Posts tagged "property"

JC 021: Finding the Perfect Property Manager with Riana King

August 16th, 2017 | no comments
Everyone on your real estate team must share the same goal

Riana King is an Arizona native with fourteen years of experience in the real estate industry. For the past seven years, she has worked for Real Property Management (RPM), which has locations in Scottsdale, AZ and Tucson, AZ. Riana manages residential long-term, short-term vacation, multi-family, and commercial properties and her clients range from accidental landlords to clients with much larger portfolios.

According to Riana, the most important thing to look for in a property management company is a solid foundation. She warns against part-time property managers and one-man shops that might not have the time or resources to fully devote themselves to each client. A sign of a good company, she says, is the ability to call them and get a real person on the phone right away. At RPM, Riana prides herself on her own communication and reachability.

Landlords don’t have to be local to Arizona to take advantage of Riana’s services. Riana uses technology to keep out-of-state and even overseas clients in the loop and acts as their eyes and ears. If her clients need someone to go in-person to check on their properties, Riana is the one to do it.

Investment property is a business, Riana says, and you have to be able to trust the other people on your team so that you can use your own time wisely. Riana works to keep her strategies in line with her what her clients want. She says that the key is to find a property manager with the resources of a large company, but who treats you as an individual and helps you reach your specific goals.

Property managers like Riana spend most of their day “putting out fires,” which can be stressful for some but which Riana finds exciting and motivating. She lives by the words of former UCLA basketball coach John Wooden, “Discipline yourself so others won’t need to.”

5 Key Points:

  1. Communication is key. Good property managers bridge the communication gap between landlord and tenant. Beware of property managers who are difficult to reach on the phone or who don’t respond promptly to communications.
  2. Have questions for potential property managers. Have a list of questions ready when searching for a new property manager and prioritize the ones that are most important to you.
  3. Good property managers understand your goals. Don’t be afraid to cancel a property manager that isn’t right for you.
  4. Bad property managers will spend your money without you. Poor managers don’t abide by maintenance terms and will spend money without calling you first. Good property managers will always call you before spending your money.
  5. Good landlords recognize that real estate investing is a business. Be prepared to set aside your personal feelings, take reasonable risk and accept that incidentals happen. Even great tenants can be unpredictable and landlords have to understand that.

Favorite Athlete: Peyton Manning, former NFL quarterback

Favorite Book: #GIRLBOSS by Sophia Amoruso

Thank you Riana for taking time out to share some great property management tips with us.

Connect with Riana King and Real Property Management on Facebook or check out RPM’s Scottsdale and Tucson websites.

Thank you Riana for taking time out to share some great property management tips with us.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonline.com

POST GAME REPORT: Episode Transcript

JC 021: Finding the Perfect Property Manager with Riana King

Everyone on your real estate team must share the same goal

Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.

 

John Carney: Welcome back everybody, to another episode of The Real Estate Locker Room Show. As always, I’m your host John Carney, coming at you today from Cleveland, Ohio. Joining me on the line in Scottsdale, Arizona, is Riana King. She is a property manager and she’s going to be talking to all the investors out there; she’s going to be addressing what you need to look out for when you’re including a property manager on your team. So if you’re a landlord, stay tuned because this is going to be a great episode.

As always, always grateful that everybody tunes in and thank you for the reviews we’re getting on iTunes. So without any further ado, we’ll kick this off by introducing Riana King, who was born and raised in Arizona, so she is a native in the Arizona market. She’s worked in the real estate game for over 14 years, specializing in many aspects of niche marketing and investment properties. For the last seven years she has used her focus to cultivate and grow one of the state’s most effective and proven property management companies, RPM, which stands for Real Property Management. Her client list ranges from accidental landlords to large portfolio owners and her property management services include residential long term rentals, short term vacation rentals, multifamily complexes and small commercial.

So, looking forward to learning a little bit more from you Riana. Welcome to the show.

 

Riana King: Hi. I’m excited to be here.

 

John Carney: Perfect. And I did get that correct, your offices are currently in Scottsdale, is that right?

 

Riana King: Yes, we are in Scottsdale, and then we also have a location in Tucson. So we’re covering both major metropolitan areas in Arizona.

 

John Carney: Awesome. Well, we like to kick this off with a — we’re in the real estate locker room, so just a quick sports question to get the conversation going. Do you have a favorite athlete?

 

Riana King: It would be Peyton, I think he’s a great role model and I love the way that he leads his team. So that’s my guy.

 

John Carney: So looking at the quarterback leading the football team and what a great competitor Peyton was. Do you see a correlation between that and what you’re doing to lead your team?

 

Riana King: Absolutely. I mean, you can’t have one person that is not part of the group, and isn’t brought into the bigger process. So he does a really good job of getting everyone motivated and helping them feel like they’re part of the team and understanding what the goal is, and property management you have to have that.

 

John Carney: I agree and believe that it doesn’t matter what product line you’re in, whether it’s single family or retail or industrial, if you’re not self-managing, the property manager is just a critical member of your team. For the people in the Phoenix and Tucson market that are lucky enough to stumble across your business, that is fantastic. Can you share with the audience what they need to be looking for in a property manager and in your niche?

 

Riana King: I would say you definitely want to look at what builds their company. We hear a lot of horror stories about people who are doing property management as a part time gig, whether they’re a real estate agent or just someone who decided they’re going to be a one-man shop. Those are where we get the biggest horror stories. We’ll get people who can’t get a hold of anyone, or unfortunately in our market we’ve seen just some really sad stories.

So look for those key things like what are they based off of? What’s their team look like? One of the things that we definitely pride ourselves on is communication. That’s one of the biggest fears with our clients is: can I get a hold of someone when I want to know what’s going on? And communication; can you call their office and get someone on the phone? That’s one of the biggest things.

 

John Carney: Yea, I would imagine that Phoenix, just being the real estate market that it is, you have a lot of opportunity there, especially over the last ten years, and ongoing with the growth and the price fluctuation. I would have to imagine you see landlords and investors coming from all over the world to the Phoenix market. Give me a little bit of background on your experience with your out of state and overseas investors.

 

Riana King: We have quite a large amount of experience working with clients that are out of state and out of the country, some of which who’ve never stepped foot in the United States, but realized the opportunities here. So we really hold their hand through the process and act as their eyes and ears for everything that’s needed. All of our systems are virtual; so their statements are online, we offer periodic inspections so they can actually see what the property looks like, up to every three months, if they want. And then of course, any time they want us to go look at the property we can do that as well. But everything’s very seamless for them, the portal, payment-wise, it’s all direct deposit. So the technology has really opened up so many opportunities for people who can look out afar and see an opportunity and be able to tackle it.

 

John Carney: So using technology for online systems and communication. As a lot of the listeners have heard, and as you know, since we’ve had a business relationship stemming back to my Australia days, in Australia, as a tenant, I was renting in Melbourne, our properties were generally inspected through some companies twice a year, and quarterly on some occasions, at the landlord’s request. So that was common practice. Is this becoming a common practice in America or is that a real point of difference that you offer your clients?

 

Riana King: I believe it’s starting to become more popular as there are more investors who are not necessarily in the back yard of their properties. And a lot of people now are looking at investment property as a business, and being a good entrepreneur is knowing that you have to trust other people to do things so that you can utilize your time. So with having eyes on the property whenever you want, that’s become a really big demand and I think that that’s going to continue to grow.

 

John Carney: So, the other side of the equation that you have to be good at as a property manager or management company, is bridging that communication between landlord and tenant, and hopefully not only retaining the tenant but increasing the rent, correct?

 

Riana King: Absolutely, yea. So having someone that understands your goals is going to be key. There are some management companies who will never increase rent, there are some who will increase without you knowing. We tend to operate a little more on the: what’s your goal? Some of our owners say, “Hey, you know what? This tenant has been in there for three years, they’re a great tenant, I don’t want to increase their rent, let’s just keep them. I don’t want to have to find another tenant if they decide not to.”

Having someone who has all of the tools of a large company but can still work with you on your individual goals, that’s really important and you’re not going to find that with every company that you talk to.

 

John Carney: I agree, when you have a number of different personalities involved in the real estate business, especially on the landlord, tenancy, management side of things, do you have any kind of good advice that you would give to someone who hasn’t found that right manager, who aren’t in Phoenix where you’re operating, but just might be in any town around the world and is really struggling to find that mix? Because I suppose I believe that you need to be able to — what you just said about understanding the goals, that’s important. But I think there’s a certain type of experience that someone should be looking for and flow with personality.

 

Riana King: Yea I agree and when you’re looking at property managers, have a list of questions ready to ask them. You can google, I’ve seen lists before of different questions to ask. They may not get every single question that you’re looking for the exact answer, but kind of prioritise within your thinking as to which ones are your major pain points. Where do you really want to be served, and look at those as weighted questions. And don’t be afraid to talk to a lot of different people.

Don’t be afraid to cancel your property manager because they’re not doing their job. A lot of times we’ll get people that will call us and they’ve been with someone for a lot of years and they have had a lot of bad service but thought it was just going to be too daunting to change. And they’ve suffered because of it. In our state, the lease stays with the property not with the property manager, so when someone transfers, there’s no interruption to the tenant except they have to change where they pay their rent. All of the terms are still the same when they transfer over, so there’s really no reason why you should stay with someone if you’re not getting the service that you are looking for.

 

John Carney: So would bad service leave clues that a new or even a seasoned landlord that might just be distracted with their life or their other business, are there some clues as to hey wait a minute, this is a red flag, I really need to be going out to the market and spending some time researching alternative property management companies?

 

Riana King: Absolutely. One of the biggest ones, and biggest fears that I get on a regular basis is people worried about maintenance costs. That’s a huge pain point. If your property manager is not abiding by the maintenance term in your management agreement and charging you funds without approval, I get that all the time and I just shake my head. You need to cancel them because that’s not correct, that’s not what’s in the law. There’s something wrong that they’re not talking to you before they’re spending your money. Our agreement, our standard is $350, so anything over that we will call you, absolutely every time. Anything under that we would take care of because it’s just easier that way. So that’s one of the biggest things that I would say: don’t let them spend your money without your approval if your agreement says that.

The next one is going to be communication. If you’re calling, emailing, you’re not getting responses, that’s an issue. That’s not acceptable. Our company, our rule is within 24 hours, even if we don’t have an answer for you we want to reply and say look, we’re researching this, we will get back to you. At least that peace of mind. But I would say those two things are going to be your biggest flags and your most common things that people will struggle with.

 

John Carney: So that really — thanks for addressing those two, sort of, maybe, items that keep a landlord that needs to be strongly considering switching over their property management to taking some action. On the flipside, wearing the property manager hat and having the ideal client walk in through the door, talk a little bit about what you look for in a landlord that just makes the relationship grow. Because real estate investing is a business, businesses exist to grow, and you want to multiply that portfolio, right?

So when you see someone walk in the door and you quickly learn that, yea this is a great client, can you maybe shed light on a few of those characteristics to maybe help people make good decisions or reevaluate their systems?

 

Riana King: Yea, absolutely. So with investing in real estate, you have to look at it as a business, you have to take the personal feelings out of it. You need to prepare yourself for incidentals. I get a lot of people that ask, “Does a property manager pay for the maintenance?” Well no, it’s your investment, you have to pay to take care of it. Or why doesn’t the property manager pay the rent if the tenant leaves? Or can you guarantee that the property wont’ get trashed? We can’t guarantee that stuff, we do our best to prevent it, but in the end, again, it is an investment and there is a risk with investment.

So having that basic understanding that it is an investment, there is risk involved, but someone who is prepared and knowledgeable and, look I’ve got this amount of money set up outside just in case the air conditioning breaks, or something happens. Those things are going to happen and unfortunately, we are dealing with people’s lives and lives can change. So even if we find a tenant who has got an amazing job, amazing credit score, perfect rental history, there’s no guarantee that that person’s life isn’t going to change drastically and they’ll have some issues and pay late every now and then or something. So just don’t expect perfection, we are kind of in the middle, we’re the middle man, so we are working on behalf of the owner, and I think as long as you understand that, that is very helpful for everyone involved.

 

John Carney: Thanks for explaining that, because I believe that property managers — probably this is the third time I might be saying this — but it’s such an important part of making it all work, and making it all profitable. And it takes just a real special personality to do it, right? I mean there’s an attention to detail, there’s a constant —

 

Riana King: But you have to have thick skin, very thick skin.

 

John Carney: Right, and I mean not everybody goes through their entire day, waking day at work, just putting out fires, and that’s how I look at the role property managers play. Building relationships is a big key part of it, but I mean there’s generally fires that need to be put out. So how do you train for that? How do you stay motivated, knowing that that’s coming at you day to day after seven years?

 

Riana King: You know, I enjoy it because it’s never the same day. There’s always something new and that in itself, I kind of thrive off of. But in the end, we’re helping people. It’s seeing a new tenant who is just getting their first house and they’re so excited and in love with it, you know, and knowing the owner who is really excited to have that first tenant in their property. Those highs definitely help cover the lows. And there are lows. There’s a lot of, like you said, putting out fires and you really just kind of have to have thick skin and know that it’s all relative at the end of the day and there’s always going to be something new.

 

John Carney: Right, never a dull moment on the property management side, or on the ownership side, I suppose, for that matter, trying to build the portfolio. Talk a little bit about your day to day in RPM and how people looking at the Phoenix Market can find you and what to expect.

 

Riana King: So, my main role is working with owners who are looking at our market and possibly looking at hiring our company currently. So I am, on a regular basis, putting different lists together to help pinpoint specific areas that will yield a high return, looking at comparables for properties for people who are looking to purchase, and also I’m talking to people who are accidental landlords, who are maybe being relocated and kind of walking them through the process of onboarding.

And I can be found on Facebook, through our website actually, we have two different websites based off of our markets. But those are the best places to go and get started. We actually even have a quiz that is on there that talks about: how well do you know landlord laws? It’s pretty cool. You can take it and it’ll tell you like, “Hey you’re pretty good.” Or “nope, don’t even try.”

 

John Carney: That sounds like a fun way to let people learn about the rules and regulations in Arizona, but also kind of if they aren’t getting the passing marks, make an easy decision that they probably are in over their head, right?

 

Riana King: Yea, definitely.

 

John Carney: Well cool. When you were growing up did you play any competitive sports? I believe that you learn a lot about team work and you work in a business that has a team in place, so could you just talk a little bit about that experience going back?

 

Riana King: Yea, so I was a cheerleader and I loved it and I loved being part of a group and a team and it really was exciting for me. So that was my sport.

 

John Carney: Harder than it looks on television, right?

 

Riana King: Yea, definitely. It’s not as easy as it looks, for sure.

 

John Carney: I have no rhythm, so I wouldn’t be able to do that. Okay cool, are you are a reader? We’re putting together a pretty significant booklist through this podcast so I ask what our guest’s favorite book is that you’re currently reading that’s generally geared towards either sports or business.

 

Riana King: I actually just finished reading Girl Boss. So it’s a little different from sports or real estate, but I think just the motivation in it was really good to read through, and I love just stories of successful women, it’s encouraging for me. And if you’re listening and I guess if you’re a guy you could read it too, but it’s a good read.

 

John Carney: So is there a quote — I see them on social media, it seems to be that motivational quotes are in quite a few feeds that I follow. Is there a quote that keeps you motivated? Doesn’t have to be something a famous person said, we get plenty of quotes from our friends and family. But is there one that kind of keeps you motivated when the fire is raging at the office?

 

Riana King: Absolutely. So, I heard this quote when I got out of college and it was: “discipline yourself so that others don’t have to.” Which is kind of simple but it kind of lights a fire under you whenever you’re thinking, “Oh, do I really need to get this done today?” Yea you do. Yep, get through it.

 

John Carney: I really like that, and when I go to write the show notes and I plug that in, I wonder if we’ll come up with a source for that, interesting.

 

Riana King: Yea it was just on the back of a business card I picked up somewhere and I actually still have the business card, because I had it taped at my desk for years.

 

John Carney: That’s pretty cool. Alright. Well is there any come from behind victory you can think of lately where — I don’t know — whether it was dealing with a landlord or whether it was dealing with a tenant, that you were able to put your years of experience, effort and focus on and solve the problem for a happy ending?

 

Riana King: You know, I have kind of a funny one. We have a tenant who is in a property, it’s a condo complex, and she kept telling us that she’s having rodent issues, and this is kind of bad, but we get a call — we’ve been dealing with it for a while and it ultimately came down to her responsibility, and she kept saying it’s the HOAs. Well we get a call from the HOA and she sent a dead rat to the HOAs office. So we, as a team collectively, have dealt with her and soon she will successfully be exiting our rental property and no dead rats were sent to our office.

 

John Carney: No dead rats sent to your office. And potentially no rodent problem, correct?

 

Riana King: Oh yes, definitely no rodent problem. Because after that the HOA decided they were going to help her out. It’s just kind of some of those odd stories that you hear about and it’s like, is this real? Yes those are some of the fires that we get to put out on a regular basis.

.

John Carney: Never a dull moment. Well thanks again for joining us today in the locker room Riana. I know that you mentioned that we can find you at the RPM website and you’re on social media, and if you’re happy we’ll post those links in the show notes so that our listeners who want to carry on the conversation with you to potentially learn a little bit more about property management advice, or have you look after their investment properties in either Phoenix or Tucson, will be able to track you down.

So there you have it folks. I truly hope that you picked up some actionable advice today from Riana King.

Make sure to check out the Real Estate Locker Room Show on iTunes, Stitcher or Google Play and hit that subscribe button to ensure that you never miss out on the pro tips from our guests. The mission here is to help you elevate your real estate game. So if you like what the real estate locker room show is all about, I’d be super grateful if you would leave us a five-star review on iTunes or your preferred podcast platform so that other like-minded real estate investors and professionals are able to easily find us when they type in ‘real estate’ on their search.

The post-game report show notes that I just mentioned, and links and additional content related to today’s episode will be available on my website: johncarneyonline.com/podcast.

And if you want to be on my email list, there’ll be a way for you to join that there.

Remember to stay focused on your goals, have fun and stay in the game. Thanks again for taking time out of your busy day Riana, to have a conversation about property management with our audience. Anything else you want to say in closing?

Riana King: No, thanks for having me, and any questions, whether it’s in my market or not, I’m happy to answer for anyone.

John Carney: Awesome, thank you

(Music Out)

End Audio

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© John Carney 2017

 

JC 020: Having a good reputation matters in real estate with Peter Nintcheff

August 9th, 2017 | no comments

Being fair and honest in business leads to results

Peter Nintcheff is the in-house legal counsel for The Goldberg Companies, a national multifamily real estate developer headquartered in Cleveland, Ohio. GCI specializes in developing, owning and managing high-end apartment projects in Northeast Ohio, the Carolinas, Florida and Texas.

As general counsel, Peter is responsible for handling all legal matters for The Goldberg Companies.  His primary duties are preparing and negotiating all legal documents for the acquisition, development, financing and disposition of real property.  Peter also advises the company on leasing, zoning, tax and litigation matters and works closely with the executive team on all business aspects of property due diligence, financing and management of the company’s real estate assets.

As in house counsel, Peter is involved in every step in the development, construction and management of each project. He’s a transaction attorney who writes fair and neutral contracts to get deals done.

Peter believes that in order to have a highly successful business, you must maintain a good reputation in the market and always be fair and honest in dealing with buyers and sellers.

Operating with integrity allows Peter to build teams in multiple markets to accomplish the mission. Working with a strong team that includes complementary skills sets and different approaches makes accomplishing the job fun.

Five key points:

  1. You don’t have to be the best or strongest, or smartest in your field. You just have to utilize your natural skill set to the best of you ability to excel.
  2. Think of attorneys as guides who are able to help real estate professionals navigate the variety of issues that arise during due diligence and property transactions.
  3. Ensure that your purchase contract allows for an appropriate due diligence period. Give yourself plenty of time to do your due diligence on each property and the option to get your money back if your criteria are not met in that time period.
  4. Include a seller default provision in a purchase contract to ensure that the seller cannot negotiate / search for a better offer from a third party during the due diligence period.
  5. The buyer with the most money is not always the best buyer for a deal. Do your due diligence on buyers and on sellers to ensure that you are dealing with reliable, fair and honest people.

Favorite athletes: John McEnroe and Wayne Gretzky.

Favorite book: Running with the Kenyans by Adharanand Finn

Peter trains for success by planning ahead and being prepared.

Check out The Goldberg Companies online, http://www.goldbergcompanies.com and connect with Peter on LinkedIn or send him and email, pnintcheff@goldbergcompanies.com

Thank you Peter for taking time out of your busy schedule to share your insights with us today.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonline.com

 

POST GAME REPORT: Episode Transcript

JC 020: Having a good reputation matters in real estate with Peter Nintcheff

Being fair and honest in business leads to results

 Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.

 

John Carney: Welcome back to The Real Estate Locker Room Show everybody. I’m your host John Carney, coming at you again today from the sunny west side of Cleveland, Ohio. Joining me in the locker room today to talk about commercial real estate development and multifamily ownership development and operations, is the in-house legal counsel for The Goldberg Companies, and my cousin, Peter Nintcheff. Pete is the general counsel for The Goldberg Companies, which is a national real estate developer headquartered in Beachwood, Ohio, which is an eastside suburb of Cleveland, for those of you who are not from the northeast Ohio area.

