In today's episode, we are joined by Rhyan Gamet & Charlie Bell. Her company, R&G Remodeling LLC, is one of Maryland's leading construction companies.
Rhyan and Charlie share their experiences, from being real estate investors to business partners, the world of investing, and their insights on the real estate market.
In today's episode, we are joined by Rhyan Gamet & Charlie Bell. Her company, R&G Remodeling LLC, is one of Maryland's leading construction companies.
Rhyan and Charlie share their experiences, from being real estate investors to business partners, the world of investing, and their insights on the real estate market.
Just winning is how we paid it off. You know, just making more money. You know she paid herself enough to live. You know I'm only getting, like we do, profit share.
Speaker 2:So I think at that time you were working for free.
Speaker 3:That's actually a great way, though, to get partners and to build businesses. If you don't have money in the beginning and you want like a high level person, you start a business like the best way to do it. It's hard to do, but the best way to do it is hire up top first, instead of like being the top person and infilling underneath you like hire somebody that's like upper level right from the get go and, if you don't have the money, like give them equity If they believe in that thing. Now you have like a COO or a CEO like right off the gate without having to pay anything. Welcome to the everyday millionaire show with Ryan Greenberg and Nick Calvis. All right, guys, welcome back to another episode of the everyday millionaire show. We are here with Ryan Gammay and Charlie Bell. How you guys doing.
Speaker 3:Good all as well, all right, nick, how you doing Good good, thanks for coming, guys. Yeah, thanks for coming. Sorry we're late, mostly Nick's fault for not coming to help set up Busy day. Tell us who you guys are. What business do you own? What other stuff are you doing in the investment space? Give us like a little elevator pitch.
Speaker 2:So my name's Ryan, so we're with R&G or modeling. We own a construction company, so we do a lot of projects for homeowners. We do additions, full gut renovations, some rental stuff, but not as much we do our own flips and we are also landlords. He has way more properties than I do, but working on it.
Speaker 4:How'd you guys get to where you're at today? Did you guys start off as a partnership? Did you guys do your own thing and then form that partnership after a while?
Speaker 2:Yeah, so I started off as an investor. I'm from a chemistry background, so my first rental property I decided to do the renovation myself with my then partner and during that whole process couldn't find good contractors. They were like sleeping in the living room and they should be working and it just didn't work out. So I kind of accidentally became a contractor.
Speaker 4:What year was that?
Speaker 2:This was in 2015. So I met him 2017, right.
Speaker 1:I think it was 15, I was 16. No, it wasn't 15.
Speaker 2:So we met eventually. So we had a mutual friend at the time and this guy was like, hey, you gotta call Charlie. He's got a bunch of rental properties and at the time I was doing like 20 renovations by myself, like all by myself, and I was like, yeah, I'll call him, I'll call him, blow him off for like two weeks. And this guy's like you really gotta call Charlie. Like you know, he really needs some work. He's got a ton of rental properties and could be good business. I'm like, yeah, okay, I'll call him, blow him off for like another week. And finally I called him. We met. He had just drank like a Red Bull or something before we met. So he's talking my ear off Super fast yeah.
Speaker 2:And I'm like I gotta sit down somewhere. It's just blah, blah, blah. Really good information, though, and so he hired me for a drywall job, and that was it a drywall job. He gave me money, he went to Iceland, he came back, and then he hired me to finish it, if you want the real nitty gritty. I was more of a paper contractor at the time, so I was getting the job, giving them to a contractor and then managing the contractor.
Speaker 4:So you said you were doing about 20 renovations at the time where they are your personal projects.
Speaker 2:No, so people were hiring me. And then I was hiring like a real GC, because I wasn't licensed yet, and so over time we were working together by then and he was more of a consultant. So he was consulting me and we realized that this guy was like kind of stealing money and so ended up once I confronted this other contractor he walked he was doing like seven or eight for me at the time and then he had people so kind of saved the day.
Speaker 3:How did you find out that he was stealing money and like, how was he stealing?
Speaker 1:Well, I can go over that. Give me a little background on me so we can catch up. My name is Charlie. No, I've been a real estate investor since 2002. I was in the mortgage business from 2001. So a good friend of mine from college, he started buying rentals. He owned like 20 or 10 or so and I was like, hey, I want to buy some. He started selling me some. I got up to 20 within a couple of years and then I kind of left the mortgage business at a certain time. I went part time and then I became a consultant around 2014, 15.
Speaker 1:And she was like one of my first clients. I hired her. I was doing flips too. I had my 20. So rentals and I had a couple flips going each year and around 14,. I read Art of the Deal and I was like why am I being my own GC on my own flips? I should be finding deals, not finding drywall and doing deals. So I was like I'll hire a GC. I hired a contractor A wholesale guy knew her and I tracked her down, like come on, let's go Finally got in touch with her and then hired her, went out of town and then I was like why don't you just do the rest. I got a good number from her Prices were good and then I mentioned hey, I can consult your business, I'm a consultant.
Speaker 2:That's just first and only client.
Speaker 1:First and only client. Because also the mortgage business got kind of like cruddy. The Frank Dodd Act kind of killed it. You couldn't be a part time loan officer anymore. You had to be like salaried. So they'd put you on a minimum wage. And then they're like why didn't you do a loan? I'm doing my investment career Like I do loans whenever I want. So I just got tired of it. I left, I got into life insurance and all that too. But I was like I'll consult you.
Speaker 1:So in consulting her I found out how her business was structured. I asked her some questions of how everything went. In the questionnaire she mentioned and she was a paper contractor. She would get a job, say, sell it to the client for $100, find a GC at $90, and then just make $10 managing the guy. When she mentioned she had one guy that was her most trusted guy and he was doing seven and me being like a very untrusting person because of reality and life, I was like well, red flag, who knows.
Speaker 1:And then a month after I thought that she said something's funny. I gave him a lot of money and now he wants a lot more and I was like why don't we do this? Let's go to each project, we'll make a list of a subjective number of the percentage of how far along a project is you being a contractor, you know it's kind of subjective and then the objective number of how much you've paid him and it was overpaid. He's been overpaid whatever 110,000, whatever number. She confronted him, he quit and it was like, oh okay, what do I do now? So I'm like no big deal. I know a lot of people. I'm older than you. I've been a landlord. I didn't get that time for 15 years at that point when I met her. So I was like this is my HVAC guy, this is a good you know.
Speaker 2:And I actually-, and he was used to being broke, so he knew how to run jobs with no money.
Speaker 1:Yes, being a landlord in Baltimore City for 15 years, you know how to run a marginal business. You know marginal that's the word right.
Speaker 2:So it's very little-.
Speaker 1:Good word, yeah, good word Fancy word for like very little profit. So I was like we can get through this and I found out you know what her situation was that she had a bunch of credit cards not used and there was all these guys I was referring. I was helping negotiate. To finish, of course, as you know, as a contractor, to bring another contractor in it's more expensive.
Speaker 2:You gotta fix everybody else's mess.
Speaker 1:Yeah, so it was being like 130,000, really like behind, you know. So I actually designed a software you know, quotation mark, air quotation marks in Excel that split the labor and material. So we used the credit cards for the rest of the material and the remaining draws from the clients on the labor, got through the whole situation. The clients got their products because of course if you back out, you know and you owe money, that's a very big problem. So they, you know, it got done. There was no face loss there. Of course now she had a little bit of debt and A little that's a lot.
Speaker 1:Like you know, some credit card debt of over 130 to whatever thousand you know, of course. And then she's like, well, why don't we partner up? Because half the people now are your people Assume half my debt.
Speaker 3:Yeah, not your debt.
Speaker 2:Yeah right, he didn't.
Speaker 1:I didn't. But you know, we got together and I think she was doing a million of sales that year and the next year after I was partnering and using a bunch of my people and her people, we did like over, we did like 2.3 in sales the next year and then it's just going up each year after that.
Speaker 4:How did you bounce back from that $100,000 plus loss?
Speaker 2:I mean I I just called my parents and I was like listen, this is the situation. I mean I was really at that time 26. So and I've never been in business I mean I'm from a science background, corporate America and I basically was like I'm either gonna like file bankruptcy and just like cover that up and just go back to corporate America, or like he helped me work through the whole thing. So I basically didn't pay myself for like a year and a half.
Speaker 3:Were you working your corporate job, then no, oh yeah, it was just this she's got a hustle.
Speaker 1:She's renting a room. She had a car and that was on the list of her assets.
Speaker 2:My asset was one dog, yeah, and a dog.
Speaker 1:So just winning is how we paid it off. You know, just making more money. You know she paid herself enough to live. You know I'm only getting like we do profit share.
