Looking for smart ways to earn passive income through real estate, without becoming a landlord or flipping houses?
In this episode of the Infinite Financial Freedom Podcast, Josh Mettle interviews Lindsay Davis, CEO and Co-Founder of Spartan Invest, a leading provider of turnkey rental properties for passive real estate investors.
With over 2,000 investment properties under management, Lindsay reveals how Spartan helps everyday professionals invest in real estate without the hassle—including:
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How she scaled from flipping homes to building a cash-flowing rental portfolio
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Why turnkey real estate investing is gaining momentum in 2024
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How investors are locking in 5.5% interest rates for long-term rental income and cash flow
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Common myths that hold new investors back—and how to overcome them
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What a realistic entry point looks like for first-time real estate investors
Whether you’re looking to invest in real estate in 2025, researching passive income ideas, or looking to build wealth with rental properties, this episode will show you a model that works, even in today’s high-interest-rate environment.
Lindsay Davis:
One thing that is kind of a myth a lot of investors see is how sexy real estate is. How it’s the get rich quick scheme that a lot of your gurus try to push. And that is not the case. Now. We have seen this work time and time again over the years. We have seen investors who purchased with us very early on purchasing properties in 2000 14, 15, 16. So all those people are like, yeah, it’s probably not a good time to buy. I am going to wait until a little bit longer. A little bit longer. Those investors that purchased with us are on have seen the rewards now. If they’ve chosen to sell their properties, some of them have doubled their equity.
Josh Mettle:
Hello and welcome to the Infinite Financial Freedom Podcast, where we empower you with financial literacy and guide you on your journey to financial freedom. I’m Josh Mettle, and today I’m joined by Lindsay Davis, the CEO and co-founder of Spartan Invest, a company that’s helping everyday professionals build wealth through turnkey residential rental properties. A topic near and dear to my heart, Spartan Invest manages the full real estate investment lifecycle. We’re going to get into that from sourcing, renovating homes, leasing and long-term management. With over 2000 residential properties under management and 50 plus million in real estate transactions annually, Lindsay and her team are making real estate investing passive, profitable and possible for professionals across the country just like you. So I’m really excited to have Lindsay here today. How are you doing? Thanks for being with us, Lindsay.
Lindsay Davis:
Thank you so much, Josh for having me. It’s great to be on here talking about more ways to have find financial freedom, so thank you.
Josh Mettle:
Amen. We need more of that. Alright, well let’s jump.
Lindsay Davis:
Absolutely.
Josh Mettle:
So let’s just kind of start with a little bit of background. You help Spartan invest grow into a nationally recognized leader in turnkey rentals. So where did your real estate journey begin? Let’s start with that and what inspired you to build a firm around this passive investment residential passive investment market?
Lindsay Davis:
That’s a really great question and it really came just from experience. So me and my business partner, we started, we were both in the corporate world, kind of saw an opportunity, knew some other investors out of Montgomery that were flipping houses, and it was very HGTV and this was back in 2008, nine, and we were kind of doing that on the side. He had left the corporate world and I was working with him on the side as well. Then I stepped out and we’re like, Hey, we’re going to do this full time. We’re seeing the numbers, the properties were able to purchase on the foreclosure steps. Obviously they were in abundance then. And then we moved from Tuscaloosa, Alabama to downtown Birmingham set up an office and it was just he and I and we were doing the chase and finding properties in your a plus areas, having them staged, but properties were not moving as quickly in 2010 and 11.
Josh Mettle:
Yep, I remember. So
Lindsay Davis:
We were experiencing that. Yeah, absolutely. So if you are a two man team in a startup and you go through a winter month or a winter quarter where historically properties just don’t tend to sell that much and you don’t have a lot of capital, you don’t make money if you don’t sell a property. So in kind of a panic, we went out and purchased a ton of single family homes and when I say a ton, I mean probably 12 to 13 because we just didn’t have a lot of overhead. It was just he and I and started managing those properties. We did minimal renovations to them, but the cashflow that we were able to experience and were able to have with just that small portfolio was allowing us to keep the lights on was allowing us to look at other ventures and really sustaining us in those early days. And so that’s kind of when the light bulb hit and was like, okay, this is where we see the value. We are just managing these properties. The residual income is helping us do other things. This is the value that we need to be selling with real estate. So in 2013, and we were successful, but it was a little bit harder to do the owner occupant flips for us just because of the constant chase, the constant grind.
And so in 2013 we made a hard pivot and focused solely on the turnkey style and started our property management company at the same time strategically going after areas that were going to generate a better yield for rental property investment and kind of those, as they say, the rest is history.
