Discover the transformational journey of Shaun Magner, from a tradesman to a real estate tycoon, and how he's pulling back the curtain on property investment for novices and pros alike. He's the principal of Monument City Capital, a collective of real estate investment companies based in Baltimore.
As we navigate his story and share our own beginnings, you're guaranteed to uncover the keys to meaningful connections and the importance of guidance in the world of real estate, highlighting how camaraderie and shared experiences can propel success in the industry.
Discover the transformational journey of Shaun Magner, from a tradesman to a real estate tycoon, and how he's pulling back the curtain on property investment for novices and pros alike. He's the principal of Monument City Capital, a collective of real estate investment companies based in Baltimore.
As we navigate his story and share our own beginnings, you're guaranteed to uncover the keys to meaningful connections and the importance of guidance in the world of real estate, highlighting how camaraderie and shared experiences can propel success in the industry.
How am I gonna buy another house when I can't even figure out how to buy the house that I wanna buy to live in? How am I gonna buy something for somebody else to live?
Speaker 2:in. If you've not done it before, you can't connect dots forward, but if you have, you can connect them backwards. So the idea there I went go on with this, finding yourself a mentor that's done it. If I've got a mortgage and I have this income but I wanna buy these rentals and I see all the other people doing this buying houses, flipping houses and buying rentals how do I do it? Well, find a mentor that's done it and ask them to connect the dots.
Speaker 1: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're here with Sean Magner. How you doing, sean?
Speaker 2:Good buddy, how are you? Good, nick, back for another one, I'm gonna ask you how you're doing, but we've been here for a couple hours.
Speaker 3:We have.
Speaker 2:Sean, thanks for joining us today, of course, thanks for having me, sean.
Speaker 1:It's been a long time coming, since we are kinda neighbors, now friends in the industry. So tell us a little bit about Sean Magner. Who is Sean Magner? What's your business? What do you do? What do you like for breakfast? That kinda thing.
Speaker 2:Sure breakfast. I usually skip breakfast, unfortunately I shouldn't. But about my business. I run a boutique kind of I call it a boutique collective of real estate businesses exclusively for residential single family rental type of stuff. So Monument City Group I run a Monument City Homes Holdings and Capital Capital is the primary focus of the business, which is a boutique hard money lending business. I also own a portfolio of a few dozen single family doors and all in and around Baltimore, ocean City and that's the primary focus of the business.
Speaker 1:So how did that start? Did you go to school for real estate investing, or you just kinda started this? Did you have another job before this business?
Speaker 2:Yeah. So probably like a lot of people listening Rich Dadport out, I read the book back in 2002 or so, written in 97, so I wasn't the first one to read it.
Speaker 1:But we gotta pay somebody to go through all of the podcasts that we've recorded and how many times that book has been referenced.
Speaker 3:I mean. So if you haven't read it yet, make sure you read it.
Speaker 2:Yeah, I just referred that book to somebody yesterday. They've responded to something I put on social and she says where should I start? I'm like go buy the book and read it.
Speaker 3:Yeah.
Speaker 2:Devour it, listen to it, I guess now.
Speaker 2:So my background after I'll go back a little ways and try not to digress too much.
Speaker 2:But after high school I had no real direction, which you know what was next for me so took a year off, decided to start swinging some hammers because we heard the rumors that there was money in the trades. So I swung some hammers, realized I kind of liked the trade, got a formal education from a trade school up in Pennsylvania where I grew up and got in the field, was working as a remodel and a trim carpenter and remodeling contractor for a couple of years and started getting to know some building material sales reps that would come to our job sites and an opportunity popped up for a window and door manufacturer sales rep. So I just kind of jumped ship from the field to selling building materials and parlayed that to the next, to the next and on to a few different building material sales companies and sales leadership and sales management for a few different material manufacturers and the barrier of entry. Realized that my goals and my income there and my opportunity there weren't gonna. They didn't match up right.
Speaker 1:So the barrier of entry for real estate's pretty low, as we could probably all agree, And- it's funny you say that because in the beginning, when you're thinking about real estate and like you're intimidated by trying to buy properties and stuff, you don't think the barrier of entry is low.
Speaker 2:No.
Speaker 1:You think it's like this massive wall that you can't get over.
Speaker 2:Well, it's real estate, right, it's not like buying stocks. 50 bucks you can go buy some stocks, right, you can get some sort of a fund, and I mean you could do it. But here, real estate, you do think it takes thousands or tens of thousands of dollars, right, and to hear these like buy it with no money down, you think how in the world do you connect those dots? So you're right, though you do think man, real estate that's I can't do that, I'm not rich.
Speaker 1:That's what everybody says. Like I can't do that, and I think now with like social media and kind of people telling their story on YouTube and podcasts and all that kind of thing, it's making it more relevant and more reasonable that people are like, okay, maybe I can do that.
Speaker 1:But I feel like it is like this big thing that people are like well, how am I gonna buy another house when I can't even figure out how to buy the house that I wanna buy to live in? How am I gonna buy something for somebody else to live in?
Speaker 2:You know I agree. So I recently read a book. I'm a Navad reader. I read a book. Dan Barton and Benjamin Hardy.
Speaker 2:They've written a trilogy of three different books who not how, I don't know, I'll get into that, but this book, 10x is greater than two, is easier than two. X, right? Not the same Grant Cardone 10X concept, but 10X is easier than two. X was the name of this book, and the one that they wrote before is called the Gap and the Gain, and that book they referenced this ability to connect dots backwards, right, meaning if you've not done it before, you can't connect dots forward, but if you have, you can connect them backwards.
Speaker 2:So the idea there I went going with this finding yourself a mentor who's done it and saying how the hell do I connect these dots, like you were just saying, if I've got a mortgage and I have this income, but I wanna buy these rentals and I see all the other people doing this buying houses, flipping houses and buying rentals how do I do it? Well, find a mentor that's done it and ask them to connect the dots. In the book they have this concept. As you're climbing a ladder, you've got one hand forward and one hand behind you, right? You shouldn't have a hand behind you, but that's the example they used and I thought it was pretty interesting.
Speaker 2:So finding a mentor allows you to cut the line and allow. Is a cheat code right and not a lot of people? I think now it's probably beginning a lot easier because of social media and these sites like bigger pockets. That's probably another one that you guys mentioned.
Speaker 1:And the Everyday Millionaire Show and the Everyday.
Speaker 2:Millionaire Show. But I mean really, though, there's just access to information that wasn't before, and so. I think that the excuse to not be able to do it now is less than what it was, but finding a mentor and asking them how, obviously delivering some value to them. But if you can ask them how to cut the line, you can help connect some dots.
Speaker 3:Getting a mentor is such an easy concept, right, but why do you think so many people fail to make that step to even getting a mentor?
Speaker 2:Man, I don't know. That's a good question. I think maybe it's just a fear of taking action, a fear of the unknown, limiting beliefs, that they'll embarrass themselves, maybe. Or because I mean, listen, that's fair People. I mean, it's very common to feel intimidated by asking a question that you might look dumb right.
Speaker 1:And how do you also like, if you think about it now, it's such a normal thing for us now. But if you think back to high school, if somebody were to tell you some one of your parents' friends were to tell you and maybe this is just for me but they were to say, oh, I'm a real estate investor, like that's what I do for a job, I'd be like what the hell is that? Like what?
Speaker 2:do you?
Speaker 1:mean that that's your job, Like. I always knew that people bought real estate as an investment, but I never thought of it as like oh, this is my identity, this is my job. Like that was never like a real thing. Like you're an accountant, you're a fireman, you're a cop. Like you're a carpenter. Like that's what I thought about with jobs and I felt like somebody to tell me like I'm a real estate investor, like I was like kind of like what is that?
Speaker 2:I don't know that anybody anyone ever told me they were a real estate investor. I do remember like a friend from high school's dad owning like a hundred houses and me just wondering how, how, so like how do you find that mentor?
Speaker 1:You know, like, if you're not in the space and you're not kind of surrounding yourself with those kind of people, or you don't know that those people even exist, or there's a place like the Maryland Investor Network or these meetups or whatever what you know. Where do you start trying to find a mentor?
Speaker 2:I'll tell you most of my mentors have never met their authors of books. Some of them are dead. I mean you can pick up a book and learn and that might, that could transition into, you know, finding your way to bigger pockets. And then finding your way to a local meetup and then meeting somebody that's and you explain what your goals are and they may say, hey, you know who you should meet. You should go, sit down with this guy and have a conversation. So I mean, putting yourself out there is a big one. I really do. I mean I believe that I think, again, reading these books, building the confidence that you can have an intelligent conversation when you find yourself in these environments, I think is important. I mean think about this. So I'll give you a story.
