Legacy in Real Estate Investing)

Transcript

[Antonio]
Luke you ready to jump in on some real estate investing with me? I am so excited Antonio. Alright man thanks for being here today.

So before we get into business how about you tell us a little bit about your personal life?

[Luke Andrews]
Sure so I am married have two kids I I got two boys that are 12 and 10, very active in sports and I’m very active on the coaching side with them. So I coach both football and basketball for both my kids. They are starting to get into golf a little bit too, so my life is pretty hectic and busy.

From a work perspective, I do a couple of different things in real estate. So I am a real estate agent. I’m also a real estate leader.

I run a team of a little over 20 agents. And then I’m also a real estate investor as well. So recently, I had a goal that I wanted to be able to purchase 40 investment properties by the time I turned 40.

And just closed on the 40th one about a week and a half ago and I will be 40 September 1st. So I am just kind of squeaking in under the wire there.

[Antonio]
Nice man, congratulations, that’s good. Setting goals is like it man, that’s good, I love it.

[Luke Andrews]
Yeah, I mean, that’s kind of the hardest part. I mean, it’s figuring out what you wanna set. Once they’re set, they’re pretty easy to obtain.

[Antonio]
Right, right. So what were you first, an agent or an investor?

[Luke Andrews]
It all kind of happened around the same time. I mean, technically, I was probably an investor first, but that was just a function of the market. My wife and I built our first house in 2006, kind of as the market was starting to creep up.

And then as it crashed in 2009, 2010, we were at a point in our life where we were starting to have kids ready to make an upgrade. We were fortunate enough to be able to keep our first house and still be able to purchase the second. So we kept that first one as a rental.

Had that for several years, let the appreciation creep back in and sold that and then started buying several others here in Louisville.

[Antonio]
So was your wife always in on the team of this whole mastermind plan? Or did she take convincing? Was she in before you?

[Luke Andrews]
She is all in on the mastermind plan. What she just doesn’t really wanna be a part of the day-to-day. I think the kind of the ups and downs, the roller coasters, the risk is not something that she’s really built for on a daily basis, but she’s on board, she’s excited about it.

She just wants to hear about the wins after they happen. She didn’t wanna live in those lows. She didn’t want the headache.

No, exactly. She didn’t want those midnight phone calls with somebody who’s got a toilet clogged or locked out of their house. Right, right.

[Antonio]
So what’s the main reason you’d say for getting into real estate investing? You know, I had a couple of buddies.

[Luke Andrews]
So I come from the corporate world. So I was in strategic marketing and data analytics for a long time. And had a couple of buddies that I was working with.

And it was something that we were all just kind of passionate about. We’d take walks at lunch and just kind of talk about getting into it. At the time, we were looking for a little property in an up-and-coming neighborhood that we thought the neighborhood was really gonna take off over the next year or two.

But it was a spot where you could find a fixer-upper for around $20,000. Wanted to pay about 20,000 cash, do the work ourselves, and then just, you know, kind of allow that cash flow to start building up and then allow one to turn to two, two to four, four to eight. But, you know, life kind of has different plans.

As we were in the process of trying to find one, one of the guys that I was there with, his girlfriend’s parents were having a dinner. And, you know, he was telling some of the people there, they were looking to buy, we were looking to buy an investment property. And they said, well, we’re actually selling our portfolio and retiring and moving to Denver.

[Antonio]
Nice.

[Luke Andrews]
So we went from trying to buy one $20,000 property cash to we’ve got a package of 13 dropped into our lap. Right. And now we gotta try to figure out, we knew it was a great deal, but how do we do this?

We didn’t know anything about anything. We didn’t know how to manage. We didn’t know about cash flow.

We didn’t know about any of that stuff. Certainly didn’t know about financing or how to pay for it or how to manage it. So we found some people that did know.

We picked their brain. We learned as much as we could, and we found a way to make it work on the front side.

[Antonio]
Man, talk about a crash course.

[Luke Andrews]
It really, really was. I mean, it was super exciting and a lot of fun. And we actually, we managed those 13 ourselves while we were still working full-time, had families and everything else, and then bought one or two to add onto that portfolio.