Josh Mettle:
Congratulations. It’s funny, we got started in real estate investing the same way were we thought when I say we long-term listeners know, my mother and I started real estate investment together 25 years ago and we were just too stupid to sell anything. It turns out you hold properties for 25 years, all of your moves are genius. It’s crazy.
Lindsay Davis:
Right? Exactly.
Josh Mettle:
But we thought we were going to be flippers Lindsay, and we found, boy, it’s a lot of work. And then you sell the property, you pay a lot of taxes and then next month you start over at zero and you got to do it all over again. Not to mention we were terrible sellers, we were better landlords. So it’s interesting, you kind of had the same evolution and the same thought process and you’re like, no, the magic is really holding these properties, not flipping ’em for a small profit that you pay big amounts of taxes on.
Lindsay Davis:
Absolutely. And there is a lot of money to be made in flipping and there are still a lot of people out there that are extremely successful in it that is not a dead or dying business. It’s still a great opportunity, but you’re absolutely right in that the grind is nonstop and we feel like the benefits, true benefits in real estate lie in its passive ability. So that’s really where we wanted to put all of our focus.
Josh Mettle:
Yeah, I’m involved in a bunch of real estate investor communities and when I talk to people who have great flipping businesses, to their credit, they’ve got a well-oiled machine. But when I ask ’em how many of those properties do you still wish you had that you bought 10 years ago? They’re like, oh my gosh. Sometimes we follow those properties and we see what the values have been over the last 10 years and we just want to shoot ourselves. So no doubt, I completely agree with you. Let’s get into that term that you keep mentioning turnkey real estate. So what does that mean? Explain that to our investors and how is that different than most traditional real estate investing that you see?
Lindsay Davis:
That’s a great question. So when I say turnkey, because there’s a couple of different definitions floating out there about what true turnkey is, and I can talk a little bit about that, but turnkey to Spartan invest is essentially mailbox money. Our goal is to create mailbox money for our investor clients. So what we’re doing is we’re going out, we’re finding these properties that meet certain criteria. We’re targeting places that are going to generate a certain yield, a certain rate of return, and they got a decent owner occupant tenant mix crime rate low. If you want to put it in your A, B, CD neighborhood, we’re going to focus primarily on your C plus to a minus area. So we’re going out and acquiring these properties. We’re doing renovations to them. So the goal for our renovations is our three MS and that we’re going to do all of the work that’s going to keep your long-term maintenance down if a tenant will pay more for it or if it’s a safety must.
So if the roof is older than five years old, we’re going to put a new roof on it. If the HVAC’s older than five years, we’re putting a new HVAC in. Every house gets a brand new water heater. We’re removing any kind of carpet that is a maintenance nightmare. Anybody who owns rental property knows that. And so we’re putting in new flooring, granite countertops, we’re doing all of those renovations and then we’re passing it off. As soon as we’re done with that, we’re passing it to our property management company that is in the same building. And when I say there’s a lot of different definitions for turnkey out there, what I mean by that is that there’s a lot of flippers that hand off the property that is ready to be rented and they partner with other property management companies. And I think the distinction with Spartan is that our property management company is in one house.
I’m also a co-founder of the property management company. It is still under my management. It’s still under the same building. Yes, it is a separate entity that’s for real estate, real estate reasons, it has to be licensed through the Alabama Real Estate Commission, et cetera, et cetera. But it is a separate entity under one family of companies that is servicing Spartan Invest clients. So that property is handed off to our property management company that will find the tenant, place them handle rent collection, move out maintenance. They’re doing absolutely everything. So once that property is cash flowing and ready to go, that’s when we hand off the ownership and sell that to an investor. And most of our investors are living in areas that it doesn’t necessarily make sense to invest in rental properties. A lot of them from Southern California, New York, Hawaii, we have a lot of European international clients as well that want to get in to real estate investing in the United States but may not be able to manage that, but we’re doing everything for them. So that is essentially what turnkey means to us is that we are handling everything and our goal is for you to just sit back and collect the rent checks every month.
Josh Mettle:
And something you just said, you said, I thought I heard you say sell to investors. Now are you actually selling the ownership of these properties and then you’re retaining the management? Okay, walk me through that model so I understand it a little bit. What does that look like as an investor?
Lindsay Davis:
So if you’re an investor and you’re wanting to grow your portfolio or diversify you’re investment strategy plan for retirement, pay for kids college, whatever reason why you’re interested in real estate, you just come to us and we’ll set you up with one of our sales representatives that’s going to walk through all of our properties. And then it’s just like any other purchase. If you’re buying your own home that you’re living in and that you can get a conventional loan, Fannie Freddie allows up to 10 in your name and then you’re able to utilize DSCR lending options. Majority of our investors do seek to leverage their funds. And if you’re looking for a higher rate of return, that’s definitely the way to go. Your cashflow is not going to be as strong, but your return is higher because your capital contribution is sizably lower if you’re only contributing 20%.