GCI is a developer, owner and manager of high-end apartment projects in Northeast Ohio, North and South Carolina, Florida and Texas. GCI also owns and manages approximately 500 square feet of office, retail and flex space.

 

Prior to joining The Goldberg Companies, Peter was in private practice for six years. Now, as general counsel, he is responsible for handling all legal matters of the company. His primary duties are: preparing and negotiating all legal documents for the acquisition, development, financing and disposition of real property. Peter also advises the company on leasing, zoning, tax and litigation matters and works closely with the executive team on all business aspects of property due diligence, financing and management of the company’s real estate assets.

 

In recent years, The Goldberg Company’s focus has been on the development of Class A apartment projects in high-end suburban markets, primarily in the southeast. GCI is the developer, general contractor and manager of all new projects and Peter is involved in every step of the process. The goal is to own the property long term. So GCI pays particular attention to detail in order to produce the highest quality product in their respective markets. Sounds like The Goldberg Companies keep you pretty busy Peter!

 

Peter Nintcheff: Yes, we’ve been very active in the past few years. As you know, multifamily has been a very strong sector. We’ve developed several projects and currently have about 1000 units under construction. So yes, it’s been very busy and it’s been an exciting time.

 

John Carney: Yea cool. Can’t wait to dive into that. But before we kick off your day-to-day expertise and knowledge of what you do for The Goldberg Companies, I like to just get the show rolling with a stretching question, sports related of course. Who is your favorite athlete and what, if anything, have you learned by being a fan of that athlete and applied to your career?

 

Peter Nintcheff: My two favorite athletes of all time are Wayne Gretzky and John McEnroe. I admire them the most, I think, because if you look at both those guys, neither of them were the biggest, strongest, fastest athlete in their respective sport. Wayne Gretzky had a vision like nobody else. but there were people who were bigger, stronger and faster than him. I don’t know what he’d be like in today’s game—today’s hockey is a lot different. But he used his vision and his intelligence and his incredible skill to overcome any speed or strength deficiencies he may have had. And the same with John McEnroe. He was just a wily guy on the court and really knew the game and understood his opponent.

 

Those two guys were at the top of their sport, and again, not given probably the best physical tools. So I think if you step back, what you can learn from them is they had a very strong skill set, and they used that skillset to become the best. Maybe they weren’t the best or had the strongest skillset in everything, but they used their smarts and what they did have to be the best at their respective sport.

 

John Carney: That’s interesting too. Wayne Gretzky, at the end of the day, had a team of people supporting him. He had a great cast in his younger years with Edmonton. And then when you’re playing tennis, that’s a gladiator sport. There can only be one winner. You have your coaches, your trainers and your nutritionists and a whole cast these days. But probably back in John McEnroe’s’ day it was a thinner team. That’s pretty cool and interesting.

 

Peter Nintcheff: Yea, two different sports, like you said. One’s team and one’s individual, and they are actually two sports I played growing up and really enjoyed. So, I think you can learn from sports; both doing a team sport and working with your team mates, and an individual sport and really learning from yourself and relying on yourself out there. Like you said, you’re on an island and you’ve got to be the one.

 

John Carney: So, let’s jump into the exciting world of developing, owning, and operating a multifamily/commercial real estate business and being a critical player. I always stress with people who are starting out in real estate (the seasoned people playing at the high level know this very well) that your accountants and your lawyers, are important team players for any size real estate business. Even if that business only owns one rental property or an Airbnb. Because they’re part of the initial structure and the protection. So, from the legal side of it, can you just talk a little bit about how you use the law to protect your client and to work towards the best outcome?

 

Peter Nintcheff: Sure. So, as an in-house counsel, my role is a little bit different than an outside attorney that somebody would engage. You take a development process and if there’s ten steps, I’m involved in step one through ten. Whereas, if you’re engaging an outside attorney, you may bring them in in step seven, and have them guide you kind of towards the end.

 

So when I say I’m involved in step one with our company, what we do is we try to go out and find land, do our due diligence, purchase the land, then we’re going to obtain a construction loan, build it, own it, manage it. So it’s a long process and I’m involved in every step. So that keeps me involved in the due diligence (i.e. is the zoning in place?) and possibly meeting with municipalities and meeting with even local attorneys to understand the zoning and the due diligence on the property, and going through all those steps.

 

Like you said, I do agree that relying on an attorney is, even in a small transaction or a big transaction, very important. Because there can be certain issues in any real estate transaction that can arise, where they can kind of guide you through the process, whether it be a title or a survey issue, a zoning issue, or a tax issue. I was a real estate attorney before (in private practice). So I view myself as a very good real estate attorney and know the legal aspect well, but I don’t know other things. So I have to go out and rely on outside counsel for tax advice, which plays a very big role in our business. Because we’ve been in business for about 50 years, we have smaller assets that we have sold off in recent years, and we’ve had to go out and 1031 those assets (1031 exchange). And then we use the proceeds from those assets to acquire new assets. Because it’s a very tax-driven method of doing it, I’m going to rely on my outside tax attorney to guide me through that process. So there’s a lot of different issues that could come up, and there are different people and different types of attorneys that can help guide you through those issues.

 

John Carney: Alright, just to further that, you do a lot of contract work. I would imagine reviewing contracts and drafting contracts. What would be, if you’re, say, going to purchase a property, like The Goldberg Company is going to purchase a company, and you’re given a purchase agreement by the seller, what are the things that you look out for or that you could advise our listeners to look out for if they’ve never seen one of these before, or if they’re reviewing it? What are the highlights: good points, bad points, that you might want to look for in a purchase agreement?

 

Peter Nintcheff: Sure. Number one, it depends on what you’re buying. I’d like to say that I’m a transactional attorney. I have form contracts that I start off with that I think are very of neutral. Both the buyer and the seller theoretically want to do the deal. So I want to do something that’s fair, something that’s pretty straight forward. But it really depends on what type of property you’re buying.

 

So right now, we’re doing more land purchases. We’re not going out and buying existing apartment communities. So those are two very different purchase agreements. So for a land purchase agreement, I’ll talk more about concepts. What I’m really looking for is an opportunity to have a due diligence period. I think for our group that’s probably the most important thing. Initially I’m going to ask for about 90 days to do my due diligence and have that be a free look. We’ll put money up in an escrow account, say $50,000 to $100,000. But in that 90 days I get to do my due diligence, and if I’m not satisfied with the property, I want to have the ability to get my money back.

 

And during that due diligence period, we’re going to be doing our soils testing, our environmental, our title, our survey, all of our due diligence, to really get our arms around the property. So that, number one, is one of the first provisions that I’m going to ask for, is a due diligence period.

Other than that, I think what the contract really has to do is just kind of spell out what’s going to happen: who is responsible for payment of the transfer taxes; how real estate taxes are going to be pro-rated; what’s going to happen at closing; when that closing is going to be. Another real big issue for us, is when that closing is going to be. So, I’m going to have a 90-day free look. If the zoning is in place and everything is in place, I’m willing to close within 15 days after that.

 

I’ll give you an example. We’re looking at a property in Michigan which has significant environmental issues, so my due diligence period is longer. And we’re looking to get tax increment financing money, so we’re meeting with the city. All that takes a lot of time, so I’m going to look for a long closing period.

 

Sometimes if my due diligence period expires in 90 days, I may not close on the property for a year after contract execution, because it takes a long time to get through the process to where we’re comfortable with the environmental and getting all the city and state approvals that we’re going to need. So, you really want to build those time periods in from the get go.

 

Because I’m doing my due diligence, I’ll ask the seller for certain representations. But oftentimes they’re not willing to give me too much. They’re going to say, “Hey buyer, you go rely on your own due diligence.” But I’m going to ask them to say, “Hey, yes, they’re not aware of any environmental issues, they have the authority to sell it, they own clear title”, provisions like that. You’re going to ask them if they know if there’s anything wrong with the property. But again, they’re going to try to limit that.

And with land, I’m not too worried about that. In purchase agreements, oftentimes you’ll see a condemnation provision or a damage and destruction provision. Meaning, if something happens to the property, if it catches fire during the contract period or if a municipality initiates a taking during the contract period, that they have the ability to get out. Usually those aren’t big issues, and I’m not going to negotiate those too heavily, but that’s something you’ll see in a contract.

 

And I guess the last thing that has been a hot button for us of late, especially on a deal that’s going to be under contract for a long time, is the seller default provision. Usually we’re in markets where there’s a lot of demand, so there’s a fear that the seller goes and tries to get a better offer, and tries to go to a different buyer. So, usually in a default provision you’ll see a specific performance; meaning that the seller has to perform, and that you can sue them if they haven’t. Or what we really want is: we’re spending a lot of money during our due diligence process, up to $100,000. If they default for some reason, if they don’t step up to the closing table, I want the ability to get out of my agreement and then come after them for the money that I’ve spent on my due diligence.

 

So, those are some of the provisions that I’m looking for in our contracts. And again, like I said, if you’re doing a built project, it’s a little bit different. You’re buying a property where there’s tenant leases in place, and you want to make sure you get to rent rolls. There’s different types of due diligence that you’re doing, and some different things that you’re going to be concerned about because there’s a physical structure in place.

 

John Carney: Right, so that’s all really good advice and a great summary of some of the things you want to be aware of when you’re making any offer. I suppose on a single-family home purchase it would be called an inspection period. But that’s — I’m not going to say it’s interesting — it’s a great explanation on the seller default. I would imagine that is something that you see included, or something that you add in your contract language. Just knowing that you’re trying to protect against something that could potentially happen? I’m sure it’s happened in the past. I’m sure there’s a lot of stories out there; people who have lost a deal because they didn’t have that provision, right?

 

Peter Nintcheff: Well, I think you’ll pretty much see both a seller and buyer default provision in every contract. And with the buyer default provision, you’re going to see that the seller will be entitled to the earnest money they put up. And again, for a piece of land, we’re trying to put up a small earnest money deposit because what’s the seller really losing?

 

In a built project, you’re going to see a much more significant deposit. And, maybe one contract execution and then another one after the inspection period ends (in between closing). So you’ll see both of those in pretty much every contract.

 

In a seller default, usually what you see is, the buyer has the right to either terminate or sue for specific requirements. But like I said, we try to add in a little bit more and just say, “Hey listen seller, you’re also going to reimburse us for our costs.” And we’re trying to hold their feet to the fire to bring them to the closing table.

 

Because if we have a property under contract for a year, not only have we spent a lot of money, but we’re getting ready to get our development team into place and we’re looking at this as a way to increase our capital for our company in a future ownership deal. And obviously, if we’ve invested that much time in it, we’re very excited about it and we want to close. So it’s just a little something extra to make sure the seller performs. But I think you’ll see both the buyer and seller default provision in every contract. We’ve never had an issue, knock on wood, and hopefully that continues, but certainly you want to protect yourself. There are times when a party doesn’t perform.

 

John Carney: Well you haven’t had an issue because The Goldberg Companies has such good in-house counsel, right?

 

Peter Nintcheff: That’s right. I’d like to say that, but we also have a good reputation and a proven closing track record. We’ve sold a few things—we’re usually not sellers of properties. But when we sold some smaller assets we are very selective in our buyers too, and I think that’s important. Sometimes the best offer isn’t really the best offer. If you have a known buyer who has a proven track record of closing, they may be your best buyer, even though they’re not offering the most money.

Sometimes, what we’ve seen is: you get a buyer who offers the most money, you get your due diligence period and they’re going to come back to you and try to re-trade on you and lower their purchase price. They’ll say, “Well, we found this, this, and this wrong with the property. We want the purchase price lowered by x.” So you’re kind of back to where you started. And maybe an offer that was lower initially would have been a better offer because it was a better buyer.

 

So you want to make sure you do your due diligence on your buyer and your due diligence on your seller. So it’s good to know who you’re dealing with. I think we’re known as having a good track record as owners and buyers and sellers. So I think that’s important.

 

John Carney: That’s a great point, and something that I believe in. And if you listen to Warren Buffet or anyone who’s running a highly successful business (Richard Branson) you want to have a good reputation in your business, whether you’re in the real estate business or retail business, right? Because it does matter.

What you’ve just said, I think is worth reiterating: it matters if you have that reputation for being somebody that closes. You’ll probably inevitably do more deals, grow your business, and be more profitable. As opposed to earning the reputation (reputations are earned), o trying to hammer in lower pricing at the end, maybe illegitimate concerns at the end of a due diligence period, or just not being able to get your financing in order and close a deal. Those are good points that you brought up.

 

It matters when you want to play at the highest level, to be entering the arena with a good reputation as a seller who’s fair and honest, and as a buyer that says what they are going to do. Is that a good way to look at it?

 

Peter Nintcheff: Absolutely. I agree, and I thank you; you hit the nail right on the head when you said fair and honest. And I think that’s the approach that I try to take from the get go when I’m negotiating a contract with a buyer or a seller’s attorney, or even just dealing with the buyer or seller themselves. If you’re fair and honest with them and you expect the same from them, I think you’re ultimately going to have a good result. And even when we’re looking at a piece of property where there are some issues, and we’re not sure if we’re going to be able to get through those issues, say from a due diligence standpoint, we always keep our seller informed of what we’re doing, where we’re at, and say “Hey listen, we have some environmental issues, and we really have to get our arms around them, and if we can’t, we can’t purchase the property.” And they’re saying, “Listen, we’re ok, because you’re being honest with us. We understand that there are issues, we understand that you have to get through them.”

 

So I think if you’re fair and honest throughout the process — like I say, we try to keep our sellers informed of what we’re doing and where we’re at — I think that goes a long way. Good communications, and so that there’s no surprises down the road and they know that we’re doing our homework and if we can’t get comfortable with it, they understand. And I think that helps our reputation out.

 

John Carney: Perfect. Well one question I wanted to ask based on, sort of, the John McEnroe conversation from earlier is: when you left private practice and you started out at The Goldberg Companies, which puts a lot of responsibility on your shoulders, was that like that championship tennis match? What was that experience like? And maybe you can talk just a little bit about the team you have around you internally, because we believe it’s a team sport at the end of the day, real estate.

 

Peter Nintcheff: So that’s a good analogy. When I left private practice — because I was at a medium sized law firm, I believe there were about eight real estate lawyers in our department. We had tax attorneys, other business attorneys, litigation attorneys. So if I had any questions — because I don’t know everything and I don’t pretend to know everything — it was easy to go down the hall and ask colleagues questions or for some help. Maybe they changed something that would help me out on something I was working on. And then when I came in-house, I’m still the only attorney here, so I was kind of on an island, so I kind of had to do everything by myself. But I didn’t do everything myself, let’s be honest.

 

So we set up kind of a team, I have a team of outside attorneys that I use. I have tax attorneys, I have local attorneys in the states that we are in that I use for guidance. So it took me a few years to kind of develop that network of people who I really rely on. I have a title company that closes all of our deals in North Carolina and they’re fantastic. I give them business and they pick up the phone anytime there’s an issue. So you build these relationships and you build these networks and you get a group of people that you rely on and trust, and it makes your life and job a lot easier. And it makes these deals that we do go a lot smoother, and that’s really what you’re looking for.

 

And since I’ve been here, we really have developed an in-house team as well. Like I said, I’m the only, I guess, practicing attorney. There are other people here with law degrees, but we have a due diligence team. We have a director of acquisitions who goes out and finds our property. We have an investment officer. We have a construction manager. The four of us meet every week, and we go through deals. We have very different ideas, and we’re looking at deals in very different ways, but we complement each other very well. The development manager, wants to close a deal, and I sometimes have to put the brakes on things and say, “Hey listen, we need to look at these issues.” Our construction manager can read the due diligence reports and understand what kind of soils we’re looking at. Are these right for development? Can we build here? He can read the environmental reports. And the investment officer, obviously, is looking at if will the pro forma work, will it pencil, are we going to be able to get the return that we desire?

 

So when you put the four of us together, we have very different skill sets and different personalities. But I think in a real estate transaction it kind of covers almost everything that you need, at least in house, to get us to analyze these deals well. And then we use our outside folks as well to help us. Whether it be with a zoning issue, or if you’ll use local counsel for that.

 

So when you develop these networks and you develop these teams, it really helps. Especially when you have people who have complementing skillsets and personalities and work together well. It makes the deal a lot smoother and a lot more enjoyable. It makes for good constructive discussion and it makes an exciting process.

 

John Carney: That’s good to hear, because it sounds like you guys are having fun. You’re finding great deals and you’re getting a lot done. We’re kind of at the point where we wind this down with a few final questions, Pete. I’m putting together a pretty extensive reading list now by asking all of our guests a few questions that we call our two-minute drill. Do you have a favorite book that you’ve read recently along the business lines, that you could recommend or a nonfiction book that you think is something that you turn back to once in a while? Maybe it inspired you or taught you something that you apply every day?

 

Peter Nintcheff: I’ll be perfectly honest, I don’t read a lot of books. I spend most of my day reading, and so then when I’m not in the office, I haven’t been reading a whole lot, so I’ll have to get back to you on that one. I don’t have a whole lot of advice. I’ve read a few running books lately, which I’ve enjoyed. There was one, “Running with the Kenyans,” that I thought that was very, very interesting, about an Englishman who lived with Kenyan runners for a period of time to try to figure out why they’re so far superior. That’s the only non-fiction book I’ve read recently. But you get good lessons from those as well. Good life lessons. No business books, sorry.

 

John Carney: Well look, it didn’t have to be a business book. Maybe I didn’t phrase that properly on my own list of questions. It could also be a sports book, so you ticked that off. But I mean, you are a runner, you’ve run multiple marathons, and we know you’re a Spartan.

 

Peter Nintcheff: Now I’m a Spartan. Thanks to you John. I enjoyed that experience as well.

 

John Carney: Alright. You’ve talked extensively about what you do day-to-day. Is there anything that comes to mind, like a come from behind victory where everything falls in line right at the zero hour to get documents signed and wires sent, that you can think of? And maybe an obstacle that you overcame to help bring a deal to the forefront? Or do you get everything ironed out smooth ahead of time.

 

Peter Nintcheff: Well everything has to come together at the last minute, and we’ve had quite a few of those. I guess I try to over-prepare. I try to really, really plan ahead and make sure, if I’m using local counsel, if I’m using a title company out of state, if the seller has attorneys out of state, that everything is going to come together without issue. And to do that, I think you really need to plan ahead. So I’m trying to plan weeks ahead.

 

I’ll just give you a recent example: my parents, my brother, my siblings, we were all in Wyoming a couple weeks ago at a ranch. We had no cell service and there was a dialup internet on the ranch and that was it. And during that time I was closing a transaction in Florida that we had been working on for about a year. So of course, it comes up, well, while you’re gone.

 

So the week before I was gone, I had everything that we could get done, done. And everything, using my team here to send things into escrow, to get all the documents signed that I didn’t have signed. But everything that I did have in my possession was signed. Everything was ready to go, gave detailed instructions, and it all came together on the Thursday that we were on the ranch. I was probably horseback riding or fly fishing at the time, but it’s nice — that felt really good to me, that I had a team here, that I was prepared, and I got our seller’s attorney on board and our seller on board, because they knew I was going to be gone, but we had to close. We had a tax deadline while I was gone, because of a 1031 exchange (your period ends 180 days after you sell, and you have to use your proceeds). And we were right at that period. So we had to get that done and with a lot of preparation, a lot of planning ahead, we got it done while I was without cell service and only had a dialup internet. I did check my emails a couple times on the dial up, which is certainly different than what we’re normally used to, but it was a good feeling.

 

John Carney: That’s a great way to exit this interview, Pete. I mean, always prepare. A good plan is better than a wish and a prayer, I suppose. Well, thank you very much for taking the time out of your busy schedule to join me in the locker room today, Pete. Is there any where the audience can find you if they have any questions? Is there a way to contact you? Is sending people to The Goldberg Company’s website the best place, or do you used LinkedIn or any social media?

 

Peter Nintcheff: I am on LinkedIn. That is really the only social media that I’m on. You can search my name, but it either comes out with me or my Dad, we’re the only Peter Nintcheffs out there.

Go on our website, check out our properties at Goldberg, just do a google search for Goldberg Companies. You’ll see some of the stuff that we’ve done, especially some of the stuff that we’ve done recently. I think is really spectacular.

I don’t think there’s any link to my information on the site, but email is my first initial and my last name @goldbergcompanies.com and I’m happy to shed further light on what I’ve discussed today, or certainly provide any insight that I can to you and your audience. And John, thanks for having me, I appreciate the opportunity to talk a little bit about what I do.

 

John Carney: Yea thanks. It was a great interview, and we will make sure that we have all the appropriate links in the show notes and the post-game report on my website. So there you have it folks. I truly hope that you picked up some actionable advice today from Peter Nintcheff, who is in-house counsel for the Goldberg companies.

Make sure to check out the Real Estate Locker Room Show on iTunes, Stitcher or Google Play, and hit that subscribe button to ensure that you never miss out on the pro tips from our great guests. The mission here is to help you elevate your real estate game by learning from the experiences of the people who are out there doing it every day.