And then all of a sudden the package of 15 fell into our lap. And so portfolio was just doubling in size going from 15 to 30, which kind of forced us out of managing it ourselves and then forced us into going out and hiring a manager, which is essentially, I mean, that’s learning an entirely new skill, how to manage a manager, right?

[Antonio]
Because they’re not all created equal, and that’s for sure. Man, that’s an incredible story, and we just got started. That is awesome.

[Luke Andrews]
Well, I’ll explain to you here in a little bit how we ended up losing most of those due to some partnerships going bad and then just essentially just trying to rebuild up that portfolio. So it’s ups and downs, peaks and valleys.

[Antonio]
Yeah, yeah, that may lead right into the question I got in just a moment. Wow, interesting. Okay, cool, this is good.

So at the moment, I guess I should say, what’s your favorite aspect of being a real estate investor?

[Luke Andrews]
Favorite aspect is just no two days are ever the same. Like I tend to get bored pretty easy as I think a lot of us do, and that’s probably why I got into being a real estate agent, because I’m always distracted by the next shiny thing that’s out there. Us realtors, that’s kind of a blessing and a curse.

But I love the fact that we’ve got these assets, and we’ve got this tangible thing that we can go look at, this investment, and we can do little things to it and little tweaks that we can make to add additional value, while also being able to feel good about what we’re doing, right? My partner and I, we’ve had a plan from the beginning. We want to provide quality and affordable housing.

And especially in a market like this, if we can find a spot, find places that are good quality places for people to live, that it’s affordable, and we can still make a profit, have the appreciation, and get the tax breaks that go along with it. I mean, you don’t find many win-wins out there, but I think we’ve stumbled upon one.

[Antonio]
Are you doing all your investing in the Louisville market only? Because I can only imagine that. I think that market’s probably one of the best in the country.

What do you think?

[Luke Andrews]
It is, it’s gotten really saturated over the last couple of years. You know, there have been a lot of podcasts that have been done about how great the Louisville market was because, you know, first it was kind of Nashville, and then Nashville exploded, and then it kind of became Indianapolis, and then it became Louisville. And now we’re starting to spread out a little bit.

The majority of what we’ve done is right here in the area, but we’ve got a few, you know, within an hour to two hours down the road. The one that we just closed on this past week, it’s actually, it’s gonna be an Airbnb for us in an area called Red River Gorge, which is a state park about two hours away.

[Antonio]
Oh, nice. That’s a good spot, man. That’s good.

[Luke Andrews]
It is, and it’s an interesting property. It’s actually, it’s in the shape of a teepee. Oh, nice.

But it’s made of stucco. I mean, for all intents and purposes, it’s a house. It’s just shaped differently.

But it’s, you know, two bed, two bath, about 1,000 square feet. Gorgeous views back behind of nothing but trees and canyons. And then we got an acre and a half next door to it that we’re trying to find something cool to build on.

[Antonio]
Oh, that’s good. That’s a sweet, sweet setup, man.

[Luke Andrews]
It is. Well, you know, like I said, we closed on it. We’ve got several bookings going, but now it’s all about can we make it make money and pay the bills?

[Antonio]
Now, this may connect back to your previous story, but I guess we’re about to find out. What’s the most, or what would you say would be the most unsuccessful time you’ve had in your real estate investing business?

[Luke Andrews]
The most unsuccessful time was the first flip that we tried to do. And really, I’d say it’s probably the only true flip that we’ve done. I mean, we’ve bought a couple of four and five plexes and done a few minor things and really just kind of turned over the rents, raised the value enough to be able to sell it right away.

I mean, I guess in a way that’s flipping, but we took a true, like, this place was bad. I mean, three-foot hole in the ceiling where water’s just dumping in on a regular basis. Buy this property and start on the flip.

But we had some additional partners at that time, some of the ones that kind of helped us in the beginning, and I stayed out of it from dealing with the contractors. I kind of let other people handle that, and it got a little away from us. Ended up paying one contractor $30,000, $40,000 upfront.

He skips town, then we got to turn around and hire somebody else to come fix the few things that he did do and then actually get it completed. And that’s one that we actually ended up having to hold onto for about two and a half years as a rental because the flip just wasn’t working, just way, way overspent. And it didn’t help that we had a contractor take off on us.

[Antonio]
That seems to be a regular occurrence in every market. Can anybody explain that to me? Because I can’t believe this.