Speaker 2:I, when I first started in real estate, fully investing as like a full-time gig, was 2015. I flew out to Vegas to attend an event and I remember, before this event, I was attending some local meetups here in the Baltimore market and I was like who I'm talking about? Who like who we were talking about? I was, I would attend these events and I would sit on the sidelines like a wallflower, intimidated to get engaged and get involved, because it seemed to me that everyone there knew everyone else and they all knew way more than I did. So I'd listen to some schmuck talk about insurance and then I'd go to the back and eat some handful of potato chips and sneak on out of there. Right, I did my time at Total, this Service.
Speaker 2:Then I attended this event in Vegas and a buddy said sit in with me, I'm on a panel and we're gonna be talking about low-dollar, no-dollar marketing. So okay, so I sat in on this thing and he said when you attend these events, your intention should be to not do what I did, but instead meet one person, add one person to your team, whether you need them or not, just add one person to your team. So they made it digestible, they made it manageable, right, it wasn't quite as overwhelming. And so I came back and I attended an event and I did that and I walk up to a guy and I explained to him. I saw that it was a Baltimore Rea event and at the time it was a packed room. A couple hundred people were in this room. It was the main event. This was back in 15.
Speaker 2:A lot of the people in this room and the host said raise your hand if you're a rehabber, raise your hand if you're a landlord, raise your hand if you're a lender. So I saw this guy raise his hand and when he was a lender, I walked up, I introduced myself. I didn't need a lender, I didn't have a deal, right, I just saw him. He seemed approachable so we exchanged information. That was on a Thursday night. I hid him back on Friday about 10 o'clock at night. I was working in the office, sent him a message on about 10 o'clock on Friday and he responded. I guess he took it seriously. Thinks well, this guy's working on 10 o'clock on a Friday night, maybe he's serious. So he accepted my invitation to coffee.
Speaker 2:We sat down and I just kind of laid out what my goals were and he says man, for your house flipping goals, you should really meet this guy and for your land-lording goals, you should really meet this guy. And so sorry to make a long story long here, but I reached out to an agent who introduced me to. He started sending me leads. I said, hey, I like these houses, but I don't have a contractor to do the work. He said well, you should reach out to this guy. He did a bunch of flips for me in the past. I said great.
Speaker 2:So those two and I, we did about a dozen deals together over the next six or 12 months or so, right. And then on the land-lording side, I attended a different unrelated event and I heard this guy introduce himself. I'm like, oh, that's the dude that the other dude told me I should meet. So we hit it off. I invited him to lunch and the rest is history. And so I say all this to say that the answer to your question just put yourself out there right, you really want it.
Speaker 3:Badly enough, you're gonna find a way. Yeah, no, that's a good point. I mean meeting all these different people. When I first started out, the only thing I focused on was the first thing that's in front of me, and I kind of did it wrong. I would much rather have known everybody in the space, like the lenders, the banks to do the refinances with at the time, the contractors and everyone in between, versus just at the time I just did what was in front of me. I need a hard money lender.
Speaker 2:Right.
Speaker 3:And then I found the hard money lender and it's like, well, what do I do? Next, like I was asking people like what do I do? And then I found the contractor and fumbled through that.
Speaker 2:But that's no right or wrong way to do it. I don't think there's anything wrong with that. I mean, here you are, you've done well and you pieced it together and you're bulldogging through. I mean, that was just a different way to do it.
Speaker 1:Yeah, but I think you said it before like getting that mentor and having somebody that can walk you through these like deals and the problems that they went through. That is like a cheat code.
Speaker 2:It is. It's absolutely a cheat code.
Speaker 1:Cutting the line a little bit.
Speaker 2:Absolutely.
Speaker 1:But I also think it's harder to learn when you don't fumble through it yourself. No, I totally agree. So there's just situations in like property management and contracting, where, if I didn't like, fuck it up a couple of times and somebody just told me this is how you do it, this is how you do it. I probably still wouldn't have done it that way. I probably still would have done it wrong. And now it's like ingrained in my head.
Speaker 2:You and I have had this conversation before about property management. You know, I still self-manage my assistant manages in house and I advocate for self-management for new investors regularly, and the reason I do it is because there's a loss of education when you just hand it off, and so now I understand that it's also limiting in some ways too. I fully accept that. But I think that there's a loss of education when you just hand that, when you outsource that right away, and you know. The other thing with a mentor is this you know, a lot of us try to shoot with a shotgun and not a rifle, and this is an analogy I use a lot. Maybe we've talked about this before.
Speaker 1:I like it. I like where it's going.
Speaker 2:Yeah. So I like especially a new investor, right, a new investor tries to do it all. I want to be wholesaling, I'm going to be flipping, I'm going to buy some rentals, I'm going to buy some multifamily short-term rentals. Jesus, doing a lot, right, you see it, I've seen it all the time. And a mentor can help you. Kind of laser. You kind of get a little more laser focused. So the analogy I use is if you want to get through this wall and you walk up to it and I start pushing on it, it's unlikely that I'm going to get through it anytime soon. If I start swinging at it, I might get through it a little quickly, quicker, but if I walk up with a hammer and a chisel, I'm going to get through it in no time. Right, because it's just concentrated effort, concentrated energy and a mentor that's done it before can help you to set the shotgun down and pick up the rifle to get through it a little quicker. And I understand in the beginning you've kind of got to do it, especially those that are working a job. They haven't made the transition to full-time yet and I know that's a big hurdle that a lot of people want to get to, and so you have to be shooting with that shotgun, right, but the sooner, I firmly believe, the sooner you can set the shotgun down and pick the rifle up. There are riches and niches. Find your way to just niche down, keep niching down.
Speaker 2:I struggle with it. We're all entrepreneurial, so we see opportunity in every damn thing we do and we think, well, if he's doing that, I could do that, I should do that. I used to use this analogy when I was coaching that there was a. We were all trying to build a bridge over to financial freedom island, right. So you start building your bridge and it might look like a wholesaling business. And you look over halfway through building this thing. You look over in the distance and you see he's having success with this construction business. So you decide to start doing that. And this guy's flipping houses and this one's doing wholesaling, this one's buying rentals, whatever it is. You start doing those things because he or she is doing it and having success. But the problem is you look back a year or two later and all you've got is a bunch of unfinished bridges. That never got you over there, right, and it's very common you see it a lot. I have to talk myself out of doing new things and scratching bridges all the time, 100%, I do the same thing.
Speaker 1:I'm thinking about starting car wash. In the last month I've thought about starting a car wash, a laundromat, a cleaning company, because Nick texted me the other day about a post construction cleaning person.
Speaker 2:Got some dirty shit over there, nick, just need to clean it up.
Speaker 1:That's one of the hardest, like we literally build buildings, and one of the hardest positions to fill is post construction cleaning for some reason. The cleaners that clean and sweepy, sweepy and just wipe the floor down.
Speaker 3:That's one thing.
Speaker 2:What do they do? They'll sweepy, sweepy people.
Speaker 1:But post construction where they're vacuuming out cabinets from the sawdust and really getting into that like that's one of the hardest things. So I'm like why don't we start a commercial cleaning company? So every week I'm like I have to talk myself out of probably half a dozen businesses that I feel like I should be starting.
Speaker 2:I've got a real interest in private equity I really do, I mean and the idea behind that is to like I could be involved in a bunch of different businesses that I don't have to manage and run and operate myself. That's down the line.
Speaker 1:But operating, though, for me, is like or like. Problem solving is like part of the fun.
Speaker 2:I agree.
Speaker 1:Building the idea of it and then putting into place, like you figure out that one little system that makes your life like a little bit easier and that's like a high. And then you're like, wow, if I can do this, like app folio. When we started like unlocking the levels of app folio, we're like, wow, I could do that too. And like, oh, wow, we can automate that too.
Speaker 2:Like that just excites me. You'll find that, with this new VA that you're, that we've talked about oh yeah. I mean, if you can do that, maybe, maybe they can do this, maybe they can do this, and all of a sudden you just keep buying more of your time back, and that's dangerous for guys like us, because now you're going to find more shiny objects to go chase.
Speaker 1:Yeah, I think, though, the shiny object syndrome in general is a huge problem for people like us.
Speaker 1:If you're like an entrepreneur, if you're somebody that's driven to build and grow your business and stuff like that, like that is one thing that has been a struggle for me, especially when you have you start like, in the beginning you're just like so focused on trying to make it, and then you have a couple dollars in your pocket, and that's when it becomes really dangerous, because then you're like well, I could technically do this, but should, should I be doing this?
Speaker 1:That's like something that I have to like think about, and then, for some reason, I got on this really ridiculous train of looking at private jets and planes. I hate flying, right, I hate flying, but I was like, going to these conferences, doing all this stuff is like how can I make private jet into business? And I saw this is from an Instagram video that I saw somebody that's like I really wanted a private jet. I figured I needed to make this much money to make it make sense to have a private jet. Or I can start like a charter business and make arbitrage on renting jets to other people, and blah, blah, blah and now he has like a fleet of jets.
Speaker 2:Isn't that what net jets was?
Speaker 1:You could buy in and own part of it, yeah it's the same thing. But like, I'm like, well, how, what's like, how can I own a jet? Like, well, I have to start a business around jets and then I'll have a jet, because that's what we like, that's how I think. I'm like, god damn, I have to stop thinking like this.