Speaker 2:So I might I think at that time you were working for free.
Speaker 1:Well, I think the whole first year. That was kind of the joke. That's why we partnered, Cause she's like I can't pay you, Like I have no money.
Speaker 3:The guy's stolen my money. That's actually a great way, though, to get partners and to build businesses If you don't have money in the beginning and you want like a high level person. Cause we interviewed that was one of the things I took away from when we went to Maui and interviewed Brandon Turner. He was saying, like, when you start a business, like, the best way to do it it's hard to do, but the best way to do it is hire up top first. Instead of like being the top person and infilling underneath you, like hire somebody that's like upper level right from the get. Go and if you don't have the money, like, give them equity If they believe in that thing. Now you have like a COO or a CEO, like right off the gate, without having to pay anything. You give up equity, but like 0% of zero.
Speaker 2:Yeah, so he got like negative equity for like a year and a half or so.
Speaker 3:Right, but you believed in the vision.
Speaker 1:Absolutely. I mean like she's awesome and she does really well what she does. And I gave what I do well, like the estimating and all that kind of, and also the problem solving. And I've owned property for 15 years in Baltimore city. You know, when it was like what do we do here? This is what you do, you know. It's just I was just like the consultant on every other issue that come along.
Speaker 1:So we were able I'm like okay, and I've just left the mortgage business. I I mean, I know like I didn't have a job. I was selling life insurance whenever I felt like it. I had 30, some properties, 35 properties at the time, I think, so I don't have to pay my bills. And I was like you know, if we built this thing, you know, like you said, like you're investing the time to build it up, to give something of value instead of like starting as an employee somewhere. So like I didn't want to go back to being an employee after leaving the mortgage. You know job, even though it was kind of part time. So I don't like work for anybody anymore. I'm my own business, just me.
Speaker 4:You know well, yeah, so you know how did you both determine the right time to quit your job and start and you know going into real estate full time? Cause I know a lot of people, a lot of the listeners, a lot of people that are wanting to get into real estate and maybe they're getting into it full time. They don't know when is that breaking point to break off from their current job.
Speaker 2:I think it's different for everybody. So for me personally, I just like jumped and hope that I would land somewhere, and I did. You know, I think it, you know, but I'm a contractor, so it's different. I'm not going to preach about being a contractor, cause you know it's not it's not all glory, yeah.
Speaker 2:So you know if people are just being like investors or you know more passive investors and passive in the real estate industry like you can do that. But you know, I guess when you reach a certain he probably knows what to do.
Speaker 3:I feel like there's a fallacy with that. Because you can't just like. Unless you have a bunch of money legitimately, it's very hard to just jump into passive real estate investing and replace your income. It's really like I don't even want to say it's possible, because you really need a like. You either need to be like super involved with and doing all this stuff yourself fixing toilets, doing all that stuff and just keep it small and be the operator, or but then you're the contractor too, so it's kind of one of those.
Speaker 3:Like you know, I don't believe I feel like all the gurus online say like, oh yeah, just buy these properties, replace your income and then quit your job and you'll travel to Bali. But like that's not, like you know, everybody asks me like, oh my God, you're killing it in real estate. I'm like 90% of my business, my money, comes from contracting. Like it doesn't come from my real estate. My real estate is like a good retirement money, but like that's not the bulk of the money. It's all from a job that I have.
Speaker 2:And it's a job. It's a job.
Speaker 1:And that's a great point. I agree completely. And to your question of when do you quit, I mean, I think it's an issue of when do you do something different so it allows you to do more real estate. Because what I did, I had the opportunity to go from a full-time mortgage job Like I was a manager of a finance company and then I was like, okay, I used to be a loan officer, so I'll just be a loan officer at a shop part-time, but then that industry kind of sucked. So I became like a life insurance agent, which is I call people, I go to their house. You know I set my own schedule. Then it allowed me to be a full operator of my rental portfolio I've been building.
Speaker 1:But then you learn how to do everything Collect money. You're like a part attorney, like you need to learn law, you need contracts, like you become a contractor. If you're gonna make money as a landlord, you have to do everything. That's the thing If you have small stuff in the beginning. So I think the question is what's like? We call it a side hustle. What side hustle can you do to make a little bit of money, just to even out the money you're not making from your rental. And here's another crazy thing Once I partnered with Ryan and remember I had enough properties to live, I had this little side thing going on too. Once I partnered with her and I was making enough money to pay my bills again, all my money that the rental portfolio was making could stay in the portfolio so that money could grow on itself. And that's the mistake a lot of young investors do. They go okay Trying to pay themselves with that yeah they try to start paying themselves.
Speaker 1:And it's like I mean I remember I used to live in Can. I moved there in O2 and I had two check cards and a couple of properties and I was selling them and it's spending money like crazy. Like if you leave the money in the company and this is any company, not just a rental portfolio or company or business if it's in the company it can grow faster and then you will get to the point one day, to whatever that number is in your mind that you're making enough, a true net.
Speaker 3:Well, that's a true net.
Speaker 2:I was just gonna bring that up. I think we were talking about that before this too.
Speaker 3:I would say to people if you have properties for five years, do a five-year profit study, look at all of your properties. And the other problem that we didn't have in the beginning and we're just now finally comfortable with it is having really clean books. Because if you really did property by property over five years, I bet you'd be astonished with how much you're not making and how much you thought you were making. But if you do it for six months and you don't have a furnace go out or you don't have a roof that goes bad, then you don't really know if you're making money or not, because that 500 bucks a month profit after your PITI is not $500. Like it's not, it's $100 or it's less than that or it's negative.
Speaker 1:In 2008,. Well, I was in the mortgage business, like I went part-time at a certain point, but I was in that crash, like I mean, my income went from 140 in 2008, 27 year, whatever nice income back then to like 35, working the same time, and I was like, well, I got 20 properties, it'll all work out. And then I realized how very little the properties made Okay, because then when you had to rely on them to live, you're like, oh geez, like this one made the 400 this year, you know, like after I paid the roof and whatever. So the books are very key. You gotta know for sure and this is any investing Like, what separates the rich and the poor is the poor is the rich buy assets that pay them. So if you buy a rental that doesn't pay you any money, you're still poor.
Speaker 3:You're getting poorer, You're getting poorer and you're like oh, well, I got that equity.
Speaker 1:Yeah, well, the equity you can only get when you sell it. So that's a different form of investing, not a passive investment. So but that was a big eye opener. I was like, whoa, these, okay. And then I really started saving more. I'm like I'm not gonna pay the roofing company 4,500. I'm gonna find the guy that does the roofing and hire him and I'm gonna, you know, as the landowner, landowner or the landlord, I can hire a guy directly, do the work, and then I do a roof for 2,000. So you have to do that. You cannot pay retail if you're a landlord.
Speaker 4:Sure, and yeah, owning rental properties definitely a long-term play. I feel like you know, as I grew my portfolio over the last six years, you always need some sort of active income and that has to help to support whether it's flipping properties or for me, I have the landscaping business just creating that active income. I feel like the more properties I buy, the more active income I need or want.
Speaker 3:I think that the active income is something that all the people that are like touting things on Instagram and everything, like they don't talk about the money that they're making from, whether it's social media or whatever, and then they're buying properties with it. I feel like people do a bad job of really explaining how they're making their money. They're like, oh, I have 10 Airbnb's and like, okay, great, but you operate 10 Airbnb's like you need a full time person or you are a slave to those properties. It's not passive whatsoever and I feel like it's just like such false advertising. All these people that are like, oh no, we make a million dollars a year on our rental properties and like each one is making 500 bucks a month.
Speaker 2:They're also like selling coaching programs and like education Rentals are going so good.
Speaker 3:Why do the other things?
Speaker 1:And it's also your acquisition process. So how I bought 20, or maybe even got up to 35, was I was selling loans, I was refinancing homes, making over a hundred grand. And I go to a bank yeah, they see my properties, but they see what they really make and banks take 75% of the rent. So with your actual loss it could be even more, according to the bank. So that W2 income showed them okay, he makes money. Great, all right, cool, we'll give him the loan. So if I was like I'm quitting, I'm not doing anything, I never would have got to the. I actually ended up getting the 50 at one point, but I never would have got there if I was not earning income.
Speaker 3:The more I learn and the more houses I do for other people, the less rentals I want, like literally, I'm like so not excited to buy more rentals and usually this time of year is when we try to buy stuff to like feed the machine through the winter, and we look at these like the cash flow, projected cash flows, and I'm just like God I could really be investing in like a CD right now and making you know less, but it's guaranteed, it's liquidable, it's there, and for me to like buy a rental and make less than 10% cash on cash return, like doesn't it literally just doesn't make sense anymore.