This is business, but there’s a lot of contractors who just disappear. What is it?

[Luke Andrews]
There are, but there’s also a lot of people that are still paying so much upfront, right? I mean, at a certain point, it becomes shame on me as the investor for writing those checks on the front side before the work’s done. Now, I’ve got another contractor for a Triplex that we have, it’s about 90 minutes away, and this guy is phenomenal.

He does great work, does it at a very affordable price, but he will only be paid by check on Saturday mornings. And when we’re in like these three, four, five, six week projects that we’re doing where we’re doing big renovations, I have to go drive and meet him on a Saturday morning. He won’t take cash, he won’t take Venmo, he won’t take a check by mail, he won’t take a credit card.

I have to drive, go meet him, walk through his receipts for the week of everything that he spent, and then he has a little piece of notebook paper that he wrote out, here’s how many guys I had, here’s how many hours they did, here’s what they spent it on, and then write him a check. But I’ll tell you what, it’s worth the alternative of paying somebody up on the front side, and then they just take off with all your money.

[Antonio]
Yeah, yeah.

[Luke Andrews]
They have better things to do on a Saturday morning, but keeping money in my pocket really needs to be at the top of that list.

[Antonio]
Yeah, it’s good to work with somebody who’s actually trying to be calculating like you’re trying to be. That can be appreciated. Yeah.

So to circle back around to your portfolio, I gotta hear that story, man, you touched on it. You said you lost a portfolio eventually? We did.

[Luke Andrews]
So when we were up at around, it was 32, 33 properties, we had some additional partners, and we realized at the time that we were going in entirely different directions. We had different goals, we had different visions, we had different values and different plans for what the portfolio needed to do over time. There was constant infighting and bickering and things like that.

And so we eventually just said, hey, we need to part ways. We are going in different directions. And so we sold everything at that moment.

And then my original business partner and I, we had stayed together and just started building our portfolio back up. And really, we didn’t walk away with anywhere near as much as we should have from that deal as we sold those out because it was a, hey, we need to cut ties quickly. Let’s find somebody that’s willing to just come in and buy the whole thing.

We took a massive discount on it. And looking back, wasn’t the right thing to do. I made more of an emotional decision than a true financial fiscal responsible decision and probably left, I would say, at least five to 10,000 a door on the table on a package of close to 30 units.

[Antonio]
I mean, sometimes that stress is worse to linger. It could snowball into something extremely bad.

[Luke Andrews]
It can, and it was keeping me up at night. However, the lessons that I learned throughout that process are worth 10 times what I left on the table. And that’s what I have to keep telling myself at the end of the day.

[Antonio]
Yeah, for sure. What’s the one positive goal you’re focused on in your business today? Hoo, the one positive goal is…

[Luke Andrews]
So I’ll tell you, with my business partner and I, we are exact opposites. So when I wrote my book on real estate investing, one of the things that I wrote in there was find a partner who is, you guys have similar goals and visions, but you have opposite skill sets. So where I’m weak, he’s strong.

Where he’s weak, I’m strong. But he’s always been the one who has always, we gotta grow, we gotta grow, we gotta buy more, we gotta buy more. And I’m the one that’s like, eh, let’s hold off a little bit.

Let’s see if this works. Let me make sure that we have enough money to do that. Well, he’s the one that got me interested in the teepee.

He said, this is something we gotta do. We gotta get into the short-term rental game and we gotta get into these experience houses, is what he calls them. These places that people are booking because they’re inexperienced.

And it’s never something that I would’ve done before, but now it’s like I’ve got this itch. I see the potential and I see what’s out there. And so the positive goal I got now is just find more cool property to buy.

I mean, just unique and cool property. We’re looking at one right now that’s a hotel in Hawaii, which I’ve never even been to Hawaii, but they’ve taken half the hotel and taken the rooms and people own them on an individual basis. And you can kind of decorate them yourself and then rent them out as Airbnbs.

You can manage it yourself or you can actually have the hotel manage it for a fee for you. They can do the booking, they can take care of the cleaning, the maintenance, everything. So it’s just something new that we’re focused on that even six months ago, I would’ve told you, there’s no way in the world I’m ever gonna do anything like this.