Josh Mettle:
Right.
Lindsay Davis:
So almost things like 87% of our investors do not buy with cash. They’re financing these properties and do it just like any other purchase of a home. You come to us and you say, you know what? I love this house. The returns, the numbers look great. It’s already got a tenant in place. I love this area. And some investors don’t care. They don’t care if it’s pink with purple shutters as long as it’s cash flowing. And then we have some investors that want your ranch style or your full brick three twos. And so it really depends. But we have a variety of both renovated and new construction homes that where you can pick and we’re in three different states, so you have the ability to pick different markets so you can diversify all with one company as well. And once you’ve purchased those properties or once you place those properties under contract, we’re going to walk you through the closing process as well.
We’ve got our closing coordinator that’s going to work with your lender that is going to say, okay, well I’m going to help you set the appraiser up. I’m going to help you schedule your home inspection. Now again, I would recommend everyone use a home inspector please. Even though we are doing the renovation, we have certain warranties that protect our investors for our construction and for our renovation processes, please always get a third party inspection, just double check us. And once you do that, then you’re going to get to the closing table. Once all of that, all of the i’s are dotted t’s are crossed through your lending process. So it’s really no different than purchasing any other home.
Josh Mettle:
Great. So let me just perception check and repeat that back to you to make sure I understand the model. You’re acquiring properties in Alabama, Tennessee and Georgia I believe. Correct. Which are low price to rent ratio communities. The opposite of that would be San Francisco, right? Absolutely, yes. High price, low rents. So you’ve got cashflow heavy markets. I’m guessing that those markets also are pretty landlord friendly as it relates to evictions if you get to that type of a situation, is that accurate with those three
Lindsay Davis:
States? Oh, absolutely. All of the areas that we’re operating in, that’s what makes it so attractive for those living in different parts of the country and the world is that affordability and the barrier to entry is extremely low. We are very landlord friendly and eviction processes can move very quickly, especially comparatively speaking to some states. And then you also have low property taxes. The state of Alabama is the second lowest property tax in the country. So there’s a lot of different things that make it make investing in the southeast ideal for those wanting rental properties.
Josh Mettle:
I can’t stress how important that is to make sure you’re investing not only in a place where you can create cashflow, but that you have a landlord friendly legal system. It is one of those lessons. You learn the hard way and you only have to learn once, but if the government isn’t behind you to help you uphold the contract that you have with the tenant and they basically just let the tenant stay in there for very long periods of time rent free, it’s a very hard lesson to learn. So that’s one of the reasons why I really love those markets that you’re in. So then you buy the property, you renovate the property, as you said, you get the tent, you put the tenant in the property, then it’s almost like a franchise. Now you sell that off to the investor, your company retains the management maintenance, eviction, any work that needs to be done on the property and the investor just as you said, gets mailbox money and looks at a p and l on the property.
Lindsay Davis:
Absolutely. That is our goal. That’s exactly what we do. And then of course we have a customer service team, so you have a point of contact post sale for all of your property management needs. They’re going to give you monthly updates to let you know if something’s going on or if you had a plumbing bill or if a tenant flushed a GI I Joe or anything like that. They’re going to let you know about it and they’re available there for any further questions. But yeah, we want to remain your point of contact and your in-house everything.
Josh Mettle:
Got it. I love the model. Fantastic. Thanks for helping me understand it. Okay, so let’s get into some of the lessons that you’ve learned around passive income and wealth building. I just imagine owning and going through this process with and managing over 2000 rental properties, what are some of the lessons that you’ve learned through that process that maybe most investors wouldn’t know but probably most realtors wouldn’t even know as well? What are some of the realizations you’ve had at the scale that you have about residential real estate investing?
Lindsay Davis:
There’s been so many lessons learned with 2000 doors under management. I’ll be very honest. One thing from an investor standpoint that we have seen, again, I’ve been doing this for almost 15 years and one thing that is kind of a myth a lot of investors see is how sexy real estate is, how it’s the get rich quick scheme that a lot of your gurus try to push. And that is not the case now. We have seen this work time and time again over the years. We have seen investors who purchased with us very early on purchasing properties in 2000 14, 15, 16. So all those people are like, yeah, it’s probably not a good time to buy. I’m going to wait until a little bit longer, a little bit longer. Those investors that purchased with us early on have seen the rewards. Now if they’ve chosen to sell their properties, some of them have doubled their equity.
