The School Of Cash Flow

Having a full-time W2 job and giving extra hours in real estate investing does require your time. There are different ordeals that an investor encounters, and dealing with them is challenging. In this episode, Trent Parks, the owner of a construction company called Billings Best Builders, shares his story of how he started as a real estate investor. He also talks about persistence and perseverance as the keys to his success. Listen to this episode and hear more about Trent and his road to success.

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Persistence And Perseverance: The Keys To Becoming Successful In Real Estate Investing With Trent Parks

My guest for this episode is one of my other colleagues from my GoBundance mastermind. I brought on a few guests on past episodes, but this guest is special since he’s part of my GoAbundance weekly small group, which we call a GoPod. We’re a small group within GoBundance of about 4 to 5 folks. Our group happens to be five folks and we meet weekly to hold each other accountable to our goals and push each other to level up in all areas of our lives. That being said, I meet virtually with my guests weekly in our GoPod meeting as we do everything over Zoom. I’ve been part of this GoPod with my guest, Trent.

I used to be prior GoPod but it dissolved. I’m certainly learning to know more about Trent and his story. I wanted to bring him on as a guest to share some of it. Here’s a little bit more about Trent as well. Trent Parks is a resident of Billings, Montana, where he’s the Owner of a construction company called Billings Best Builders, specializing in ground-up new developments and build-to-rent communities. He’s completing a 26-unit build-to-rent, and they’re working on their next community. When he’s not working on projects, he enjoys Montana outdoors with his wife and his daughter. Let’s roll into this.

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Trent, welcome to the show. How are you?

I’m doing great, Dale. Thanks for having me on your show.

I appreciate that. Let’s start with GoBundance. We met each other through GoPod. Remind me, how long have you been in GoBundance? What has it done for you so far?

I’ve been a member at GoBundance for a few years now. Before GoBundance, I very much felt like I was alone on this island and on this journey. It introduced me to all kinds of people that are on similar paths and are like-minded. I remember reading the book, The Millionaire Next Door, and I think a lot of the preconceptions people have about wealth are dead wrong. GoBundance was a perfect example of that. They are some of the most generous people you’ll ever meet and super forthcoming not only in their business experience but with their families and personal lives. It’s been a great thing that I’ve been happy to be a part of it.

I’m curious about your background. I know that you weren’t born a real estate investor. I wanted to know when and how did your real estate investing journey started?

I was in my sophomore year of college and I think like a lot of people out there. I read Rich Dad Poor Dad and it made me realize that I wanted something different for my life than working the next 50 years in a W-2 and hoping I had enough in my 401(k) to retire. I realized that was not what I wanted in my life. At that time, I had no clue what I was going to do. I knew that that paved the ground for knowing that I had to do something different. I kept doing more research on how people accumulate their wealth. It seemed like the overwhelming response I kept reading was through real estate. It was at that point in time, I decided I wanted to start investing in real estate.

It was still super early and I still didn’t quite know what that was going to look like. When I got out of college, I bought a fourplex, lived in one unit, and rented out the other three units. It was life-changing. It was super amazing and somebody wrote you checks. All of a sudden, you’re breaking even on your mortgage, living somewhere for almost free, and continuing to build wealth.

I did that for a number of years. I tried doing some things. At that time, wholesaling and fix and flip were all the rage. I did a couple of projects like that and found out that wasn’t necessarily the direction I wanted to head. At that point, I started looking more into new construction and development. Fast forward to where we’re at now, it continued to grow organically from that point.

I wanted to unpack a few things here. You first started off by buying an owner-occupied fourplex. Remind me what year was that in, out of curiosity.

That was back in 2010.

It was tight in the middle of the crash.

The response I kept getting was, “Are you crazy? Do you know what’s happening in real estate now?” I said, “I know but look at what these people are paying in rent. I’m going to get to live somewhere almost rent-free.” People still needed a place to live so I stuck to my guns and jumped into it. It was during the housing market crash that the whole US was going through at that time.

It looks like you house hacked the fourplex. Did you come in with minimal down out of curiosity when you bought that property back then?

I did. It was 3.5% down at that time. Oddly enough, I believe it was an Obama program that was going on for first-time home buyers. I think I got $7,000 from the government to help out with the financing of that deal.

When you bought it, you lived there and it happened to be your investment property at the same time since you had three other units that were renting out. Is that was your very first experience being a landlord? What did you think of that experience? Did you learn anything? Was that pretty easy going through that initial experience?