Speaker 1:It's definitely also. There's the other side things of the rental. It's the tax shelter. You know the tax, you know the tax benefits you get. I think one year I made a when I was like 25, I had 10 properties and I made $110,000 selling mortgages. And you know commission sales. They take tax higher because like one month is high and they take like 50%, but I had 10 properties. I ended up only paying like $10,000 in tax that year, like you stayed in federal. So I was like, oh, there's something to this, you know. So you know. I mean like that, if you don't count that like you know, yes, you're right, it totally does not make sense.
Speaker 3:But you have to. Also, for that to make sense, you have to be making a bunch of money too, right, somewhere else? Right, absolutely.
Speaker 1:I said a lot of carryover loss, because if you make over a hundred, you can only take 75% of your loss and make over 150, you can only take 50% of your loss at that time. Now they change this stuff all the time. I'm not a CPA, so you know. But but when you go to sell it, actually it comes back as income. So, yeah, then you get into, like transfers, and I've recently done one of those, a 1031 exchange, not transfer, so but, but you're doing, okay, it's get rich slow.
Speaker 1:You know, I was thinking of these good book ideas. Like I'm like I'll write this one. I'm not a writer. I'm like I'm gonna write this book one day. Get rich slow. I mean, it's what it is, you know it's. It's not a scheme, it's real. You're a lord of a land, like you know, this is America. You're gonna be born to somebody to go buy a piece of property and you are the Lord. Now you have all the responsibilities, you know. Like, you know the water bill, you know the taxes. The furnace broke, you know all the license, you know. So it's, it's not nothing. You have to be on point and learn.
Speaker 3:So how have you guys in your contracting business like, have you guys had to adapt and change now that the rates are up? Are you doing like the same amount of investor work that you were last year, the same amount of homeowner work? Like, what does that kind of look like for you guys?
Speaker 2:I think right now it's a good mix of the two. I mean, I think you know investors it ebbs and flows. I feel like when the investors there's a ton of investors in the market the homeowner's kind of the work dies down, and then when the investors die down, the homeowner work goes up. So I would say it's a good mix right now, like 50-50.
Speaker 3:And what is like are you doing any kind of marketing specifically to target these different, like investors versus homeowners? You're targeting kitchens, or is there anything that you're doing like specifically, or you're just Really?
Speaker 2:It's mostly word of mouth. I mean, I would say this is the first year we've actually paid for any marketing. Up until this year it's all just been word of mouth. So we try to target as many investors as we can, but you know the homeowners. We can't deny them either.
Speaker 3:So yeah, we noticed in the beginning when we were all basically all word of mouth, I was getting like all the jobs I would get probably 90% of the bids that I would get. And then when we started marketing, we started putting ourselves out there more on like Facebook groups and whatever else. Now I'm getting like 50% of the jobs and you could definitely tell the difference between somebody that just calls you off of a marketing thing versus somebody that's like hey, you did my friend's bathroom and I'd like you to do mine, and that to me, has been really frustrating, because now I feel like I'm not knowing but bidding against a bunch of like one-man bands with a truck that I come in at 70 and they're like oh, my other contractor said they do it for 35. And I'm like, oh, okay, I didn't know there was another contractor, but go ahead with him for 35.
Speaker 2:We reported somebody recently for it was a homeowner job but it was like a full renovation and it was like in the twos and he's like well, I have this other contractor at like 130 and I'm like good luck, let me know like he doesn't finish and you know you need some help, but yeah, but, sometimes they're also not comparing apples to apples, you might be doing something that they're not, and that's exactly what we were talking about before.
Speaker 3:If there's no contract in place that says what they're going to do. And he says I'll do it for 135,. Well, what are you doing Exactly? Because I'm going to write everything that I'm doing on a document, so you see exactly what I'm doing.
Speaker 2:And then you're going to sign it.
Speaker 3:Yeah, if you don't have that from them, how do you know that he's just not going to do it? How is he going to do anything Like that? To me has been kind of a not a struggle, but it's definitely just annoying like working with new people or new clients to us that are just like so out of touch with what real pricing is. So we started recently. I don't know how you guys do this, but like, if somebody calls you and they're potentially going to buy a flip, do you go out there and estimate it if it's not owned or under contract?
Speaker 2:We don't we do, but we charge a fee for it.
Speaker 3:Same. What do you guys charge? 250.
Speaker 2:I just raised ours to you were 300. I saw it. I saw that on Facebook. I was 250.
Speaker 1:I think we're going to raise it just 350 now, go ahead.
Speaker 3:I don't even like I'm doing one on Friday and like I'm so not excited to do it, because it takes a couple hours of your day. You're talking to somebody that probably doesn't really know what they're doing for the most part, and then I sit here and I write it all out and it's like great, I made 300 bucks, but we literally just talked about this the other day, like it's not really just one hour, it's like four hours of your time, by the time you, if you're really estimating a job.
Speaker 3:if you're truly estimating a job, you need a couple like at least three hours of sitting in front of a computer having measurements out. I use Polycam now. Have you guys used that? No, I'm going to change your life after this podcast and show you. It is the coolest thing. You scan a room with your phone and it gives you a 3D model and perfect blueprints. Oh, that's pretty cool. Just using the LiDAR on your phone. That saved me so much time.
Speaker 3:I use a laser, but that seems faster. So this is like using LiDAR and then I have a laser that I just double check, like the gross measurements. The house is actually like 45 and it's within a couple of inches accurate. It saves it and it's really I'll have to show it to you after it's pretty sweet. How many houses are you guys doing for yourself right now?
Speaker 1:Well I'm actually doing? I'm flipping three of my rentals right now and we are doing two and about to do our third flip right now. We're about to close on one next week.
Speaker 2:Plus the rent and the triplex.
Speaker 1:Oh well, yeah, the triplex we're renovating, so probably I mean together like seven total.
Speaker 3:But bulk of your work you're doing for other people.
Speaker 1:Oh yeah, absolutely we do. Last year we did like 55 flips for clients.
Speaker 4:Yeah, and how many other clients? Another 30 contracts? How many different clients do you guys have for those 55 flips that you did for them last year?
Speaker 2:Well, so for the flips, I would say probably half were new and half were like, I repeat, people. And then, on top of that, we had the homeowners, which what do you prefer, the homeowner work or the investor work? It depends on the day you ask. I mean, lately I started as investor only and I like that business model because it's no emotion involved in it.
Speaker 3:But then it's a volume play.
Speaker 2:Yeah, so we're more of a volume play type of thing.
Speaker 3:Tyler and I differ in the sense that, like I would never really send him to like an, like a homeowner operation at all. He loves the investor stuff but the homeowner stuff like it takes a different type of person to deal with that and do that project. But with that being said, the profits are three times as much.
Speaker 1:Yes, and they're higher. And there's something you mentioned earlier about like comparing apples, apples and being frustrated with. This is where sales people come in. Like I used to sell, like when the mortgage crash hit, you know, I didn't sit around and, oh darn, I can't make money doing the mortgages. So I actually sold windows and siding and roof. I did a lot of other things too, but that was one of the things I did and that actually gives that buffer between the owner of the business and the homeowner and like kind of saying, well, why is this this much more? And they, you know, and but they're drive, they're driven by that commission, you know. So where, like, we are sitting there going, we're doing like 30 projects and this one person has this one issue and I don't have time to call them back, that salesperson is sitting there going. I better call them back because I don't want to lose my commission. Like if they like cancel or whatever. So that's the problem, you know. Like because there needs to be that other type of person like there.
Speaker 3:Do you guys have any sales people like that, or is it JC2?
Speaker 2:It's just us too. And what's funny is you talk about your partner Tyler, and how he won't go to the homeowners, and I guess you're more of the homeowner, so he's our homeowner person and I am I'm not a fluffy.
Speaker 4:She's very direct.
Speaker 2:She's very direct.
Speaker 4:Do you guys have contractors that do them? That's the work that you feel uncomfortable with sending them to a homeowner.
Speaker 2:We do have some of our workers that were like we're not using them.
Speaker 3:We have guys not to be gross, but we've had guys that have like literally shit and garbage bags on job sites. We've had that we're not going to send you to the $75,000 kitchen that we're doing.
Speaker 2:Yeah, we've had people in buckets and unfortunately they don't do anything with it. Yeah, or?
Speaker 3:like bottles of bee, throw this sitting all over the job site. There's three bathrooms in the house that work.