Speaker 2:This is very dangerous and I've been regularly with the short term rental thing. I've I've been identifying places that I want to visit regularly and I'll buy something there that I've rarely used the one we have but for the same reasons I'm like well, if I want to have a house in the mountains, I can justify it because it's technically a short term rental in my business so I know you mentioned you had a property in.
Speaker 3:Ocean City. Is that a short term rental?
Speaker 2:Yeah, yeah, how many do you have there? Just one, just one. Yeah, how's it going? That thing performs really well. It really does.
Speaker 1:It's a good business with with Ocean City short term rental this one crushes for us.
Speaker 2:It really does. We only have one, and my wife, we wouldn't own it if it weren't for us?
Speaker 3:What about in the offices in like in the fall and winter?
Speaker 2:It is. I was actually logged in yesterday pulling some reviews off of there and we have two bookings right now and they're in next summer for next summer. So we've, we have it's dead all winter long, which is the time that I like to go down there, because nobody's down there. So, except in Ocean City, there's only one Dunkin Donuts open this time of year, which is annoying.
Speaker 3:Which one is that it's way up there.
Speaker 2:Yeah, no, it's way up there, there's a man, he's a coffee addict.
Speaker 3:It's in the hundreds of streets. I love Dunkin Donuts. I go there forever. I'm on 28th. I go to write the one on 28th Street and get coffee. Every morning I'm down there.
Speaker 2:Yeah, I brew some cold brewed homes. I usually take a few gallons down with me when I go, but if I have to go to Dunkin Donuts it sucks. There's, there's not. It's not a lot open down there, but it does. It performs really well. So back to your question. That thing pumps in the summer. It's a three bed, three baths. We get a lot of families in a week long stays. This year we didn't have as many three days or one week's days as we did in years past, so we had a lot more turnover but we still crushed. It was performed really well.
Speaker 3:So I mean, does it make up the difference of the downtime throughout the fall and winter? If you like, average it out throughout the whole year.
Speaker 2:Yeah.
Speaker 3:Kind of like more than like we can get if you rented it out annually versus, you know, short term.
Speaker 2:Yes, so I've, we've done on. I mean I can tell you that property we've flowed about 40,000 bucks on that thing, almost 40, about $38,000 on that thing. So that's cash flow. So it carries the. It carries it all year round Nice.
Speaker 1:Yeah, the short term game, where we have the house of Florida, and it is interesting because you got a really like the science behind booking like week long people, or if you book them like Thursday to Monday, which were Sunday, which is what people normally wanted to do, now you have to basically assume that, like Monday through Thursday is going to be vacant. And in the beginning we're just like, oh, just keep it open, three day minimum or whatever it was. And then we just started getting these super inconvenient bookings. So now, in like through July of 24, we have these bookings that are like three days and three days and it leaves like two days, you know, or one day in the middle that's vacant, and at 500 bucks a night, like that, opportunity costs adds up after a while. So the short term game is a totally different, a totally different beast.
Speaker 2:I didn't get into that business. To get into that business, we went down there. We were, my wife was pregnant. It was the height of COVID. We were living in the city at the time and we just wanted some space. So we went down on like a baby moon or whatever you call it. When you get away before you have a baby.
Speaker 2:And as I got nosy, I'm like, well, who owns this place? Where do they live? What do they do? What do they buy for, right? So I started doing some research and like, what could I buy for? So by the time we left we'd written an offer on a place. We didn't get that one. But now it got in our heads and my wife kept. Every time I'd come home she would show me a new listing. And we ended up buying this place, site on scene, and we renovated it and furnished it and put her touches to it, and it was definitely less of a business thing than it was a shiny object and itch that we decided to scratch. I'm not on the hunt for more short term rentals. I'm not building that business at all.
Speaker 3:But if it was COVID time again, I would be. I mean, that was a great time to buy. I got mine at 3% as a vacation home. It was awesome.
Speaker 2:Yeah, the debt on this place is great. That's part of the reason it performs so well. If I bought that today it certainly wouldn't perform with that kind of flow I mentioned.
Speaker 1:So yeah. So now let's get into that a little bit, because rates are crazy. They're higher than we've experienced in our careers as real estate people. What's like your strategy? Strategies for your borrowers that are looking to build wealth, looking to buy rentals, looking to flip houses? What are you telling them to do now that the long-term rates are damn near close to the hard money rates?
Speaker 2:Right, I know, I know We've had a lot of conversations when I say we me and other lenders have had a lot of conversation recently about that, but still the easiest money in town we're no longer. The delta is getting smaller between us and banks. I wouldn't say that I'm telling them much of anything. I will say that the portfolio, the loan portfolio, has shifted a bit. What I mean by that is since I'm primarily when I was an active operator and still an active operator it's primarily rentals than flips I've bought way more rentals than I've done flips and so naturally my rental or my loan portfolio looked very similar to my rental portfolio. It was about two thirds burr and a third flip and I was looking at those numbers recently and it's changed dramatically. I was wondering why my average loan size has increased so dramatically. But then I looked at the portfolio, the split between rentals and flips and it's 50-50.
Speaker 2:And the reason is probably largely because these rates, rentals aren't as profitable as they were before. Right, unless, of course, you're going direct to seller with your marketing and you've got, you've cut all the middle men out. If you will, then you can still make a lot of sense of it. And I hear people say, well, date the rate, marry the house, and by now you can refine a few years. Well, I never bought cash flow for the future, right, I mean I was. I wanted to quickly fire my job, so I needed the cash flow today. So I've never had that mentality of well, down the road it'll perform.
Speaker 1:I think a lot of people say that too, and I don't want to speak from experience because I haven't been in it that long, but there was a time, like in the 80s, if you said that you'd be waiting like 21 years for the rates to go down, I saw something.
Speaker 1:I saw a meme or something like that, but I was like, okay, well, that makes a lot of sense, because all these people were like, oh, it's fine, just buy it at 9%, it's going to be fine, you're going to get down to five next year. Who's telling you that they're going to drop it to five next year? Where's?
Speaker 3:the Cristobal.
Speaker 1:Because that's not what happened. The last time this happened. It went up and up and up and then it stayed up for a while before it came back down. So like, if you're buying stuff at a 9% rate just in the hopes that next year is going to be 5%, you might be not so pleasantly surprised.
Speaker 2:No, I agree. I mean I saw a meme or something that someone shared. You guys might have seen this. It was local, from somebody local that, and I didn't fact check the data, but it said that if you bought a house in 1971, I think it was 71 or 72, when rates were 7.1 or 7.3% and you decided to wait until rates dropped to buy again, you would have waited until 1992 to buy. It's 20 years, so you'd have been renting for 20 years. So there is an argument that there's always a good time to buy. It's just that how you buy should differ, should change.
Speaker 2:I'm not actively buying myself right now rentals. I've got one house under renovation and I haven't put anything new under contract since June or July. That's difficult for guys like us because I'm a deal junkie. I want to buy, but I'm also realizing I'm parking a lot of cash in these deals. Between acquisition costs and carrying costs and overage of construction and refi costs, You're parking $15,000, $20,000. You can only afford to do that so many times for you to think, Sean, should I be doing this? I mean trading $20,000 for $400 a month that's a big trade-off, that's so true.
Speaker 3:Whereas two years ago we were refinancing, cashing out that amount and it was still cash flowing pretty quickly because the rates were so low.
Speaker 1:So what's the move now? Is it just do we flip? Do we not buy rentals? I've slowed down a lot on buying too, but with guys like us that have built businesses around it, it's hard not to feed the machine of the people that you have working for you.
Speaker 3:I think the biggest problem originally when rates started going up, is sellers still wanted top dollar and they were still getting top dollars even when rates kept getting higher and higher, whereas now I do see the market pulling back a little bit, where sellers are starting to realize that the markets are starting to slow down. Houses are sitting on the market longer, which is most likely going to drive prices down, which will help out in those scenarios where the rates are 8% to refinance a rental property, for example.
Speaker 1:Yeah, I mean I just talking about talking a little shit about Daniel and Wesley over at HK. They try to sell me a house for 315 or 317, I think it was, and we were over at Brian from Beltways event on whenever that was last week and I was like now, this house. I went there, saw it the house worth 305.
Speaker 1:Like I'm not paying you more than 305. Like we're gonna get 325 for it. We're gonna give up what I said they'll. Like we'll give it to you for 317 I think that's what it was and I was like no, I think it's worth 305. Like I'm gonna stick with 305. Like okay, we're gonna take this other offer at 315. I just got a text today. If it's you still got 305, like it's all yours that's indicative, isn't it?
Speaker 1:and I'm like, yeah, that's what the house is worth. Like the person back down at 325, because that's not what it's worth like. If this was last year or a year and a half ago, the house would have sold for 350. But I think we are starting to see the softening of the market a little bit, which is like where does it stop to? That's like the concern. Right, what? What are you like?