It was like a lot of things in life. Nothing is easy at first, but once you learn how to do it, it becomes easier. I immediately joined the Montana Landlords Association as soon as I bought that property. I can’t remember at that time, but I think it was $75 a year. It was almost a no-brainer. They held monthly meetings that you could attend and learn. They also offer all their documents and forms, which I used for leases for a lot of years. That was how I cut my teeth. I did my own property management. As people would move out of the units, I would spend a lot of nights and weekends remodeling kitchens and things like that and learned how the business side of it worked.

It looks like you always had this entrepreneurial hustle. I believe during this time, you’re also maintaining a W-2 job. Am I right?

I was. I worked at a W-2 job for about a decade, all the way up until 2021. I was working a lot of extra hours in the real estate business and also working full-time at this W-2. I would say that spirit had always been there but I also knew for me that I relied on some of that income to keep investing in real estate. I think that’s a story for most people. There are those unique stories out there where they figure out seller financing right out of the gate. They land a huge deal then things explode from there. Mine was more of the Taurus story where it slowly started accumulating assets and started growing year over year.

Real Estate Investing: In that path of growth, to feel that you’re accomplishing things in life is when you have more time in your day.

What was your W-2 job? Was it connected to what you studied in college?

It was and also what I had been studying in high school. I was a Network Engineer for a number of years in a couple of different places. I am very grateful for the education on the technology side of things because it has partnered very well with real estate and what I do now. Even though I’m not doing the networking side of it anymore, I’ve been building my own computers since elementary school and love the technology side of it still now.

I’m curious. A lot of people that are my audience are based in the Bay Area in the middle of Silicon Valley. Pretty much a lot of my audience is in tech. What experience in the tech industry and/or skillsets that you’ve learned that made you successful in tech have translated even over to what you’re doing now?

One thing I did not plan on having an edge within the home building industry is the research side of it. Being able to use not only our county database to potentially research properties overlay distances on maps. The research side of it has been surprising and also being able to draw my own floor plans. That’s a thing that I think most builders old-school do on paper, whereas I do it digitally. I can take things and edit them to convey the vision we have for a community to some of our engineering staff and be able to help create that vision a little more vividly than you might be able to if you were telling somebody.

I find it interesting that, basically, you are a land developer. I don’t know anybody personally in my spheres that do that. I think it’s pretty unique. When you got into your first land development deal, how did that go about? Were you already financed well? Did you bake roll a lot of past profits or did you have to have a lot of money to get into it?

No, we did not. At that time, I did that first deal with a partner and we bought five acres of land for $75,000. Looking back, it was one of those deals that I don’t know if I’d say once in a lifetime, but it was a very unique deal to buy land that cheap. From my engineering background, I’m very heavy on due diligence. Land development fits well with my skillset. I’m asking a lot of the right questions. I’ve always been pleasantly surprised how engineering firms and even our local city participate in providing answers to questions.

They’re genuinely interested in helping people. At least, that’s been my experience. If you ask the right questions, you’ll find those answers. In that first deal, we bank loaned the development and the land. Me and my partner at that time each brought $60,000 in cash that we had saved up. That was all I had to my name. Things have changed quite a bit since then, but that first deal is getting going. That’s less than some people would put down on the house, depending on what market you’re in.

What did you build on that first piece of land?

We developed sixteen duplex townhome lots. There was one multifamily lot that was zoned for a fourplex and then one single-family home lot. There was a total of sixteen lots in that first development.

Were they all designed to be sold or did you keep any of yourself?

I still own six units in that development now. We did sell the rest to homeowners. We individually townhome to them so that you can sell half of a duplex to someone. The street has turned out beautiful. Most of our residents there were of retirement age because we had decided that we were going to build homes with no steps. We had a lot of retirees purchase those homes. Retirees have a lot of free time and they have taken great care of their homes. The neighborhood, to this day, still looks awesome.

That’s good. When did you realize that you had a knack for doing that stuff? Did you think that this is your thing after doing that first development?

It did. It went well. It was one of those things where I think as you continue to slowly build your skillset, you don’t realize how specialized that skillset has become until a little bit further down the road. For me, there was never this light bulb moment of like, “This is going great for me.” My stories more one of persistence and perseverance to where consistent action every single day, keeping after that same goal and chipping away at the tasks in front of us to keep moving forward. Day by day, this thing has grown substantially. There was never a day where I necessarily hit this peak. I feel like it’s all been part of this journey, and I keep heading down the same path.