If you like what this show’s all about I’d be grateful if you would leave us a five-star review on iTunes or whatever your preferred podcast platform is so that other like-minded real estate investors just like you are able to find this show online.

The post-game report show notes that I just mentioned, with links to this show and Peter Nintcheff will be available on my website: johncarneyonline.com/podcast and while you’re visiting the website you can look through the catalogue of past shows, or drop your email address into the newsletter sign up form to receive the occasional update from myself.

Remember to stay focused on your goals, have fun and stay in the game. I’m your host John Carney and until next week: work hard play hard and profit hard.

Thanks Pete. Have a great day and look forward to catching up with you and the family soon.

 

(Music Out)

End Audio

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© John Carney 2017

JC 019: $400 million dollars of development in 18 months with Tom Charek

August 2nd, 2017 | 2 comments
Accelerate your success with a team who complements your strengths

The Real Estate Locker Room Show with John Carney EP 019Tom Charek offers his clients the knockout combination of his experience as a large-scale commercial builder and his training as an engineer. Tom is no stranger to large-scale projects and completed $400 million dollars of development in 18 months with the Geis Companies in Cleveland, Ohio.

Tom combines his experience on the construction and project management side of a deal with his knowledge of business structure and finance to deliver a total package to his clients who invest in a range of development from apartment buildings to hotels to office buildings. Tom will tell you if a deal is bad early on so that you don’t waste time and money and you can keep moving forward.

The three questions that you must ask when evaluating a development opportunity are:

1) is the land good?

2) is the city good?

3) is it easy to build?

Tom entered the real estate investing game when he was looking to own his first home. He fixed and flipped his way to success by purchasing and renovating a tri-plex, collecting the rent, managing the property and exiting for a profit. A few years of hard work and hustle will pay off if you are willing to make sacrifices and self-manage your investment properties.

Many investors hold onto properties for too long. Tom recommends selling an investment property after you renovate so that you maximize the improvement value and you do not have to spend time, effort and money a second time. Trends change so plan your exit and renovations accordingly.

Tom encourages investors to study their local market and determine where for the same rental rate you can purchase or build for the lowest cost.

5 Key Points

  • Say “yes” to opportunity
  • Know the rental rates for your product type. You want to invest / build where rental rates are high and costs are lower
  • When starting out, self managing your investment properties will keep you accountable
  • Maximize the improvement value of your investment buy not holding it for any longer than three years after you renovate
  • Surround yourself with a team of people who complement your strengths

Favorite athlete: Kevin Love – NBA player

Favorite book(s):

Bringing Out the Best in People by Aubrey Daniels

The 7 Habits of Highly Effective People by Stephen Covey

Tom trains for success by reading for 2 hours daily. Reading and gaining more knowledge is the key to gaining the advantage in business / life.

Thank you Tom for taking some time out to share your business insights with us.

You may connect with Tom Charek direct on LinkedIn or you can reach Tom at Pride One Construction http://www.prideoneconstruction.com and “like” Pride One of Facebook, https://www.facebook.com/prideoneconstruction

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonline.com

 

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© John Carney 2017

JC 018: Every Action Matters

July 5th, 2017 | no comments

Massive amounts of focused action required

Host John Carney shares his beliefs about taking massive amounts of focused action to achieve success in business and in life.

John references three books that helped him grow as an entrepreneur and real estate investor. These books taught him how to focus his attention, cut out the chatter and accelerate his career as a real estate investor and developer.

John believes that every action matters. Consistently working hard is the key ingredient to success in the real estate game. All of the action, mistakes, lessons and wins that you have accumulated over the course of your life matter today and in the future.

All of the “little wins” add up to bigger wins. You will have more “little wins” over time and those are the lessons that you want to recall when you encounter obstacles. Tap into your past experience to keep moving forward.

We all have multiple tasks to accomplish every day. A hierarchy of priorities exists, and we have to remember to focus on what’s important now.

 

Recommended reading:

The 10X Rule by Grant Cardone

Do you want to stamp “Guarantee” on your success? Apply a multiple of 10X to what you do in life and every action you take. Be accountable for your actions and the results they produce – both good and bad.

The Obstacle Is The Way by Ryan Holiday

Ryan Holiday examines the writing and wisdom of Marcus Aurelius. “The impediment to action advances action. What stands in the way becomes the way.” We face resistance in our lives the minute we wake up each morning. We encounter obstacles in our life every day, at home with our families and at the office in our chosen professions. We have choices. We are in control of how we react to challenges and failures. Our reactions determine either success or failure.

The Way Of The Seal by Mark Divine, Commander, US Navy SEALs (Retired)

Learn how to become laser focused on the task at hand. This book is about forging mental toughness as the key to a better life, better relationships and a better business. Being physically strong is important in life but without mental and spiritual strength we will fall short of maximizing our true potential. The good news is that mental toughness can be taught and forged through practice and discipline.

 

Key points:

  1. Real estate investors face obstacles every day. The Obstacle becomes the way.
  2. Apply the 10X Rule to every action
  3. There is no short cut to success in real estate. It takes consistent effort over time to make it.
  4. Every action matters – you draw experience and lessons from all of your actions.
  5. Have a hierarchy of priorities and stay focused on what’s important now.

 

Thank you for tuning in to my first solo podcast. I truly hope that you took away some actionable advice. Until next week, work hard, play hard, and profit hard.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonline.com

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
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© John Carney 2017

JC 017: Apartments, Banking and Politics with Michael Gibbons

June 28th, 2017 | no comments

All people want to live in a nice property

Michael Gibbons is a highly respected investment banker with decades of experience successfully owning and operating multi family real estate. Mike is the senior managing director, principal and co-founder of Brown Gibbons Lang and Company (BGL) with offices across the USA and Global M&A Partner offices in more than 40 countries across 5 continents, which allows BGL to deliver their clients unparalleled access to corporations, investors, and opportunities globally.

Michael always had an interest in real estate and started out with a few doubles and a 4-plex. He learned how to install toilets and more importantly what it will take to run a real estate ownership organization effectively. The key is to build up the number of units that you are managing so that you don’t have to personally do all of the work.

Michael and his team are dedicated to providing well-managed, quality multifamily homes. Michael owns an interest in over 10,000 units and lives by the philosophy that each unit must be “good enough for mom to live in.” He believes that everyone deserves to be proud of where they live, and the apartment communities that he owns provide a safe, clean, well-maintained and friendly environment that residents are proud to call home.

Michael’s winning formula is to look out for undermanaged and/or poorly maintained properties and apply a high standard to maintenance and management. You must apply social responsibility to your real estate investments and success will follow.

Michael Gibbons is on a mission to save America. He is entering the political arena and running for a seat in the US Senate representing Ohio. He believes that “the government doesn’t create jobs, business creates jobs.” Michael doesn’t want to be a career politician. He wants to apply his business knowledge in Washington to serve the American people and accelerate the growth of the US economy.

Five key points:

  • Everybody has to start somewhere – Michael entered the business of real estate investing where many entrepreneurs start, buying single-family properties and working from the ground up to restore and resell them. The small details that Michael learned during his early days set him up for success in the future.
  • “If the unit isn’t ready for your mother to move into, it’s not ready to rent to someone else.” – people want to be proud of where they live. This applies to all income levels. BGL looks for undermanaged or poorly maintained properties and applies defined management strategies to improve the situation, providing people with a safe, clean, well-maintained place to live, somewhere they can be proud to bring their friends and parents to visit.
  • Find tenants that fulfill their side of their contractual obligations – always pay their rent in full and on time. It is dangerous territory for landlords to get into situations where they allow tenants to stay without paying rent for any period of time. This practice can quickly lead an investor to defaulting on mortgages. Retain high credit standards, source tenants that have pride in themselves and their property and they will in turn take pride and care for your property.
  • Utilize modern technology – install video cameras in your multi family investments. “We have found that with the technology that’s available now, if we put up camera systems, generally people behave properly if they’re always on camera in common areas.”
  • Every person involved in real estate is important – from the person fixing the electrical faults to the person vacuuming the hallways, insure that you have a team with the correct cultural fit and chemistry. Success comes when the work is fun and you’re surrounded by other people that “find it fun” and are also willing to put in the hard

Mike is a three-sport college athlete. These are his top three favorite athletes;

  1. Jean Gibbons – Michael father, world class athlete, wrestler & coach
  2.  Aaron Shea – former NFL player and Mike’s son-in-law
  3.  Tom Brady – NFL quarterback for the New England Patriots and godfather to Mike’s grandson.

Favorite books:

  1. God’s Gold: The Story of Rockefeller and His Times by John T Flynn
  2. The Constitution of Liberty by Friedrich A Hayek

You can reach out to Michael at BLG, http://www.bglco.com

For more information about Michael Gibbons US Senate campaign visit –http://www.gibbonsforohio.com

Thank you Michael for taking some time out to share your story with us.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

POST GAME REPORT: Episode Transcript

JC 017: Apartments, Banking & Politics with Mike Gibbons

Michael Gibbons is on a mission to save America

Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.

 

John Carney: Welcome back to the Real Estate Locker Room Show. I’m your host John Carney, coming at you again today from Cleveland, Ohio. The goal for this show is to help the listeners raise the bar in their real estate investment game. Joining me today is a great guest, he is a mover and a shaker in the multi family world of real estate, specifically here in Northeast Ohio and I will let him talk to you about his formula for success in just a moment.

 

But I’d like to welcome Michael Gibbons. He is the senior managing director, principal and founder of Brown Gibbons Lang and Company. Michael provides an active senior role to client engagements and business development opportunities. Now Brown Gibbons Lang and Company, or BGL, is a leading independent investment bank serving the middle market. BGL specializes in merger and acquisitions, advisory services, debt and equity placement, financial restructuring advice and valuations and financial opinions. With global industry teams in business services, consumer, health care, industrial and real estate, BGL has offices in Chicago, here in Cleveland, Ohio, Salt Lake City and global MNA partner offices in more than 40 countries across five continents, which allows them to deliver unparalleled access to corporations, investors and opportunities globally.

So, we’re going to learn a little bit from Mike about when you scale up a business like BGL, and you get into real estate, you can certainly apply those business skills in that competitive environment of high finance to apartments.

Now, immediately prior to BGL, Michael was president and CEO of Underwood Newhouse and Company, a leading regional securities and investment banking firm in Houston, Texas. And prior to that he was senior vice president for McDonald and Company here in Cleveland. And recently, Mr. Gibbons has announced that he will be running for a spot in the US Senate right here, for a seat in northeast Ohio as well.

Welcome to the show Mike, thank you for taking the time out of your very busy schedule to share your experience with our listeners.

 

Mike Gibbons: Well I’m glad to talk to you John. I want to make one correction though, we’re no longer in Salt Lake City; we’re in Irvine, California, San Antonio and Philadelphia. And that was a brief stint in Utah where we were unable to really make it work there. And it’s kind of an organic process that you go through and as you staff various locations with various skills you take advantage of that, and we’re doing that.

 

John Carney: Your resume is extensive. We want to drill into the real estate, and we talk a little bit about sports, we call it The Real Estate Locker Room Show basically because there’s just as fierce a competition out there in the real estate market day in and day out, probably the same in the MNA market day in and day out as you would see in the super bowl, correct?

 

Mike Gibbons: Well, it’s a very competitive business. I was warned many times before I started it that the likelihood of success, particularly out of Cleveland — and that’s where I wanted a family, and really commuted to Houston for four years, in a very tough environment in Houston, and came to Cleveland and said, “You know, I can’t go back to where I was,” just wasn’t the right thing for me to do, and started BGL.

I had an early setback, far greater setback for my partner, as is noted in the name of the company Brown Gibbons Lang — well Kevin Brown was a wealthy entrepreneur and had a bit of wealth from an inheritance. We had become friends and we were going to set out, with his capital support and my deal skills I developed, and form a company. Unfortunately, Kevin was killed a month and a half after we started the firm in an offshore powerboat race. Actually, the Trump race in Atlantic City. I and a number of my friends were there to watch him and he came into the restaurant where we were sitting — and actually we were playing Blackjack. First time I was ever in a casino in my life. — And he said, “Go home guys it’s too choppy.” By the time we got home, sat around for an hour or two with my family, and we got a call from one of my friends and said Kevin had been killed in the race that he wasn’t supposed to run.

And it was an unfortunate occurrence, but it created the true entrepreneurial situation where I was left with basically my capital, which was relatively insignificant at the time, and a telephone. And that’s where we started. So it’s all worked out, and it shows you what you can do in America if you just set your mind to it. I’ve been very fortunate to have the opportunities I had, and we tried to make the best of it.

 

John Carney: So just can you just tell a brief — talk about how you went from investment banking and how you stumbled into real estate and what that looked like?

 

Mike Gibbons: Well it really wasn’t a stumble, John. I was very interested in real estate, literally from the day I got out of graduate school. I remember I read a book called No Money Down. Since I didn’t have any money, that was an important part of where it started from. And I began acquiring with very little down payment money, had a real estate license and used my real estate license. And the commissions I’d receive on the acquisition side helped acquire various things and would buy some double houses and eventually a four-suiter.

None of those were very successful but I learned a lot. Not only did I learn how to install toilets efficiently, but I understood what it would take to really run a real estate ownership organization effectively. And the key is to building the number of units that you’re managing to where you don’t have to do all the work. Because if you try to do all the work, you’re very limited in the scope of what you can know. And I started out that way, sold those off as I was advancing in my career. But again, I always had that interest and attraction to real estate.

I was in capital markets in the financing business, advising businesses, and I was always attracted by the relative certainty of the cash flows versus the various business I was working in. And I never really had any engineering training or I really didn’t understand how manufacturing worked early on. And obviously, I’ve been in probably one of every kind of manufacturer in the nation and got to learn about their processes and how they operated over the many years I’ve been in the business. But during that period I always had an attraction to real estate. And indeed I was part of a partnership in a regional investment bank where they permitted you to make investments outside the normal scope of everyday business. And I got a couple of partners and one of them ran the real estate. And at one point we got up to a relatively significant number of multi family units that we’d owned jointly. I owned a relatively small percentage of them, of the whole enterprise. But again, expanded my knowledge just from being around and looking at properties, buying properties, financing properties.

And then as my career progressed I found myself working with real estate enterprises. And I was always — my early days were public finance, I was using tax exempt debt to do financing for various enterprises. And at that point in time, under the tax laws in the United States where you created an increase to employment you could use tax exempt financing. And the firm I was with, McDonald and Company, was a very significant underwriter of that kind of capital back in that period.

So I just learned more about the financing markets, the mathematics of financing. And ultimately kind of left public finance and moved into more financial institutes in bank, corporate finance type activities; took converted mutuals to stock, in smaller institutions and worked with REITs – a few of them that worked back in those days. And then when I went to Houston, which was supposed to be a two-year stint that turned into a four-year stint, I did it largely because McDonald and Company had gone public. They didn’t have the same cultural fit that I had felt so comfortable in while it was a partnership, and really sought that kind of partnership structure where I could own a piece and help build a company, help build something that I own.

So in doing the thing in Houston I was already — I still had my real estate partners up in northeast Ohio; we were still acquiring and improving and selling multi family during that period of time. And when I came back to Cleveland and formed BGL I was all about MNA for 20 plus years.

And right around when the crash came, actually maybe a little bit previous to that, I had consented to doing a development deal while still at BGL. It was a multi family with an older gentleman that I had established a great friendship with. I did that, saw the deficiencies in the way that they were then managing the properties, and ultimately wanted to create an organization that I could use BGL and investment bank as a platform and create an organization where we had very fine management, and kind of fit my philosophy of investing in multi family. And we’ve done that now for seven or eight years, and we’ve achieved some pretty good milestones in that period.

 

John Carney: So yea, hardly a stumble in. That’s a correction without understanding the whole story, for sure. But so, I suppose the important take away I got from hearing the whole timeline was you started out with single family homes, a few duplexes, probably spent some evenings there applying paint and fixing plumbing without a license–

 

Mike Gibbons: Many, many.

 

John Carney: — so that your tenants could move in the next day. And that is a familiar story with just about every single real estate investor I’ve interviewed to date.

 

Mike Gibbons: You’ve got to start somewhere, you know?

 

John Carney: You have to start somewhere. And then what does that look like today? And where —

 

Mike Gibbons: Well, in a week — I don’t own 100% of very many things, I have a few I own 100% of, as far as real estate dwellings. But generally we’re operating in LLCs, oftentimes it’s the partners in the investment banking business, at times we’ll take in outside investors.

And I didn’t mention this, but early in the days of Brown Gibbons Lang, having been in Cleveland, I knew a lot of the developers in the region, largely stemming from my public finance days as a matter of fact. And I was in a very good position to — down a number of REITs formations, and we took them public while I was in Houston. And the real estate investment trust business changed considerably in the early ‘90s. Prior to that, you needed a separate enterprise to manage those businesses, or to manage the real estate homes that were owned by the trust. It was a very unwieldy, difficult structure to operate in and all that changed in the early ‘90s. And because of my relationship with some of those developers, because I had as much familiarity with REIT structures as anybody probably in the Midwest at the time — I wasn’t an attorney and didn’t work in those areas, I was really an investment banker that had worked with the formation of REITs –I was called on to use some of the expertise I’d developed to advise a number of REITs and their formation, and actually model those enterprises for largely a collection of partnerships; model those pre-excel. I was using Lotus123 back in those days. And created those models and took them to Wall Street, found an underwriting team and we took a number of REITs public where I acted as the advisor, BGL acted as advisor.

Around northeastern Ohio it was Associated States and Developers Diversified, both of those were enterprises that I advised on their formation. I ended up on the board of Associated States after about ten years, became an active board member, shared financial planning and really kind of studied where real estate performance was. Being in the Midwest, it’s very much different than if you’re in the coast or in you’re in the hot growth areas. We have a housing stock here that’s a bit older than most other locations, and I was always tied to Ohio and tied to Cleveland, this is where I love to live. I had spent four years commuting, coming back here every weekend almost. Coached my daughter’s soccer team, I was an assistant coach while I was working in Houston, so I was always connected to northeastern Ohio. So the natural place to invest was northeast Ohio. But the housing stock in a city like Cleveland or around Cleveland is very much different than you’ll see on the coast or in Florida or in Atlanta or in Dallas.

Having been on the border of public multi family REIT, I kind of studied what the differences were and where I thought I could make a difference and also do well for my investors if I had them. And kind of developed a plan. And generally we’ve stuck with working class housing, is what it’s called now. I think we were lucky enough to identify that earlier in the trend, and it’s now become a topic of conferences to talk about work force housing.

And I just have a philosophy about people and about where they want to live and how they feel about living in a certain situation. And I took that philosophy and applied it to my real estate investment. I believe that every single person in the United States wants to be proud of where they live, and they want their friends and family to come over and visit them and not be embarrassed of the maintenance levels of the property that they’re living in. They want to walk through a lobby that looks like they’re prosperous and they’re living in a well maintained, well managed facility. And I think that’s true across all income levels. I don’t think it’s any different, no matter if you’re struggling in a lower wage job to you’re a wealthy person that just doesn’t want to have any duties of home ownership. And I think every level of those you can do more and more, commensurate with the level of rents and the level of profitably.

So what we look for are properties that are undermanaged or poorly maintained, and our effort is to find those, buy those cost effectively and manage them in the way I just talked about. We have a rule with our management operation: if that unit isn’t ready for your mother to move into it’s not ready to rent to somebody else. And I think a lot of businesses say they have a social responsibility too, and I think anybody that’s operating in America in business should have a feeling of social responsibility. And one of those things is I want to make our tenants lives a little better, because we do the things that need to be done when they need to be done and provide with them with a safe, clean, well maintained place to live. And some place they can be proud to bring their parents or their friends and feel comfortable going in and bringing them there into their apartment. And I think that’s a solution that’s worked for us very well.

 

John Carney: So would you say your approach and your philosophy has to be in some respect a point of difference; do you see a dramatic change when you buy a property that’s under managed and in need of repair. And can you just talk about the turnaround that you see with existing tenants. And then how that would compare to someone across the street or next door that just doesn’t have that same attitude about providing an environment that you’d want your own mum to live in.

 

Mike Gibbons: Well, you know, it doesn’t happen immediately. I think you have to convince the tenants that live there that you’re different, and it takes a while to do that, you can’t just come in — we typically don’t come in with a total rehabilitation of the project, because in many cases we just can’t afford to do that.

One of the advantages of investing in workforce housing — and I might add, not everything we have is workforce, we have some higher end properties but we don’t really have the low-income properties. We don’t have any units that would be considered low income. It’s people that work; they may not make professional level salaries, but they certainly are hardworking and they have pride in themselves. And generally you want tenants to have pride in themselves because they are going to have pride in the property that they’re living in, and they’re not going to do damage or dump litter, or they’re going to keep the place clean and not fight the management company.

