Breaking Ceilings with Due Diligence and Research: How Lukas Vanagaitis Grew His Business with a Brilliant Strategy
Lukas Vanagaitis came from Lithuania with a dream since he was a small boy to be a millionaire. Traveling to the United States with aspirations of seeking financial freedom has often been a story for the ages in our melting pot’s history—and Lukas’ story is a true testament to this long-told tale. However, his story has its own twist. It cracks the code on how to create exponential momentum in real estate investing.
Read more to discover how.
Lukas started his journey basically from scratch. He first moved to Las Vegas from Lithuania and used the money he came here with to try to invest. Because of his lack of experience, he was not entirely sure what he should do, and this particular time in his career was a learning experience.
He was spending more than he was bringing in, maxing out credit cards, working 80-100 hour work weeks, and earning only $30k a year.
“My biggest motivation was knowing there is something more,” he says, illustrating the drive that eventually led him to continue the hustle. So, he educated himself by listening to podcasts, reading books, listening to audiobooks, reading Bigger Pockets, and the BRRRR strategy, etc. This practice set a precedent in his business, strategy, and skills that have pushed him far in his work.
After Las Vegas, he moved to Houston to try his hand at investing there after Hurricane Harvey. Unfortunately, there was little demand and a large supply, and it was not the best environment to invest in. He ended up losing a lot of money and wiped out all of his savings, making no profit—the properties sold for way less than planned. For a year, year-and-a-half after that, he had to use his savings to live and survive. He attributed the failed venture to a lack of market research and decided he would not make that mistake again moving forward.
Research and the next step
From there, Lukas started to really use that research muscle and flex. And when we say research, he was a supreme investigator. He visited different cities all across the United States to find a great spot to continue his business.
He went to neighborhoods, looked at city standards, reached out to residents, went into coffee shops and talked to people. He gathered insights that eventually led him to St. Petersburg, Florida, a location with a beach along one side that’s a 20-30 minute drive from a very trendy downtown. The town is surrounded by water, but a shortage of land isn’t a problem. There is also less competition around.
Because he knew it would be an advantage to gain more leverage in the area, Lukas decided to take his money and buy a property management company that manages 100 rental units for out-of-country investors. His company now had direct access to these properties and the tenants, in-depth knowledge of property conditions and complete control over the portfolio. In addition to the 100 properties, this strategic move also provides plenty of tenants to manage and ARVs to learn the ins and outs of.
The golden strategy
Lukas’ success is attributed to the golden strategy, which is characterized by the following steps taken by other investors:
- He takes the properties from the portfolio he bought alongside the other investors, and when an investor is ready to sell and profit, they flip it themselves and make money. The money from that flip goes to another property, and they implement the BRRRR strategy (buy, rehab, rent, refinance, repeat).
- He makes sure that all of the properties, rentals and flips, are of similar quality. His rental properties look the same as the flips, and they’re all of the highest-quality finishes. He always strives to get the maximum quality and maximum value out of every single deal they do.
- All of their flips are in one area, so they create their own comps. For instance, when he buys a rental, he knows they will increase the ARV in the next six months of rentals.
Lukas knows this strategy of investors creating their own comps is a game-changer. You simply make more money by flipping more houses in the same neighborhood because it increases your equity in the rentals. Then, when appraisers start looking at your property, they also see similar comps in the same area done by the same builder.
This strategy is a genius way to gain an advantage in the neighborhood and create the profits you want.
Also, when investors know they are going to flip a new property, instead of implementing the BRRRR strategy, they sign the purchase and sales agreements with investors involved with a delayed closing date. This way, the investors make their money and collect 100% of the cash flow. Plus, they have a buyer.
Because he does this, along with his business partners, for their BRRRR properties, they lock up the price six months in advance so as they do a nearby property flip. This raises the equity of the house they bought four or six months ago. By the time closing happens, they already did multiple flips in the neighborhood, helping to appreciate the price and create the comps.
The momentum from this strategy and Lukas’ hard work has created an over million-dollar business in six years. It took four years to hit that million dollar milestone, and his team boasts equity and assets of more than a billion dollars.
But as Lukas praises the strategies they implemented, he insists there is one characteristic needed to get to this point of success and growth in a real estate investing business—and that is an excellent work ethic.
That drive to be scrappy when needed, ask questions, learn, take risks, work hard—it’s all that makes up the recipe to succeed where many people’s road to their goals is paved differently.
Also, setting personal goals and boundaries for yourself helps keep you in check. For instance, Lukas’ goal was to always have $100k in the bank for his savings as insurance. This isn’t stock or equity but cash. He mentions he has lost that before in his efforts to get where he is today and does not take the amount for granted. So having that in cash is necessary for his comfort in moving forward and making decisions in his business.
He also mentions to invest wisely and don’t jump on any random deal. Do your research, analyze the location, run the numbers. Ensure you don’t go in over your head. Finally, try to control the scenario as much as possible by having as much information as possible about your surroundings, partners, and properties.
Another benefit of his golden strategy
Lukas also suggests that finding an area to invest in and creating the comps, as mentioned, also has another benefit. It attracts more investors and when investors are involved, the city hears about it. And when the city hears about it, they get involved, knowing that it is in their best interest to invest there as well. They start improving the area’s infrastructure–building bridges, repairing roads, installing new streetlights, etc.
This only furthers the value in the area. This kind of advantage on building momentum is invaluable in a strategy.
It takes some research to get that done—talking to locals, storeowners, etc.—anything to get the lay of the land and the culture, but the outcome of that time taken is worth it.
Lukas has realized in real estate that you need three things: deals, money, and contractors. Even if you have two out of the three, your business will not work. You will always need all three, no matter the kind of investment.
“The team is very important. People are the hardest out of the three to find. The money is out there, it’s America, deals are out there. You just need to get creative and do the legwork to find them.”
Lukas’ business is now made up of 10 people, including a business partner, construction crew, management team, and handy team, including a full-time plumber and electrician.
Lukas also mentions that the purpose of getting quality funding isn’t only in the project, but also that it helps you invest in your people as well. This creates a solid foundation in a team that enhances the development of the business.
“I moved here with nothing, and it took a lot for me to prove I was capable,” Lukas says. “It’s a numbers game; everything is predictable. If you do the math ahead of time, you will be protected.”
He continues, “I don’t regret that I didn’t buy anything sooner. Maybe I would have failed, and maybe I needed to learn lessons and let those sink in. I think everything happens at the right time for everyone.”
We couldn’t agree more!
Thank you for sharing your story and techniques with us. Your honesty and openness gives fascinating insight for all those looking to start to further expand their business.
Real Estate Investor, Lukas Vanagaitis, and his company, Horus Homes, is based in St. Petersburg, FL. You can visit his company website at: http://www.horushomes.com/