Speaker 1:Yeah, or like using the toilet like trash can instead of flushing this.
Speaker 4:Yeah, other cultures to punch out guy.
Speaker 2:No, I would say we have our main people. I would say, in terms of, like, keeping up with the volume is HVAC.
Speaker 1:I agree, hvac. Yeah, because HVAC guys do their own stuff.
Speaker 2:They do their own stuff, like we're in house for everything. But when it comes to HVAC, like we just brought on another HVAC guy and it's like okay, maybe he like, now we can like, instead of feeding everything to one person and things get delayed, now we can diversify, like you know different things?
Speaker 4:Is that, when you're doing like full duck work?
Speaker 2:Not all the sometimes it's just rerouting different things or just sending him to do an exhaust fan. You know, but it's down in Annapolis, or and I need him to do one exhaust fan and he happens to live down there. So I would say HVAC is the one.
Speaker 3:Everybody else were pretty, pretty good with keeping and for us, it's finishers like finishers are just so hard because they're so like finishers like drywall, just like, yeah, like I guess, punch out finishers, like I call them finishers, like the guys that go in at the end, and we'll spack a little things and pain and just ready, like blue, the blue tape.
Speaker 1:Yep.
Speaker 3:Those guys for us are just so difficult because we only have or can trust a very few select people to actually go and get it done without us going there five or six times and re walking them through it re, you know, re putting tape on the wall, all that stuff. That's been a struggle for us, and you mentioned HVAC. For us, we just sub all that stuff out. We were talking at that event the other day where, like you, guys are probably doing it for like a thousand bucks. I think we figured out like a thousand bucks less than I am, but I never had problem with volume because I have three companies that all matched the same price. I was like, if you want my business, this is the price that we're going to do it for, and if you want it, to go ahead and do it. And that's been nice to not have to, matt, because you guys buy the material for them too, right.
Speaker 1:Yep, yeah, so maybe not like the well, yeah, all the time. No, no, yeah, yeah, we do.
Speaker 3:Yeah, so I don't want to worry about, I don't even want to think about the tradespeople.
Speaker 1:With her starting really like those that first year she was doing 20 rehabs it was. They're all investors right, yeah, maybe one homeowner, but so we were. We were in with me, merging with her and helping her. We were finisher heavy and we call a finisher like drywall, paint, cabinetry flooring all the way to the end, all the way, and they do blue tape.
Speaker 1:We hold back a certain amount of money for the blue tape and all that. So we had at one point we had six finishers, like six different guys, that had their own crews, and of course you cut the fat over the years. Like you know, one guy's yeah, he's not as good as this other guy and he's a pain to deal with. Okay, we'll call you if we need you, and then you get down to like two, and then you're like now we need more, you know. So you go back and forth and there's some personality differences there. So, but that's when it's. That's why it's been better for us, cause in the flip world sometimes they're not even doing anything with the MEP, you know. They're like, you know, maybe adding one bathroom and then just making it nice.
Speaker 4:Do you guys do a pin list for realtors?
Speaker 2:We do.
Speaker 3:Those are fun right.
Speaker 2:They're great yeah, especially when you get the one that's like, well, it shouldn't be this way, but but consult was a contractor. And it's like, no, this is okay, it's fine, I've done a couple of them.
Speaker 3:When I look at, like, if I've taken into consideration how much time I spent reading this thing and the inspection is like okay, I made $17. Awesome.
Speaker 1:Yeah.
Speaker 3:I took. I took five hours of my life reading this inspection, calling four different contractors that all are going to have to charge me like a hundred dollars to to look at a pipe that's coming out of a roof. Those are. I hate those.
Speaker 1:It's probably one of the biggest value ads. We have our clients that we don't like sell or don't talk about, and it's only for clients that no like you know, if you flipped enough, you know you get that list and it says consult. You know it's like 12 things and three of the things are talk to a plumber, talk to electrician, talk to HVAC. We have all that in house. We've already did all the work. If we didn't do the work, we'll just do the stuff that belong with our things and just build them for what's left. But it's a great thing for flippers.
Speaker 3:It's a good thing to what I've noticed that for us it has brought in other jobs like we do a pin list at somebody's house that they were selling. Now I'm doing a high end bathroom that the house they bought. So like that is okay. But it's when you work with a couple of brokerages and then they they're like, oh, he's a contractor, he'll do it. And then all of their agents are now hitting you up for pin lists and you're like God damn, this is fucking time consuming and very unprofitable.
Speaker 4:Yeah, can you just charge accordingly then? Yeah, but the realtor's.
Speaker 3:Nobody wants to pay. That's the problem. Like the pin lists are like the things that nobody wants to pay for.
Speaker 4:That's gonna get past the finish line, so that's any.
Speaker 2:I still don't want to pay.
Speaker 3:Yeah, they still don't want to pay, like any reasonable person would say yeah, of course that's what's going to finish and get the household. But when you send them a bill for $200, they're like it's $200.
Speaker 2:Then they negotiate and it's like the work is done.
Speaker 1:Pay up. This is a building situation Like being built Then they call it.
Speaker 3:can you just write me a letter Like I had my other guy do it? Can you just write me a letter for the work, like so you, basically you made me look at your thing for three hours and tell you the price was this. Then you hired some other guy to do it for cheaper, but he didn't have a license. So now you're asking me to write my license number on your like. No, sorry, you got to tell your other guy to go get a license. Yeah, like quick.
Speaker 2:We don't do that either.
Speaker 4:Yeah, can you guys talk a little bit about how each of you bought your first rental property and what that looked like?
Speaker 1:You want me to go first, you're older. Okay, yeah, it happened earlier in the history. So I started the mortgage business after one year. Right around the same time a guy I went to school with I went to Frostburg State. He was in my fraternity, he graduated a year before me but he started buying rental properties. So I was kind of like, hey, you know, I want to get it, let's be partners. And he's like, no, never be a partner, just have your own stuff. Okay.
Speaker 1:And we both bought that no money down Carlton sheet system back in the nineties. Okay, you know, it was like 300 bucks. So that was like, oh man, that's a lot of money back then. So it taught you how to buy property with no money down. But eventually he got it in his head Okay, I'll sell you some.
Speaker 1:So I bought my first property actually two at the same time in moral park, one on Janis Avenue, one on Norlin. You know still have those. And you know, and I bought them at this, you know, after working for a year, you know W two income you need. You know. You know, when you're buying stuff they get to prove you I'll. You know, I just bought a house in Ken Brewer's Hill, ken, whatever. So I had that under my belt, I was a homeowner, so that's important. So everyone out there, you know, show the bank that you can buy. You know you have stuff, okay. And then I bought my first one and since he was a friend and an investor already, he, you know it was. They were both section eight. They're already rehabbed, you know not really, but they were rental ready, you know. I mean there's someone living in there. And then, of course, later things like start breaking. You start blaming your buddy and really that's just how it works Things break. But he actually ended up selling me my first 10.
Speaker 3:And this was so for listeners to. This was before DSCR was a thing.
Speaker 2:Yes.
Speaker 3:Getting loans was way more difficult.
Speaker 4:Like even in 2016,. Like, yeah, that just started way more years ago about I think it was- 2018 or 2018.
Speaker 1:Yeah, these were 80% or 20% down or 25% down deals yeah.
Speaker 1:I mean, of course they were only $65,000, you know fully. You know fully rehabbed or rented already. But I had to come up with the money. I was selling mortgages. You know my mortgage payment of my personal house was like 1,100 bucks. I rented out one of the rooms to a buddy for 600, you know. So my, my spend was low. I save, I. You know I made commission checks like pretty good commission checks because I had that kind of job.
Speaker 1:Highly suggest sales to anybody that's trying to be in real estate because you can make a lot of money by working hard and take that money and put it into something else. Don't buy liabilities, you know. Just don't buy cars. And you know like, go out too much, save your money. And I used the money I saved to buy property. You know the way I did it. I would use the same money over and over again. Now it's a complicated thing for another show, but that took time. You know that took. You know it's like get the house refi it out later and all that kind of stuff. But yeah, this is normal. I mean my rates were like 7.5, 7.8. And I was like, oh, this is a good one. You know, like you know, back then and the harp came along after 08 crash and I refied all those down to, like you know, 4.5. So that helped. Rates are temporary, so don't concentrate too much. It's got to make money when the rates are high though you got to keep that in mind.
Speaker 3:That's. That's, I think, the biggest struggle right now. All right, so, ryan.
Speaker 2:So I got mine. This is before I was partners with him. I was a wholesaler.
Speaker 3:Ooh, that's another business. I failed that miserably.