Speaker 2:are you guys trying to hedge against that in any way, or not necessarily no, and the reason I say no is because the portfolio split with what I do primarily is I service investors with our short money loans right, and so a lot of these operators are doing both fix and flip and burr right, so they're doing both and one feeds the other and nobody wants to go out and get a job, so they're gonna continue doing what they're doing. We've got a lot of steady repeat borrowers in the pool. We're not really shopping for new regularly, right, we're not having a market for new borrowers and such, and so these guys are staying steady. Now. That said, of course I don't want to have all my eggs and one in these few baskets, of course, but I'm. I mean I'd love to be buying again. I do look forward to buying again.
Speaker 2:Plus, obviously, in hard money there's not a lot of. There's not a lot of right off there, right. So I'd love to buy some more depreciating assets for those obvious reasons. But right now, in single-family space, it just doesn't make a lot of sense, and I've listened to one of your episodes recently. You guys are talking about multifamily, I think with Michael Schiff, and that's a space that's I've got, I've had my eye on for a long time but just never pulled the trigger and I certainly am not planning to do it right now. But I think that why I bring that up is that I think that the, the exit strategy or the asset class, I might be making some, some changes in the near future so let's talk about that.
Speaker 1:Because today I analyzed the deal with one of my clients who I manage his properties for and he has, like he does a lot of data scrubbing, like he gets lists from people like Faisal and does a lot of data scrubbing and he has under contract now an RV park in like you know where Rocky Mount North Carolina is. So it's like just north of there, right off 95, it's like a hundred unit RV park and it's got a ton of value adds. Like right now it's got individual pedestals with electric but they're not individually metered so they could put like smart meters on there, charge people back for electric, just stupid things like that. The, the lots aren't cleaned up. That needs a lot of landscaping and needs some love. It needs better management, needs some marketing. Right now it's like 30% occupied. It needs to be 50% to make real money.
Speaker 1:But at like 60% occupancy, the, the cash flow, the, the cap was like ridiculous in 20-25% with like very, very little marketing. I mean very little management. You have one or two people that manage the entire park and it's all their own shit. So it's like you bring in your trailer and it breaks like sorry, you're, you know, get fucked like that. You can't, you know, too bad too, so sad. So I think that's like a cool model, changing, like you said, asset classes, like I was looking at today and I was looking at like okay, so if we can just raise market, like do some marketing and raise this by 10 trailers a year, we're gonna make an additional $60,000 a year. Whatever it is is $6,000 a year or $600 a month, so what's that?
Speaker 2:like five, I don't know it's much money, it's a lot of money.
Speaker 1:So you you like that asset class, I I do personally, just because, like this is right off 95. How many people are snow birds that drive from here down to Florida. They have a place to stop. It has public sewer. This is the other thing that I really liked about it, because a lot of the stuff that I've heard about RV parks is the septics they get. Septics are expensive to begin with. This is on public water, public sewer. Like the water bill for a hundred. Now it's not as occupied, but it's 200 bucks a month. Like that's for all the water. Now you can smart meter those out and charge that back, but the cash flow like you'd be all in with catbacks, purchase everything it was like 1.2 million and it's $600 per month per spot for the hundred spots. What's 600 times 600 times it's a 660 thousand dollars. Right, 60 thousand dollars a month on a million dollars.
Speaker 2:So this is an RV park, so a temporary pull-in, pull-out.
Speaker 1:Yeah, I gotcha did, and they said they have a couple of long-term people that like live there full-time but most of them are just like coming in for a month come they work. They're a lot of workers. He said like there's some development going on nearby it's like an hour from Riley so there's a lot of people that come in. Even companies that rent and you know, rent to put a trailer on the spot for some of their workers, whatever what's the demographic of the owner right?
Speaker 2:now, who owns it? What type of person? Company?
Speaker 1:it's an old guy that tried to basically, I think, from what I understand, sell. He tried to subdivide and sell it and they wouldn't, the county, the jurisdiction, wouldn't let him. So he said, okay, well, just set up an RV park, essentially. And that's what he did. And it's an old guy, doesn't want it anymore, doesn't want to manage it. He has done a really bad job of marketing it and that's why it's just sitting there kind of empty. But the purchase price is like 880 and cat-backed, everything like say, you can be in it for like 1.1, 1.2 and if you're even 70% occupied, you bring in like 40 thousand dollars a month, like on a million dollar note. That's pretty fucking good.
Speaker 2:The reason I asked them, the demo, the owners, because of these boomers that are all retiring. It's what's got me interested in private equity. I mean so many business owners that have no succession plan. They're aging and they're getting up there and age they want to retire. They're gonna sell their businesses off. A lot of mom and pop, a lot of things you mentioned earlier, right with car washes and laundromats and such trade businesses service for sure for sure.
Speaker 2:I mean there's. I don't and I'm gonna botch this statistic, but I believe it's something like 10,000 boomers are retiring a day, or we're famous, or maybe just bullshit statistics so nobody fact check me you want just go that check. We got it right here, just go with how many boomers are we just retiring per day. Man, oh, this is good. Yeah, how many boomers retiring a day?
Speaker 1:it's some staggering number and I think that their generation too. We have such an advantage because I thousand.
Speaker 2:You're a bingo. Look at me. Ten needs Google. That is crazy.
Speaker 1:That's a lot of people, a lot of them own businesses and I think one of the big things that we have the advantage of and I feel like maybe you and I we've had so many like long business talks together, but like I feel like maybe one of the ones is that the ability for us to implement technology and beat out those companies that haven't integrated technology in a successful way, like they're, you know, in their 60s, late 60s. They're now trying to sell their business and the only way that they're gonna get the value out of it is, if they are valuable, by using the stiff stuff that they're doing.
Speaker 2:I've got a lot of buddies that have that made the shift to the, the self-storage asset class, right. So the asset class, a lot of people like it's a very I mean, for a lot of good reason. But a lot of these guys are flipping these, or at least value adding to these. These facilities are doing are because of what you're talking about. This is a mom and pop that's owned it for decades, generations maybe, and you pull in and it's gravel parking lot. The corners of all every building have been banged up, there's nobody working any facility, there's no security, there's no cameras right, there's no lighting in the parking lot, none of that stuff. So these guys are essentially just coming in and they're adding tech by putting gates, automation and things in place, building other websites similar to short-term rental. That's more of a business that happens to have some real estate involved in it.
Speaker 1:In my opinion right, just collecting money online is one thing, that yeah these folks aren't doing right.
Speaker 2:I mean even me. I got into the. I mean I started collecting rent from you know, maybe about 10 years ago or so, and a lot of it was money order or cash that I would have to pick up that's ridiculous.
Speaker 2:Now, if it's not in our software, it doesn't exist. It didn't. If it's not a maintenance request, that came through online with pictures, it didn't happen. We're not collecting money through cash app or Venmo. It's all paid through to the portal, so it's you have to, you have to adopt, they have to brace it so I have a change.
Speaker 1:I had this like kind of segue into because I know that you are starting to think and talk about maybe I'm gonna blow up your spot here but doing some business coaching on your own to private businesses and such. You know, with you being a coach, what is one thing that you come in and the first thing that you're looking at is this person like coachable? Is this a business that I even like, that I want to be involved in? Like what is? What does that kind of look for and what are you looking for in these business?
Speaker 2:owners. Predominantly, we're focused on real estate investors that want to go from being a hobbyist to six figures regularly, or six to seven figures right to scale the griller business, the business acumen and the the word just slipped me. What I'm looking for predominantly is the business acumen and the why, the desire they're really desired to grow. I'm not looking to the mindset is a big one. That's the word I was looking for. Thank you. Sorry, I don't know why I said thank you, but the mind.
Speaker 2:Thank you. The mindset, that's the big one. Why in the world are they want the seeking coaching? Is what they're looking to do realistic, is it not? And are they the type that is coachable and they're gonna be able to listen to us? Because there's nothing more deflating than walking a horse to water and not watching, watching them just sit there, not drink.
Speaker 2:I did some coaching for, at the time, one of the nation's largest real estate and best-medication companies, back before pre-covid. We're doing traveling on the country, doing some speaking and coaching for them and I, like some of these people, spent tens of thousands of dollars to join these programs and I had to convince them. It felt like on some of these coaching calls, to want to be an entrepreneur. Even. I'm like what am I doing here, man, like this is that's painful. So I'm looking for not that right when I'm looking for that, so I can avoid that, because I want to see results right. I don't want to pour into someone and not get and them not have results. You know that. So that's what I'm looking for.
Speaker 1:The mindset is a big one, man that's kind of interesting, like when I look when what I would really like to get into is not so much coaching I don't think maybe like new people, into how to start. I would love to go in and look at businesses that are like 20, 30 years old, that have had the same management, the same person, the same Karen that's sitting behind the desk doing the same paperwork, the same work.
Speaker 2:She got to be a.
Speaker 1:Karen, you know that there there's Pam better.