Oftentimes when you see these undermanaged properties, they’re just not well managed in a number of ways. If you don’t pay your rent, and you have tenants that don’t pay their rent on time — unfortunately we’re not the government where we’re responsible for making sure that everybody has their rent payment every month. So we have very high credit standards and the reality is, is I wish I was in a position to give everybody free rent. If I was in that position it would be a wonderful thing. I try to contribute a significant portion of my income to help those kinds of people, but you can’t do that and have a business. So unfortunately, you’ve got to have people who pay their rent on time. The minute you start allowing people to live there while they aren’t paying rent — I’ve seen a lot of property owners make that mistake; so they’ll try to negotiate with the tenants and they end up defaulting on their mortgage. And you wouldn’t be interviewing me right now if I’d defaulted on a number of mortgages over a period of time. And when a relatively small percentage of your tenants aren’t paying rent you can find yourself in that position.

I’ve never defaulted on a mortgage and I don’t intend to, and the only way to be certain that that isn’t going to happen is to make sure you get cash flow under the contractual arrangement that you have with those tenants. And it’s a win/win situation: we’re going to keep the property up in good condition if they just meet the terms of their contract, which is paying their rent on time.

And oftentimes we’ll move into a turnaround situation, under managed situation, sometimes even over managed situation, where they have a few other different characteristics we can get into. But that undermanaged situation, generally they’re letting people slide by, and you’ll end up with the tenants owing multiple months’ rent, that’s a recipe for disaster. That’s when you talk about the decline of areas and properties, that’s what usually leads to it.

Everybody talks about the terrible slum landlords, well in many cases they are terrible, but oftentimes it starts where they just don’t get their rent payments. And most if not all of these projects are leveraged and they need to make mortgage payments, and if they aren’t collecting their rent they can’t make those mortgage payments. You’ve got to have a discipline about making sure people pay rent on time.

We’ve also had very good luck, where we’ll find a property that’s in disrepair and has been neglected as far as the management, or maybe the right management techniques haven’t been used and they’ll have problem tenants. You’ll have tenants that are selling drugs, or they’ll be having gatherings in front of the building and will harass other tenants as they come out. We have found that with the technology that’s available now, if we put up camera systems, generally people behave properly if they’re always on camera in the common areas. When somebody breaks a window we know who broke it. When somebody steals furniture from the lobby, we know who stole it. When somebody comes in and commits a crime on the property we can generally trace when they come in and when they leave. So we had very good luck of just getting better behaved people living in our properties. Because all people want to live in a nice property that is well maintained, and if you allow people that don’t care about that to move in you’re not going to be able to do that.

So that’s one of our initial steps, is to spend the money on camera systems, spend the money on common areas; just the general condition of the property, the street appeal of the property is very important. People want to see landscaping and green grass and nicely maintained shrubbery and lighting and everything should be well lit. You cannot have a full-time security force, it doesn’t work at the level of rents that we run at. But we’ll have — particularly when we’re turning a building around, we’ll intensify security to a certain level and if somebody is on site that’s causing a problem, generally we can have security there in pretty short order.

 

John Carney: Well, that’s basically a long — for the listeners that are out there that want to be in the multi family game, or anyone who’s struggling managing their own multi family, take note of what advice Mike has given us. Because that’s generally, I would imagine, almost a weekend course in property management and multi family all wrapped into a ten-minute segment, so thank you for that.

 

Mike Gibbons: I’m happy to do it.

 

John Carney: That’s great advice, well we wrap this up with a few questions that we end up posting up on the show notes. But when you were growing up as a kid, you were also a college athlete, what sports were you into? And how did you see that team sport aspect of your childhood translate into success in business?

 

Mike Gibbons: Well, you know, I guess I didn’t appreciate how much participating in team sports — and some individual sports too — how much they helped. But I think it’s just a general attitude of being able to get along and work with people, where you have a particular function, they have a particular function, and when everybody’s doing what they’re supposed to do at the same time, things work a lot better. It’s that simple.

I played high school football and I wrestled. My father was actually a wrestling coach, I never quite achieved the level of capability that he would have wished. And I think he would have been a lot happier with me if I’d found wrestling to be my sport. But he was a great athlete, an all American national champion, and I just was never going to be that. And I also participated in track. And when I went to college, I really decided I wasn’t headed to the NFL, and although I had some looks by division one teams, I thought I was better suited — and again I wanted to stay around Ohio. The only D3 school I looked at transferring into, I waited so long to make my decision they’d already agreed to go to a school out of state. And ended up at a D3 school and was able to compete in three different sports while I was there and still go to class and maintain good grades. It was a great experience for me.

I played lacrosse and football in college. And the four years of football, and trying to compete in Ohio in football in a heavily academic school, where it was tough to get a lot of players to help this into the school. We were able to field a pretty good team. And a lot of those guys are still my friends and in each case they’ve all been successful — or I think all of them, I can’t think of any that haven’t been — but they’ve all been successful in whatever profession they decided to go in, and we often get together. We had an undefeated team in the college I went to, that was an unusual thing to have, it was the only one in the history of the school. And every one of those guys — we talk about how the coaches put us together and got us working together. We were always not as deep as the teams we were playing, as long as we didn’t have a lot of injuries we were going to do pretty well. We had people knew their roles and fulfilled them.

And it’s the same thing in real estate. It’s the same thing in investment banking. You have a job to do and you’ve got to do it as well as everybody else does their job, and it’s particularly important in real estate. You’re relying on the guys that vacuum the hallways as much as you’re relying on the people that are fixing the electrical problems or the plumbing, it’s all got to work together. And that kind of team atmosphere is the best situation you can create. And we have that right now and it’s not always that easy to achieve, you’ve got to have the right chemistry among people. But we’ve done it and it’s worked out very well.

So we’ve grown, and we’re one of the larger property owners in northeastern Ohio, and we intend to continue to grow in that area. I’ve got a couple of sons that seem interested in real estate, all of them are still in school, heading to law school and business school, but I think they’ve seen the fun I’ve had with it and the interest I’ve had in it, and I’m hoping one of those guys decides they want to follow and keep this effort going in the family. Like you’re doing John. Your family’s been in real estate for generations. I’m the first generation in mine.

 

John Carney: Right, and that’s just it though. It is fun. And I think it’s fun because it’s challenging, and it’s hard work and you get to surround yourself by other people that find it fun, challenging and are willing to put in the hard work. Three rapid fire questions before I let you go. We’re compiling a bit of a list. Who’s your favorite athlete – all-time?

 

Mike Gibbons: Well, it’s funny, because I actually know him, and this probably isn’t going to be a popular choice in Ohio. But my son-in-law, married to my daughter, played for Cleveland Browns, and so obviously, he’s probably my favorite athlete along with my father. My father was a world class athlete, just happened to be in wrestling. But my grandson’s godfather is a guy named Tom Brady. I’ve gotten to know Tom a little bit, and I’d consider him one of the — a guy with one of the finest characters — if you’re a Cleveland Browns fan, you only see this guy that comes in and destroys our team when he’s in here. I’ve gotten to know him personally and he’s kind of just a really great person. As is my son in law, as is my father.

So I guess I’ve got three of them. I would say: my dad, Jean Gibbons, and my son-in-law, Aaron Shay, and his big buddy Tom Brady. And I know each of those people pretty well, and it’s great seeing somebody in competition. Aaron’s not playing anymore, my father’s passed away, but I’ve heard the stories many times about how he competed and how good he was at what he did. And we can still watch Tom, usually in the super bowl every year. And for how much the fans of the opposing team seem to hate him, he’s really a great person and he’s a regular guy that just works harder than most everybody else.

 

John Carney: Yea, he works hard and he’s a leader. So I mean, two key ingredients to become a multi super bowl champion. Is there a favorite book that you have? We’re putting together a booklist out of this show.

 

Mike Gibbons: It probably is — I often say that there’s been a lot of books that have kind of shaped my — where I’ve ended up in life. When I was in 8th grade I read a book called God’s Gold about John D Rockefeller. I lived in a family that didn’t have a lot of extra dollars floating around the house, and I kind of set off to try to change my family’s trajectory, and I think I’ve done that to some degree.

But I can tell you what changed my whole attitude about politics. In college I majored in political science and economics, and just as most other college students, I didn’t read everything as carefully as I should have the first time I was asked to read it, but it’s become kind of a hobby for me over the last 20 odd years.

But a book called The Constitution of Liberty by Friedrich von Hayek, changed my world view. My grandfather was a labor union president, my dad, who was not really about in politics, pretended to be a democrat early on. I had a grandfather that was probably even to the left of that, my mother’s father. And I didn’t really form a political view really until after I was in college and got out of college. And I have to tell you, Friedrich von Hayek influenced me. It was a rational argument that really kind of convinced me that free markets and capitalism could change the world. It has, it’s taken more people out of poverty than any other system of economics in world history and that book changed my view.

I don’t read a lot of fiction, I read a lot of non-fiction and as my best friend says, “You read the weirdest stuff I’ve ever seen Mike.” But I think I’m curious, and I read a lot of things that aren’t best sellers. And it’s given me a great base of completely irrelevant and unimportant facts that I can talk about at length, and if you aren’t interested in that sort of thing I’ve got to be pretty boring. But it’s probably the book that changed my life.

 

John Carney: That’s good. And we’ll link that in the show notes on our website. Well we’ve run a little bit over. If you have a couple of minutes would you like to share your thoughts on your decision to enter into a big political campaign?

 

Mike Gibbons: Yea, and it took a long time and it was a decision that was very difficult to make. And I’ve said this many times, but I wish I could have found somebody with similar world experiences than me that would have been willing to run. My last son graduated from college a month ago, not even a month ago. My commitment to my children has changed as they grow up. I’ve got more time. I’ve got a son that graduated from Georgia Tech with honors in aerospace engineering, which if you know anything about Georgia Tech and having a degree in that field, he had great job prospects, and he went down and joined the navy and is in Pensacola now in flight training. And I think the combination of that and kind of having my last child graduate from college — I don’t need to focus on my kids as much as I used to. It got me thinking. And he’s adamant about wanting to help his country and defend his country, and I came to the realization that I’ve never really tried to do anything for my country directly. I’ve created hundreds of jobs over the years, and I’ve taken the risks necessary to create those, but I’ve never really given back to this country the way it’s given to me. And I’ve had — there’s been some opportunities, taken advantage of it that I hope everybody can have that same opportunity.

And I don’t like the direction our country is headed. I don’t like the politicians that we’re electing to office. I think we have too many career politicians who really have no experience and they’re very good at winning elections and raising funds to win elections but they really don’t have any day to day knowledge of what it takes to make this country thrive.

 

The government doesn’t create jobs, business creates jobs. And being a business man who recognizes his own capabilities and is not just out for some kind of an ego trip, that really wants to ensure that our governments can use the principles that made our country as great as it is, and not forego those and pick up on the latest ism that’s out there, the latest cause that somebody comes up with. And really kind of keeps the country directed where it’s — in a direction that’s gotten us where we are right now. And I’m going to try and do that. I promised my wife and my kids I wouldn’t change one iota. I tend to be blunt, and I don’t — I’m not a political soundbite guy. And I want to take that kind of an attitude. I’m going to try to get to Washington and actually tell the truth.

Because this country is in a very serious predicament right now: we’ve got national debt 105% of our GNP. The only time it’s ever been greater than that was after we fought a world war. And the difference is the end of that world war we hit 50% of the industrial capacity of the world. We don’t have that anymore. We have got to grow this country. If we don’t grow 3 or 4 percent over the next many years we’re in serious trouble. We’ve got to address that and there’s ways to address that that our politicians just don’t want to talk about. And they may have the soundbites, they really haven’t developed an argument and understand why we have to do that. Because right now we have enough debt that we’re either going to have to default on it, or we’re going to have to grow the country so that becomes a less significant portion of the GNP, that debt. Or we’re going to have to inflate our way out of it. And the very people that won’t allow this country to grow are the ones — the people that they’re claiming they’re protecting and representing. And they’re going to be the ones that are most hurt in that inflationary environment, if that’s what we end up doing.

 

But we’ve got to grow the country. I think I know how to do that. I think I know how businesses are formed. I think I know what stands in the way of their prospering. And I think our government has to ease off on those businesses. I think we have to lower tax rates for businesses and get people to create jobs and make sure that those lower tax rates are tied to people that are really taking risks of job formation. And if we do that, we can super charge this economy and we won’t head down the path that so many countries have that have tried this kind of foray into socialism. It doesn’t work. It hasn’t worked, ever. And they keep saying, “Oh well if we do it right..” There is no right way to do socialism. And even if you want equality in a country, you’re not going to have freedom. And I think that freedom and the fact that everybody gets a shot at opportunity here is what we need to make sure it continues in the future. I’m going to try and do that. And that’s really why I’m doing it.

I’m not a career politician, never thought about it before. If I could have found somebody better to run, I would have certainly supported them and would rather help them in their quest for office. But I can’t find anybody because they aren’t willing to take the considerable risk that comes along with running for office. And I just said –you know, they can make up stories, or they can come up with something they somehow will twist in my background that will make — try to make me look unacceptable to the voters, but I’m willing to take that shot. I think I’ve never done anything unethical in my business career and I’m proud of that, and I’m willing to take anything they can come up with because it won’t be true. So, long story short, I’m doing it because I can’t find anybody else that has my experiences to run and to support. So I’m going to do it myself. I’m the one that complains, I might as well take a shot. That’s what it comes down to John.

 

John Carney: There you go. That’s the American story. I wish you nothing but luck in your race for the US senate Mike. Alright, well that wraps it up. Thank you for joining me in the locker room today Mike. Where can the audience find more about you if they want to reach out or contact you online?

 

Mike Gibbons: Sure. Well I’ll give you our firm website is: bglco.com and we’ve got a good bit of information on there. We’ve been around for 28 years, just found out that we are among the top five most recognizable names in middle market investment banking in the United States. I’m very proud of that. They said it couldn’t be done in Cleveland; we managed to put it together and do it. And then my website for my campaign is: gibbonsforohio.com

And we’ve only been at this a couple of weeks, so positions aren’t filled out, but there’s a video on there that will pretty much summarize what I’m about. And I hope the listeners watch that because it’s — I want to be that new politician that our founders envisioned and not the career politician that unfortunately we’re forced to vote for now. We really have no choice because those are the only people that are running.

 

John Carney: Get in, get the change going, and then hand it over to the next generation. There you have it folks, I am sure that you picked up some actionable advice today from Mr. Michael Gibbons. Make sure to check out the Real Estate Locker Room Show on iTunes, Stitcher, or Google Play and hit that subscribe button to ensure that you never miss out on the pro tips from our great guests. The post-game report show notes, links and additional content for this episode will be available on my website: johncarneyonline.com/podcast when this episode is live next week. And while you’re visiting the website, feel free to drop your email address into the newsletter sign up form to receive even more real estate investing insights, tips, tricks, hacks and other good stuff. Remember to stay focused on your goals, have fun and stay in the game. I’m your host John Carney and until next week: work hard, play hard, and profit hard.

One more time, thank you very much Mr. Gibbons, for taking the time out of your busy schedule and your campaign to join us. Have a great day.

(Music Out)

End Audio

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JC 016: Lessons from selling 42,000 units with Daniel Burkons

June 21st, 2017 | no comments

Multifamily success begins with a strong team

How do you eat an elephant? One bite at a time. Dan Burkons joins us in the locker room today to share his story of success as multifamily sales agent. Dan’s kicked off his career by listing and selling 14 units in East Cleveland 15 years ago. Today he’s closing $58 Million dollar deals. Everyone starts small and grows bigger by working hard over time.

Dan has worked with clients who started with one small deal, quit their day jobs and scaled to 10,000 doors. He believes that having sold management in place is a critical component of success. Pairing a profitable operating and management system with private equity is required to successfully scale.

Something will always go wrong closing a commercial deal. Find out who is creating the roadblock and what their motivation is. You will overcome the obstacle by drilling down into the problem, identifying the root person raising the objection and getting to the decision maker to find a way to solve the issue.

Ice hockey taught Dan that hard work is fun if you like the people who you are doing it with. He attributes his success in business to working hard with people he enjoys working with.

5 Key Points:

  • Have a management plan first.
  • Bad management will sink a great deal.
  • When entering a new market you have to find the right multifamily agent who is active in the product type you want to purchase.
  • You want a local real estate attorney on your team who’s an expert in your niche in the market.
  • Hard work is fun when you like the people on your team.

Favorite athlete: Matthew Dellavedova – Australian born NBA player

Favorite book: How Wall Street Created a Nation: J.P. Morgan, Teddy Roosevelt, and the Panama Canal by Ovidio Diaz Espino

Favorite quote: “If it were easy, everyone would do it”

Thank you Dan for taking time out of your busy day to share your story with us.

Dan’s office phone is 216 264 2018 or email – Daniel.Burkons@marcusmillichap.com

Website – http://www.marcusmillichap.com 

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

POST GAME REPORT: Episode Transcript

JC 016: Lessons from selling 42,000 units with Daniel Burkons

Multifamily success begins with a strong team 

Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.

 

John Carney: Welcome back to the Real Estate Locker Room Show. I’m your host John Carney, coming at you again today from Cleveland Ohio. I’m here on the sunny west side and joining me today is mister Dan Burkons, and he is on the south side, correct?

 

Dan Burkons: I am, Independence.

 

John Carney: Alright, perfect. This is going to be a great episode today. We are talking to one of the regions’ premiere experts on multi-family investing. Dan is a broker and he is a senior director of Institutional Property Advisors, or IPA, which is a division of Marcus and Millichap. And he’s one of the three original founders of the Marcus and Millichap Cleveland Office.

His leadership and specialization within the Midwest department market enables him to create substantial value for major private and institutional investors. Dan joined the firm in 2003 and he and his team are approaching 42,000 units sold across 14 states, totaling over 1.8 billion. Impressive stats there. Dan’s expertise is in assessing value and leading national marketing campaigns, selling apartment portfolios ranging from to as many as 25 properties in multiple states, owned by multiple partnerships.

In 2013 Dan received Crane’s Cleveland Business Forty under Forty award and in 2012 he was induced into the Midwest Commercial Real Estate Hall of Fame. No stranger to the media, he’s regularly featured in publications such as: Apartment Finance today; Globe Street; Heartland Real Estate Business; Midwest Real Estate News; Multi Family Executive; Multi Housing News; The Cleveland Plain Dealer; and of course, Crane’s Cleveland calls him for any information they need from an expert regarding the multi family. Alright Dan, welcome to the show. Thank you for taking the time to share your expertise with the audience.

 

Dan Burkons: Well thanks John, thank you for that nice introduction. It’s all flattering but I still think of myself as doing the same thing I’ve been doing for 15 years of selling apartment buildings.

 

John Carney: Right, and you’re good at it. So that’s okay to be good at stuff. 42,000 units sold, everyone starts with one. We’ll get to that in a minute. So, I like to kick off this show with a little bit of a stretching question to get everyone warmed up here, and I generally ask our guests: what sports did you play growing up and who was your favorite athlete?

 

Dan Burkons: Well I would say — so hockey is the sport that I played the most growing up, and I still play. In fact, I skated last night, had some beers and that’s actually — to me, I’m not the world’s greatest hockey player but I like it and got great friends through it, and that’s what I do for exercise more fun than the treadmill.

If you asked my favorite athlete, I actually was just thinking about that as you said — I know you have a lot of Australians followers and I tell you one of my favorite athletes, nothing to do with hockey, is Matthew Dellavedova, Australian guy that came to the Cavs and was a real part of a couple of those runs to the finals. And he’s my favorite athlete because, like me, he doesn’t have the greatest natural talent but I envy his work ethic. The guy shut down Steph Curry, weekend VP in a couple games 2015 and went straight from the basketball court at Quicken Loans arena to Cleveland Clinic because he was almost dead of exhaustion, to get IV fluids to come back the next day. That’s a guy I admire.

 

John Carney: Yea, maybe we should have kept him around to shut them down again this year.

 

Dan Burkons: Right.

 

John Carney: So, I believe that for those of us that like the competitive nature of sports, whether it’s a team sport like ice hockey or an individual sport like golf with your buddies, that business has the same type of competitive nature to it. And so, we draw the comparison between business and sports on this show.

But look, I’ve had clients in the past come to me who want to — when I was living in Australia and working with America Property Source — clients who wanted to get into US multi-family investing. And just like anything, I believe you need to start small and you have to find an expert for your team before you even start small; before you get started you have got to recruit your team. And so finding the right agent with the right experience in the market is critical. Tell us a little bit about your experience over the years, from kind of when you got started to where you are now. You’ve probably seen it all and — share some insight on how do you get started in the multi-family game if you don’t own any apartment buildings or duplexes yet.

 

Dan Burkons: Sure, I’d be happy to, and for myself getting started as a broker it was the same thing; starting really small. My first listing was 14 units in East Cleveland, which for those of you who aren’t familiar with the area is a war zone, it’s the worst of the worst of the worst. That was a $230,000 transaction barely qualifying as commercial real estate. Went from there to — we closed a 58 million dollar deal a couple of weeks ago. So everybody, whether it’s as an owner of a brokerage, starting small — no one is just going to plug you in and you’re not going to be doing 58 million dollar deals. You’ve got to start somewhere, you’ve got to build, you’ve got to build off success.