And so I think that just further proves that never waiting to buy you buy and wait. That’s kind of the goal with rental properties and getting in when you can. And we’ve seen that time and time. It is not a get rich quick if the goal is for you to, I want to be, I want to buy five properties and quit my job tomorrow. I would strongly not recommend that. I think that real estate is a great vehicle to get you to retire early, but it needs to be coupled with strategic planning and making sure that you’re set up for success with all of your cashflow and planning for those risks. I think from the property management standpoint, the biggest struggle or the biggest lessons we’ve seen compared to other real estate investors, I would probably say the concern with Fair Housing. We’ve seen over the last year, there’s been a lot of property management companies that have been allowing investors to pick and choose tenants.
And so we’ve had investors come to us and say, well, I would like to choose my tenant. I just had an eviction. And I really want to say, and I think that’s been a very big lesson that we’ve learned in saying, I’m sorry Mr. Investor or Mrs. Investor, you’re not allowed to do that. I think the first fine if you’re found, if they find out or if there’s a complaint, I think it’s about a $33,000 fine initial fine and potential suspension of your real estate license. So it’s extremely serious. And so that’s been a pretty big lesson that we’ve had to work through that maybe I don’t necessarily know that if you’re active in real estate investing or if you are a real estate agent that you necessarily see that day in and day out. And we do, especially when processing as many applications as we are from the single family side of it. See, did that answer your question? That was a little bit of both from the property management and the investor side, but
Josh Mettle:
It’s a great tip. Great tip, Lindsay. Yeah, I mean, as a landlord you have to have a set of qualification standards. I want a credit history that looks like x, I want income that is a certain multiple of the rent or a percentage of the rent. You’ve got to have a set of standards. And then if somebody meets those standards, you can’t say, well, I’m not going to let you in because I don’t like your last name or I’m going to wait for somebody else. You have to have a set of standards and if somebody applies, you have to give equal opportunity to those properties. And I didn’t realize that fine was that big Lindsay, but in our management, my mom eventually after being a serial entrepreneur and lots of businesses went on to found a legal career and she started Utah law lady and she was an eviction attorney, believe it or not, for 20 years. So she’s helped us run our management company and of course she’s very good at helping us make sure we don’t violate fair housing, but you’ve got to watch that. You need to make sure you have a management company that’s washing it or you have to watch it. There’s no margin for error there.
Lindsay Davis:
And I think that the number and the way and our size has allowed us to learn those lessons very early on and adjust and make sure that we have policies in place to keep. And so if we were to get fined, yes, that would come to the property management company, but that would also negatively impact the owner. So yes, please partner with property management companies that have been in the business that know the fair housing regulations and know really what their local law requires them to do because you could definitely get caught up in that.
Josh Mettle:
Yeah, great call. I love that. This is the easiest way for self-employed business owners to qualify for a home loan without the headache. If you’re a business owner or self-employed, you understand that sometimes banks just don’t understand our complicated income structures and can make it a real headache to qualify for mortgage financing. But there’s a better way. We specialize in home loans specifically for entrepreneurs using your real income, not your after tax deductible income enabling you to qualify for a home loan much faster than traditional banks. If you’re dreaming of buying a home, don’t let traditional underwriting guidelines hold you back. When banks say no, MIO says yes, click on the link in the description below to schedule your complimentary consultation now. So our audience is mostly self-employed, entrepreneurs and medical professionals and both of those different professionals want to replace active income with passive income. So let’s just talk about what is a realistic entry point in terms of capital timeline expectations. What does a typical deal look like for somebody that is looking to replace their active income with passive income,
Lindsay Davis:
Your typical deal. So basically your point of entry for purchasing one of our properties, and again, this is whatever your goal is. So if your goal is like, Hey, I want to, I’ll give you an example of mine and my husband’s personal portfolio. We practice what we preach and we are acquiring properties every year. Our goal is to purchase two properties every year while we pay off one each year. So that’s kind of the path that we’re going. And within 10 years, we’ve kind of mapped out where we want to be comfortably and have said, okay, in 10 years, so when I’m 50, I’m going to be able to, not that I’m going to necessarily walk away from Spartan, but I would be able to, I would have everything being able to be paid for by my rental portfolio and live very comfortably. So it really, I think, depends on what your goal is on timeline, but your point of entry for our properties, our average purchase price is $165,000, so it’s extremely affordable.