Speaker 2:I failed too, so it's okay. I didn't like to talk to people. I didn't like to talk on the phone.
Speaker 3:I didn't even get to talk to people. That was. That was my trouble.
Speaker 2:Yeah, so you know the yellow letters and the postcards. So I'm pretty sure somebody called from one of those postcards and the partner that I had at the time she did all the negotiation and I don't know. We basically just bought it as a rental but we had just a rich guy with money and he lent on it and he lent money for the rehab and we did the work ourselves. That was my first rental and then, when it was time to refi because we only had his money for so long we sold it because I didn't know what I was doing and I was like, okay, we're gonna sell this and move on. And then I became a contractor.
Speaker 3:Nice. So when you sold it did you have you didn't know about, like the REFI process and getting the money back tax free, all that stuff you just didn't know.
Speaker 2:No idea.
Speaker 3:And how's it like it's okay. So you started, you did that one and then you started contracting. How did you like bridge the gap with your education, like in real estate, to then start to really learn? Like, oh, I did that wrong, I should have probably refinanced and kept it? What did you do to like educate yourself?
Speaker 2:I met this guy Charlie.
Speaker 3:Oh, okay, so that's where Charlie comes in.
Speaker 2:So he is, like you know, even with our current deals, now, like he's the finance guy, I'm more of the like the logistics person. So, ceo, coo.
Speaker 3:Yeah, that's a good. I feel like with partnerships in the beginning, with ours the biggest thing, and it sounds like you didn't, you guys didn't have this problem, but in the beginning we didn't have all that much business. So, like we were stuck kind of doing the same things, like the same job, a lot of the times where, like and we were also full-time teachers for like a long time up until a few years ago so we would get off of school and both like meet at a project just to like fight about it, because we were like this is the right vanity, no, this is the right vanity. I'm like we spent.
Speaker 3:We had this one day where we were like we had to flip what we were doing. We had three bathrooms and we bought the wrong vanity twice, like three wrong vanities, like they were stubbed up through the floor and not through the wall. We like just, we're like God damn, we spent like five hours like fighting about vanities, like just like six, seven years ago. But we were stuck, just we couldn't figure out how to like separate our jobs. And once we figured that out, then, like it was, we could scale and we weren't fighting as much. But in the beginning it's very hard because there's only so much that you have. It's only the two of us and then a couple of guys that are in the field. So if you guys had issues like and what issues if you've had issues as like partners since you started your business together, I would say, like figuring out the roles.
Speaker 2:Like you know, it's only recently that we've figured out he's gonna be more of the point of contact for homeowners and I'll be more of the investors. I mean, that happened a couple of months ago, so up until that point, you know, it was just kind of like me divvying up everything. I would say the things that we argue about now is like he'll give me a budget for something of like, let's say, a vanity for 200, and I wanna spend 350, and he's like no, and I'm like, but it's gonna look really pretty. So I would say like we argue more about that kind of stuff and me always trying to go over budget and him trying to rein me back in.
Speaker 4:So is that for like homeowner stuff or an investor stuff, as far as like picking out a vanity More so?
Speaker 2:investors, homeowners, they pick out their own stuff. I mean, we let investors pick out their own stuff too, but some of them don't want to. But it's more so for our flips and our stuff. I'm always, you know, trying to put a diamond in like a rough thing and he's like, no, don't.
Speaker 1:Someone's gonna buy the house, someone's gonna steal the diamond and like you know whatever.
Speaker 3:Yeah, we've definitely learned. Just put it. You know, put the white or gray, whatever it is, just put it in there. Like that's not really the thing that's gonna make the huge difference. Like does it have new cabinets or does it have old brown ones? Like, as long as the new? Like whether they're 36 or 42s that was a big fricking argument with us. Like he wanted to put 42 wall cabinets in all these houses that we're doing. I'm like we're spending, like he's like it's only a couple hundred bucks more. I'm like, yeah, but times that by like 150 kitchens and it's a lot of money. And nobody comes in here and like with 36 inch wall cabinets. So like, damn, I would buy this house if it had 42s, but it doesn't, so I can't buy this house. Like that's not a thing, like people don't care.
Speaker 2:They don't. I had 42 inch cabinets before I moved into the house. Now I never use a top. I'm six foot.
Speaker 3:I never use a top shelf. I can't ever reach it anyway.
Speaker 2:So when I did my kitchen, I made sure to, when I did my kitchen, I made sure to do like 36, because I was like I can reach that.
Speaker 3:There's, I think, one of the big things that I always tell like, especially new investors, I'm like don't think about this as your house, it's not your house, you don't have to live here, your wife doesn't have to like this and you're like it doesn't matter, like the biggest mistake I see is people are over renovating. They're buying a $65,000 shit box in Edmonton Village and trying to put a $550 vanity and it's like that is not.
Speaker 1:Don't do that it's not needed. I don't know how many times at the table, cause when I was younger I'd wanna go to the closing table. Now I really don't, for a lot of reasons. But I remember sitting in the like the few things or the one thing I was super stressed about, on the flip like, oh, I don't wanna do this. No, change it, rip it out, do it again. And then I get to the table and the one thing I was the most proud of, the people that were buying the house would say we love it. We can't wait to change that one thing you know that I stressed about.
Speaker 1:And then I realized you know, yes, people are the same, but people are unique at the same time, you know. So stop trying to think for them and know your market. You know, like you know, yes, you might've grew up in some nice area in Bethesda or something. And you think like, look, look at the comps, not just for the numbers, right, and the days on market. But what did they do? Like you know, did they even finish the basement? Like we have, we talk one client out of like just don't do it this time. She's like okay, and she's like good job.
Speaker 2:But you know, she she over. She's one that over improves, but for the most part she usually makes her money back. Oh yeah, she does great. She does great Like.
Speaker 1:But she sold that house in like two days with no basement finished. I mean she's still like, put you know, and she cleaned it and they made her look really nice. I mean unfinished and really nice. But she would have finished, that would have been 60 less thousand or 40 less thousand, whatever in her pocket, but she still sold it. You know people buy new homes, new construction homes all the time no finished basement and at a flipper. If they're really a full flipper, like full, like gut, do everything. We're in competition with builders Cause the people buying your house are either going to buy a new construction or your house. They don't want to buy grandma's house that they have to do any work.
Speaker 3:But he doesn't want to do any work anymore. I mean, you go to these like Ryan Holmes communities I ironically we're both right, but you go to these, like Ryan Holmes, communities and they put shitty bathrooms in. They give you one or two options for tile and most of the and they put in those stupid inserts for bathrooms and they're like literally frame in the shower, just so they can stick this insert in there. And people are still scooping up those houses like crazy.
Speaker 2:They just hire us after, have you walked into their model like any of their model units with Ryan Holmes.
Speaker 3:Not with Ryan Holmes, but I recently was in one for Lenar.
Speaker 2:Okay.
Speaker 3:And those are a little nicer than Ryan Holmes, but it's the same shit basically.
Speaker 2:So we were bidding on a townhouse development I think it was like 184 townhouses like years ago, and we weren't licensed builders at the time. We are now, but we were like we need to go and see what a spec'd Ryan Holmes is. So we pretended to go and like we're buying a house.
Speaker 4:We're buying a house.
Speaker 2:Super awkward, like we're gonna buy a house Yay.
Speaker 1:And we walked through pretty much. Yeah, had to. I mean the realtor's giving us her time.
Speaker 2:Yeah, she's like, I was like yeah.
Speaker 1:We wanted all the options.
Speaker 2:We wanted to go through the whole thing.
Speaker 1:Let's do this. And it's actually a great idea.
Speaker 2:It is a good idea. We got like their pricey. We like figured out okay, this is what they put in their houses. They put nothing in. And we went from like our basic. You know builder grade laminate countertops, you know carpet everywhere, laminate flooring, no fixtures anywhere, no recess lights. You don't get anything. And we went from like 250. And then we did basic, give me a couple of lights, give me, like your basic, granite, no backsplash type of stuff to like 350,000.
Speaker 1:And then the little townhouse.
Speaker 2:Where did the money go? It's crazy what you get for those and they get put up in like they are very fast.
Speaker 3:That's what it's hard to compete with. That like the fact that they can put up these. I just did a bunch of bathrooms in forget the name of it, but it's like literally right up here, a really nice town, home, community, and I was doing like a bathroom and I think I did a bathroom, a back splash and like an office where I hung like some cabinets in an office or something. By the time I did that project they had put up like 45 homes Like in like the two weeks. Every day I come back there's like a new structure that's erected. Like how the hell are they doing this this fast? But they have stocks of machinery and everything that's there. It's like it's impossible to compete with those.