Speaker 2:I mean Karen Karen or Pam.
Speaker 1:That's the only the only two older you know older white women that are in the office. They're stacking these papers in when their competition is me on my phone with Dropbox and Google Drive and Google Suite and the VA in the Philippines, for $9 an hour, where Phyllis. Phyllis is also. She's in the back office. Now. Phyllis is taking the papers that Karen scans and then putting them into a different folder, so then they can stack they have a wet sponge there so they can get their finger when they thumb through the papers funny, I'm joking about it, but like that's.
Speaker 1:There's real businesses, people that I know and I'm not gonna call them out, but like people that I know that are stuck in these ways, that my construction company is doing more revenue than them and I have half the staff like how is that? How is that possible? How are you gonna compete in this market when you're not changing with the times? You don't have the person in the Philippines, you don't have iCloud, you don't have Google Drive. Like you're still operating in this kind of old. I would love to take those businesses and consult them and be like you're doing this way wrong. Let's fire half these people, let's hire Dropbox, let's hire Google Drive, and now we're gonna be double the valuation.
Speaker 2:So some of the these modules that I've been building out and they're certainly focused around that business foundations right and so getting the domains and the entities established in the right, the right way and getting adopting the right types of software to be using so that you're not stuck in the past. I remember when I got into the, the rental space, I was mentored by a guy who called himself the lazy landlord. I'll leave his name out, but he called himself the lazy landlord and so I just got kind of, I kind of adopted that and this guy was using Excel spreadsheets very successful, no doubt about it, and learned an awful lot from him one of the most creative thinkers, I know, but he was just antiquated right, he was there's no way around it, and people now have run circles and let around him and lapped his success in a short period of time because of their embracing the tools that this guy refused to embrace. And so part of these modules that we're building out do definitely do speak to business foundations. So I'm just picking apart.
Speaker 2:What are you currently using and why? How's it working? I don't think I follow follow Marcus Lamonus, you know he is. He had a show. I forget the name of it. Anyway, it was a television show, but I saw him speak recently at an event and he was a keynote speaker there and his, his whole thing was just saving businesses, just rehabbing business. He would come in and remember there was that guy, the bar rescue you ever heard of that yeah?
Speaker 2:same thing, but for for small businesses. I forget the name of that show, sorry, anyway, no chance he's watching this right, marcus Lamonus anyway. But interestingly he would do that. He would deep dive on someone's business and find out the weak points and and exploit those weaknesses point, draw, draw, you know, draw light on them and correct it. I think that's awesome. I think that's a lot of fun. I'm not saying that my business is perfect, but in theory it is right, so I know.
Speaker 1:I know what I should be doing. You know what the thing is, too like. Even if you have a business that's making 50% net margins and you're doing great like, you still don't really know what you're missing, until someone else comes and looks at it right.
Speaker 1:That's very true you just really have. You think everything's going well. So, like even successful businesses, they have consulting companies that come in and look at things. Because you're you just have these blinders on. You're like, okay, well, my bank accounts growing, the assets are growing, the business, the people seem happy, so let's just keep rocking and rolling the way it is. But you don't know that you're parallel business. That's coming up, that that 20 something. That's like building a software that's gonna eat up at folio and eat up all these other things that you're doing. You have no idea that that's also happening at the same time. So, as well as you think you're doing, there's somebody else that's like coming up the bike and it's gonna take your spot.
Speaker 2:I think it's a good exercise to have your business audited, even if by just a friend somebody else that's in the business you know we do, I'm sure you do.
Speaker 2:You and I were on the boat a few weeks ago and we're like and you I forget what the mention was, but I got you just it provides perspective that you're you're because this is a lonely business at times. Right, we're on islands at times right, it's a cliche, we all say that. So you go, you get, you know kind of I don't know what to say like in your own lane, you stay in that lane and just to to have somebody else that's maybe in a similar business or an answer like your business, come in and say, hey, why are you doing that way? Why haven't you just, why haven't you used this? Why are you still using that thing when this is now out like dude, I didn't even know about that thing. Yeah, right, so having it audited and having somebody come in and poke holes in your business Is a healthy thing for sure just like the simple question.
Speaker 1:I think I probably asked Nick this and I think somebody asked me this before and it's like okay, well, if I just gave you like double the amount of business right now, like why can't you handle it Like what's the right and what's gonna be the thing that breaks you?
Speaker 1:Yeah is it your staff? Is it your training? Is it that you do too much in your business and you don't have enough people that you're delegating to, or people aren't trained right? Like I think that's a huge, I mean maybe just mental exercise with yourself as a business owner. Like, okay, what if tomorrow Double business just came in? How would I handle that? What I fail, what I, and how could I possibly succeed? What's that next person that I need? Or the next Software or whatever the tweak is? You have to think to start that like problem-solving kind of you know thought process.
Speaker 2:And I think, another thing this is kind of parallel past what we're talking about, but accountability partners, right, and I have an accountability partner in almost every aspect of my life. Right at the gym I have a trainer because well, I'd if I wake up feeling kind of lazy, I know there's somebody waiting there for me at 6 30, right, and gotta go. So, having accountability partner, they allow you that to, to they get the best out of you, I think, in all aspects. Whether it's for your mental health, you're talking to a therapist. If it's your physical health and you're at the gym or you have, you hire a business coach just to help you poke holes and draw light on the weaknesses and find out what I mean there's. There's no harm that can be done, done by that, other than your ego gets a little deflated. But you know, a ego checker once in a while is a healthy thing. Mm-hmm.
Speaker 1:Yeah, no, absolutely so. When you're thinking about starting this coaching business, what is like your, your step one in trying to Sell yourself to people, why should they hire you? And and that's kind of one of the reasons that Nick and I started this podcast it's almost like a living resume, right. Like people now see us, we're starting to throw bigger events where, you know, most of the people now in the real estate space are gonna know kind of who we are, and that was done on purpose, so then maybe in the future we can sell different products or grow our businesses through that market. Sure, so how are they, you know, how are they convinced that Shawn Magners, the guy.
Speaker 2:I like that living resume thing with the podcast. It's exactly what it is. I mean, we've been doing some of that for the last year on social, for the same reason because I've been Anti. I mean, I'm a little older than you guys so I have not embraced social as quickly as some, and so last year I recognized about two years ago I recognize my business really needs that we've had, you know, some social presence for a long time, but we took a little more seriously about a year ago for that same reason.
Speaker 2:Just credibility, and I mentioned earlier riches and niches. Right, if someone wants, I can help somebody achieve at a high level it something that I have. I can't, I'm not gonna be able to coach. If somebody came to me with a car wash you mentioned that earlier for some reason that just came to mind. I don't know the first damn thing about car washes and running them. I could probably figure it out pretty quickly.
Speaker 2:But what I've done is I've I've been able to produce some, some level of marginal success and what I do in this small little thing that we've done, that we've got and I've had a lot of conversation with a lot of investors when I've done some coaching before, and I realized that there is a big Gap between connecting those dots, between the wants and the ha, the haves and the haves not, so I hate to say that have and have not, but the ones that want it and the ones that have it right.
Speaker 2:How do you get there? Well, I'd like to be able to reach back with that all of branch, as I mentioned earlier, with the climb in that ladder you know, I've had some. It's not for monetary gain at this point, it's because I want to make an impact right and I want to be able to provide. I have a fun life, I live a free life, I'm in control of my time, though I work very long hours and hard. I enjoy it. I like building this thing, but it's all by design, and so I'd love to be able to provide that for others, and so if I'm not gonna be the business coach that helps somebody take a company public, that's not at all what I want to do. But if they're trying to build a little bit of a lifestyle brand, a small little lifestyle brand, I can certainly help with that. I don't know if that answers your question or not, though.
Speaker 1:No, it does a bit now. Why do you think? Because we keep going back to the kind of getting people from working to not working.
Speaker 1:What? And? And it's so ironic to me because I think the people that want to be their own boss, they want to be the entrepreneur, but they still have that job. They think freedom is on the other side, as like they don't have to work as much, but really that's not the case. You have to work double the amount, but you just kind of get to choose when you do it. So sometimes it's 2 am when you wake up and you can't sleep and you just have to do those emails because you have to, not because, like, you're on the clock because your boss is looking, but because if you don't, then you're not gonna get paid next week and then you can't pay your employees. So what do you think is like that thing that separates those people but that Won't? Like they know that they want to be an entrepreneur but they don't really know what is on the other side. Do you, or do you think that they just most people just like hate their job and they want to do something else? Like what is? What is that thing?
Speaker 2:I think it's both. I think some people do truly hate their jobs. I do think to your point. A minute ago I heard this saying a long time ago Could it becoming entrepreneurs skinner, quitting your 40 hour week for an 80 hour work week? And it's very true. I mean, it's very, very true.
Speaker 1:So I think I Don't know if it's like false pretenses or.