Our first year rate of return, you’re going to see anywhere from a nine to a 10.5% on average. Now with that comes our forward commitment. So we buy down upfront your interest rates. Interest rates have been a very big factor over the last few years, and we’ve seen a lot of investors kind of recoil. So we have partnered with lenders that allow us to buy in bulk down to a 5.5% interest rate. So that is what you’re able to secure. That is not an arm, that’s not a balloon, that’s a 30 year conventional loan that you can secure and purchase the property. So you’re only looking at about 20% down for that first property to lock in a 5.5. Also, please always have reserve. Again, we’re doing renovations upfront. We offer other warranties. We offer a 90 day maintenance warranty. We offer a one year lease warranty. So if your property goes into eviction for whatever reason in the first six months of ownership, we’re going to start paying your rent for you. So while we have those protections in place, hey, life happens. And so you want to have that reserve, so you want to put back some of that money and then use that 20% to have that initial purchase. Now again, it depends on how many you buy moving forward, what’s your overall goal for your portfolio looks like. So I think that can vary by individual investor.
Josh Mettle:
Totally. So I love the idea on the forward commitment. So you’re taking out a forward commitment just like a home builder would take out a forward commitment and doing that direct through direct investors that enable you to buy down the interest rate of the loan for the buyer who’s going to buy that property from you over the life of the loan over 30 or 15 years, not a temporary buy down. Is that correct?
Lindsay Davis:
Correct. It is a permanent 30 year buydown.
Josh Mettle:
That’s very interesting because obviously that’s the primary challenge in this market is even if you’ve got a low price to rent ratio markets, when you’re looking at financing at seven point a half percent, it’s hard to make things cashflow. So by virtue of that forward commitment participation that you’re doing and delivering the buyer a 5.5% rate, that’s how you’re getting that eight or 9% first year
Lindsay Davis:
Return. Correct.
Josh Mettle:
That’s great. And when you talk about eight or 9%, or maybe you said nine or 10%, is that an internal rate of return that takes into perspective appreciation and amortization, or is that just cash on cash?
Lindsay Davis:
No, that is cash on cash. Now, on our proformas, we do lay out what the average appreciation looks like over 10, 20, 30 years, but that is just for you to have on the side. That’s just additional information that is not factored in your overall rate of return. When we’re looking at our first year rate of return, we’re taking the 20% that you’re going to put as the down payment, what the annual rent is, property management fee, property taxes, and insurance. Now, since majority of our properties are not in any HOA, that’s typically nu and void, but if it did factor in, if there was a property that had HOA, it would include that as well. So those are your basic fixed cost rate of return for that first year. And of course, as you know, buying your first year is going to look a little bit rougher because you’ve got closing costs and lending costs associated with that. So you really want to look beyond. It is not the get rich quick. You want to look at the five year, the 10 year and the 15 year to see what that ideal return would be.
Josh Mettle:
Yeah, absolutely. And I think what surprised me the most as being a landlord for 25 years, Lindsay, is if you would’ve asked me 25 years ago, Hey Josh, what do you think this home appreciation will be in 25 years? I maybe could have guessed how much the home value went up, but you know what shocked me the most is how much rents have gone up? I tell this story all the time. We still own the first eight plex that my mom and I bought to together 22 years ago. And when we bought that plex, the rents for two bedroom, 850 square foot nice units, right by the capital in downtown Salt Lake City, a great area, we were renting those units for between 275 and $315 a month. Well, today, those units rent for 1695 and we charge for parking and we charge for storage. So we’re like almost $1,800 when it’s all in. And if you would’ve said, Josh, do you think you’ll see a 600% increase on rents over 20 years? I never would’ve imagined that, but it’s the power of inflation because inflation pushes up the rental income while your mortgage payment stays the same, or you probably have an opportunity sometime over the next 20 years where you refinance even to a lower rate. That’s the power of long-term real estate investment in my opinion.
Lindsay Davis:
Absolutely. I mean, it’s inflation profiting and that your dollar has remained the same. It’s locked in when you’ve locked in that fixed cost in your mortgage. And as rents continue to increase now yet other costs are going to continue to increase. But if there’s one thing that history over the last 85 years has told us since we’ve been tracking it is that property values do not decline. I think total in the last 85 years, there were six years where it did, it took a dip in the worst housing bubble that we’ve seen, but yet since have recovered and doubled and tripled in some particular markets, or it stayed at 0%. So if you look at the data, you’re going to see that rents and home values constantly increase. Now, when we put appreciation on our proformas too, we’re not putting the appreciation that we saw in 20 22, 20 22. That’s unrealistic your once in a lifetime, maybe not once in a lifetime, but it’s pretty rare we’re putting the average. So we’re only basing that on a two 3% appreciation, and the numbers are still phenomenal. We’re undercutting what your appreciation or what your equity growth is probably going to look like, and it’s still, the numbers are tough to walk away from.