One of the most rewarding things, and really just the coolest things in my career as a broker is, as I’ve grown from a young adult to — I don’t know what I am now at age 37 — as I’ve grown as a person and I’ve grown in business, I’ve had a sort of symbiotic relationship with several key clients where we’ve grown together. One of them — in fact I mentioned the 58 million dollar deal we just closed — one of them, my second listing at east Cleveland, one was 13 units in another, not much better suburb. And I sold it to this group that was four young guys with full time jobs, and they’ve bought 10 or 20 units. They wanted to buy this thing and they actually ended up — we ended up arranging it with seller financing and I learned a couple of tricks because I didn’t understand what it was at the time. They actually got in with cashback at closing, which isn’t always the best thing but worked for them. And the bank thought they were growing too fast so one of their parents had to cosign for them.

They ended up making a ton of money off that deal, buying another one, buying another one, buying another one, I sold them a lot of it. Then four of the guys that bought that $300,000, no money down transaction in 2013, I’ve actually sold them a 53 million dollar and just recently 58-million-dollar deal. As they grew organically, left their jobs, went into real estate full time, then they hooked up with a private equity shop who gave them the capacity to take down really big deals and portfolios. So it’s an example of somebody who started in commercial real estate part time, built up their management expertise, learnt from some mistakes, took in a little money from local investors and once they’d perfected their craft a little bit, took on little bigger time money and was able to really get into the big deals.

 

John Carney: So when I look at real estate, and you can just pick the asset type, or the class, I mean it really does always boil down to good management: what I believe is the success multiplier. So, could you elaborate on that component, about how these guys were able to grow about over 10 to 15 years, right? They were an overnight success in 15 years, right?

 

Dan Burkons: Right, from zero to ten thousand units. Yea, whether it’s them or anyone else, management really is the key. And I know you have a lot of listeners on here who are earlier on, or some who are just looking to start, or some at obviously more advanced levels, but as far as building that portfolio, management is key. The place where I’ve seen, particularly international or out of state investors come to our markets, and where I’ve seen some fail over the years is not having thought out about a management plan, just looking at the numbers on paper and saying, “Yea, this is a good cap rate, this will work, this meets what I’m looking for.” And a day before closing saying, “Oh, can you recommend a good management company for me?” It sort of should be in the reverse.

You should be — if you’re looking in an area, you should be trying to get comfortable with a management company first, before you really make any serious offers and about to invest your hard-earned money into deals. Because the best deal in the world can get screwed up very, very fast by somebody — whether it’s a dishonest manager or somebody who just doesn’t have the expertise. That is crucial; very small differences in occupancy and rents and expense management can have huge impacts on operating incomes and failures.

 

John Carney: Yea, across the board I suppose, because some management companies make it easy on themselves by keeping the rents low, but there’s all this money being left on the table, right? I’m sure you’ve come across that. That also leaves a big chunk of value for an incoming buyer I suppose.

But, so if you’re coming in from an out of town market — I’m contacted by people often that want to pick my brain about the Cleveland market. The first thing I tell them is that it’s competitive like any market. Can you give us a little bit of the 2017 overview of what Northeast Ohio looks like in multi-family?

 

Dan Burkons: Sure, like any sort of market there’s stratification based on asset class and asset size. And on the larger assets; on the, call it ten million and up, a lot of competition is experienced, national syndication groups. Not so much in northeast Ohio, recent and public companies — it’s for various — are less desired market for that, which actually makes it more profitable for others because those types of public entities often compress cap rates and starve the yield.

So actually it’s more of an opportunistic market, in all sizes from small to big. And in the 500,000 to 5 million range, where we do a lot of business as well, there’s just a mix of local and out of town guys who are coming here — if they’re local, they’re here because they’re already here and they’re looking for the next deal that’s good for them to add to their portfolio. If its someone out of town, they’re usually finding their way to north east Ohio because the cap rates have compressed so much in other parts of the country. Even other parts of the Midwest make Cleveland look like a relative bargain, just because there is — historically there has been a little bit less interest, and quite frankly with the development of Cleveland there should be more, but not everyone has Cleveland on their map, which is good because it leaves the yields a little bit better. You usually get people who are not from the area saying, “Hey, I’m coming to look at properties in Cleveland, Columbus, Cincinnati, Pittsburgh, Indianapolis.” They’re not in love with any one market, they like the idea of getting into the Midwest. A lot of times they’ll come back and say, “Wow, Cleveland, there’s really nice areas and you can buy really stable product, not susceptible to these big swings of up and downs, and look, that’s what I’m coming here for. That’s why I’m not buying in California, I’m buying in the Midwest go get something really stable and those opportunities are here.

 

John Carney: It’s an interesting market. Cleveland has everything that any major city I’ve ever been to globally has, right? We’ve got three brand name sports teams, two stadiums right downtown, you can walk from one to the other and then you’re walking through multiple neighborhoods that have all the foodie and nightlife culture you’d want. Big banks and it’s a pretty homely town.

 

Dan Burkons: And to be honest, I think especially as Cleveland’s downtown has developed — like you and your partners have been an instrumental part of developing Cleveland’s downtown as more of a 24-hour center. as that’s happened more and more young people are saying wow I can really do all the fun 25-year-old stuff in Cleveland that I can do in Chicago or somewhere else and literally pay a third as much and live in a much better place. And as you get older with a family, a lot of my friends have been moving back because jeez I’ve tried to make it in San Francisco and we’re both working and I’ve got no money to pay daycare and this and that. And I go to the pool and there’s 10 billion people. In Cleveland I go anywhere I want, there’s no lines and they have everything. So the quality of life is really good and that’s actually been attracting more and more companies to come back here.

 

John Carney: Yea right so I was gone — I’ve just been back in town for my first year, completed my first year back living on the west side of Cleveland after being away for 19 and last night we took a drive with the kids downtown just for something to do and they had a free concert at Edgewater Park. And traffic on the shore way, which they have converted now into a boulevard and they’ve really spruced up the area and the Metroparks are running the lakefront beach. You know, it was wedged. It was a line of traffic from 25th street to the new Edgewater entrance and then from Lake road and Clifton to the west all the way down. And it was packed. It didn’t look like there was a place to park a car on that whole piece of property. And that’s now kicking off summer with concerts and the beach seems to always be full when I drive by. So they’re really doing a good job there in that Gordon Square and West 25th street neighborhood of utilizing the lake front.

 

Dan Burkons: It’s interesting that some of your audience — I’ll tell you what, we’ve had — that Westside area and Edgewater park west, the higher city area — there are places that even 5 years ago I would have thought of as man that’s kind of rough, sort of being a rundown part of the city. That area on the Westside is just — we’ve had a lot of out of town investors actually buying 10 unit 20 unit, 30 unit type deals there and seeing it as a big opportunity. And because those are some areas that were historically not nice in Cleveland, a lot of local people overlook them and the amount of millennials and highly educated young folks who want to live in those — it’s a little bit more like living in a neighborhood of Chicago or something, a little more edgy area. A lot of the out of towners are getting that faster than the local folks, and buying up stuff that ten years ago would have been worth $15,000 a unit, and they’re buying it for $20,000 a unit, putting $5000 into it and making it worth $40,000 a unit. And there’s opportunities there, and seeing the opportunity and the growth pattern in some of those Westside neighborhoods.

 

John Carney: Yea, I mean it’s fascinating to watch. They grow and continue to flourish. So if you’re coming to Cleveland and you’re looking in multi family, or any market really, obviously the role that you play as a broker agent — talk a little bit about how you work on the buyer’s side for people, and what level of expertise having the right person — there might be someone listening that wants to go to Florida and they don’t know anyone in that market, or they want to go to Texas. What questions should they be asking a guy like you to make sure that they get the right person helping them out?

 

Dan Burkons: I think it’s important that you find somebody who really is active in that specific product type in that area. So there’s a bunch of guys, for instance in Cleveland, who run around saying, “Yea, hey, you want to buy apartment buildings?” They’ve never really done an apartment building, they’ve done one. Our team have sold several hundred in Cleveland. It doesn’t have to be that, but wherever you’re going, Texas, figure out and find out and maybe call around, find out who are the guys who are actually active. If you’re trying to buy 10-30 in a deals in say, San Antonio, before you just grab on to the first guy and spend two years being dragged around by somebody, spend an extra couple of weeks figuring out and maybe interviewing or meeting a couple of people. Say, “I want to see your track record. Not the market, I want you to show me how many deals you’ve done.” It doesn’t have to be a guy who’s sold 400 deals, but a guy who, “Hey look, I’ve closed three deals, I have three on the market, here’s what I know about — I can tell you about.” Somebody who is actually active in that.

Don’t hook up with a guy who sells houses who’s trying to get in — make you his first client to do an apartment deal or a shopping center deal with or whatever it is. You don’t need to be the guinea pig. It’s okay to be with a younger guy, as long as the guy’s focus is actually to be doing some transactions in that niche. Because they’ll understand really quickly the fit. they’ll say, “Hey, you don’t want to waste your time with that deal, the expenses are not underwritten well.” Or “Hey, that’s a really poor rental market you’re not going to get upside.” Somebody who can make a very quick judgement on something.

Look, there’s so much information out there, all of us have limited amount of time to rule out the stuff — there’s a lot of stuff people throw on the market that doesn’t make sense. To someone who can very quickly cut through 50% of them and say, “Throw that in the garbage pile, let’s focus on looking through these other 50% of deals.” You’ll go a long way by hooking up with somebody who is actually plugged into that product type.

 

John Carney: Sound advice. And then, if you’re coming into a new market or just getting started, from your experience –management — let’s circle back to management, how would you go about finding the right group to manage and what advice would you have on how to source someone like that?

 

Dan Burkons: You know, I think if you find that right agent to work with that’s a good place to start. So if someone’s actually doing a lot of transactions in that specific niche, you can ask them, “Hey look, can you recommend three good management companies? What do you think their strengths and weaknesses are? Who might be good for me?” And they may say, “You know what, there’s really only one that’s good for what you’re trying to do.” Or they may say, “Well there’s a few.” That’s a good place to start is to hear from the agent.

You can also — another good thing would be to hook up with a local real estate attorney who is local to that market. Because we have a lot of folks who are from out of state, they are using their out of state attorneys. Every market has its niches and loopholes and laws and the way to do things. You want to find someone who’s experienced, who’s a local real estate attorney to that market, and that guy can, one: help you navigate the intricacies of the purchase agreement and so forth, but also that guy’s also great for a referral service. Both attorneys and brokers are constantly dealing with people who touch every other part of the real estate spectrum, and they say, “Oh no, you know what, I’ve got a few clients that use this guy. He’s a really good manager, he’s local he’s this that. Or stay away from this guy he’s got a great sales pitch on the internet but he actually has no substance.”

 

John Carney: I like what you just said there, because when you look at attorneys, attorneys who fill that niche and are laser focused and have the track record are good people to have on your team. I add an extra layer that you should gel and trust your attorneys on your team, and that’s just a matter of meeting a couple of people. But you know, they have so much insight behind the scenes and they really do connect the dots, don’t they?

 

Dan Burkons: Yea and so again just with like the — it’s important, don’t just find the first guy you find with a picture on a billboard. Try and find out who actually is representing clients, doing real estate deals like yours in that market. Not the guy who is doing $500 divorces and, “No, yea, I do apartments and real estate stuff too.”

 

John Carney: Right, family law and commercial real estate, two things that probably one person can’t do well.

 

Dan Burkons: Right.

 

John Carney: But, I mean, again, when you make a transition, when you’re doing single family homes, you don’t really need a lawyer that much, unless he’s finding you deals through probate or other forms. But so you get this mentality that you don’t want to pay the fees. Absolutely, 100% critical to pay those fees as part of your costs of doing business when you’re on the commercial level, especially in higher dollar value transactions for sure.

Well cool. We’re kind of going to wind down into our two-minute drill here Dan, and so you’re talking about ice hockey, and you grew up playing ice hockey I imagine. What kind of lessons did you learn playing team sports that you bring to the table running your team at your business to help your clients succeed?

 

Dan Burkons: Well, hockey really taught me that hard work can be really fun and can be really motivating if you love the people that you’re with and if you love what you’re doing. So I love to play hockey, even more I love the guys that I met through hockey, lifelong friends at all these different junctures. So hitting the gym or skating or practice or whatever it was, never seemed like work when I was with people I wanted to be with, that I was doing something that I thought was fun. If I wasn’t with people that I wanted to be with, I don’t think I could have ever worked there.

Now the truth is, I’m not the best or have the most god given talent for hockey, probably at the other end of the spectrum. In real estate, it turned out that I do have some of those gifts to build and sell and understand and think quick on the feet and size up buildings. So it turned out I learned from hockey what it’s like to work hard at something you love, and then I found something else that I loved and I actually was good at it too. So that ended up being a good fit for me. And I just learned: hey, hard work is fun if you like who you’re doing it with.

 

John Carney: That’s a good story, thanks for sharing that. And look, do you read? Do you have a favorite book that you keep handy either at your desk or at home? I’m just curious, because we get a lot of — I’m compiling an awesome book list through this show and everyone’s got a different favorite so far.

 

Dan Burkons: I’ll tell you what, I’d love to see the book list when you compile it. Because to be quite honest, it’s been a while since I’ve read a lot of motivating business stuff. I tend to see reading as my escape from business, family, and chill my mind out. And by the way, I don’t read fun stuff like mysteries, I usually read history stuff. So that just takes me to totally different places and I like to decompress, not to think about business. However, I’d like to see some of those business books, because there’s always something new to learn.

 

John Carney: Well look, a lot to learn through history, what’s one of your recent favorites? I’m not going to let you off the hook.

 

Dan Burkons: That’s ok. You know what, I’m almost finished with this book that I found in my father-in-law’s bookshelf the other day. I’ll think of the name in a second. It’s called “How Wall street Created a Nation.” It’s about — it’s kind of a cross of history and business, and it’s about the Panama Canal and Jackie Morgan and a bunch of Wall Street people bought up big shares of the failed Panama Canal. This company from France, and then pushed the US government to more or less instigate a revolution of Panama. And then they got these great concessions from in the Panama Canal, and then all of a sudden, their shares that they bought for like two cents in the dollar were worth $2 a share. And it’s actually a great cross between history and business, and how there are certain actors and players in there who straddled both lines, who had the business connections and then went to meet with Theodore Roosevelt to push things into action to help them in their business.

 

John Carney: That’s very cool. I’m going to look that up. That’ll be online in the show notes. Well, along with books — look, I always have my favorite sport quotes and business quotes. Is there any quote out there that you think is that one motivator? You’re having a bad day, a deal is about to fall apart, you’ve got to figure out how to save it for your client, save it for all your hard work and effort.

 

Dan Burkons: Yea there is. It’s from my Dad who is a source of tremendous quotes, I always go back to what he told me when I started out which is: if it were easy, everyone would do it.

 

John Carney: There you go. That holds true for sure. Cool. What about any recent or, over the course of your career — where you and a client have found the perfect deal but you’ve got some obstacle, and you had a come from behind victory that you’d like to share?

 

Dan Burkons: Man, there’s been a lot, because I feel a lot more often than not, getting a complicated commercial deal, whether it’s apartments or shopping centers or whatever, to the finish line, there’s almost — there’s very few deals that are without major road bumps, bumps in the road or obstacles. I’d think if one comes to mind, but it might not do that on the spot here. But there’s always something — there’s always something wrong, and there’s always some player in the continuum who has a different motivation than you that is getting in your way. And I think the talent of somebody who can put deals together and get them closed is — you see those obstacles, whether it’s, hey the lender backed out, or this issue came up with inspections, or the seller changed his mind, it’s really finding out — it’s getting behind the people — oh well P&C bank is now saying this. Okay, who is the decision maker? Get to the decision maker, whether it’s a buyer, seller, lender, appraiser, an inspector, don’t just let it happen to you. Find out who is the one creating this roadblock, what is their motivation, how can you help them change their mind. whether it has to do with: give me the money or money off the price, or if it’s an inspection issue that came up say, “Alright, I want to meet with you Mr. Engineer, I want you to show me exactly what the problem is and then let’s figure out what the solution is. And by the way, don’t you think there’s a less costly solution to this?” And those sorts of things that’s really drilling down into any problem to get to the root, deal with the root person raising the objection and then finding a way to overcome it.

 

John Carney: That’s fantastic. I’m glad that you shared that because — would you believe that every problem has a solution if you’re willing to work hard enough?

 

Dan Burkons: I believe that — look, there’s a few that are real tough, like Israelis and Palestinians and stuff like that. For the most part, yea. I do believe that every problem has a solution.

 

John Carney: Right. We’ll add a caveat. Asterisk real estate problem. Okay, well great. I think that just carrying on what Dan just said, you know, I learned this one day, and I think I might have heard it on a podcast or read it in a book: if you just wake up and expect when you go to work that you’re going to be putting out problems, and you’re going to do it with a smile on your face, eventually you’re going to have an expectation, and you’ll kind of build up that problem-solving muscle. And you won’t’ be as phased as much; you’ll become a cool operator, people will want to do business with you. Perfect.

Well that’s kind of wrapping up. We’re right on the thirty-minute mark, Dan. So I’d like to thank you for joining me in the locker room today. Where can the audience find you to carry on the conversation? Or if we have any out of state investors or local investors that want to get a hold of you to learn more about the Cleveland apartment market?

 

Dan Burkons: Yea, first of all John, thanks so much for having me, this was great, I love your show. I’m honored to be a part of it. And as far as investors who want to come talk more about Midwest apartments or anything of that nature, getting into deals and so forth. You can reach me at my office is: 216 2642018. Or if you look me up on the web its danburkons@marcusandmillichat. You’ll find my website, you’ll find my link my email address etcetera.

 

John Carney: Perfect. Well we’ll post that on the show notes it will be on my website. So there you have it folks. I truly hope that you picked up some actionable advice today from Mr. Daniel Burkons. Make sure to check out the Real Estate Locker Room Show on iTunes, Stitcher, Google Play and hit that subscribe button to ensure that you never miss out on the pro tips from our guests. The mission here is to help you elevate your real estate game. If you like what this show is all about I’d be really grateful if you would leave us a nice five-star review that other investors like yourself can find this show and join the conversation. The post-game report show notes, links and additional content related to today’s show will be available on my website: johncarneyonline.com/podcast and while you’re there feel free to drop your email address into the opt-in and we can keep in touch through the monthly newsletter where we offer other investing insights, tips, tricks, hacks and other good stuff. Remember to stay focused on your goals, have fun and stay in the game. I’m your host John Carney and until next week: work hard play hard and profit hard.

One more time, thank you very much for taking the time to share your story with us Dan.

(Music Out)

End Audio

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

© John Carney 2017

JC 015: Cash flow addiction with Jack Gibson

June 14th, 2017 | no comments

No team equals “no chance” in any business

Real Estate With over $1 Million in sales by the age of 21, earning a “C” in marketing class didn’t make sense to Jack Gibson.

Jack’s been a driven entrepreneur since his freshman year in college. He powered through a tough start in the nutrition supplement industry and established a multimillion-dollar business before he walked at graduation.

When the oil market tanked, Jack decided that it was time to start investing the income from his business in real estate and multiply his passive income. 90 days and 100 hours of podcasts gave him a level of comfort to get started in the real estate game. Jack actively recruited his team and was able to scale his real estate holdings to 70 plus doors in less than two years.

Jack was able to add value to his existing business network by offering opportunities in real estate and founded High Returns Real Estate to help other people become successful in the industry.

Jack’s advice for winning more to keep your word and treat everyone with integrity.

5 Key Points:

  1. Entrepreneurs solve problem and that is why you are paid. The more problems that you solve, the more value you create in the market place.
  2. There are no limitations – the only limitation is your resourcefulness
  3. No team = no chance in any business
  4. All wealthy people have multiple streams of income. Create passive income and cash flow.
  5. Build a network of people who know, like and trust you.

Favorite athlete(s): Michael Jordan & Bernie Kosar

Favorite book(s):

Favorite quote: “85% of joy in life comes from relationships” by Brian Tracy

Favorite Podcasts:

Thank you Jack for taking some time out to share your story and business insights with us.

Connect with Jack by visiting his website, highreturnrealestate.com

Facebook: https://www.facebook.com/HighReturnRealEstate/

Twitter: @highreturnre

Listen to all of the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

Connect with John Carney
Facebook: www.facebook.com/JohnCarneyOnline
Twitter: @John_M_Carney
Instagram: @johnm_carney

© John Carney 2017

JC 014: Leadership, influence and publishing with Nick Raithel

June 7th, 2017 | no comments

How to become a real estate industry thought leader

The Real Estate Locker Room ShowNick Rathiel is the creator of The Seven Hour Book; a proven system that allows any real estate professional to write their own professionally published book on amazon.com. Nick is committed to aiding industry experts in sharing their stories and their knowledge to get the recognition they deserve. Becoming a published author will helps extend his clients sphere of influence outside of their current professional niche as well as attract new business and investment opportunities.

Nick and his team at The Seven Hour Book assist people who want to tell their unique stories relating to their area of expertise but lack the time or know-how to produce a published book. Nick’s clients need to only commit a total of seven hours of their own time to the program and the team at The Seven Hour Book will take care of the rest.