Speaker 2:I mean they've got a system, it's their system is fast and cheap, yeah, and they really just don't.
Speaker 3:The big thing is they don't really give you options, like they just have all the stuff stocked in their houses.
Speaker 2:You get three options, and that's it. If you want to deviate, you got to sell and then hire somebody else to come in and do it.
Speaker 1:Oh yeah, remember the model home, the back splash tile. That wasn't even an option. No, it was just like oh, that's there, but you can't get that. It's like, okay, wow.
Speaker 4:So how much time do you guys spend dealing with investors as far as picking out and giving them options, or are a lot of the investors that you work with frequently? Do they choose the same stuff for all of their flips or rentals?
Speaker 2:So I would say a lot of people choose the same thing. A lot of people ask for our input and I'll say this is what everybody's doing. A lot of people want to do what everybody else is already doing. We don't really handhold them in that process. We have a spreadsheet that we send them, which is part of the contract, and I say follow the draw schedule and, as I'm ready for them, put the link on there and we'll order it or go pick it up or have it delivered. So there's not too much handholding. But sometimes there is handholding like oh, you can't use that. Your plumbing's, like you said, coming out of the floor, it's coming out of the wall. You need to get this, or your toilet needs to be a 10 inch, not a 12 inch. So there's not really that much handholding. People are pretty much doing the same.
Speaker 1:And we buy it. We don't want them to get it to the site.
Speaker 4:They will not do it right, and I know you mentioned when you first started out that you were kind of like hiring a GCN and having them and just managing the job. How have you evolved over those years? And then, when you guys formed the partnership, what does that look like now? Do you guys hire a contractor who has his own crew? Do you guys have employees on payroll?
Speaker 1:That's a great question because that was part of my when I was consulting her and how we changed to make sure nothing like she didn't get in the same situation she was in before. So now we buy all the material ourselves, so we control that money. Another thing she was doing with the 20 projects she was actually going and meeting the bank for the investor. So she would start working with no money in the bank and meet the bank for the investor and I was like, wait a minute, the investor is not putting any money up, so he's not investing anything. He's not investing his time. You're doing all of it Like you're doing way too much. So now, like we do get a deposit to start, we use that money and we help them set up their draws, to help them. Sometimes they don't know how to do it right, but we're controlling all the money. Also, we don't pay our people and they're all in-house people, so they're not like we're not hiring somebody else. They're working for us. All right, go here now and we don't pay them till they do the work. We're not putting a deposit down on our one guy to go paint. We're like sure Williams will deliver, whomever will deliver the paint, and when you, maybe after a week or how much you've done, we'll give you some of the money we already agreed to about on your portion.
Speaker 1:So what this does is it protects the client's money and that seems kind of funny, but that's actually like if you look up the legal like you know ramifications of being a general contractor, you have a fiduciary responsibility to the client's money. Yeah, yeah, I was like I'm glad I didn't stutter. No, it's good. No, but it's like okay, so what happens when contractors fail? Like it's like well, they pay their guys and then they guys they bounce and like, oh, wife died or whatever, he went back to wherever. And then you got to go back to the client or come out of your pocket to fix it. We protect the client that way. We've even had client one time.
Speaker 1:We got started. We fixed his roof, did the roof. The job was just going to be crazy because of like the, how bad the framing was in the house and he's like I can't finish this, I need a GC of myself. So we said, okay, we've done this much work, you've paid us 30 or whatever it was, and we, you know, we broke the contract and gave them back to whatever we haven't spent. There you go, cause we have it. You know we haven't spent it. We spent it on the framing and the and the and the labor and we were ready for another 11. I think we gave him 11 back. We were ready to pay that for something else, but he just had to GC himself to save the money. He was an investor.
Speaker 2:Um so um he's almost done with that. Maybe, you should have used us later.
Speaker 1:It's been a while. It's been a while. Good luck, Mike.
Speaker 3:No, just putting them on blast. I think, uh, when you try to, when you're trying to GC it yourself, I I tell people this all the time For one, like you're not going to get my discounts, like I try to sell people on the idea, like especially with property management too, like you can manage it, but when you call lend the plumber and he charges you $1,800 for a snake and I was going to charge you 550 and I was still going to make my money, like I'm getting it way less than retail, I'm passing, kind of passing those discounts along to you because I just want to make my margin. Once I charge you my margin, it's pretty much going to be either retail or less than what lend the plumber or whoever you know big plumbing company, whatever, is going to charge you for GCing yourself If you already have, if you have a job, if you're busy, if you have kids and it's not the job that you want to be doing like as an investor, it's, it's no, it's not.
Speaker 1:Um, being a landlord from from O two. I mean, I bought my first house in a one, but that was my house. But being a landlord since O two, you know I throw hands on, you know I'm doing everything. I was a loan officer. I worked from like 10 to eight, but you know you're not calling all day. So I gave me a lot of time to like do this stuff and in 2014, I needed to move. We were ready to move back to the county where I'm from, western Howard County. I'm like, okay, couldn't find anything under $600,000 for four bedroom. Like I'm building my own house. So I built my own house and I was my own builder because you're allowed to do that as a land owner in Howard County, um, and for it took eight months.
Speaker 1:It was over winter. You know it's my first build. You know I wish it was a little shorter, but I didn't make any money that year. I mean I wasn't making. You know I didn't pay myself to do it. Be the GC because it's all my loan. I don't want to do that. I don't want to hire mortgage. It's the sweat equity, you know. That's the whole point. Also, I was selling mortgages part time, so it's hard to get loans part time when you're barely doing it, let alone run around chasing contractor, and I really gained a big respect for general contractors or builders, you know. So I was like, okay, it's a job, you know. Like I don't know what's worth what they try to make sometime, you know, I was so anti, like I'll do everything myself, but it is that. But that led to, like the next year I was reading the order of the deal, like I'm like I'm like man Trump owned a football team when he was my age. I gotta get my, you know.
Speaker 2:I gotta get in the game here. Plus, you're a really bad pain.
Speaker 1:Yeah, I mean, I mean I've been in houses before, like sanding, like you know, like when I had like 10 properties, like you know, the dust is getting on my contacts and like the contacts flipping. I'm like do I want to do this? No, like you know, like no.
Speaker 3:In the beginning I was literally like you tubing how to snake a toilet and like snaking toilets at a college house in Towson. Because like who do you call? Like I owned three properties. I had $75 in the bank, probably at that time. And like who are you going to call? Like I had no idea. So it was just me. Like YouTube, like I'm not getting it down far enough, like I gotta keep going. Like I was like what the fuck? Like what am I doing with my life? That this is, this is like I was teaching kids. Kids were yelling at me and crying all day. And then I would come here and like be playing with shit and some college kids toilet and I'm like God, this is glorious.
Speaker 3:Like this is really one day, as I'm like stopping the snake down there.
Speaker 4:But I feel like at the beginning that's what you have to do. You know you don't have money when we both started and it's just tough. You know you get those call. You call a plumber that you don't know, just from the internet and that's going to cost, you know, 500 bucks for them to go out there even more sometimes. So sometimes you got to save that money.
Speaker 1:It does teach you value, though, of what this thing. You know because, like, you could do one job and you're like that sucked. And then some of you hire or go to hire somebody's like, oh, I want a thousand. You're like, no way, it's 300 bucks, you know. You know already because you're like I know I could do it for free, or 50 bucks with whatever material, but I'll give you this and I'll give you all my work. You have to start dealing in volume with these. You know the handyman people. You know like, hey, I'll give you all my stuff if you just don't kill me.
Speaker 3:And then you got to trust but verify in the beginning, and I think one of the things that I've this year and last year where we have really good books like put together, where now I can go to like a cabinet supplier where we use the same people and I love them, and I'm just using some of the example I can go to another cabinet supplier and be like hey, look at my sheet, I spent $250,000 last year in cabinets. Like, what is your best price for somebody that spends a quarter million dollars a year in cabinets? And now you have that leverage with those people. You go to a plumber and you're like hey, I know you don't know me, I've never worked together before, but I did $300,000 in plumbing last year.
Speaker 3:Like here it is Like what's your best price on a new three bed, you know two and a half bath or whatever. And I think that you know having those numbers together as, like investors or contractors, is super important in getting the prices where they need to be. So next steps for you guys' company Are you guys actively trying to scale? Are you happy with where you're at? What's the next steps?