[Antonio]
Yeah, true. And the thing is is that the pandemic has increased most consumers, their thought process of, I better create more experiences and do things like that, which Airbnb rentals falls right in line with that. So this is like prime time, man.

You’re right on it. That’s right.

[Luke Andrews]
Yeah, and like I said, if it hadn’t been for my business partner and his venture or his vision, I would’ve been sticking with that, hey, that easy little single family that fits right into our wheelhouse, up into a fourplex and then just kind of just keep building like that. But he’s really got me working on some things. And like I said, we’ve got an acre and a half next door to our teepee right now that we’re considering putting like, we’re looking at like luxury yurts.

We’re looking at tree houses. It’s kind of a unique piece of land and we’re trying to find something interesting for it. And again, something I never would’ve done six, eight, 12 months ago.

[Antonio]
It’s gonna be exciting. What’s your current favorite piece of technology you use pretty much day to day? Favorite piece of technology?

[Luke Andrews]
Man, I mean, I know it’s gonna sound unbelievably just kind of basic and simple, but it’s my iPad with my Apple Pencil. I mean, it just, it does so much because I’m a spreadsheet nerd. And so it just allows me to just kind of go in and just work through anything that I need.

And then it just gives me an opportunity to be able to go in and just jot notes. I’m constantly trying to write something because I feel like that’s how I get all of my ideas out. That’s where all of my best stuff has come from.

And one of my mentors once told me that fear has no place on paper. So anytime I’m feeling overwhelmed, I’m feeling a little scared about the process, I just start writing. I just start doing these massive brain dumps.

And then all of a sudden it’s just like, either the fear goes away or the solution just appears out of the page. And so now it’s like I’ve got this Evernote portfolio of just all of these things that I’ve worked on over the last several months where I’m just out writing what appears to be nonsense on the front side, but really turns into something on the back.

[Antonio]
Let me ask you this. So when you’re using that iPad, are you actually using the interface of using the pen and writing in the form of, okay. The powers and the physiology of human beings taking that action of writing things down as if it is on paper, whether it’s iPad or not.

That- You’re relatable with it. You send your own handwriting, right? Right, right, yeah.

Yeah, I love it, man. Love it. People don’t realize how much they’re losing when they’re just typing all the time.

I know, I know. What’s your current portfolio look like these days?

[Luke Andrews]
Right now, like I said, we just sold those 35 properties not long ago. So we are at six at the moment. And then just looking for deals that we can find.

We talked a little bit earlier that our direct market has gotten a little oversaturated and the ROI numbers are starting to come down. And so we’re starting to expand out a little bit. The difficult part with expanding out to some of these towns is finding the property managers.

That’s been the real challenge is finding good solid property managers. And I don’t mind managing a little bit here and there, but when all of a sudden it’s like our portfolio starts building back up and then I’ve got three that are two hours east and I’ve got three that are two hours west and three that’s 45 minutes north, it gets a little bit overwhelming at times, especially with everything else I got going on with family and kids and stuff.

[Antonio]
Yeah, true, true. How, if anybody wants to connect with you, how do they do that?

[Luke Andrews]
Easiest way is just to go right to my website, lukeandrews.us. There’s ways you can follow me on Instagram. You can follow me on LinkedIn. Those are the two where I’m by far the most active, probably LinkedIn more than anything.

Or always just send me an email, lukeatlukeandrews.us. I answer all of my own emails as far as that’s concerned. So if somebody wants anything, they’re more than welcome to reach out anytime.

[Antonio]
You also, do you also have some courses and a book that you wrote?

[Luke Andrews]
I do. So you can access any of those from my website. The courses are really geared a lot towards real estate agents, insurance agents, mortgage brokers.

They’re on communication and negotiation, and then getting started in your real estate career kind of that first year or two. But a book that I wrote from real estate investing, we absolutely touched on that I’ve made a lot of mistakes from an investment perspective. And I am super passionate about getting people into real estate investing.

So whether that’s getting real estate agents to start working with investors, or just getting average everyday people to start investing in property. But I wanted people to be able to learn from my mistakes. So I wrote this book, and it’s just the 10 mistakes I think every investor makes buying their first property.

It’s an ebook only. It is 100% free. You can go download it at any time.

10investormistakes.com. And it’s the number 10, so 10investormistakes.com. You can go, you can download the book right away.