Five key points

  • Having a published book is a priceless SEO play as it will appear on one of the world’s largest search engines amazon.com.
  • Having a book is a great way to filter your potential audience. It will help them understand who you are, what you’re about and if your business is a good fit for them.
  • Publishing a book provides a broader range of options outside of your normal range of work. It will establish you as a thought leader, coach and potentially protect against real estate market nosedives.
  • Although the process of creating the book only takes seven hours of the client’s time, the Seven Hour Book team spend a great deal more time to produce a quality book for the market.
  • No matter what your specific role is within the real estate industry, a well written book is a great way to position yourself with clients and attract more deals.

Favorite books:

Total Recall: My Unbelievably True Life Story by Arnold Schwarzenegger

An Iron Will by Orison Swett Marden

Favorite quote: “All our dreams can come true, if we have the courage to pursue them” By Walt Disney

Reach out to Nick and The Seven Hour Book team at: http://www.contentcorps.net

Thank you Nick for taking some time out to share your business insights with us.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

POST GAME REPORT: Episode Transcript

JC 014: Leadership, influence and publishing with Nick Raithel

How to become a real estate industry thought leader

Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.

John Carney: Welcome back to another episode of the Real Estate Locker Room Show. I’m your host John Carney, coming at you today from Cleveland Ohio. Joining me in the locker room is Nick Raithel, who is the creator of The Seven Hour Book. He has a proven system which allows any real estate investor to get their own professionally published book while spending only seven hours of their time doing it. I can’t wait to get into his system here in a moment. With The Seven Hour Book, Nick is on a mission to help investors and others in real estate finally get the recognition they deserve. Time and again he sees those in nearly every community who have incredible stories and knowledge to share. A book is the ultimate way for experts to share their insights, and in doing so, attract new business and investment opportunities. Yet the common complaint always seems to be the same, no one has any time to sit down and write the book. Recognizing this, Nick combined advanced time management strategies with his own experiences in publishing and marketing, the result of which is The Seven Hour Book, a service that’s been delighting clients ever since he released it. His website is www.contentcorps.net, and we will have that link in the show notes. Welcome to the show Nick, how are you doing today?

Nick Raithel: I’m doing great. It’s a pleasure to be here John. Thank you.

John Carney: Well, before we get into the nuts and bolts of your business, I just wanted to say to the audience that this show is really going to cover a couple of things. We’re going to cover the business of real estate and you as a real estate investor, operator or property manager, and combine that with the general business knowledge of setting yourself apart from the competition. Nick provides a service and a product which will allow you to do that and probably accelerate your path towards success. In today’s market, there’s a lot of different channels coming at you, a lot of different media and a lot of people. Nick is going to elaborate on why putting your thoughts and your story down on paper, or digitally, is so important and how it will help you stand out from the people who aren’t doing that. So Nick, welcome to the locker room. It’s great having you here. I like to kick things off usually with a sports related question. Tell us a little bit about who your favorite athlete was either when you were growing up or today.

Nick Raithel: Well, there are tons of good athletes out there. I would say the best answer I can give when growing up would probably be either Alan Webb, who is a distance runner from many, many years back, or Michael Johnson. I’m very into running, distance running, and I remember both of those guys really standing out to me as examples of athletic excellence and pushing yourself to your limits.

John Carney: Do you participate in distance events?

Nick Raithel: I have in the past. I had to tone it down a little bit. I am a little too busy with the books now, but I do occasionally engage in marathons. I’m pretty active and hopefully looking to get more into that in the future.

John Carney: So running for you is something that allows you to kind of check out, think and reboot. Is that correct?

Nick Raithel: Absolutely, and I would add that anyone listening to this, whether it’s running or whether it’s something else, really should, if they’re not already, engage in some kind of physical activity or some kind of sport. Because it does allow you, as you were just saying John, to kind of reboot and get new thoughts and new ideas. It helps to change things in a very positive way. I’ve personally come to believe, for me in terms of running, that running solves everything. And you can just as easily apply that to swimming, a good football game, a good soccer game, a good basketball game, or whatever your chosen sports activity or pastime is. It really can often solve just about anything.

John Carney: I agree with you Nick. Moving is important and it definitely helps me focus on my work, when I know that I’ve gotten out and got some exercise. Ok, perfect. Would you give us an example of the different types of people involved in real estate that you are helping put their story out there in book form, and why it’s so important for people.

Nick Raithel: Sure. Just to start off on an overall macro level, the book really is important in terms of a credibility builder. In terms of something that you may choose to sell, but also in a sense that most people listening to this have probably not thought of, or really taken to heart, in that a book is an SEO play. Just as you John, with your podcast, are appearing on iTunes, which is, when you think about it, one of the world’s largest search engines. In the same way with your book, you get a chance to appear on amazon.com, which is, like iTunes, one of the biggest search engines in the world. So when you have this book out there, you’re putting your own piece, essentially, of real estate on amazon.com and you’re going to show up when people search for real estate related terms. So I would say, on that general level, having a book really is essential in terms of claiming your SEO. Having a website is good for SEO, I’m sure a lot of people out there in real estate businesses are going to really focus on their website’s SEO, but you also need to be hitting these other search engines that have tremendous traffic and tremendous visibility, and you do that with a book through amazon.com.

John Carney: So you’re talking about bringing the book, bringing your story to the public. I want to jump in and say hopefully that’s going to add some tremendous value and help someone solve a problem. And you’re going to weave that into your business, the fabric of your business, because of this additional content you’ve put out there, that you can discuss across your social channels. I imagine you’re going to elaborate on that. This is going to help people find you to do business with you. Is that correct?

Nick Raithel: Yes, absolutely. People can find you and not only will they find you, but you will accelerate the conversation. What I mean by accelerate the conversation is that normally, many of us in business, when we have content out there, it helps people to get familiar with us. So we don’t have to spend time educating them on what we do, how we think and how we do it. Your book familiarizes people with you. They read it, they understand your philosophy, they understand also if you’re right for them. So in a way it also helps to kind of deter the people who might be good people, but they’re just not suited for you personally and professionally, to be working with. So a book helps to really provide a filter too, so that you don’t end up, for example, going to a coffee meeting, driving all the way across town to meet with someone only to find out that: oh, they really don’t have the kind of capital that would be needed to invest with you, or values-wise they’re just not on the same page as you, or the kind of people who you’d normally work with. So it really helps to provide that filter aspect as well.

John Carney: That is something I’ve never thought of before, the filter aspect, instead of just having a shotgun approach, right? By writing a book and really putting down your story, talking about your business and your values and how that molds the service and products you supply, you’re saying that that’s going to filter out the people who really are going to be wasting your time and potentially not interested in doing business with you anyways?

Nick Raithel: That’s exactly what I’m saying. And it comes down to the sense of the book being basically a land grab, in that you’re grabbing your piece of land out there, figurative land, to show who you are and to state that as your claim.

John Carney: So, could you talk to the audience a little bit about the types of real estate professionals that you’ve worked with so far with this business? And let me just elaborate on that question. I’ve written a book called “Real Estate’s a Team Sport”, right? And I identify nine players that anyone needs to know and recruit for their team to position themselves for success. I believe it can work pretty much in any country around the world because, given some semantic differences in the roles, say in like title work or legal, they’re generally the same type of people that you need. But they’re professionals in different professions—legal, accounting, banking, insurance, mentors and the like. So have you worked with a cross section of people through your business that support the real estate industry in a variety of different ways? Or do you just work with investors with different niches in the industry?

Nick Raithel: We definitely concentrated on a pretty wide spectrum. For example, one of the people who I’m working with currently is just your basic real estate agent. He’s got a pretty good practice, doing quite well, serving some pretty interesting demographics, some interesting segments, and we’re helping him to get it out there. This is exactly what we’ve been talking about here with the positioning with getting his foot in the door with the kind of buyers who he’s interested in. So that would be an example of a real estate agent. Another person I’m working with is an investor right now. And he’s looking to not only get himself out there and attract more deals, but he also has some coaching and some other sort of programs that he is looking to launch and do more with so that he can become more than just another real estate investor. Those would be two examples that come to mind John, right off the top of my head. And there are plenty of others who we’re involved with.

John Carney: So we’ll use the real estate agent because they’re very important and they’re definitely a team player that everybody wants. There’s so many different niches that we discuss. Specialties in real estate from the investor point of view. We’ve talked about multi-family operations, multi-family syndications, a few different people in mobile home parks here. But with different strategies. So there’s just so much in real estate that people can learn from. Not only is the book providing a platform to elevate the individual writing it as a knowledge source, but really the target audience is benefitting from that. Can you talk about the type of benefit and the immediate benefits that your clients are seeing by producing a book?

Nick Raithel: Sure. I think one of the immediate benefits comes back to what we were saying about the filter. That’s very important. I think another one is it helps people in the client’s market, who wouldn’t normally think they have a need for the client’s services to understand that maybe they do, or that maybe it does make sense to have that initial conversation, that initial consultation. I would also say, coming back to another point, that having that book allows those who wish to do more than just their current profession or their current niche within real estate, to have that option. Certainly not everyone, wants to be a coach. Not everyone wants to have products that they go onto, but it does give you that option. And in the same way, not everyone wants to go to conferences, be invited to conferences to speak and to present and to be a thought leader, but a book sets you up for that too.

Finally, I would say, in setting yourself up for these other opportunities, it’s also a very good hedge against a bad real estate market. Because when you have this book and you are set up as a speaker and in these other capacities, the real estate market can take a huge nose dive often, and you have something to fall back on. You have something that you truly own, that is your idea and that is your stake in the ground. That piece of land, I keep saying, that piece of land that you own which economy or other events can’t take away from you. If you think about how many people are investing in real estate nationwide, or providing a service related to investing in real estate nationwide, and then think of the amount of people who’ve actually written a book about it, can you talk about how those figures stack up? You might have a little bit more insight than I do. But then, I want to learn about your system and the service that you provide to get someone who says, “You know what? I have a great idea and a great story that I’d like to share, but sitting down in front of a blank computer screen, I’m never going to be able to write a book.”

Nick Raithel: Sure, well let’s address the first one. The first one you asked in terms of the amount of investors and people overall in real estate who are out there, compared to how many actually have a book? I could probably say that if we were to come to any kind of a figure on that, it’s probably quite small. You could probably put them all in an auditorium. It’s tiny. Because most don’t understand everything we’ve talked about here. They don’t understand the land grab aspect of it. They don’t understand the SEO. They don’t understand as well how much they’re losing in terms of most likely actual monetary figures or in terms of losing out on just work time by not having this book.

John Carney: Ok, I would tend to agree that it’s pretty small, and it’s a hard figure out. But I agree that you could probably fit all of the authors who’ve written about real estate in an auditorium, compared to all of the real estate investors who are out there. And like you said earlier, not everyone wants to sit down and write a book. It’s time consuming. So, in my experience, you have to have a bit of a plan. You have to have a reason for writing the book, and you have to have some type of guidance. So, would you share with the audience how your system, The Seven Hour Book, works? When you get people from — I’ve got this story, I’ve had this experience, how do I share that with the public? In my case, I was sharing experience based on a mistake I’d made that was costly. And based on the experience I was having, providing a service and having a number of clients to test what was working and what wasn’t. So I wanted to add value and let people be positioned for success in real estate by understanding that: recruit your team first and learn from their specific professions how to put a deal together. And then you should, while nothing is guaranteed, be positioned to be more successful than if you just go out there and try and do this on your own without any guidance. So when I went through the process I had a specific person in mind that I was kind of writing to, an avatar so to speak. So, I’d love to hear how you help people get from the concept that I do have something to share to sitting down and actually putting the pen to paper or typing away on the keyboard.

Nick Raithel: Well, in answering this, I want to preface this very first by saying that (just so we don’t make this completely a commercial or imperious to your listeners) oftentimes there are people who come to us who find out, just when they really think about it when we help them through it, that they don’t really need a book. Maybe they think they do, but maybe all they really need is just some Facebook ads, or maybe what they really need to do is start a podcast. So there are plenty of benefits for everything we’ve talked about really, for having a book. But then sometimes it’s worth taking a look and really considering whether you actually need a book, or whether or not the needs in what you’re looking to accomplish could be done through some other channel. So I just want to be clear, as we’re getting into this, that people who are listening should consider that. And then if it still makes sense, or then if they’re still set on having a book, then the system and the process that we offer could be a good option for them.

John Carney: So before you get into that: we’re just talking about general content creating that offers value and that has a target audience, as opposed to just sitting down and writing a book. Whether it’s videos on YouTube or Facebook live or tweeting, I mean there’s different — Instagram — there’s so many different channels, correct? But you’re saying that there might be other channels that are more relevant to specific people who don’t want to spend the time and energy to write the book, But this is your area of expertise, so let’s talk about books.

 

Nick Raithel: In terms then, of how we would help someone, how we would help them to do their book, we break the process down into a series of Skype calls (Skype or phone). There are a total of seven hours of that person’s time. And John I want to be clear with that, that when we say that this only requires seven hours of time, that’s seven hours of the person we’re working with, of their time. On our end, we’re spending quite a bit more than seven hours. I mean, I don’t think realistically you could put out a quality book that added value to your market and was positioning in all of the ways you wanted, in just seven hours. Maybe if it was short—really, really short. But it’s just in terms of the size of the books, the quality of the books that we’re putting out as well. On our end we spend a lot more than seven hours. But to everyone we’re working with, all they have to do is log on to Skype, pick up the phone and just talk to us. Walking through a specific process we have that takes seven hours of their time. And at the end, it gives them their own professionally published book.

John Carney: Ok, so there you have it guys. You’ve got a program out there, The Seven Hour Book Program, with Nick, where if you are thinking about reaching a broader audience with your experience and your thoughts on leadership, there’s a platform available to you to do that. So if you’re a real estate agent or an insurance agent, or if you’re working with investors or are an investor yourself, maybe you want to target accredited investors, or you want to boost your audience for syndicating larger commercial deals and you’ve always thought about becoming a thought leader by writing content, there is an avenue for you to do that in the Seven Hour Book.

So, keeping on with the book theme Nick, we’re kind of wrapping this up and we’re down to what I like to call the two-minute drill. I wanted to know what your favorite book is, whether it’s about sports or business. Is there something that you keep close by that you refer to from time to time, or maybe it’s more than one?

Nick Raithel: Well as someone who leads a team in putting out books for other people, my own quote “favorite” would probably be all of the ones that we’ve put out, for all the various investors and other business people. But not to play favorites with that. Let’s talk about then, a book, as you were saying John, that’s related to sports or other things. I would say right now (I do read quite a few books), it’s probably a tie between Arnold Schwarzenegger’s book, his biography is a fantastic read. There’s another book that I think a lot of listeners probably aren’t familiar with from which I like to read motivational text. But the ones that were popular years and years ago, before Tony Robbins, before any of today’s contemporary gurus, before motivation and personal development really became an industry, back when it really was just people putting out wisdom and ideas in the hopes of empowering others. And from that earlier time, I would have to recommend a book that is called “An Iron Will” and the author is Orison Swett Marden. It’s a fantastic little book, it was written probably, if I’m not mistaken, in the late 1800s. So it’s a really old book. When you read it he has examples of motivation and of people who overcame tremendous odds. We are talking about people like Napoleon and Cyrus W. Field, who is just a fascinating figure. He was responsible for laying the first cable under the Atlantic Ocean and when you hear about his story and the number of times that the cable snapped, and all of the grit that he mustered, well it’s inspiring to say the least. So that would be probably the other book I’d recommend.

John Carney: Iron Will. I’m going to log on and buy that immediately when we’re concluding this interview, because I can only imagine that a book like that is going to provide you with such a different frame of reference, which I like to apply to any type of business problem or child raising problem that I encounter. I mean, laying a cable across the Atlantic Ocean with no phones and no radios and simple navigation and probably wood boats would be a challenge. And I’m sure that it took a lot of time to get it right. So thanks for that suggestion. And a side note is that I’m compiling an amazing reading list for the listeners and for myself by conducting these interviews, so thank you for that.

So, you’re a reader and you’re an active runner and you’re running a business. Can you talk about a motivational quote that helps you get up on that rainy day and go for a run, or keeps you moving when business is throwing obstacles at you?

Nick Raithel: I listen to quite a few motivational sources and come into contact with many, many different good quotes, especially from those books we were talking about. One of the ones though that really has stuck in my mind recently is a quote I heard from Walt Disney. When you consider everything he had to go through and all of the obstacles he was up against in, basically, creating an entire universe, if not worlds on worlds with his Disneyworld, with his characters and all of those, and basically inventing the medium of animation as we see it today, I really take to heart much of what he said. And Disney’s quote is that all of us have the ability or the freedom to pursue our dreams and to achieve our dreams if we only have the courage to take that first step. I’m paraphrasing it a little bit, but that’s essentially what the quote is. That if you’ll just get out there and have that courage and get started, that you can have and you can achieve anything you want.

John Carney: That’s a good quote and I’ll make sure we have the full quote up on the post-game report on the website. Alright, before we sign off and in following along with the theme of this two minute drill, could you share your number one ‘come from behind’ victory with our audience?

Nick Raithel: I would say, like any entrepreneur, I’ve certainly had a fair share. One of the ones that comes to mind pretty recently would be being behind in terms of the workload that we had. I can remember various times recently when we’ve been behind or we had more on our plate in terms of catching up, responding or catching up in terms of completing work on our end. Putting our deadlines pretty far ahead and really just being able to use time and just sit down and realize that this has got to get done, our clients are counting on us, and kind of pulling out a victory in that sense.

John Carney: Finding the time and that boost to motivation to deliver. Happy clients, right? We all want them.

Nick Raithel: Sure. I mean it really comes down to something I remember hearing Charles Mumber say, which is just the importance of providing the kind of service that you would want and the kind of service that makes you deserving of the people you help. And that’s something that has stuck with me that we always aim to do.

John Carney: Excellent advice for any businessman and entrepreneur out there. Thanks for sharing that Nick. And thank you for joining me today in the locker room. Where can the audience find you to carry on the conversation online, offline and social media?

Nick Raithel: It would be at www.contentcorps.net.

John Carney: Perfect. Alright, there you have it folks. I truly hope that you picked up some actionable advice today from Nick. Make sure to check out the Real Estate Locker Room Show on iTunes, Stitcher, Google Play or anywhere that you log on to listen to the podcast, and subscribe to ensure that you never miss out the pro-tips from our guests.

The mission here is to help you elevate your real estate game, and you can do that by providing good content to your clients and the greater audience. If you like what this show is about I’d be grateful if you would leave us a review on iTunes, or your preferred podcast platform, so that other like-minded real estate investors just like you can find us when they search for real estate online. The post-game report show notes, links and additional content related to today’s show with Nick will be available on my website: johncarneyonline.com/podcast

While you are there, feel free to drop your email into the newsletter sign-up form to receive more real estate investing insights, tips, tricks, hacks and other good stuff. Remember to stay focused on your goals, have fun and stay in the game. I’m your host John Carney and until next week, work hard, play hard and profit hard. Thank you one more time for taking the time out of your busy day Nick to share your story and a little bit of insight about your business with our audience.

Nick Raithel: Thanks a lot for having me John, and keep up the great work you’re doing with the locker room.

(Music Out)

End Audio

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© John Carney 2017

 

 

 

 

JC 013: Positive thinking and flipping 100 deals a year with Geremy Heath

May 31st, 2017 | no comments
Systems are the key to a successful house flipping business

Geremy Heath is the owner and director of Texas All Cash Home Buyers. A native Australian, Geremy studied Civil Engineering at the University of New South Wales. After completing his degree, Geremy worked internationally as a management consultant for twelve years. While on assignment in the USA, Geremy met his wife Melanie in San Antonio, Texas and decided to stay and live in America.

Geremy and Melanie founded the company Texas All Cash Home Buyers that specializes in the all cash purchase of single-family homes. Texas All Cash Home Buyers has successfully flipped over 250 properties to date and have the goal of achieving 100 flips this year.

Geremy is a great believer in the power of affirmations and positive thinking and shares his thoughts and beliefs on how to be successful in the real estate business.

Five key points

  • When establishing a flipping business, you need to become an expert in all aspects of the business yourself: from marketing to raising capitals, to project managing and sales.
  • Good systems are essential in home flipping business. Defining what tasks need to be achieved in order of priority and having thorough checklists for each stage will streamline the processes.
  • A good team requires a good coach or mentor to guide you and teach you how to build your skills.
  • It is essential to invest in yourself, particularly when starting out in the real estate business. Finding and investing in an experienced mentor will help accelerate your path to success.
  • Having a morning ritual involving meditation, affirmations, visualizations and exercise is the best way to kick start your day. Long term, this practice will support you in achieving your goals.

 

Favorite athlete: Muhammad Ali

Favorite quote: “Whether you believe you can do it or not, you are right.” Henry Ford.

Favorite books:

  1. The E-Myth Revisited by Michael Gerber
  2. “The Law of Success” by Napoleon Hill
  3. The Miracle Morning” by Hal Elrod

Success tip #1 – Know how to manage these three constrains; Deal Flow, Capacity, Capital. When one constraint impedes progress you must focus on removing that constraint.

Success tip #2 – Develop a morning ritual to begin each day right.

Thank you Geremy for taking some time out to share your insights with us.