Speaker 2:I think that social media influencers have done done big companies some damage by by making their employees think that the grass is greener. It's certainly not always greener. We all know grass is greenest where you water it right, and that can be at your job. If you like your job, stay there. If you're answering your calling as a first responder or a teacher, that's admirable. Stay there. It's poor water on that grass, it'll be green. But I think that these social influencers have really People see that and they want that lifestyle, and I don't know that they realize the work that goes into it behind the scenes.
Speaker 2:It's a lot of work. It really is. I also don't know that entrepreneurialism and I don't I've had a hard time with that word right, entrepreneur? I don't know that. I consider myself an entrepreneur. I think I'm doing the same thing that it's been done before, like a Elon Musk, jeff Bezos these are some entrepreneurs in my opinion, right, steve Jobs, rockefeller, all of them. But I'm not, I'm not, I'm not inventing a wheel, right? I'm just doing it's already been proven. So I have a hard time calling myself an entrepreneur. But I think that this, this self-employment thing, is Is appealing to people because they think they can control their time, and you can to some degree, but if you don't do it right, your time will control you and, and, and I don't know that people are maybe realize that Until they get onto the other side.
Speaker 1:Yeah, I think one of the things that when Nick and I were out talking to Brandon Turner one of the things that he said that really resonated with me when you're starting a business and I was guilty of this and I'm sure most people are you do the task yourself. You start this business, you're doing the task yourself, you start selling that service to somebody else and then you infill underneath you with employees that you train to do that task, instead of starting with people above you, essentially. So like starting with a director of operations and then have them being the people that are, like subcontracting out some of the labor on the lower end, where it's not maybe they're not hiring a full-time person because you can't afford that and then that top person, instead of getting a salary, gets equity in that business. Now you've like from the beginning, kind of auto removed yourself from the daily operations or from the need to learn how to clean the floors or how to wipe the toilets down or whatever. You're kind of just like putting somebody else on top. What do you?
Speaker 2:think about that strategy. I love it. You and I talked about this in brief one day and I completely agree. I've not even done it myself and I completely agree. I mean, I love the idea of hiring a higher level, higher caliber something that scares you. I don't even know if I can afford this person. I don't know why they'd even want to come work for me. That's the person you probably need, right, depending on the business, depending on your goals.
Speaker 2:If your goal is to stay the lazy landlord, as I mentioned earlier, chuck in the truck. I mean, there's nothing wrong with that, so you might not need to think as lofty or shoot for the moon, in that case, right. But if your goal is to grow as I think a lot of us want to build and grow and we enjoy doing that we get a lot of fulfillment from building and growing it might be a it's kind of counterintuitive. You'd think, well, I'm doing all these tasks and you buy myself some time. I want to hire a VA to do these little tasks that I don't want to do, so that I can be thinking about the bigger picture, right? Okay, that sounds good in theory, but if you could hire somebody bigger than you and put them in place instead almost flip that thought on its head. I think that sounds. I mean, it gets me excited. I think it's amazing. I have not done it myself, but I think it's a great idea.
Speaker 1:So with my property manager company right now and I was golfing the other day with Brenton and was explaining this to him like I was like our property manager coming to our house not making much money, profit wise, but I'm overstaffed, which is like a place that no prop. Not many property manager companies say like I have higher level people than I should on staff, not making money. But now I know that those systems are like so solid that the next person that comes in underneath them is going to be trained properly. They're ready to take on somebody. There's not, you know, fire drills getting put out every single day. It's like you take that short term hit for the ability to set yourself up for like that long term gain.
Speaker 2:Yeah, I love it. I ask myself on the way in to work each morning, usually every morning, what's the most important thing that my business needs of me today it's usually just like you said is either putting out fires or just dealing with day-to-day stuff. I've got an assistant that helps with a lot of that. But you know, I think to myself what if she leaves, what if she was gone? What would I do? You know, that's a real thought. You've got to be prepared for those moments, and so that's why it's important to embrace software and important to think bigger. But I love the idea of bringing somebody in even bigger than you. That's almost intimidating to you, right? I?
Speaker 1:love the idea and just saying, hey, like this idea is, if it's successful, you get 50% of it, or you get 40% of it, or whatever it is.
Speaker 2:We can't afford your salary right now, but we can afford to give you this equity you know I have an interesting thought, kind of circling back to the private equity space, I was doing some deep diving a couple years ago in this private equity thing and I came across a guy. We got on the phone one day. I forget exactly how I got. We got in touch, but he had a concept and how he bought in, how he gained equity in businesses, was by adding value. And I'm like well, tell me more about that. So he was a marketer, he was good with building funnels and bringing in, you know, inbound leads.
Speaker 2:And this guy cut his teeth with small real estate teams. So he contacted a real estate team and said hey, if I can increase your sales by X percent in X period of time, can you pay me X dollars? Right, just as this is just for resume building. And he did that a few times successfully. So finally, now that he had proof and concept, he reached out to a small contractor. This is out of Philadelphia. So we reached out to a small contractor and said listen, if I can grow your business by 50% in the next six months I think it was 50%, some big percent, whatever it was if I can grow your business in the next six months by 50%. Would you give me a 30% equity stake in the business?
Speaker 2:The guy's, like you know. He had him in hall, it was his baby, all this. But he ended up doing it and midway through the six month period the guy called him up. The contractor called this young guy up and said we're there, let's sign you up. Because he just pumped the sales guys filled the schedule, the sales guy schedule. They had more business on the books than they ever had and I'm like, well, I'm going to give up 30% of this much bigger business that I now have. It's no brainer for him. So I don't know why it went off in a little bit of a digression there, but you made me think about that.
Speaker 1:Yeah, I love that Like the automating of businesses in general. Like there's a family member of mine. He's like one of the smartest people that I know he's. He was a Chinese linguist in the Air Force. Like looks like us but speaks perfect Mandarin three other dialects of Chinese like just super good.
Speaker 1:Was it in the military, then went private sector or whatever, and he's an automation guy. So all he did for the government was take tasks that were done by probably 50, 60 people and automate them with computers, artificial intelligence, and that's was his job. But he got paid like a government employee did like not that much, right, and I was like dude if you took and I was, I was actually fishing with him the other day and I was like dude if you took all those things that you like you got rid of. Like he got rid of, like complete departments of people in the Air Force, like got rid of their jobs because of his automation. I'm like, if you just did that in like the private sector of business to like five or six businesses and you're like, hey, if I can like figure out a way to get rid of half of your overhead, which is like mostly payroll, if I could just like get rid of half of it.
Speaker 1:Would you give me this much equity and a buyout plan in five years or something like that, where you could just like lock yourself in, be like hey, like talk about Elon Musk, he went into Twitter and fired 80% of Twitter. Like there's video of him like talking to. Like yeah, it turns out like you don't really need that many people. Like he fired 80% of the people. Like I think most businesses are like that, where the owners just become complacent, like I'll just hire this person to do this or just subcontract this or do that. Like I think most of these businesses have so much fat on them that can be trimmed and automated and technology can take over. I think there's so much value in doing that and holding value, taking an equity stake and then either selling it back or just collecting the dividends.
Speaker 2:Yeah, now you make me think of subscriptions. In my own business, and probably in all of our business, you used to pay Dropbox to have an account for you and you start using Google Drive and you never got rid of the Dropbox account and you keep paying that All right, you're both smiling. You're guilty of it too.
Speaker 2:I have both, I think that's some fat that could be cut out, and I talk with my assistant about that regularly. I just saw a charge today from one of our cards, from jobsonlineph or onlinejobsph in the Filipino, fiverr and Upwork that a lot of people get their VAs from. I'm like why did I get charged for the second month? We only needed that last month. Get rid of this thing. So, anyway, you made me think of that. Between auditing and then hiring this person or bringing somebody in like that, what was your family member's response to that? Did they have any interest in building a business to help people's businesses?
Speaker 1:So, yeah, they did. I think I opened up his eyes a bit to getting the equity back, because he was like, well, people aren't going to want to give up their equity. And I was like, well, because I remember the conversation that you just said about the guy. We were sitting in the space. We were standing in the space and you told me about the guy that you were just telling me about on the podcast and I was like, well, look, dude, like if you think about it and you promise this person, you're doubling their business and you're just taking 25%. And in that deal you have a five year buyout plan. So, like, your business gets valuated in five years, you're just buying my equity out and it's all done. So you just put aside this much money for the next five years and, boom, my stake is bought out and now you have your whole business back. That's like a genius.
Speaker 2:You know what this kid told me? This guy was in his mid-20s. He said he was bringing them and this was about like I said a year or two years ago 17 to $21,000 monthly dividend checks from this contracting business. So his 30% stake was bringing him and he said that his role was director of sales and marketing. Yeah, I think it's a smaller modeling contractor. What is director of sales and marketing? He runs their social media and he helps these people, like make sure the funnels are functioning properly and help them convert these leads into sales. Four hours a week is what he said he was working. I don't know if I believe that. I mean we all say we work less than we do, right, but yeah, Nick's name is for lying about how much he works.