Josh Mettle:
Yeah, yeah. As I think about the headwinds or tailwinds for real, estate inflation is one of those tailwinds that I think practically guarantee a very good rate of return over a long enough time horizon. And I’ll just share something that I’ve shared before on this podcast, but this is the US national debt clock and we’re approaching 37 trillion in debt in this country. And the fact is is that our GDP or our gross domestic product, which is correlated to our tax base, isn’t growing as fast as our debt. And if you have growth that isn’t keeping up with debt, there’s really only one way to get out of this $37 trillion, which is through inflation. So the government, the Fed in orchestration has to continue to manufacture this manageable level, and sometimes it’s unmanageable, as we’ve seen over the last couple of years, this manageable level of inflation, and that pushes your rents up. So if you are fearful of the US debt, if you’re fearful of inflation, there’s no better hedge in my opinion, than watching your rents rise year after year as your mortgage payment stays the same and your mortgage balance goes down.
Lindsay Davis:
Absolutely. And even worst case scenario, and we’ve seen a lot of investors that have been hesitant over the last couple of months, or even when times were a little tougher or when rates started increasing, they’re like, you know what? I think I’m just going to hang tight. I’m just going to hold on. Housing bubble, let’s say everything blows up. Housing is a basic need. So let’s say that there is another oh 7, 0 8, your property is still going to be able to rent. You’re still going to be able to rent your property out and cashflow. Now, are you going to be able to rent it at a three, four, 5% year over year increase that you’re seeing right now? Maybe not, but you’re going to be able to maintain that level. Even if you have to dip a 2% for a couple of years, you’re going to continue to see it. And we know that because that’s what’s history and the data shows us. So I think that understanding that is extremely powerful when analyzing any kind of real estate or investment deal
Josh Mettle:
Completely aligned with you. So you’re not only a wickedly smart investor, but you’re running a very successful business. So let’s jump into the Spartan Invest success playbook here. I got a couple of questions for you as an entrepreneur, as a business leader. So I believe Spartan Invest has landed on the Inc 500 list multiple times, and I’m just curious, what have been the key inflection points, perhaps some decisions that you can identify that have fueled your growth as a company?
Lindsay Davis:
I think the most important thing that has helped us be successful, and I could talk for hours about our team and our company culture, which have been vital to helping us get to where we are, but I think it’s really primarily been our ability to pivot. Like I said early on, we saw the capability, the ability to scale and generate more passive income for our company as well as our investors. So we completely changed business plans. Two years in, we said, you know what? We’re just going to throw this in the trash and completely move away from it and do something completely different. I think seeing the different opportunities, seeing what’s coming on the horizon and being able to quickly pivot and make changes. I don’t know how many times I sit around these round table with business leaders, whether it be in the state or whether they’re at these regional conventions and talk about, Hey, you know what?
Well, this is the way we’ve always done it and it’s always worked. And that mentality has really led to a lot of company’s demise. So I think seeing the challenges, seeing potential changes coming and being able to adjust your business and Hey, we’re creatures of habit. No one likes change. Even if you’re used to it, even if I’m sitting up here and preaching to you, Hey, you got to be able to change. I don’t like it either, because if you’re talking about an operational change, there’s a lot of different things that have to happen in order to be successful if you make that change and there’s going to be times where it messes up or things fall through the cracks because it is new and you just have to move with it and move quickly.
Offering the forward commitment, this was something that historically lenders were not offering large family sellers. It was only for new construction. In fact, I think we were one of the very first turnkey providers to start offering forward commitment. And it was at a time too, where a lot of lenders now they’ve adapted, Hey, you can buy it and extend it. The first forward commitment that we did, we bought down $2 million worth of loan amounts, and it was like, Hey, there was no extension offered on that. If we didn’t use the $2 million, we lost the amount that we paid in that forward commitment, and that’s just a very big risk to take as a business owner. However, seeing where interest rates were going, how they maintained at that higher level, and it was harder to move properties, we just knew that we had to take that leap. So I think that that’s the biggest thing from an entrepreneurial standpoint, from a business owner standpoint, is just the ability to make and pivot.
Josh Mettle:
I love it. Have you read the book Infinite Game by Simon Sinek?
Lindsay Davis:
Yeah, I love Simon Sinek. He is one of my favorite authors, the Starts With Why Infinite Game. Yes, I love him. I’ve actually heard him speak in live one time.
Josh Mettle:
He’s an exceptional dude.
Lindsay Davis:
Yes.
Josh Mettle:
And he calls that an existential flex, right? In the infinite game. He talks about one of the key success metrics of companies that survive hundreds of years is they’re open to an existential flex and they have a just cause that is greater than just making money or earnings or growth, but there’s an impact that they’re trying to create. And the moment that that you create that impact changes, you have to be able to flex into that existential flex and pivot, as you said. So I really think that’s an important point that you bring up. Thanks for highlighting it.