Reach out to Geremy and his team on: www.texasallcash.com or email Geremy direct at geremy@texasallcash.com

Facebook: https://www.facebook.com/texasallcashhomebuyers/

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

POST GAME REPORT: Episode Transcript

The Real Estate Locker Room Show with John Carney

JC 013: Positive thinking and flipping 100 deals a year with Geremy Heath

Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.

 

John Carney: Welcome back to the Real Estate Locker Room Show. I’m your host John Carney, coming at you today from Cleveland, Ohio. We are in the post season here, the Cleveland Cavaliers looking to repeat. Joining me from the great state of Texas is Geremy Heath who is the owner and director of Texas All Cash Homebuyers, which he founded with his wife Melanie in 2009. Texas All Cash’s primary focus is the redevelopment of single family homes in the San Antonio area. Since starting his business, Geremy has flipped over 250 properties and currently has a goal with his team to complete more than a hundred rehabs this year. Originally from Sydney, Australia, Geremy moved to the US in 2006. Prior to real estate he worked as a management consultant for twelve years, specializing in process improvement, and earned a bachelor of engineering, civil engineering degree, from the University of New South Wales in Australia. Welcome to the show Geremy, how are you doing today?

 

Geremy Heath: Yea, good. I’m doing good, thanks for having me.

 

John Carney: No worries buddy. Look, this is going to be great. I’m really interested to hear how you capitalize on your process of improvement for flipping and rehabbing a hundred properties this year. That’s a large number and a great goal. But we like to kick this show off with a little question to stretch out and get the conversation going. You’re from Australia. We’ve had a couple of Australia guests.

Is there a favorite athlete that you looked up to when you were growing up, watching sports? And if so, how did this person influence you in your athletic and business career?

 

Geremy Heath: There’s quite a few Aussie cricketers and Aussie rugby players that I looked up to, but if someone was to ask me now, “Who’s your favorite athlete of all time?” I’d probably have to say Muhammad Ali. The thing I love about him is that he was always saying affirmations: I’m the greatest, and I guess he ended up realizing that through believing in that at the beginning, so I’ve always respected that in him.

John Carney: Yea Muhammad Ali—great athlete, great champion, warrior and influencer. So, you didn’t start off your professional career in property. Will you talk to our audience a little bit about how you ended up in the United States and what drew you into real estate?

Geremy Heath: I originally came to the US in 2006 on a work transfer actually, and I’ve been bouncing around to a few different parts of the world doing my management consulting. America was a place that I really haven’t spent a couple of years, and I’d like to go deep there and really understand more about the culture and the psyche. So when I first came here my plan was to be here for a year or two with my job and then head home. But I met my wife, who’s from San Antonio. She was actually working with the same company at the time, and within less than two years we were married. So, by 2008 we were married and we’d bought a house and then I kind of realized, man, it looks like I’m staying here for a while.

John Carney: Right, the wife and the mortgage led you to believe that you might not be going anywhere soon, huh?

Geremy Heath: Yea, so that was almost ten years ago. But, after living in the U.S. for the time that I have, I’ve got nothing but love and respect for this place. I would say to people: there’s nowhere else in the world where you could come and be here such a short time and start a business and have the opportunities that I’ve had. And one thing that I really love about the American culture and the people is that through my whole process of getting started — and a big part of our business is raising capital, getting private funds to fund our deals — I never once had anybody question, like, “you’re Australian, you’re not from America, why should we do business with you?” I was always greeted with open arms and I think Australia and America are similar in a lot of ways. But the one thing where I do think America trumps Australia is probably just in the overall positivity and openness that the people have. It’s a very open place to people from all cultures all around the world.

John Carney: Right. I believe that in the American market, whether you’re in real estate or tech, if you’re in business and you’ve got a good idea and you show that you’re committed to it and you’re going to hustle a little bit and you’re willing to put in the work, the rewards soon follow. And with this show, my intention is to be able to get people who are interested in real estate, or are looking for a way to grow their asset base and cash flow outside of work. Not everybody can quit their job and become a full time real estate investor. But there are great opportunities out there for people to put their money to work for them. Other options are real estate versus shares or investing in a business. So, you have one of these businesses, and I’d love for you to share with our audience what you do and how you’ve been successful in applying systems that you would have had to use and implement in your civil engineering career into turning houses over for a profit.

Geremy Heath: Yea. In my old business career when I was doing management consulting, I studied civil engineering, but I actually specialized in supply chain management and BPO (Business Process Outsourcing) when I was working with my previous employer. So, I had a big system and process focus. Particularly in the second half of my career, in the outsourcing world, it was really about factories. We’d set up the call centers, and things like that, and it was really about having inputs that go into the factories; having the processes which can turn those inputs around and produce the outputs that are needed. So, I kind of thought of flipping houses as exactly the same thing. And I thought for me, my factory is my ability to rehab a house. The inputs or the raw materials that I’m having for that are houses that need repairs. Then my output is going to be a retail property that’s high quality, and that I’m going to be able to sell to a bank or qualified buyer. So, with that kind of mental model in my mind, the next thing that I kind of thought is: well, if that’s my factory, what are the constraints? And I boiled it down to three simple things: you’re either going to have a constraint around the flow of deals that are coming in; you’re going to have a constraint around your capacity in the factory to rehab the deals; or you’re going to have a constraint around the capital that you need to actually fund the deals. And I guess ever since I first started, it’s always been a balancing act, and it still is to this day, between those three constraints and one of them is always the constraint. So, whichever one of those three is constraining you, you need to put your focus into removing that constraint and then the next one of the three will kick in. It’s kind of an evolutionary process.

John Carney: That’s a different way of looking at the same problem all real estate investors eventually face on any level, right? The constraint that popped into my mind, the capacity, and that for me, thinking about it, goes hand in hand with capital. So, I’m a big proponent of the team, especially if you’re just starting out in real estate and you want to be an investor, and the team changes depending on the type of deal and the size of the deal. We’ll talk about that. But can you talk to me a little bit about how you started in a new country, in a new industry? You had a great background in management consulting. How did you go about recruiting your team, what did that look like initially and how has that evolved?

Geremy Heath: Yea, for sure. I think probably one of the things that a lot of people who get into real estate don’t realize is how much of a team sport it is. I know that your book has a title along those lines, and I couldn’t agree more. And one of the areas that a lot of people do get into is flipping homes—the single-family homes, because it seems like it is a little bit more accessible to people. But what they don’t realize when they get into it is that, if you want to set up a flipping business, when you get started you’re wearing all the hats, you have all of the different components of a full business to run and they all have their own complexity. So, you need to be able to be an expert at marketing to get the deals in. You need to be an expert at raising capital to have capital to do the deals. You have to be an expert at project management to be able to find the contractors and manage them. You also need to learn about the realtor side when it comes to selling the houses. And so, there’s really so many aspects to it, and when you’re trying to do it all by yourself, it’s a lot to learn and a lot to take on. But it’s definitely a passage of entry that everyone has to go through. Because before you can step up and start to hire people and build the systems for people to come and do the work, you need to really become an expert of every single one of those areas. If you don’t first master each area, there’s no way you’re going to know who to recruit, what system they need to run, how they’re going to operate and work for you, and then how you hold them accountable to a certain standard.

John Carney: So, it sounds like a familiar story that I’ve heard. You’ve really learned by doing. It’s the only real way to go from flipping that first house to flipping a hundred houses, right?

Geremy Heath: Definitely. And I think a book that, in the beginning — because I love listening to audiobooks and reading books — and one book that really had a big impact on me early, was The E-Myth Revisited. A lot of people are probably familiar with that book. But one of the big things it taught me is that you have to first be the technician in your business, and once you’ve mastered that area, you then need to be able to systemize that area so that you can then hire somebody in and have them run the system for you. And so, sometimes also people hear the word ‘systems’ and they think, “Wow what are systems, what am I going to do?” And for me, systems 90% of the time come down to having a good checklist that really defines the tasks that have to be completed and in what order. And it sounds simple, but the magic is really in those checklists and getting them right for the different parts of business.

John Carney: Right. And so with the challenges in flipping, I would imagine that every house is similar and then slightly different at the same time. What are some of the most recent challenges that have stressed your system, where you’ve had to say, “Maybe we need to rethink this,” and then you tweak it a little bit and it becomes even better? Have you experienced that recently?

Geremy Heath: Yea, I think a common area in single-family homes when you’re flipping them that people have a lot of frustration with is when it comes to the sales side. You’ve done the hard work to do the marketing, get the deal, rehab the deal, and then you’ve got the house for sale and you’re really in the last mile of the race, but sometimes it can feel like the most frustrating. And the reason for that is that the end buyer who is going to get his inspection via a home inspector, and they’re going to give you a 30-page report of all of the deficiencies in the house, when you feel you’ve already put all your money into remodeling it. These home buyers are most of the time first home buyers. So, you’ve got to understand from their perspective that it’s a big decision and when they do get these thirty-page inspection reports it does freak them out. And so, I when I think back from the very beginning to now, we’ve really put a big focus on quality. So, our goal is to really minimize the amount of deficiencies that would come up in a report, and we’ve done that through implementing vigorous inspection processes when we sign off on a rehab. And then once we get a contract on a house, before the property inspector goes out, we have another inspection, we call it a pre-inspection, where we send one of our internal guys out to re-inspect the house before the inspector gets there because we’re trying to drive a real high level of quality. And so, the end result of that is a smaller inspection report, and a happier end buyer. And I think one of the biggest tools that we’ve used over time to continue to improve that, is our signoff checklist that we use at the end of a rehab. For example, there might be electrical issues that keep coming up in our inspection reports. Then if we see it repeating, we would put it in as an inspection item in our signoff checklist. And that checklist keeps growing and growing, but it improves the end quality over time.

John Carney: That sounds like a really good system that you’ve put in place and it makes a lot of sense to me. So, I want to continue on with Texas All Cash Homebuyers. What is your business doing for an investor—for someone who wants to invest with you. You’re buying properties with all cash. We can call them distressed, whether they’re distressed financially or distressed situationally or people just don’t want to live there for whatever reason. Is that correct? And then you’re remaking them, remodeling them, and the end user for the finished product is going to be a permanent home buyer as opposed to an investor. Is that what you see the majority of the time?

Geremy Heath: Yea, that’s 80% of our business. And I guess our value proposition is that we have cash and can close quick, so there’s no inspections and additional financing approvals or anything needed. So, if somebody’s looking to sell a house quickly, we can close in as little as three days. And then we’ll rehab them and put it onto the MLS and sell it the traditional way. But it’s a remodeled home that’s being purchased by a bank qualified buyer.

John Carney: And so your team is really servicing two groups: making your investors happy, which is important, and your end users happy, right? I mean, they go hand-in-hand. So, would you talk a little bit about how you run your team and how you can accomplish that so successfully?

Geremy Heath: Yea, absolutely. I’m down here in San Antonio, so quite often with my team I use the analogy of the San Antonio Spurs. Luckily for me they’re a great team, they’re very well coached and well managed. The thing I love about the Spurs is they’re not necessarily a team of individual superstars. It’s the collective team that makes them great. So that’s kind of why I like sharing that analogy with my team, because I feel that in real estate everybody has a different role to play. And it’s not about having a team of people that are all experts in one area, it’s about having the right skills across all the areas. But the magic only comes together when the team is working well together. And I’ll say to the team, “We need to be passing the ball and moving the ball and communicating and working together as a team.” When you see the Spurs playing at their best, that’s what makes them great—the way they move the ball and the way that they work together. When we can do that in real estate, that’s when we really can exponentially increase the results that we get. And something that I always say to my team is: if you took us all individually and we went off to create our own flipping businesses, the results that we would get combined is nothing compared to what our collective results are as a team, because that’s when the magic comes together, when we can specialize in an area and help each other to reach the end goal.

 

John Carney: Great analogy, that definitely resonates for me and our listeners so thank you for sharing that. What advice would you have for someone who is listening and wants to get into house flipping or wants to scale their house flipping, going from something they’re doing as a side job to a full-time job, which is a scary step. What’s the best advice that you have for taking your business to the next level or just getting into it?

 

Geremy Heath: I think a huge element that’s helped me with my success is to have the right coaches and mentors. Think of it with the sports analogy. Popovich for the Spurs is arguably one of the greatest basketball coaches of all time. They’ve had sustained success over the last fifteen years or more and he’s a huge part of that. And so, when we look at sports, all great sports, whether it’s an individual or a team, there’s always great coaches that are involved with the athletes. So, when it comes to your personal life and your business life, I think I’d put a huge amount of weight on having good coaches and mentors around you to really help guide you in the right direction and help you find where you need to build skills, and maybe also where you’re strong.

 

Real estate can be a lonely game if you’re just out there sitting in your home trying to put a business together. So, get connected with the right coaches. And also, something else that I’ve consistently done is I’ve connected into good mastermind groups where I’m actually with others that are like me. So rather than being like a coach that’s maybe coaching me, it’s more a group of peers, and we end up coaching each other. That’s been a huge thing that’s helped me to accelerate my success.

 

John Carney: Did you actively seek a mentor when you made the decision with your wife that you were going to pursue this as a career? How did that unfold?

 

Geremy Heath: Actually, it started like it does for a lot of people. It just started with a few books, an interest, and a few books in real estate. And then there was one book that I’d read and it talked about the importance of a mentor. The light bulb went off in my head, and I’m like, “Man, I got to go find a mentor to help me with this, somebody that’s already done this before.” And I came across a guy who flipped more than 300 homes and now he was a professional coach. I probably dumped 10 or 12 grand to get started with him, but it was money well spent. And since then I’ve spent tens of thousands, it could even be in the hundreds of thousands now. It actually is, on coaching and mentoring, but it is the best money that I’ve spent, because it’s really the one thing that has helped me to grow quickly. Much quicker than I would have if I’d just been by myself.

 

John Carney: Thank you for sharing that. I agree and think that’s an important message which I’m happy that you’re echoing. We can stress again that you have to invest in yourself, right? That is a capital commitment, but the results speak for themselves, don’t they? You don’t become an overnight success in the real estate game, but if you just keep plugging away, you get there. Awesome stuff.

Well I’ve got a few questions here that we call the fourth quarter questions that I’d like to throw at you. What sports did you love playing when you were growing up, or that you still play today?

 

Geremy Heath: When I was a kid, my brother and I used to love dirt bike riding back in Australia. I now do the milder form of that, now that I’m an adult, and I’m into mountain bike riding. Probably a little safer. Arguably it’s a little safer, but maybe not.

.

John Carney: I don’t know. I mean, I’ve fallen off both. So if you like speed, you’re going to eventually go over the handlebars. Maye that’s just me. We talked about books. I think this is an important message, that we’re coming up with a great book list here by conducting these interviews and producing this show.

What is your all-time favorite business book or sports book that you’d like to share with our audience?

 

Geremy Heath: My all-time favorite book by a long way is a book called “The Law of Success” by Napoleon Hill. And everyone’s familiar, or most people are familiar with his book, “Think and Grow Rich”, but actually not as many people are familiar with the book “The Law of Success” which was the precursor to “Think and Grow Rich.” The specific book that I really love is the original edition. I think it’s from 1925, and that was really the starting point of his philosophy. The way that book is structured is that there’s 15 lessons to go through, or 15 laws. I’ve read that book probably 10 times, and it’s very foundational in a lot of the ways that I think and act.

 

John Carney: Ok. Perfect. We’ll have that linked and listed in the post-game report. Can you tell us about a success habit or a practice? You’re a very analytical and systems oriented businessman. Is there something before you step foot in the office, or after you leave the office for the day that you do to kind of help you along in this journey of being a successful real estate person?

 

Geremy Heath: Absolutely. I would say probably one of the most critical habits that I’ve developed over the years has been my morning ritual. And there’s actually another book that I model a lot of what I do in the morning. It’s called “The Miracle Morning.” And for me, I spend about an hour, at least an hour every morning going through a series of exercises. I start with some meditation and then I’ll do some visualization. I’ll review my goals. I’ll go over some affirmations. I’ll do some reading and then I’ll finish it off with some exercise. Including the exercise, it’s normally at least an hour and a half. But what I’ve learned is that if you make the time, that morning routine really sets up your whole day and sets up your whole life when you compound it. You keep doing it continually. It’s so important that you just have to set the clock as early as you need to make time for it. For me, I like to get up at [4:30]. I don’t always do it, I’ve got to admit, but I like to try to get up by [4:30] so I can knock out that hour or hour and a half before everyone gets up and I start the day off right.

 

John Carney: So, do you have children in the house with you?

 

Geremy Heath: No, that makes it a bit easier maybe.

 

John Carney: Ok, I got you. Because we have a one-and-a-half-year-old, actually her half birthday is today, it is easy to be up. Having kids trained me to get up earlier. And then as a result of that I found myself waking up earlier to get the exercise and the other things in. So, the morning ritual, I would imagine, puts you in a pretty good flow state or zone and prepares you to start your day. Correct?

 

Geremy Heath: Yea, absolutely. And if I ever have times where I get out of that routine, the first person to tell me to get back into it is my wife, because she can definitely see the difference.

 

John Carney: That’s great. You’ve got a business partner who knows you well and can help keep you on track. So, with all this being said, we’re getting ready to wrap this up. Is there a quote that you ever fall back to that keeps you motivated? There’s a lot of motivational quotes out there these days on Instagram, I kind of like the athlete struggle quotes myself, but is there anything that you think about when things aren’t going your way, you’ve got to get something done, there’s a time crunch and all these things that happen when you’re flipping a hundred homes?

 

Geremy Heath: I think probably one by Henry Ford, which is a pretty famous one. “Whether you believe you can do it or not, you are right.”

 

John Carney: That’s a good one. How does that resonate with you?

 

Geremy Heath: I’m huge on mindset, which is a big reason why I invest so much time on that morning ritual, but it’s really something that was taught to me from my first mentor in real estate. He was really big in that area, and I guess what I’ve learned with 100% certainty, I’d even say one million percent certainty, is that your thoughts are your future. And so, when I think back to when I first started in real estate, every milestone that I’ve hit with the growth of my business when it was all started is that it was a thought in my mind. So probably a couple of years into the process of building my business, I’ve started to realize how powerful my thoughts were, and so I started to set bigger goals and try and have bigger thoughts. Because I started to understand if you can believe it and you take the action and you have full faith that it will be realized. Then it’s only a matter of time until that happens. And that’s why I like that quote from Henry Ford, because if you think it’s going to be hard, then it’ll be hard. If you think you can do it and it’ll be easy, well then, it’ll be easy.

 

John Carney. Thank you for diving into that one a little bit deeper for us and thank you for taking your time out to join me in the locker room today. Where can the audience find you to carry on the conversation? Are you on social media? We definitely want them to check out www.texasallcash.com. And where else do you live online where people might be able to reach you directly?

 

Geremy Heath: You could also check out our company Facebook page which is @texasallcashhomebuyers and then my email address is: geremy@texasallcash.com

 

John Carney: Cool. Well there you have it folks. I truly hope that you picked up some actionable advice today from Geremy Heath. He is the director and founder of Texas All Cash Homebuyers. Make sure to check out the Real Estate Locker Room Show on iTunes, Stitcher or Google Play and hit the subscribe button to ensure that you never miss out on the pro-tips from our guests. The mission here is to help you elevate your real estate game. If you like what this show is all about I’d be grateful if you would leave us a five-star review on iTunes, or your preferred podcast platform so that other like-minded real estate investors can find us online wherever they look for their podcasts. The post-game report show notes, links and additional content related to today’s show will be available on my website: johncarneyonline.com/podcast. And while you are there, feel free to drop your email into the newsletter sign-up form to receive more real estate investing insights, tips, tricks, hacks and other great stuff. Remember to stay focused on your goals, have fun and stay in the game. I’m your host John Carney and until next week, work hard, play hard and profit hard. Thank you one more time from Texas All Cash Home Buyers. Thank you Geremy.

Geremy Heath: Thanks a lot, thanks for having us John.

(Music Out)

End Audio

Connect with John Carney
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© John Carney 2017

JC 011: Travel, love and mobile home parks with Bryce Robertson

May 17th, 2017 | 2 comments

 

Meet Your Australian Mobile Home Park Mate

Born in Australia, Bryce Robertson spent six years travelling all over the world. Visiting over 50 countries on six continents, he gained priceless life experience and insight into the both the world of business and personal relationships. The lessons he learned help shape the way he lives his life and handle his business dealings.

While travelling, Bryce met his wife and inspiration Tiffany. They settled in California and set out together on a new adventure in the business of real estate.

With years of experience in construction and real estate Bryce became interested in the business of mobile home park investing and made it his niche.

His company, Property Works, specializes in all aspects of the mobile home park business as well as offering mentorship, advice and educational services to investors.

Five key points

  • Look for the right market when investing in mobile park homes: the median house price should be over $100,000 and the apartment rents in the area should be one and a half times that of the rents in the mobile home community.

 

  • Find yourself an experienced mentor in your field of interest that will show you the ropes.

 

  • Have the confidence to just put yourself out there: take massive action and learn by doing. You will gain experience and insights much quicker by doing than by trying to learn from a book.

 

  • Have integrity: “how you do anything is how you do everything.” Get the small things right, and the big things will be done right as well.

 

  • Take some time in the morning to experience gratitude for your life, set intentions for the day and your long-term goals. Then during the day it’s important to take mini time-outs; to refocus and regain clarity.