For everything that you build, are you keeping some of the properties that you’re building on every project? How are you building your portfolio? What’s your investment strategy now?

That’s how it started out initially. We were selling what we were building to create capital. As I started getting more capital, I’d been in the rental game long enough to where I wanted to keep some long-term. That’s why I added this first subdivision. I only kept 6 out of 28. I did that strategy for a little while. For the latest project that we are getting close to wrapping up, I had a substantial tax event because we were selling so many homes and making great money. It was the first time I had done cost segregation. After paying massive taxes the year before, I paid no taxes in 2021 and made the same amount of income.

That was a huge light bulb moment for me. Going forward, I see the scale. We’ll try to do a build-to-rent community every year in addition to the homes that we build-to-sell. The build-to-rent cost segregations will offset the income for the homes we sell. I remember listening to a fellow GoBro talk about how our highest expenses are always taxes.

If you can take a couple of hundred grand that you would have paid in taxes, put that towards your next project. I think we’ve all seen the hockey stick graphs of how things grow. If you’re not paying that 30% to 40% to Uncle Sam every single year and you can invest that money, that’s a huge change in that curve, and it’s going to allow you to get to your goals much faster.

You mainly invest in your backyard to where you could drive to. How are you finding your deals on an ongoing basis? Is it many relationships or do you have other systems set up?

It’s been a combination of all the above. This first deal that I was telling you about, we bought a chunk of that land through a local builder-developer. He had a much larger chunk and was selling off small pieces of it. There was a dentist out-of-state who owned one of the pieces and so, I simultaneously closed both of those. I looked up his dental practice and asked to talk to the guy. I told him I was interested in buying a piece of land that was sitting there doing nothing out-of-state for him. We bought those couple parcels together. I bought stuff before that has been on the MLS. I’ve even scoured for things that are expired. Local relationships are always great sources of market deals, but I would say a little bit of everything.

Along your journey, as you were developing as a real estate investor, any conferences, books, podcasts, or whatnot that resonate with you that helped launch your growth?

Real Estate Investing: When I have conversations with people looking for deals or subcontractors, my ability to listen to their concerns and try to alleviate them has gotten me to where I am.

I would say all the above. On the journey in life that we’re all on, you’re constantly learning. At least, if you want to become a master of any of it, you almost have to. I have been listening to BiggerPockets since 2008. Once you start tuning into those communities, you start hearing about other things. It was through that that I heard about GoBundance. I’ve got a bookshelf full of all kinds of books that are finance business, business building, and things like that.

I still listen to podcasts all the time. Now I listen to Ken McElroy’s podcast quite a bit and some of our fellow GoBros podcasts like the Tribe of Millionaires Podcast. There’s so much content out there. There’s no excuse for not learning what you’re interested in. Most of it is free. Podcasts don’t cost any money. Books are $20, but I would always say that that is the cheapest form of education you will ever receive by buying a book.

Even with the looming session of economic uncertainty out there, has that changed your outlook on anything or the way you look at deals?

For me, it’s always been an underwriting game. I’ve always been a heavy spreadsheet guy. I think as long as you’re investing for cashflow. When I underwrite most of my deals, I don’t plan on any increase in rents. In the last few years, you could call that foolish, but the increase in rent was the icing on top of the cake. It was extra income that I hadn’t planned on. Most of the time, I tried to plan on the worst-case scenario. That’s how I’ve always invested and evaluated risks that way.

Let’s say, now we got fifteen spec homes in the ground, and I have to pivot from selling them to renting them. Do I have enough cash reserves to sustain the next 12 to 24 months? Can I rent those to break even for the next 12 to 24 months? I would say I’m constantly evaluating risk. As someone’s portfolio grows and changes, your thresholds for risk are also going to change. I would say now I might be underwriting a little more conservatively than I have in the past, but at least from my own level of risk tolerance, I like to be able to sleep at night. That’s what makes me comfortable now.

I want you to go back to your W-2 job. As you said, it was in 2021 that you left it. Progressed to that, you knew that was an option as you were building your real estate investments and whatnot. What did that feel like when you left your W-2 job? Did you hit that goal? Did it feel like what you thought it was going to feel like?

Not really, and it’s funny because let’s imagine hitting $1 million in net worth. We all have this plateau built up in our minds to where you hit that, and all of a sudden, the party lights are going to go off and you feel like you’ve made it. For me, it was like another day at the office where it was cool. Don’t get me wrong but nothing in your outside of that change. Your friends and family don’t change a lot. Nobody’s going to change other than your own internal feelings.