Lindsay Davis:
Absolutely. I think he’s playing the long game. I can’t remember his little slogan for it, but yes, playing the long game in that regard. Yes.
Josh Mettle:
Yeah. Let me ask you another entrepreneurial based question, and I’m just curious, as your journey as founder and CEO, what would you identify as maybe one of the most challenging seasons or most challenging obstacles that you’ve had to overcome? And how did you mentally prepare yourself or get through those difficult challenges?
Lindsay Davis:
I think this is pretty common. If anyone has ever run a business, started a business, you’re going to come through those times where it’s a lot harder. And over the last couple of years with interest rates going increasing, I would say that was the first time where we saw a struggle on our sales side and that we’ve been very blessed over the last 12, 15 years to that not necessarily being an issue, but you want to take that coupled with inventory challenges that homeowners are locked into a two 3% interest rate and they
Have no desire to sell. Man, there has been a lot of rougher times, but without using that same example, I’d probably have to go to 2019. Our property management company. This is kind of a lengthy story, so I’ll try to shorten it a little bit, but I think that it may be worth it. I don’t know. Well, we’ll see how the listeners thing, but we started, we’ll try, we’ll try. We started the property management company wanting to do things differently. Property management, the industry in has moved very tech and very away from, Hey, we’re not going to have that one-on-one touch. And in doing a lot of the research, that was investor’s biggest complaint about their current property management company was just the lack of communication to investor clients. So we were like, okay, we want to do that. We want to have our investor relations team that’s going to be able to communicate, but then also to the tenants themselves.
And there was a very big push for the electronic boxes, your yourself showings. That’s been pretty common practice. And having those tenants go out to the property on their own and really just have the platform, walk them through the entire process. But when you dive into it, it’s over 90% of homeowners still use real estate agents to purchase their first property, and they live in properties anywhere from five to seven years on average. Our tenants reside in our properties on average anywhere from three to four years. So there’s genuinely not that big of a difference. So why would we remove the agent completely? So we are like, okay, this is going to be our approach. We’re going to have that human one-on-one. So we were hiring leasing agents to help tenants walk them through that process. They have to be licensed real estate agents to show other owners properties.
So we were having to pay for them to get licensed and pay for them. And it allowed us through our early years to have extremely high occupancy. And then we hit 2019 to where our sales really took off from 18 to 19, and then our leasing could not keep up. We couldn’t scale at that human side, and it hurt. And we got very behind. We had more properties on the rental market. We were paying investors rent because we just couldn’t handle how quickly we had scaled on the sales side. And so that just required, I mean, we spent a lot of money paying other people’s rent until we were able to pivot and merge the two processes together. So we started offering the ability to do self showings and to offer that to tenants wanting to find our properties, but then still having that agent on onsite. And so it really just required a whole table flip of the entire department and making a lot of moves, but now we have the ability to do both, and so we were able to get our occupancy back up to over 95%. That’s our goal. That’s where it has to stay in order to generate those returns that we discussed. And I think that that was a really hard lesson to learn. I had a lot of very upset investors for the time being, as they rightfully should have been.
Josh Mettle:
Thanks for sharing that. What a great story. I’ll just ask you one more question maybe about that time, but I always find it interesting how business owners and entrepreneurs overcome challenging times like that. And this question is more from a mental mindset. How do you get through, if you think through those main obstacles as an entrepreneur, how do you get through those difficult times from a mindset perspective? Because we all have to go home at the end of our workday and we have to be mom and we have to be dad, and we have to be a husband, and we have to be a wife. So how do you make it through those challenging moments and still hold onto some semblance of balance and peace if that word works for self-employed entrepreneurs? I’m not sure.
Lindsay Davis:
That’s tough. That is something that I struggle with. I am a wife and a mother. I have three children and they take priority. My family takes priority over absolutely everything. So making sure that that’s tough outside from a lot of wine, being able to manage that. But I will say that I try to, whether things are going great in the company or whether things are a little struggling a little bit, I have certain boundaries, let’s say, that I’m not going to mess with. For instance, I am going to, I only try to travel and be away from my family once a month. That’s it. So that’s kind of my boundary. I have no problem working late. Sometimes it’s just going to happen. But if I have to work late a few nights a week, I’m going to make sure I leave early and I’m picking the kids up from school that following day.