 

Favorite athlete – Alfie Langer Australian Rugby League player

Favorite book –  The Unbeatable Mind by Mark Divine

Check out Mark Divine’s podcast here: http://unbeatablemind.com/podcast/

You can get in touch with Bryce by phone +1 (714) 603-1394 or email, Robertson.e.bryce@gmail.com.

Reach out to the Property Works team at http://www.propertyworkzllc.com

Thank you Bryce for taking some time out to share your insights with us.

Listen to all the episodes of The Real Estate Locker Room Show and sign up for my FREE monthly newsletter at http://www.johncarneyonlie.com

POST GAME REPORT: Episode Transcript

JC 011:  Travel, love and mobile home parks with Bryce Robertson

 

Announcer: Welcome to the, “Real Estate Locker Room Show” with John Carney. Did you know investing in real estate is a team sport? Join John and his guests as they explore the business of real estate and athletic competition. The goal for this show is to grant you direct access to the real estate pros that are closing profitable deals and growing their businesses. On the “Real Estate Locker Room Show” we are getting in the ring with successful investors, developers, operators, and all of the industry professionals to learn what it takes to achieve on-going success. Now it’s time to kick-off and level up with new ways to grow your real estate business.

John Carney: Welcome back to the Real Estate Locker Room Show. I’m your host John Carney, coming at you today from Cleveland Ohio, and joining me in the locker room out in sunny California is Bryce Robertson, who is your Australian Mobile Home Park mate and the principle of Property Works. Property Works specializes in mobile home park investments: from due diligence to assignments, syndication and property management. They are your mobile home park one stop shop.

Bryce is a real estate investing entrepreneur; an educator; and the large driving force behind the highly-geared Property Works team. A native from Australia, Bryce has 20 years experience in major construction, real estate and business. Bryce has travelled to well over 50 countries on six continents in search of greater wisdom and prosperity, which he will be sharing with us here shortly. He’s owned businesses in five countries on three continents, making him an international entrepreneur as well. He is definitely a well-versed entrepreneur and highly skilled to accommodate your local, national and international mobile home park investing needs. Thank you for joining us today Bryce. Thank you for taking the time to give our audience a little bit of insight on the world of mobile home park investing.

 

Bryce Robertson: Gidday John. I’m so excited to be here today. Real estate and sports, how exciting.

 

John Carney: I know, and we’ve got another Australian on the line; and this podcast is still in its infancy, but you’re guest number two. Your mate Reed Goossens has joined us before.

 

Bryce Robertson: Oh, beautiful.

 

John Carney: And we’re going to explore the intersection of the business of real estate investing and sports. I just personally like to draw the parallel between business and sports. I believe that business, and especially the real estate business, is a team sport, and we want to learn a little bit more about your business and your team.

 

Bryce Robertson: Very exciting.

 

John Carney: Well, to kick things off, let’s have a quick stretching question. Who, growing up, was your favorite professional athlete, and if it’s an Australian, will you please share with the U.S. audience who that person is and why?

 

Bryce Robertson: Yea, I’d say Alfie Langer. I used to watch rugby league and play rugby league in Australia, and he was an inspiration because he was a real team player and a real go-getter. And it didn’t matter what was going on, he would always come out successful. Even if they didn’t win, he always gave 100%, and I just thought that was super inspiring and yea, he was a really good bloke.

 

John Carney: So, competing in sports at a young age, looking back on it, winding the clock back now as a busy real estate professional and an entrepreneur, do you ever think about those lessons you learned from your heroes and from your coaches?

 

Bryce Robertson: Yea, and also just from my team members as well. Like, I played rugby league when I was a kid, and I was always an independent type of kid, and I soon realized when playing rugby league, that if I didn’t pass the ball to anyone else, that no one would pass the ball to me. And so that really let me know that to glide through the game with ease, or now through life with ease, that it requires building and maintaining trust and harmony in relationships.

 

John Carney: Yea, definitely. So, when you are working in your current environment, the mobile home park investing environment: talk to our listeners a little bit about what you do and how your business property works and enables investors to jump into the mobile home park investing environment.

 

Bryce Robertson: Sure. So, when it comes to mobile home parks, we own, operate, syndicate and educate, we basically take poorly managed mobile home park assets and then turn them around into much more profitable businesses that are a clean, safe environment. And our specific niche in mobile home parks is in the affordable housing space. In America and Europe, the economy is booming. Or if it’s taking a dive, there’s always going to be a massive need for affordable housing. And through the process of what we do, we provide a platform for other investors to invest their money in a very recession proof and very popular, now, asset class.

 

John Carney: So, can you just give us a little bit of a backstory on how that’s where you are now, but you started out in the real estate career right out of school, in construction management or on a construction site, like so many other operators.

 

Bryce Robertson: Well, I travelled the world for over six years. I went to about fifty countries and I thought I had it all figured out, because I had a travel pattern. And what I did, was I’d work, save some money, travel, and then run out of money and then repeat the cycle. And then I realized quickly there was a problem with what I was doing. Because at that point, my money, my income, wasn’t sustainable. So, at the end of each travel cycle I’d run out of money and I had to start all over again from scratch.

 

So, in the last six months of my six-year world travel, I met my wife Tiffany in the Caribbean. And she’s from California, so when I came to America and began my life here, we made a promise to each other to create a life that we wanted to live, yet make it sustainable. So we began looking at different ways we could make income. And we explored multi-level marketing and real estate and the stock market. It very soon became very clear that real estate was our destiny, because at that point my wife had a twelve-year background in mortgage and finance, and I had a 20 year background in construction management. So we teamed up.

 

And we began an extensive path of education, not only in real estate, but in all areas of life. And we soon found ourselves caught up in the hype of single-family fix and flips. And before too long, my wife Tiffany said to me she wanted to do something more people orientated instead of crunching numbers and searching through statistics. So, she became a realtor, and I branched off into commercial real estate investing, which I honestly wanted to do from the beginning. And that led me to the massive, passive income producing mobile home parks.

My mother-in-law had a mobile home near to Disneyland. I was over there one time and she told me she’d paid off her mobile home about five years ago, but she was still paying a thousand dollars a month in rent for the land that her home was sitting on. And I was like, “What? You own your home but you still pay a thousand dollars a month to rent the land off someone? Your landlord must be killing it!” So, I ran out front of the home, and I looked at all the homes that were in the community, and I counted about a hundred of them. And then I did the math, that’s over $100,000 a month in revenue. I need to learn more about this. And the next thing you know, I started buying mobile home parks.

 

John Carney: So that was a lightbulb moment for you with your understanding of real estate and having been at your mother-in-law’s. Will you sort of set the picture for some of our Australian audience? This was brought up by my business partner when I was living in Australia and we were running America Property Source, and talking about mobile home parks. He said it doesn’t translate over here. We have caravan parks and it’s just not like America, especially when you break it down that you have class A, B and C assets in a mobile home park community or in a multi-family community. So, would you be able to elaborate a little bit more about the mobile home parks and what opportunity you look for and zero in on in your business?

 

Bryce Robertson: There isn’t really anything comparable in Australia. I suppose there’s caravan parks, which would be equivalent to like an RV park over here, and it’s more really for recreational use, not for permanent or long-term living. But in America, mobile homes are homes that get towed around on the back of a truck, and they get set down and they are semi-permanent. But once you set one down, you don’t really move it, because it costs like five to ten grand to move it to somewhere else, to set it down and get it signed off. So, they’re pretty much sort of permanent type homes, and a mobile home park is a colony of those homes.

What we look for in a good market in a mobile home park is where the comparable two to three bedroom rents of apartments in the same city, in the same area, will be at least one and a half times that of the rents in our mobile home community. And we also look for the median house pricing to be over $100,000. By looking at those two metrics, it creates a big gap in the need for affordable housing and where else are our residents and tenants going to live if they don’t live in a mobile home park? The step is just really huge for them to move into an apartment or buy a house. They just wouldn’t qualify.

And another benefit of our residents living in a mobile home community is they have their own home and they have their own yard and they don’t share walls with people. They don’t have anybody walking above them upstairs, and they get the pride of actually owning their own home. Because in a mobile home park you can own the home and then all you have to do is rent the land off the landlord.

 

John Carney: In your parks, are the utilities paid for by the owner tenants or by the owner operator? Just out of curiosity.

 

Bryce Robertson: We try to lean towards the tenants paying the utilities, but the market will decide what’s going on there. It depends on what the market rents are and what’s acceptable in the market. But we do like to all-encompass everything so that the tenants are paying for the utilities and their rent as well.

 

John Carney: So, in order to start with one park – I would imagine everyone starts with one, when you started looking at the acquisition for your first park, what did your team look like? Can you explain that a little bit?

 

Bryce Robertson: For a team I would say get a mentor, first thing. You don’t even need to figure everything out. Just go there and get a mentor, and then you can have someone to fall back on. But yea, I would definitely say team up with somebody who has expertise and who’s done it before.

 

And you’re going to need a real estate attorney, a CPA, and a lender. You’re best off going out and searching for a lender first, because once you get a deal under contract, it’s crunch time, you’re on the clock and you don’t want to be scrambling around trying to find somebody to get a loan.

 

And then once you have your location where your mobile home park is going to be, then you’re going to build your construction crews for doing any rehabs to the homes. You’re going to have your plumbers, your electricians, your carpenters, and you’re going to find your landscapers, and all the other contractors that will be there to maintain and upkeep the property. And as far as a property manager, we do all the offsite management ourselves, and we also train people who live in the community to be onsite managers as well.

 

John Carney: That’s a great business model, as far as the management, right? Because I believe firmly that it doesn’t matter what asset class in real estate you’re investing in, if people are paying to rent space, the property management is a very critical component. That’s not downplaying any of the other team members.

 

You’ve been to all these countries, you’ve met an American lady, you’ve moved to California, you’ve made a commitment to be here, and you’ve chosen real estate. You’re in commercial on the investing and the brokerage side, correct? And your wife is on the residential side. How did you get to that first deal? Because that’s the entrepreneurial journey that I’m interested in. I would also like you to tie in how all that travel gave you the confidence to just get your hands dirty right away?

 

Bryce Robertson: I think the travel really allowed me to expand who I was and my confidence as a person, to really just go out there. You see, each time I travelled to a new country, there were a few areas through my travel where I set up basecamp. Each time I went to one of those basecamps, I had to start off fresh. I didn’t know anything about the area. Sometimes I didn’t even speak the native language fluently. And I had to start up my life there. I found that it always was the same thing: it just came down to drive and determination, and then learning the local knowledge or the knowledge of what I needed to learn as I was going. But when I was launching in each country, I didn’t have the time to sit back and figure it all out, I would’ve dramatically failed and I would have been living on the streets.

 

So, translate that into real estate and getting my first commercial deals going on. I went out there and got the base fundamentals of the education that I needed to get started, and then it was all about massive action. I was just absolutely obsessed about commercial real estate. I learned everything I possibly could and just threw myself out there in the action, and just started looking at deals and crunching numbers. And after not too long, I started to see the commonality and the patterns in what I was doing. I was learning from mistakes, and I really think, personally, that through action and experience is one of the best ways to learn. And so, I just put myself out there and just committed to it and just held up that tenacity.

 

John Carney: Did you ever have any travel experiences that were just so bad that they gave you a frame of reference, that when things aren’t going right on Monday morning in your mobile home park business, you’re like “Well, it’s not as bad as that one time.”?

 

Bryce Robertson: Well, you see I did have a lot of amazing adventures when I was travelling and I think that all of them were beneficial. Maybe at the time I’d felt that they were scary or something like that. But I think one of the biggest lessons I learnd out of all of that is: every time I look back at somewhere where I went wrong through my travels, it was because I broke one of my basic fundamental travel rules. I had a handful of travel rules that were geared around safety and common sense, and if I’d broken outside of one of those rules, that’s when the madness happened. And so, translating that into real estate, I need to stay grounded on my morals and my integrity in business and making sure that I’m not going outside there. And really, any time I have some sort of temporary failure, I’m usually just on the brink of a massive success. So, I think failures are just as successful as the good things that happen to us in life.

 

John Carney: That’s great advice. Could you elaborate on what are a few of your main drivers and what are a couple of your main rules for investing in real estate or operating your business? You mentioned integrity. Would you elaborate on those principles that you hold yourself accountable to every day?

 

Bryce Robertson: Sure. I always want to create win/win/win situations for people in any deal, whether it’s negotiating with a contractor, hiring a manager, or putting a whole deal together. I really want everybody to walk away feeling that they got something, they got some sort of value out of it. And every player in the deal wants some sort of different metric that’s valuable to them. And I think that comes down to creative deal structuring in whatever we do. So, it’s important to me that I leave every deal with everybody happy and that everything is harmonized.

Number two: Integrity. I think how you do anything is how you do everything. And if I’m getting all the small things right in time, each time, and I’m doing the right things by people, then I’ll be doing the big things right as well.

 

What else? You know, relationships are huge. So I definitely like to keep good relationships at all times, and I really like to listen to my gut. When I’m coming to a decision and I’m tossed up between, “Should I go this way or should I go that way?” I tend to stop, relax, take a deep breath, and just really connect with myself and what I really think the answer is, without any of the carrots dangling in front of me. And usually when I stop and ground myself, I’ll find the answers. But if I’m charging ahead because I’m excited about the outcome, then I’ve found that that’s where sometimes I could make a poor decision.

 

John Carney: So, in a way you pause. There’s no rapid fire emotional decisions, especially when there’s a big decision. Look, I think that’s all great advice, or a seriously good method to follow. Can you elaborate: is there anything you do as a daily practice that helps you prepare for your day, that might tie into all this? Because you sound like over the years you have a lot of experience with business and travel and real estate. Have you come up with that time of day – most people choose the morning – where you get yourself sorted out; then you go out, then you do well at work.

 

Bryce Robertson: Yea, I think the morning’s the best. You know, waking up and just fully experiencing gratitude for everything that I have in my life, and everything I’m surrounded by. And then creating an intention for all of my basic goals to be real, as if I’m already living them. And really take the time to take care of my nutrition and get myself started in the beginning of the day. And if I start the day off on the right foot then that’s perfect.

 

And then periodically through the day I like to take little time-outs, so I can regain clarity. So, things I like to do are yoga, or I might want to go surfing. I’m a big fan of CrossFit, so I love having an intense workout and just smashing any of the stresses out of my life. I feel like I’m shedding skin each time I exercise. And really focusing on other areas in my life that I think are important, like relationships and health and spirituality and fun and recreation. When we all put them together, those five areas of our life really build off each other and help generate even more wealth and success in business.

 

John Carney: So, now you’re still just as much of an athlete; you might not be on the rugby pitch, but you’re at CrossFit, which is highly demanding, and you’re surfing and you’re doing yoga and you’re looking after yourself physically. Do you plan to pick up any team sports?

 

Bryce Robertson: Not necessarily team, most of the stuff I do is individual. It can be done sort of as a team sport. I just completed my first marathon a few months ago. I’ve been doing a few triathlons and obstacle challenge races over the last few years. As far as a team sport, I mean real estate investing is a team sport. But as far as an actual athletic sport, I just like to do my sports, and I like to do them with other people. So, when I’m surfing, I’d much prefer to do that with friends.

 

John Carney: Social wave.

 

Bryce Robertson: Yes, exactly.

 

John Carney: I got it. That’s fantastic. Alright, well, if you’re an investor out in the market, and you’re unsure about where to begin in real estate, how do people find you? And what could you do to help people, through your syndication or your educational program, get in the game and start having some control over their investments and their money and their time.

 

Bryce Robertson: Yea, well, I would first off just say, “Hey, go out there and get a mentor and take massive action.” Because a mentor is really going to be the person who is going to help push you over the finish line. I definitely wouldn’t say wait back and try and figure it all out yourself. If you want to get real deals done, go out there, get those deals done. You’re going to learn ten times quicker than if you’re sitting at home trying to figure it all out.

Property Works, we provide a mentoring program for people who are looking to break into the mobile home park investing space. And if mobile home parks is not the thing that you’re interested in, then I highly recommend going out and teaming up with somebody who is light years ahead of where you want to be. Teaming up with them and leveraging their experience and their contacts, and just going out there and really going for it.

I mean, no one honestly really cares if you know it all or not. Probably the only person who cares is you, in the beginning. But most of the people out there are going to honor you for your courage, and for you just going out there and going for it. And you can piggy-back the experience of your mentor and the knowledge of your mentor. And if anybody else is out there thinking, “Oh well, you’re just a small fry, you’re out of your league,” well, they’re probably just jealous anyway. And they probably wish they had the courage that you had to go out there and take massive action.

So, if you want to get in contact with me, you can reach me at my cellphone which is: 714-603-1394. You can also email me at: robertson.e.bryce@gmail.com

Or you can visit our website which is www.propertyworkzllc.com

And we can basically take good care of things from there.

John Carney: Fantastic, so there you have it. We will definitely list all of your contact information and how to track you down in the show notes which we call the ‘post-game report’ on my website. And just to elaborate a little bit more: for someone who does follow up with you, what can they expect through your program?

Bryce Robertson: They can expect to set goals and to push themselves and to be accountable for goals and to get real life, hands on experience working on deals, and really pushing to get what it is that they’re looking for.

John Carney: You don’t strike me as a fluff kind of guy. You’re going to get right into it: day one, get your hands dirty, lift something heavy, pick up that barbell.

Bryce Robertson: Yea. Absolutely.

John Carney. Ok, perfect. Before we wind this down, we have something I call ‘the two-minute drill’, sometimes it takes a little bit longer. But we have a couple of questions I’m going to throw at you. And let’s go back to what you do to continue your education. Are there any books that you have in your collection that you just can’t put down, that you have to have close by just in case you need to reference them, and that you would recommend our listeners pick up?

Bryce Robertson. Yes. I would recommend “The Unbeatable Mind” by Mark Devine. He’s an ex-navy seal who teaches us how to gain mental clarity, concentration, and awareness and intuition, how to be an authentic leader and to avoid danger and to, like, deepen our warrior spirit. It’s a really cool book, you should just get it. No matter what you do, an amazing book.

John Carney: I will second that, it is probably a top three book that I would recommend everybody. Do you listen to his podcast by any chance?

Bryce Robertson: I have not listened to his podcast. I will be definitely interested to.

John Carney: I would say you’re lucky, only because you have about a hundred episodes you can work your way through, where I have to wait every week for that one hour to be released. But yes, check it out. I’ll throw that in the show notes as well, because I find that its good listening on my commute to work.

Alright, perfect. You’ve talked a lot about your morning ritual and what you do to stay focused and motivated. Are there any other places that you draw on inspiration other than your physical activity?

Bryce Robertson: My wife. Totally. She’s probably the pillar and foundation of my life. I really love just connecting with her and leaning to her for advice and groundedness. My wife is an amazing lady and she really just gives me so much more energy in life.

John Carney: That’s fantastic. Your wife is part of your Property Works business now as well, correct?

Bryce Robertson: She works with Property Works a little bit, and her main business is as a realtor here in Southern California. But she does play a role in property works. Yes.

John Carney: I got you. So, it’s a love story at the end of the day. You met her in the Caribbean and you followed her to America.

Bryce Robertson: Yes, absolutely. We just connect on every level, and what better thing than to have a life partner that’s totally aligned with you.

John Carney: Yes, that’s fantastic and you are very fortunate. That’s a great story. What is your number one ‘come from behind’ sort of victory that you could share with our listeners and inspire them to keep going at the real estate game?

Bryce Robertson: That’s a mentor telling me that I couldn’t do the deal. I had a deal, and my money was tied up, and I had no experience in that asset class, and I had a few days to pull the deal together. And I told this to my first mentor, and he said to me, “You know you’re dreaming kiddo, it’s never going to work.” So, I fired him and turned to my next mentor. Then I had that deal under contract a few days later. And I hustled and bustled throughout escrow and I owned that asset after three months. So, my determination and tenacity was way too big for any challenge I was going to come across.

John Carney: There you go, when one person says no, maybe that just fuels you to get the deal done even more. Well, thank you very much for taking the time to share your story with us today Bryce. You’ve already told us where we can find you and I will put that in the show notes. So, there you have it.

I hope you picked up some actionable advice from Bryce Robertson at Property Works. Make sure to check out the Real Estate Locker Room Show on iTunes, Stitcher or Google Play and hit the subscribe button to ensure that you never miss out on the pro-tips from our guests.

The mission here is to help you elevate your real estate game. If you like what this show is all about, I’d be grateful if you would leave us a five-star review on iTunes or your preferred podcast platform, so that other like-minded real estate investors will be able to find the show easily. The post-game report, show notes, links and content will be posted on www.johncarneyonline/podcast and while you’re there you can sign up for our monthly newsletter, and that way you’ll get some other investing insights, tips, tricks hacks and other great stuff that comes along from time to time.

Remember to stay focused on your goals, have fun, and stay in the game. I’m your host John Carney, and until next week work hard, play hard, and profit hard.

Thank you one more time Bryce, for taking the time to share your story with our audience.

Bryce Robertson: Thanks John, it’s been an absolute pleasure. Happy investing.

(Music Out)

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