Speaker 2:We're always trying to scale. I mean, for R&G, we obviously have like a good system in place with good people, so we're always going to be growing that. Our current next step is a personal sweat equity conversion. I don't know if you really want to talk about that yet, but we're going to be converting something with another partner and you know R&G will do the build out and it'll be like an apartment complex conversion.
Speaker 1:We're kind of thinking if we can. Obviously, you know R&G is a company that can do things and make money, but if we can aim it at something where it's an investment, we can make money with it Like a flip, Like doing the work for equity basically.
Speaker 1:Yeah, like a flip, okay, Used it and then you sold it and you made money Like one little thing, boom, it's not, or one big thing hopefully. But we're like, okay, well, maybe we can buy like an office building that need can be converted or whatever, and use our people that we already have in place to build some more ownership, you know, in that building like and keep it. So multi units is the next phase for us.
Speaker 2:And then, like we have a new person coming up to work with us that we're going to kind of branch into like more what was that term that you use? Like target marketing, I guess like, oh, like a lend the plumber or like electrical stuff, and we'll be like people that you can call for that kind of stuff.
Speaker 4:Do you guys manage your own rental properties currently?
Speaker 1:Yes, yes, I tried a couple of management companies and it did not work. I have affordable housing, meaning like they're just basic houses. So when you go to rent it, like if you're a management company and you got all the, you know you got a bunch of nice rentals and mine are kind of they're okay, you know, like lamina, countertops and oak, and then you know they walk in in both places. They don't pick my place. So it almost bankrupt me a couple of times and I don't blame them, you know. I just you know I had them so long, you know, and it's like.
Speaker 1:So I realized like you can, you can self manage and but now I do have like a part-time lady. I pay her per hour. She handles problems, she goes to court, she takes the calls. You know she, yeah, she does that kind of stuff, orders to repair, and I also have a handyman on salary for, you know, portion of his time, 32 hours a week, and he just constantly running around doing whatever we need him to do. So I've made it to that point where that's in place. It doesn't mean you can take your eye off it, but it's just the next step. You know, like you get over a hump and then you can like. Okay, I don't have to be on the day-to-day.
Speaker 4:What were some of the things that you didn't like about property management companies when you tried to hire them.
Speaker 1:Well.
Speaker 4:I mean.
Speaker 3:Can I get my notepad?
Speaker 1:out.
Speaker 4:Hang up.
Speaker 1:Yeah, exactly, well, I mean. So one time I gave 20 properties to somebody I'll test them out and there was like six vacants, you know, maybe I mean they were ready to rent. I mean, you know, maybe I needed to send a cleaner in here and there, but for six months that none was rented. And then I was like, okay, I got to move on, I got to take him back over or something's funny, and I was building with her. You know, like we're two million sales, three million sales, so I was trying to get someone else to handle them so we can build a company together, right? So that's the issue. I remember one time I let someone go, like December 3rd, and within one month I had three rent it, three rent it, I mean three rented that could have been rented four months ago. So I had a $1,200 rent times three times four months. I mean that money is just not on my account. You know, like that's how you look at rentals.
Speaker 3:Yeah, one month of vacancy just crushed your numbers.
Speaker 1:Yes, crushed and we're talking like the whole time like none were running, and I'm like, oh man, maybe you start to second-guess yourself. And then you walk with the people and you're like, yeah, it's affordable. And they're like this is great, cool, and they sign up, you know. But you know, maybe if that property management company had, like other houses that are 1500, they're getting a higher commission to do theirs. So, and I think they were growing. So they were like, oh, you're a little 20. We don't care about you know. Maybe you know who knows, you know. So one of the biggest problems with the management stuff is the true, like the true profit on rentals is about 20%, right, well, if you hire someone at 10 or 8%, they're getting half of your money. That's if everything goes well. I mean, that's if everything goes well. So you might as well do yourself.
Speaker 1:Get an app. I got an app on my phone. I use Landlord Studio. It's not the best company, but I just did it. You know. I'm sure there's free ones and when someone makes a payment on Cash App or Zell or Venmo, I put it in there. They get a receipt on an email. They get a text. It also reminds them to pay and it's all there. I mean it's, it's not a. You know I don't do any mail anymore. I used to be all mail and then I'm like this is crazy. It's 2015 at the time I changed, you know. So you know, if they don't have the money in the account file, you know file on you got to file right away. You know there's a lot of stuff you just got to do, like you know, like I can go into a whole podcast.
Speaker 3:I have one more question about scaling and it's. We have very similar business, so I want to see if our problems align. So if, let's say, I had a magic door that I could open and say, hey, we can double your revenue this year, double the amount of work you're doing, what would be like the biggest obstacle to get around in order for you guys to double your rev next year? Like, is it personnel? Is it logistics? Like, what do you think would be your number one issue?
Speaker 2:Probably personnel.
Speaker 1:Personnel, but I would think it would just be the management side, you know, of the client and also of the crews. I mean, we're keeping an eye on the. You know, last year we did four, four, four points, something in you know volume, so, and then we were like, oh, we're pretty busy, but if that doubled it would, we would need more project managers.
Speaker 2:More of us, more of us.
Speaker 1:We do have a full-time project manager and a full-time administrative assistant, so we'd probably bring somebody in maybe you know to just to cover the volume We'd have to do that, what would you have to do to double the work, to get double the work that you had the prior year?
Speaker 4:That is marketing.
Speaker 2:I feel like oh, you mean, like, what would we have to do to get?
Speaker 3:His magic door. Okay, I didn't have the magic door probably marketing meeting more people.
Speaker 2:I mean, if I had like a hundred hours a day to just go on cold appointments Like I'm sure the revenue would come in.
Speaker 3:But estimators to for us, because yeah our goal this year was 10 million. We tried, we didn't. We're not getting to 10, but I one of the big things was estimating and then me getting pulled away from estimating to deal with like we have two full-time project managers plus us and I Was getting pulled away to deal with like high, higher level problems I guess, and then I would be like five or six estimates deep where I'd need to then lock myself in a basement for five days to get all these estimates out there.
Speaker 2:And Keeping that flow of estimates, like coming in and flowing out, is really tough when you're also managing projects and managing a business and whatever we struggle with, the same thing I mean, which we constantly are like we got to get this quote out, we got to get this done, and you know, I type it up, and then he prices it, and then he sends it to me, and then I send it out, it's, and then we got to do the follow-up and then you have enough time, I have a new thing that I'm trying out and you guys can.
Speaker 3:I'll check back in a couple weeks but so I hired a VA. They start on Monday and I'm gonna be going through my estimates walk-throughs With an earbud in Recording my or, like when I leave I'll do a voice memo like okay, project admins, $5,000 and blah, blah, blah, and I'm just gonna have him type it because I'm driving around all day. I'm gonna send him this voice memo and he's gonna type up the estimate for him. I made a video, like on my computer, of how we use we just joist to write our estimates. I just went on, joyce, I made a video like a how-to video and I sent it to him. So now I'm gonna try to use him to do the typing.
Speaker 2:I used my assistant to do that. Did it work out? It worked great.
Speaker 3:Yeah, that's what I'm. That's the next step, because I sometimes I'll go to like three estimates, for example, in a day. First of all, they all blend together by the end of the day in your head. So I'm like, was that the one with the bathroom in the basement, or is there some pump, like I kind of, to go through these?
Speaker 2:So I have great memory, like I can remember projects from like six years ago.
Speaker 1:Notes are really good and I'm measuring. I just go through.
Speaker 3:I have pictures now in the polycam. Now I have a 360 picture so I can just like scan. But it's still taking my time to sit there like. So if I did it right when I left or even when I was there, if, like, the client's not there or whatever, I would just be talking through it and they can be typing and I won't have to sit there and type it out. It'll cut my time of getting these estimates out.
Speaker 2:I do want to hear if you can keep up with that, because the client is there sometimes and then you're like For me. So the client was there, I was like, okay, I'll send 10 minutes in the car drive to the next quote to Talk about it. And then people call and then you don't do it and then you go to do it later and for me talking it is more difficult than like me sitting there and physically typing it. So then it's like, ah, I'm like on the thing recording and it's. You know, oh, shoot, no, go back, don't say it, don't type that. Like erase that, like put this, and I want to. I'll definitely circle back and see how it's working out.
Speaker 3:Yeah, I'm gonna have like Joyce is good because you have different line items. That is kind of like set the ones project, admin, what's plumbing, whatever, so as long as they can like, build out the framework and get some words on the thing, then I can go back and like. But right now, that's what Jardie of my day is like spending writing, freaking, going to the estimate, meeting them and then writing it at the end of the day. It's like what's your number, what do you want?
Speaker 1:It's, it's trying to make it work.