I make sure that I’m either picking up or dropping off. Now, a lot of times, I mean, my husband’s there to pick them up and take them to soccer and baseball and all of those things, but I’m making sure that I’m dropping them off even though he can, I’m still making sure that I don’t lose that with them. And so I think setting those very clear boundaries of no matter what’s going on at work and yeah, absolutely. There’s times where it’s like, Hey, I didn’t work late. I had to leave early to make sure that I got home and ate dinner with everyone, put the kids to bed, and then it was back to work, and then it was working until whatever time. And those were just the sacrifices that business owners have to make sometimes. But I think making sure that you set that clear boundary. So I never wanted to be five, 10 years down the road looking back and saying, you know what? It wasn’t that big of a fire at that time. Looking back, it was not that big of a deal. I wish I wouldn’t have done this. So that’s kind of how I deal and cope with it. But it is very challenging.
Josh Mettle:
It’s a great answer, Lindsay, and I appreciate you answering kind of a personal question, but we talked about real estate being a long game. So as being an entrepreneur, so as being a business leader, we can burn ourselves out and get to a destination we didn’t intend to get to. IE, you have no relationship with your family and kids in the name of success. So I think that boundaries and deciding what’s right for you and your family is extraordinarily important if you’re going to have that long-term success and not burn yourself out.
Lindsay Davis:
Yeah, absolutely.
Josh Mettle:
I’m going to leave you with one more question that is less personal and a little easier to answer perhaps back to the real estate. Let me just end with this question. What trends in 2025, are you seeing anything changing in the market, the markets that you’re in, and maybe perhaps maybe something that you’re excited about as it relates to a change in direction or trend in 2025?
Lindsay Davis:
I think that there’s a few trends as there are every year, every 18 months, you are going to see a trend kind of trickle down. One thing that we are seeing is like we talked about the rent rental rates increasing that has cooled. We are seeing that calm down where it was seven 8% year over year. We’re back now to a normal, Hey, we’re going to look at a two to 3% year over year increase. A trend has been the inventory issue now, not in all markets. And I think that this is also something to take into consideration when looking and evaluating, analyzing different deals in different markets is potential saturation. We’ve seen a lot of your hotter markets that just got flooded with new construction over the last five years. Now they’re taking a step back and saying, okay, now we’ve just shifted very quickly to a buyer’s market versus a seller’s market. And it happened very quickly with that coupled with interest rates maintaining at a higher level. Well, we have not seen that in our markets, but I think overall a pretty normal, that’s a trend right now.
And then we tend to see more interest in stable rental property investments when there is a lot of volatility in the stock market. We have the data to show that, and that when people start seeing their 4 0 1 Ks go down, take a dip at other stock portfolios hurt, or really just kind of move up and down, we see a lot of people gravitate more to stable rental properties and in stable markets. So I think that that’s going to continue to push. And we’ve been on a trend. The millennial generation started this trend of not necessarily always purchasing. I think inflation has exaggerated it a little bit, but the millennials moving away and becoming more just the renter generation where ownership in general is on the decline, whether it be you grew up in the housing recession or inflation caused and you just simply can’t afford it. So I think that’s going to be a trend that we’re going to continue to see where we’re going to have more and more demand for rentals just in general.
Josh Mettle:
Yeah. Couldn’t agree more. Couldn’t agree more. Well, this has been a fantastic podcast. Thanks for coming on with us, Lindsay. Where can people follow you? I know you have an exceptional podcast as well, but where can people connect with you?
Lindsay Davis:
Yeah, no, this has been fantastic. So if you want to hear more or learn more about Spartan Invest, please go to our website, spartan invest.com. We have market reports, so if you want to learn more about the markets we’re in, which is Tuscaloosa, Montgomery, Birmingham, Huntsville, Alabama, Chattanooga, north Georgia, Chattanooga, Tennessee, north Georgia, we have different market reports for those. We have an investor guide that breaks down everything that we do all available on our website. And then we have our inventory. So if you want to just check out what we’ve got for sale, that is also on our website. You can fill out a form, we’ll get you connected to one of our team members, or if you want to learn more, I do have a podcast on the house with Spartan Invest that you can download and check out for any additional information.
Josh Mettle:
And that podcast, I should mention, is very informative and educational to teach people how to be successful real estate investors, not an infomercial for Spartan Invest.
Lindsay Davis:
Absolutely. No. So the podcast is primarily focused on, we do have guests on that talk about various forms of investing, but the podcast is ad free, and we are deep diving into what an average pro forma looks like for us, what the eviction process looks like in the state of Alabama, how do we process maintenance, work orders, those type things that is geared towards answering those common FAQs that we see from investors when they’re wanting to learn more and possibly invest.
Josh Mettle:
I love it. All right, everybody, check out the podcast. Head over to Spartan, invest. Lindsay, thanks so much for your time. You’ve been a great guest. We hope to have you back in the future.
Lindsay Davis:
All right. Thank you so much for having me, Josh. This was great.