If you’re a quick reader, you could probably finish it in 15 to 20 minutes. I mean, it’s an easy read, but I’ll tell you, I write like I talk. So if you’re out there looking for grammar, and sentence structure, and paragraph structure, and that kind of stuff, you’re probably gonna be very disappointed.

I just, like I said, I write like I talk.

[Antonio]
Yeah, you’re doing something that’s extremely important. You’re actually teaching others how they can get into this, and how they don’t just have to accept what our government has not done for our education system. You’re actually trying to help increase the knowledge.

I love it.

[Luke Andrews]
You are 100% correct. They are not doing enough in the school systems. And I’ve tried to make it a point over the last, you know, about three and a half, four years ago, I started, I volunteer at different high schools going and speaking and teaching kind of little mini-courses on basic life skills, and how to interview, and what employers expect, and you know, personal finance stuff.

You know, what’s gonna happen when they turn 18, and they start getting all these credit card applications in the mail? What do the implications look like? Because I made all those mistakes when I was 18.

I don’t want these kids doing that too, and they just don’t have the curriculum for it at the moment.

[Antonio]
And that’s the same thing. Just think about when you were 18 versus your age now, and the way your brain operated, and then you graduate high school, and then they say, okay, what college would you like to go to and take this giant college loan out? Can you imagine that the 18-year-old brain can’t necessarily make real sense out of a question like that?

It’s insanity.

[Luke Andrews]
Well, you wanna know what’s really insane, is like I said, I just got done purchasing a property a week and a half ago. I mean, they went through nearly two months of underwriting. Now, a big part of that was they were severely backed up, but all of this underwriting and all of this documentation and tax returns from my business and personal and personal guarantees and everything else for a $250,000 hard asset that they have as collateral versus all I had to do was sign a piece of paper to take out a college loan.

[Antonio]
Right.

[Luke Andrews]
Massive college loans at 18. All I had to do was sign a piece of paper. Nobody asked me anything.

[Antonio]
No.

[Luke Andrews]
But now it’s like I’m trying to buy something that they have collateral for and they’re gonna go through and scrutinize everything that I do. I mean, it’s just, it’s crazy.

[Antonio]
Something’s quite crooked in that. Doesn’t seem right, does it? No, no, not at all.

Since entering into the real estate investing world, what would you say you’re most grateful for?

[Luke Andrews]
You know, I am most grateful for the partnerships that I’ve created along the way, whether it be the partnerships with my actual business partner, the partnerships with my mortgage lender or with my insurance person, with the title company that I use on a regular basis and with property managers. Those partnerships, because they’re not only helping me from a business side and making my business run more efficient and allowing me to make more money with less work, these people have become good friends in my life. So those partnerships have been, I mean, by far the thing I’m most grateful for.

[Antonio]
Yeah, it’s all about the relationships, man. Before I hit you with the last question, I just wanna tell you thank you very much for being a guest on the show. I really enjoyed your stories because these are very specific moments in time that people need to realize what they can do with a life in real estate investing and creating financial literacy as a whole.

So I really thank you for being here.

[Luke Andrews]
No, I appreciate you having me on. And if I could leave everybody with just one thing, I mean, it’s just take that first step. And even if you get knocked all the way down and you have to sell your entire portfolio, you can start building it back up.

That is not the end of the road at that point.

[Antonio]
Right. Finally, Luke, what would you say is your definition of real estate investing success?

[Luke Andrews]
Definition of real estate investing success is very easy for me. It is going out and providing as much quality and affordable housing as I possibly can. I mean, I’m not gonna set a defined number on it because I’m not gonna set myself up for failure if I say 1,000 units and I get to 900.

But I’m also not gonna cap it at 1,000 if I’ve got a way to get to two, three, 4,000. So just as much quality and affordable housing as I can, it’s still gonna put a profit in my pocket.

[Antonio]
Successors, I hope you’ve enjoyed my quick conversation today and I hope you’ve gained just a little more insight into achieving your financial freedom and reaching your goals. For more real estate investing content like this and a lot more, please visit UnitedStatesRealEstateInvestor.com. That’s UnitedStatesRealEstateInvestor.com.

Thanks for listening and as always, stay grateful, stay successful, and be free.