Speaker 3:No, I work quite a bit. I wake up. Wait, I'm sorry.
Speaker 1:Marcus, what did he say? Google it. We were in Florida. He says I work like two hours a day on my rental, like two hours a day. For the next four and a half hours he's frantically on phone calls walking around Orlando Florida. Literally, we're all like all of us, daniel. Everybody's talking like oh, two hours, we're going on four hours if you're walking around on the phone, right?
Speaker 3:now.
Speaker 1:He's like oh, that's the construction side.
Speaker 3:It was, it was. Yeah, there's two sides to it.
Speaker 1:So he just breaks it up just to justify it.
Speaker 3:No, I mean realistically. We're always on call. We're always working all hours, throughout the day and night, sometimes most of the time.
Speaker 1:Yeah, that shit sucks, the nighttime work that I was just asking Tony. He was just on working at Bay Management For us, the property management stuff. It always happens in the afternoon. All the problems are happening and nobody else is working except for me. So that's when I end up having to deal with all of this.
Speaker 2:You had furnaces go up on Friday nights only or Saturdays. You're like how was that a thing?
Speaker 3:I think it was last year when we had those very cold temperatures down into the single digits.
Speaker 1:It was New Year's or anything. Yeah, I think it was either Christmas Eve or New Year's Eve.
Speaker 3:Yeah, and it all happened. It was four or five different. I know you had a pipe burst, I had some furnaces that were down and I'm like man.
Speaker 2:Yeah, do you say the work in the late nights sucked, though I disagree. I have a small office that's not at home. I bought an office space nearby and I get so much work done at night because the phones aren't ringing.
Speaker 1:People aren't calling me because I'll find myself on the phone all day long I'm just at night is when I'm dealing with problems that aren't my job, like I'm dealing with the maintenance requests that the daytime staff didn't get because the people were at work and they came home and their toilet was leaking or something was wrong, and then I'm the one at night. So one of the things that Tony mentioned that I think I'm going to start doing is staggering my staff time.
Speaker 1:So maybe like hiring a VA for just the nighttime just doing like an overnight kind of person, because the problem is with property management. Everything is an emergency for these tenants. So if you don't treat it like an emergency, they're going to complain. They're going to send the BBB a letter that you know If they're subsidized renters.
Speaker 2:they've got a little bit of leverage with the programs. They call it an emergency and you've got to respond.
Speaker 1:I mean, it's just all like they threaten to put their money in escrow or it's just. There's always something where it's just like okay, it's your water dispenser on your fridge, it's Friday, I'm not going to get it fixed tomorrow or Sunday. We're probably not Monday either.
Speaker 3:That's the problem with having water dispenser on your fridge or rental.
Speaker 2:That's true, that is true. Yeah, that's a good point.
Speaker 1:Some of these bougie canton places you just put it in or a lot of these owners bought it, lived in it and now rent it out and like that's something that comes to the house. So in my lease now it does state we do not fix ice or water dispensers.
Speaker 2:It's about garbage disposals and dishwashers. What do you do with those things?
Speaker 3:When I first started I used to buy brand new washer and dryers and used to put in my lease that this is a new washer and dryer that I'm providing you. If it breaks down it's your responsibility. And that would kind of help with service calls on, like if they overload the washer, overload the dryer and something goes wrong with it. Like this is a brand new washer and dryer when you lived in this property but then that became I couldn't afford that anymore to buy brand new washer and dryer.
Speaker 1:Every time it churned over it comes. So it was like, I imagine, I had to take that out of there.
Speaker 2:So it was just like from the beginning.
Speaker 3:I had someone who had more properties than me say it just go to Lowe's or Home Depot, buy a set of cheap washer and dryer brand new. You get the warranty. And then over time I'm like man that's adding up. And then when the cost of appliances went up, I'm like I have to get them used now and I can no longer add that in there like, hey, you're responsible for this for used, you know appliance. I felt that wasn't the right thing to do.
Speaker 2:Are you doing that? Still buying or buying, use for your new rehabs For new rental rehabs. Are you buying used? Yeah, are you? Yep, I had done that for a long time and I'm I've been buying new for for the last few years.
Speaker 1:For that same reasons just buying new, but I don't buy them every turnover.
Speaker 2:Not at the turnovers. I do because if you need to get the highest sprays, all with the refines you know you want to have the nice, shiny stuff in there, I suppose, but I don't know that a brain washer dryer has value to the sprays all, but you get the idea.
Speaker 3:Well, I don't think appliances are supposed to, but obviously, if you're looking at it, it may, just marketability to the tenant.
Speaker 1:Yeah, I think it's more of like oh, this looks good, so the appraiser is more like they'll just give you a better number, yeah, or just keep walking.
Speaker 2:There's so many appraisal games that I know you play.
Speaker 1:Like you just show up and like you know, just showing up to appraisals is one thing that, like you have to do. If you don't do it, like you're going to get played by these appraisers.
Speaker 3:Yeah, so I'm going to shut up to an appraisal and Two years maybe. Really, I haven't either. I used to go to all of them.
Speaker 2:But I see, I went to, I had this. I love what you're saying. I'm glad you said that. Nick, I used to go to every one of them and I would try my best. I would try not to offend by giving them some comps right, it's just what I'm thinking.
Speaker 3:Right, what was them like? I would offer I'd say, hey, do you mind if I, you know, help you out and send you something, and then kind of like gauge the response.
Speaker 1:I'm like here I need 225.
Speaker 2:Yeah, I mean, but then you can I mean in some cases you build a relationship with the same appraiser if you're going out there regularly enough and but you know, all you have is conversations about the rate names Not really names, but I know, yeah, I know.
Speaker 1:So there's a couple that we all know we're like okay, yeah good, Like I don't need to go to the right.
Speaker 2:They take the pictures, they take the measurements and they get back in the car like hey, what did you? Say you needed on this one, like yeah, but the game changer on who to meet are the inspectors.
Speaker 3:But you know Baltimore city, mainly Baltimore city inspectors. For me, like when you're going through, even like a UNO.
Speaker 1:Make sure you have cash on you.
Speaker 3:Yeah, like make sure you have a gift card to like dunk in donuts or Lowe's or anywhere and just give them a $30,000 gift card. They'll sign off on anything. Now, just kidding, but seriously, meeting these inspectors, like I met an inspector for a. I actually met him for a plumbing inspection, which I probably shouldn't have. The plumbers should have been there and I like knew him from like a couple of years ago at properties in the area and I, you know I shouted his name as he walked through. They were like, oh, he's like I haven't seen him forever and like he's known to be like a hard ass. So I was like glad that he, you know he had that initial interaction with me and then like went into the house, he just signed off and he's like did you do this, do this? I was like yeah, he didn't even check it, he just signed off on it just because I was engaged with him.
Speaker 2:Yep, no, there's certainly. I mean it's very much a relationship business. I mean, I see, that in my lending business, often Like I'm proud to be to have a reputation of being a relationship based lender versus a transactional based lender right, it's not just dollars and cents trying to fill as many people as we can. We also don't run a $50 million debt fund or something big. Right, we're very boutique in size, and so it's about the relationships, right, and there's a great example of why those relationships are wildly important.
Speaker 1:Yeah, that, and just being out in the space too. I think that's huge. Like I was saying before, this podcast is the Living Resume, the events. People see you out there, Like you're meeting people. It's it makes people, it makes it easier for them to wanna spend money with you because they know that all these other people in the space that are also successful at least know who you are. So if like, especially in Baltimore, maybe it's different in other like bigger markets like New York City, where there's like a billion people, but here, like, if you're Google fact check that.
Speaker 3:How many people in New York City?
Speaker 1:There's at least seven million people in New York City. But like that, if there was, if you were a bad Apple and you were out at these events in Baltimore, people would know who you are Like. If people didn't like you, it would be known that people didn't like you. So I think, like just half of it being here- 8.5,.
Speaker 2:yeah, I was close.
Speaker 1:Yeah, you weren't far from it. So, yeah, I think, just like you know, being out there making a name for yourself, whether, even if you haven't done any deals, like just being there meeting these people, and I think that's like gonna be the thing that kind of gives you the confidence to take that step.
Speaker 3:So I'm gonna ask both of you guys this so we're actually having our event in January, january 11th.
Speaker 1:CBT's in Towson, upstairs Six, and I.
Speaker 3:If there's someone out there who's cause we're so used to at this point, cause we've been in the real estate industry so many years now and we're so used to being around other people in real estate. So there's. I know there's a lot of listeners out there who maybe they don't even have a friend in real estate. For example, like how would you encourage them or like tell them, like hey, like how would you get them to an event that in their head it's like nothing but real estate people? They don't know anything about real estate. Like what makes them wanna come when it's hard for them to interact with anyone? Like how could we encourage somebody like that to come?