Speaker 3:That's that would be. I think the biggest struggle for us is is Estimating the amount of jobs that we would need to double the revenues, just getting the estimates out on time, finding the people to do the estimates or and I'm always scared I don't know if you guys ever used an estimator like an outside subcontracted estimator.
Speaker 2:We did one time the sales guy that we did. Yeah, I mean it was too tight, like we were like okay, sounds good. And then I have what do we make?
Speaker 1:You just didn't do well at it, and of course it's not his dime, you know that's right.
Speaker 3:He just takes his one or two points and that's it. That's a tricky part.
Speaker 1:Um, you know, I would say like if investors wanted to know how to get their quote faster, write their own scope.
Speaker 3:Yeah, they don't understand that all the time Do you have a scope?
Speaker 2:They're like no, that's why I'm.
Speaker 1:Like you mean like a, like a camera, do you?
Speaker 2:ever do like virtual quote appointments, like where they don't maybe they don't live locally and they just want you to go and look at it. Do you ever do those?
Speaker 3:So like an investor that would like live in California and have a property.
Speaker 2:Yeah, I mean I'll go there and and if they own it and yeah, yeah, I'll go there and I'll like FaceTime them or whatever and be like this is broken, this is bad yeah so I do, we do that, but now Because we would never getting like we realized, if we're not meeting them in person, like we usually don't get the job. So now we make them type of scope something, even if it's like kitchen. This is what I want to do, like some kind of investment that shows me, okay, you're actually serious about something.
Speaker 1:So that's like, like you said, typing it up. That's a lot of I mean your own words, of course to make the quote, but right, like it needs to be written. So then the numbers tied to the writing, and then they can look at it and like, oh no, you're missing something, or take this out, then the number can change, as opposed to investor going. I told you when we walked us four months ago I wanted and whatever you know marble countertops. They're like okay, well, it's not in the contract.
Speaker 3:That's one thing like as contractors, I will suggest to all the consumers like read the fucking contracts read the scope read it Like you have to read the contracts. You have to read the scope, because at the end of this project, when I put in 36 cabinets and you expecting 42 is like it says 36. You just didn't read it.
Speaker 2:Yep.
Speaker 3:Yeah, it says that we were doing you know brush nickel and you wanted black, like that's gonna be more money. We put brush nickel in there, read the contracts and have a contract first, I guess.
Speaker 1:And you know, keep in mind like general contractors make money by hiring subcontractors. You know, yeah, they might be in-house or they might be outside people, but we're using this, the scopes to give to them to give to them and they're giving us a price and we're hoping we put a little on top.
Speaker 1:So at the end we make a little bit of money. So at the end we're not like, oh, we got you on those 36s, you know, like that was from the get-go. You know your price would have been higher with that, you know. So it's not like. You know we're not trying to get over. You know you need to read what we're doing, like you know it's like yeah, so it's like tile.
Speaker 2:You want herringbone? Okay, it costs more. It costs more labor and more material, yeah, or?
Speaker 3:they sit. Like I put in every one of my backsplashes is a white sub three by six subway tile. That's like standard. If you want three by 12, sure, but it's gonna cost more. And then like, okay, well, can I get back to you on the tile? I'm like, sure, but then it's an open-ended price because you're gonna bring me some glass Subway tile from the tile shop that I need to use special mortar, special grab the saws. I got to get all this stuff. Like I want to know exactly what you're gonna put in and then I'll give you your price. Like the, the bait and switch I've had that done a number of times where they bring in this like super fancy marble, it's like $75 a square foot and I'm like, okay, yeah, the price just tripled for labor. Like yep, they're like what's the same thing?
Speaker 2:like not the same. We have all that written out as well. Now we have, like, you know, our tile guy charges extra for black grout because it's a freaking pain in the butt, and so now there's a clause in there. Now we have like tile patterns printed in our contract. Like you're getting the standard pattern, any of these basket weaves or this or that, like it's going to cost extra. It's um, you know every project that something goes wrong. We're like up new claws in our contract. Yeah, it's constant.
Speaker 3:We talked I'm not gonna blow anybody spot up, but we talked at that event the other day where I got really, really screwed by this and the contract was okay but not it wasn't. We learned that it wasn't best. It was good enough to get my money back, but we lost and were owed six figures, almost multiple six figures, on a project that we both actually bid on, ironically, and the client just didn't pay, just didn't pay, and it took a year to get that money back. And a lot of the issue was there was just like he said. She said because the contract was Not as good as it could be. Since then things have changed dramatically in contract writing because I was like that could have easily bankrupt us at that time and like Somehow we pulled it out of our ass that we were able to survive, but it was close.
Speaker 2:Yeah, my contract, since we've partnered up, went from me finding something on the internet to a lawyer on retainer. Hey at this disclosure. Hey at this. This just happened on this project, so yeah.
Speaker 3:Well, nick, you have anything else for running, charlie?
Speaker 4:So if you guys are doing contracting, make sure you do contracts. I don't do much of contracting with contracts. I do work for my own properties, but I do want to talk just lastly about I know you guys said you guys wanted to start buying some Buildings and converting them into apartments and even just buying apartments in general. Is there like a number goal that you guys want to get to, whether it's a unit count goal or like a monthly cash flow goal?
Speaker 1:1000 is like a kind of our thousand units to own, like then like a year you know as fast as we can.
Speaker 1:You know, so that's the goal. I mean. You know, when you get into the multi units, then you're really getting to where those govers are talking like, no, you don't have to work because your new job becomes managing your money, managing your assets. That is the job. So. But you know, when you have three, you know you're like staring at three properties, not a lot of revenue to pay you to manage those assets. Right, that's the whole point and it goes to that the business model of you know, serving more people. You know If you serve more, you're gonna make more, you know. You know Walmart. You know Wally made a ton of money because he served more people, not because, like the product the product is, it's super great, you know. So if we get a multi units and serving, you know, a thousand tenants, as opposed to the 50 I have and the seven we have, whatever we're gonna be, we're gonna be rewarded with, with, you know, a better lifestyle and money and then that's a volume play to right volume place.
Speaker 3:A smaller margin but a higher volume, absolutely, yeah, that's. That's one thing that has scared me is the multifamily's like I. I know like I want to do it, but it's like the five-year rate turn and the like. If I had bought five years ago a big multifamily, I would be screwed right now. Oh yeah they'd be asking me for a lot of money to come to the table with.
Speaker 1:I Just had that happen. With that I mentioned, I had a 1031 exchange and I've been in Maryland my whole life. I go to Ocean City, that's where I go. So I'm like I'm just gonna get a place down there because I had to sell six of my rentals Because the bank that had them decided they they didn't want to be in the rental business anymore. And the hit, the five-year hit in COVID. They gave me another year and then, like the vice president sat me down.
Speaker 1:It's like you need to sell these or refine, give rid of them or we're gonna foreclose on you. You know, I'm like, okay, I'm selling them. Like I mean like because of COVID my credit was destroyed at the time. You know they're gonna fix it of the cares act, all that junk, but I'm like, okay, I guess I'm selling them. So I sold them. And then I realized, okay, if I sell four more, that could be a down payment on something else. And Tell me you need to keep a good accountant and talk to them, because I just happened to call my accountant.
Speaker 1:Say, if I sold these six, what is my tax obligation? And I own like a couple, like I own them for like 17 years. Okay, one of them. Just to give you an example, just to scare you guys out there, right, one of them was gonna like at the table I was thinking I was gonna clear, like 10 grand, the gains were gonna be 70, so 70. I mean if your tax brackets 35 or just say it's 50, it's $35,000. I would have had to pay in taxes on, or say 25%, whatever you know, on on the 10 grand I walk with, I'm like I guess I'm going to do an exchange now, so it just leads you down a path. But you got to know knowledge is power. You know that. You know. You got to know this stuff.
Speaker 3:Yeah, hire the professionals that know what they're talking about.
Speaker 1:Yes, don't be too cheap.
Speaker 3:It's a real thing.
Speaker 1:I let realtors make their money because they're the salesman of the property. I say what do you want to put it like? What's going like what? What do you need me to do? This house? I know what I'm gonna do to it, but I want them to tell me you know. So I have their input. Don't think for you know, use your experts, use your team. You know, not you.
Speaker 4:Yeah.
Speaker 3:Well, guys, thanks a lot for coming out. I know you guys have Responsibilities, kids to get to and things like that. It's middle of the day here. I'm sure we all have 75 text messages to get to so we appreciate your time and coming all the way out from Howard County and We'll be seeing each other more. Yeah, thanks for having us like and subscribe. See you next time.