Rico Phillips is a real estate agent and investor in the Twin Cities.
A native of St. Paul, Phillips grew up in the Midway district, where he later developed into a competent athlete who competed in basketball, football, and baseball.
In the classroom, Phillips liked to crack jokes and make people laugh, but ironically, he is also a very reserved and quiet individual.
“Usually, I only speak when I am spoken to,” he says.
After high school, Phillips left the Twin Cities to play junior college basketball in Iowa.
“That was the best basketball I ever played,” says Phillips, who spent three years in Iowa.
“It was the most competitive because the league was comprised of dudes who had bad grades but could really hoop.”
After his multi-year stint in Iowa, Phillips tried to further his career at an NAIA school in North Dakota, to no avail.
“That quickly felt like a waste of my time, so I came back to Minnesota and started to try to make some money,” the St. Paul product says.
At first, Phillips worked for the city of St. Paul, but after routinely hearing his father talk about buying homes that he could then renovate and flip for a profit, Phillips’ aspirations extended beyond building a pension with the government.
“That [real estate] intrigued me, so I started doing research until my next-door neighbor, who was an old lady and couldn’t take care of her house anymore, offered to sell me her home,” Phillips recalls.
“From there, I just jumped right in with no first-hand experience or knowledge.”
Slowly, Phillips revamped his neighbor’s home, and over time he methodically invested in properties that with a little bit of vision and action, could yield a healthy ROI.
Still, finding those glossed-over gems in the Twin Cities real estate market wasn’t easy, so Phillips began cold-calling potential sellers, a process that he admits was arduous and unrewarding.
“People didn’t want to sell their homes to me when I was an investor because they wanted to try to max out their sale price with a traditional realtor, and historically it’s believed that investors are simply trying to lowball homeowners with cash offers so that they can make a bigger profit later on,” explains Phillips, who to combat seller reluctance, obtained his real estate license.
“I started to realize that without my real estate license, I was missing out on a lot of deals. I got my license so that I could do everything in real estate instead of just being on the investor side.”
Phillips became fully licensed fifteen months ago, and since then he has helped first-time homebuyers get into homes, but he’s made the most impact leveraging his expertise in developing homes to appeal to clients who aren’t looking for that “forever” home.
“I help a lot of first-time homebuyers, but also a lot of people who want to get into the investment side of real estate,” Phillips says.
“They see the path that I’ve taken, and they want to emulate that approach, and as their realtor, I can help guide them through that process, which is something that distinguishes me from a lot of other realtors.”
That unique ubiquity of Phillips, which allows him to relate to homebuyers and investors is special, but it should be emphasized that Phillips wouldn’t be in the position he is in if he didn’t bet on himself and go through the grind of learning what it takes to profitably flip homes.
“I did six or seven flips before I even got my real estate license, so having that knowledge, and having built those connections with tradesman and industry types, it allows me to facilitate these types of endeavors. Moreover, my body of work makes me a prime candidate to be a realtor for someone who is interested in exploring how real estate can be a vehicle for building long-term passive income.”
For context, when Phillips is searching for homes that can be renovated, he targets properties that have been damaged by fire, abandoned, and houses that the average consumer shies away from due to their derelict appearance.
“That’s where you’re going to get the most value from,” Phillips lists as the reason why he pursues less than stellar properties, before outlining why he doesn’t seek to refine that which has already been polished.
“If you buy a nicer house and come in and only do a few updates, you’re unlikely to see a significant return on your investment, unless you want to hold onto that property for five or six years.”
Phillips adds that he once bought a less desirable home for $200,000.
After investing $60,000 of his own capital, the marketability and long-term outlook of that home increased drastically, to the point where the home was recently appraised at $390,000, which is almost double what Phillips initially paid for the property.
“It’s those types of deals that energize me, and then I’m constantly looking for more of them because the upside is so high,” he says.
At the same time, Phillips cautions readers not to think that real estate is effortless and without its inherent challenges.
On past projects, Phillips has lost money, particularly on one deal where he dropped north of $50,000 for a project that never materialized in the way he envisioned.
Not that those mishaps deterred from Phillips from persevering.
“Fortunately, if you stick with it, the wins tend to outweigh the losses, and in that sense the losses are just lessons, as opposed to major setbacks that can’t be overcome,” Phillips says.
“Where I see a lot of people run into issues is when they become too emotionally attached to the properties that they’re trying to rehab, and that’s a bad way to approach real estate. It’s hard to think about it in this way, but in many ways real estate is just the buying and selling of boxes that people live in. Again, I understand that there is a sentimental component to homeownership, but being more rational as opposed to emotional when it comes to properties will allow you to move on and move off of homes much more easily.”
In addition to becoming numb to the potential outcomes of real estate, Phillips also is a huge advocate of cultivating a network of professionals who can assist in various ways, whether that’s analyzing current market trends or tapping in with roofers, plumbers, and electricians who can address pain points on a property.
“It’s taken a lot of time and I’ve gone through a lot of people and contractors who promised me good things, but then never delivered,” Phillips acknowledges, adding that prospective real estate investors should always put expectations and agreements into contracts so that any future disputes can be properly adjudicated in a court of law.
“I had to go through the fire to find good people, but now I have the right people available at my disposal. Looking back, it was all worth it because those who are in my network make my life much easier.”
In the coming years, Phillips will continue to innovate and find new ways to maintain his position as a bona fide player in the real estate market.
This includes expanding his licensure to states like Wisconsin, as well as becoming licensed in Texas, where he currently owns and operates an Airbnb located in Houston.
“The goal is to get more licensure, but also build my portfolio up to the point where I have ten rental properties that are generating income,” Phillips shares.
“This would allow me to travel and enjoy life more, while also giving me passive income. That’s the same goal that everyone wants when they start buying some real estate, but getting there is hard. That being said, I’m willing to do what it takes to get to that level.” QS
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