For me, anytime anybody does something where they’re doing it 40 hours a week and you change course is going to feel drastically different. I remember life feeling drastically different at that point to where it’s like, “I’m not going to spend my workday focusing on this. Now, I’m going to spend it doing something completely different.”

When you’re not tied down by a W-2 job, you have more freedom now. You have choices now. You can choose what you want to do with your time. For me, I always never feel like it’s about the goal. It’s about the person you’d come along the way and the journey because once you hit that goal, it’s never what you think it’s going to feel like. It’s similar to what you’re saying. It’s just you need another goal now to work towards because you’re always evolving and growing as a person. When you looked at yourself ten years ago, you’re a completely different person. Probably, you’re even thinking that looking at yourself now, it’s like, “How did I get there?”

It’s about those new challenges like you’re saying, that path of growth, and what you can do to feel like you’re accomplishing things in life. I feel like your why solidifies and becomes stronger when you have more time in your day. Now the journey isn’t about me. It’s about the people that we hire and their families. It’s become a much bigger picture.

I want to talk about that a little bit because now you don’t have your W-2 job. It almost sounds like your mental shift has changed. You’re coming from a place of more of a contribution. In your why now, how has that evolved even since you were in W-2 to now?

My why now has changed substantially back when I was at my W-2. It was very individual. I was trying to make my mortgage and take care of my family. Now, it’s to the point where I feel a personal responsibility for other people paying their mortgages and feeding their families because they rely on our business for income. It’s been a good thing. I had sat down and written a vivid vision of what we wanted it to look like and feel like in the future.

A big part of it is about impacting the lives of the people we hire and seeing them reach their financial goals. Finding out where they want to be so that they’re not heading down the path to where I knew I didn’t want to be, which was 65 years old hitting retirement, holding onto my 401(k), and hoping that things pan out. That is something that I think is leading me toward syndication.

I feel like one of the biggest ways we can give back to people financially is by allowing them to invest in our deals. Especially our staff and employees have opportunities that they might not otherwise have because I don’t know too many builders in my area that allow people to invest capital in their deals. That was something I wanted to offer here in the near future.

As you potentially transition to the syndication space, have you been able to have other people still invest in your deals, even in a non-syndication way?

There are people that I’ve had long-standing relationships with for years that have been investing in our deals and will continue to grow those relationships. This was also going to be something on a little bit of a larger scale. We realized to bring in more than one other person on a deal. If we want to bring in 10 or 20, then we would have to start doing things a little bit differently.

I’m transitioning a little bit, but I always say that real estate is a team sport. I know you’re not doing this alone. With all the real estate investing and building that you do, I’m curious what’s your team set up like? Who helps you?

Now, we transitioned from it being me. We’ve hired a project manager who’s helping run our job sites. We just hired somebody to also help that project manager. As we continue to grow, we will probably integrate vertically by bringing property management in-house. That’s one of the next positions we’re looking at and potentially purchasing office space and slowly adding to our team if it makes sense.

There are certain people that I would very much consider part of our team. I still have my realtor’s license, but we couldn’t do what we’re doing without Polly, our realtor. She’s been fantastic to us. I consider her the marketing arm of our team and Corey, my accountant. I have a very proactive accounting relationship with him. We talk a few times a month. He’s not directly on my payroll and never will be. We have that relationship where he’s compensated well for his time but we also aren’t doing the old-school. We meet once a year, and our tax bill is what it is. There are some things that we do differently. I see our team as being a collection of people that are as much beyond even our direct hires.

In all of the deals you’ve done, all the projects you’ve put together, I’m sure there’s been a lot of things that didn’t go the right way. Those are the things that help you learn as you get that experience. Are there any lessons learned or any horror stories that you’re never going to do again that come to mind from everything you’ve done?

Real Estate Investing: You need another goal to look forward to because you’re evolving and growing as a person.

I could tell a handful of them, but they’re all going to be very construction-related because that’s the business I’m in. A perfect example was one of our very first homes, which is my personal home. It was being built during the winter. It had been snowing and raining. The crawl space had gotten so filled with moisture that I didn’t realize it was starting to mold in there. After the building was framed, our plumber and HVAC guy got to undo their work and said, “The crawl space was filled with mold.”

I had a family member who owned a disaster restoration company. I didn’t have the funds. It wasn’t in the budget to fix that kind of damage, so they guided me on here’s what you need to use. I already owned a paint sprayer. Here’s how to fix the problem. Breaking bad, you’re in a completely white suit, mask, and gloves, the whole thing.

It was a miserable experience working in that crawl space, spraying the whole thing. It was full of mold but I can think of many stories and lessons along the way along those same lines to where you almost have to go through those things to become a better business and company. You don’t know what you don’t know sometimes.

You don’t know what you don’t know, but best to be prepared for the worst. You’ll figure it out. I have some final questions for you. What are you excited about in your business now?

I have another deal that I’m working on. It is a 32-unit build-to-rent. That is probably one of the biggest things that I’m excited about. I’ve got a couple of other local developers who have wanted to partner on some larger deals. The prospects of that are very exciting. It’s cool to start working alongside some of those people who, years ago, you looked up to. They’re 20 to 30 years older than I am, but it’s cool getting to partner and start looking at deals with some of those people. Those are some of the more exciting things that I’m looking forward to.

What has real estate investing done even for your life?

It’s not only created purpose but it’s also created the financial side that I had been striving for so long. I knew I wanted to spend time with my wife and my kids. In my old job, I used to have to travel occasionally. I left my W-2 and my wife has left her W-2. She raises our daughter full-time now. For me, the family aspect has been the greatest benefit. We can do what we want when we want with our time. I still work very hard and maybe even work more hours than I previously did. When you can schedule your family time around that and spend time with them, those are moments you can’t get back. To me, that’s probably been one of the most special things we’ve seen change substantially in recent history.

What’s the superpower that’s guiding you to this level of success so far?

We’re out of a show where I am talking but listening. One of my superpowers is when I go to have conversations with people looking for deals or subcontractors that have concerns about things going on in our job sites, my ability to listen to their concerns and try to alleviate them has gotten me to where I am. I constantly hear from our subcontractors, “You’re one of the best generals that we’ve worked for.”

A lot of guys yell at their subcontractors when things are going right. It’s a pretty big 180 from the way that I manage. As a result, we have acquired quite a few great contractors that love working for us, and we’re thankful to have them. I constantly tell all of our guys that we’re only as good as our subcontractors because I can’t be there to hold their hand every day. It’s been great having a relationship with them. Once we find those talented people, we try to hold on to them and take care of them. A lot of our guys have been around for a number of years with us.

If you were to start your real estate investing journey all over again from scratch, knowing what you know now, would you do anything differently?

The only thing I would say is I would have left my W-2 a little bit sooner. I feel like the time that I spent doing that, I can spend focusing on the business and seeing how much it has grown. We all have that internal fear of change, and I sure did. If I probably had walked away sooner, we would have grown even that much faster. I still wouldn’t change anything, but if you had a crystal ball and had the opportunity to do it over again, maybe that would be it.

It’s like you’re forced. You don’t have that crutch of W-2 income that forces you to take action a lot faster. The last question is how can somebody get ahold of you?

I’m on Facebook. If anybody is browsing Facebook, feel free to add me or shoot me a message. You can get ahold of me via email. My email is ParksT@Gmail.com. We just launched our website, ParksPlaceCapital.com. We are in the phase where we’re taking some drone photos of our old projects. That way, people can see the track record of things we’ve done. Those are a couple of ways you can reach out.

That’s all I got for this episode. Trent, thank you so much for joining me on this episode. Thanks for sharing your story. It’s great that I can get to know you better. I know I connect with you weekly on our GoPod meeting and whatnot, but I felt like this is another coffee meeting to get to know you better as well. I’m looking forward to seeing more of your progress as you do more developments. Your story is very inspirational.

Congrats on leaving that W-2 job and finding more time. Your why has changed since then. I love that you’re coming from a place of contribution now. I’m glad I know you. I wish you all the success as you continue to scale your business and portfolio. To my audience, feel free to reach out to Trent directly if you have any further questions for him. Thank you for checking out this episode. Remember to leave me a podcast review on iTunes as it helps me attract more great guests like Trent. Until next time, live life abundantly.

Important Links

• Trent Parks
• GoBundance
• The Millionaire Next Door
• Montana Landlords Association
• Rich Dad Poor Dad
• BiggerPockets
• Tribe of Millionaires Podcast
• ParksT@Gmail.com
• Facebook – Parks Place Capital

About Trent Parks

Trent is a land developer in Billings, Montana specializing in ground-up new developments and build to rent communities. He has been investing in real estate since the 2008 financial crisis and began his journey with a house hack. Currently completing a 26-unit build to rent and are working on our next community. When he’s not working on projects, he enjoys the Montana outdoors with his wife and daughter.