Speaker 2:I think, not to jump in, but I mean so something that I said earlier about not wanting going with an intention shooting with a shotgun, or shooting with a rifle, not a shotgun going in there, laser focused, with the intention of, hey, you know what, I'm brand new, I don't even know what I need to know yet. I don't know what I don't know yet. I wanna corner one person, have a conversation with them and be vulnerable, be open to being vulnerable. Now, how to find the events, if that's what you're asking, I mean, there's lots of ways to do that. We can talk about social and meet up at a common, all those, but once they get there, are they? I mean, I think, just being ready to be vulnerable that evening? That's a big deal. I mean, is that what you were asking?
Speaker 1:Yeah, so well not finding the events, but they're interested in that thing too right, If you're like interested in starting a coffee business, so then don't come to the real estate.
Speaker 3:Yeah well, no, no, I was mainly specifically towards you know real estate, someone who knows of an event and they just don't show up because they feel left out or they don't feel like they can have a conversation with somebody because it's all real estate related. But I love your point where you said you know, you just have to go in there and just ask, quite like I love it. Like growing up I would always ask questions and I didn't care if it was a stupid question, if I didn't know it. You know I wasn't gonna be shy on asking it just because what other people around me were thinking about the answer and you know that type of question.
Speaker 2:I was kind of different. I knew that I had a question because I wasn't able to connect the dots. I knew that the teacher was trying to connect for us and I was being embarrassed to ask the question.
Speaker 2:I would just stay quiet and stay dumb because of my ego or because of his intimidated. So it's hard. It is hard for some people. It might not be as difficult for you in a room like that, but for somebody like me, when I was starting out, it was just overwhelming. It really was. And so I think that the confidence of just getting over, just leaving your ego and your pride in the car and going into that event and saying I'm gonna be vulnerable, I'm gonna ask one person if they can help me to connect this one dot. Hey, what would I? What do I write? What do you? Where do I begin? What do I do? First? Maybe find the person that looks the nerdiest, the most at least intimidating person in the room. Right, they'll find me. I got glasses on and maybe they'll corner me. I love it, bring it on.
Speaker 1:I think too, like one of the things is like you have to be an action taker, just in general. So if you aren't taking action, you're not gonna be successful. It's just a direct correlation. So if you see the event and you want to do that thing whether it's a coffee event or a real estate event or a contracting event and you don't go there, then you don't really deserve the thing that you're talking about.
Speaker 3:That's a good point.
Speaker 1:Then you're just talking about it. You're not really taking action. If you really wanted it, you would go there. Whether you felt like an idiot, whether you didn't have any questions, whether you were confident, not confident, comfortable, not comfortable, it doesn't matter. Like, if you just didn't do the thing, then you suck. Then you gotta do better next time do better, you know.
Speaker 2:Another thought that I have to that point is go in there with a chip on your shoulder instead of what I just said. Go in there with a chip on your shoulder and just say I just want to see if this is for me. I want to find somebody that can tell me why should I want to become a real estate investor. How many of us are going to want to jump at that conversation?
Speaker 1:Yeah, yeah, right, especially in our industry like my wife hates hanging out with us as you know most of the time, cause it's just a bunch of dudes that are talking and walking and living.
Speaker 2:But she's a trooper, she comes to all the events she does.
Speaker 1:She is a trooper, but like she's just like. Oh, is it just going to be you and your real estate friends that talk about real estate the whole time, like yes, that's exactly what I'm talking about.
Speaker 1:I don't have any other friends, but that's our community is awesome in that sense that, like there's not a ton of other jobs Like you go to, like I was a teacher for nine years, right, you go to anything that gets a bunch of teachers together, whether it's, you know, an after school event, a happy hour, it's just all of these people get together, complain about their job. That's what it is. You go to an office setting where it's like the accounting team. What are they doing? Complaining about their job. They're complaining about the people. They're complaining about Phyllis in the back that she's not fast enough and Karen in the front that she's too slow, blah, blah, blah.
Speaker 1:In our world it's like, yes, we talk about problems, but we're all like so happy to talk about the problems and solutions and, like it's a community of people that really truly do love what we're doing and talk about it so much that it annoys our spouses and other people that are not in the space.
Speaker 2:Or natural problem solvers and you've got your own problems you're trying to solve, but you're in a conversation with other people and they have some problems and you get to chime in.
Speaker 1:And they're similar problems?
Speaker 2:Yeah, they're similar problems.
Speaker 1:I thought that no one else in the world had a lady that came in and did this in their house or said this in court against them. Just, you're like nobody else could have ever went through this. And then you sit with like five or six real estate investors. You're like, oh, yeah, yeah, yeah, yeah. This time this person did this and this is like, oh, wow, okay, you also had a meth lab in the basement and a drug den. It's so funny.
Speaker 2:I have a lot of friends that are not in. Most of my friends are, at this point, are real estate focused, but I have some friends that are not and they see some pictures we post or some stories, stories we share, and they're like where do you even find these houses? How do you houses are?
Speaker 3:boarded up with a tree growing inside. Yeah, exactly.
Speaker 2:Is that a skeleton of a cat? That's definitely a dead cat.
Speaker 3:What, how, what?
Speaker 2:And you're like they don't.
Speaker 3:This is gold. Yeah, you're right.
Speaker 2:They hear that mold is gold. Right, this house is full of mold. Why would you go in there?
Speaker 3:Because we know why we'd go in there.
Speaker 2:But it's interesting you say that. Yeah, I think and I remember being a corporate and attending national sales meetings or going to sales meetings and the happy hour afterwards was there was somebody who was nursing a hangover from the night before, just bitching about the company and the direction it's going and how wrong, it is. And they're just like what.
Speaker 1:Everybody has the next best idea here. The boss sucks. This guy's not right. That's what it is.
Speaker 1:I've been to corporate events not in my own job, but I've been to teacher events in my own life and I've just I've seen it and I've been around it and there's nothing like the real estate investor community. Like we just we're all like living and dying for all of the problems that we deal with on an everyday basis. It's pretty funny. Is there a shorter job? No, no, that's true. And I also think that I think most of the successful people, especially like people that we all surround ourselves with, like there's not a scarcity mindset. Like I just had it literally a competitor of ours, like Bay Management there's another management company. There's 7,000 units. They have I have a couple hundred. Like I don't even have 200 units under management yet and I'm sitting here talking. Last week we had Ryan Gammonon who runs a contracting business. Like there's no possible way that I can remodel or manage every house in Baltimore. There's like 300,000 houses in Baltimore. I think Fact check that Now I think I looked it up before. I think there's like 300,000 houses or something.
Speaker 3:In the city.
Speaker 1:Yeah, which like, or maybe even more than that, and I'm like there's no possible way that two people can manage two companies can manage all of the houses.
Speaker 2:No, and you know, I heard a thing somebody refer to.
Speaker 1:What we got.
Speaker 2:Yeah, let's see it. Yeah to almost 300. It's almost 300, see.
Speaker 3:Yeah ask how many are homeowner.
Speaker 1:Oh, how many are rental houses? That's a good question. I think Baltimore probably has a high number of rental houses, I would imagine I would think so.
Speaker 2:I would think so. I think about competition, co-opetition. I heard that term a long time ago and I think it's kind of a goofy word, co-opetition. But your competition is your co-opetition. You probably learned a lot. If you own, you're running a business that manages a few hundred doors, your ego isn't so big that you don't think and realize that you could learn something from somebody who's managing 7,000.
Speaker 3:So I would invite that conversation. I don't view that as competition.
Speaker 2:I can have a lot to learn from somebody and equally, they have a lot to learn from you. Baltimore City 51% are homeowners.
Speaker 1:Are rentals 49% are owner occupies 51% are rentals.
Speaker 3:So 150,000? Or what was it? 300?
Speaker 2:Wow, I'm surprised by that. It's split right down the middle.
Speaker 1:Yeah, 150,000 homes that need to be managed. So hit us up, peproperiemanagementcom. Sorry, now I'm distracted. Competition, co-opetition, co-opetition, learning from your competitors.
Speaker 2:I mean, that's why these meetups are so healthy. They're having these conversations. They're so much fun because you, just like I said earlier, you just get stuck on an island a lot of times, right, and you get in your lane doing your thing, keeping your business in check, in front of mind that it's healthy to have those conversations with others, how they're doing it, what they're doing. I mean some of my best friends, you could consider them competitors right.
Speaker 2:My mentors become my best friends and my business is mirror there. So technically I could be in competition with them, but we all feed each other right. Whether it's deal flow or it's just knowledge, or it's resources, there's no way you know it all.
Speaker 1:Yeah, I got a bunch of cabinet doors sitting on my porch because of you.
Speaker 2:There you go, that's right. Just an introduction.
Speaker 3:Putting new cabinet doors on.
Speaker 1:I got a new. I shouldn't say this because I feel bad for current. No, I have a cabinet supplier that doesn't have the same line of cabinets that current has. So for more of my homeowner and more custom stuff like this company offers, just a lot of different stuff.
Speaker 3:Added that shit out.
Speaker 1:I'm not gonna say their name until they pay me for sponsorship, but you know, that's that. So, sean, how can our listeners find you? They're looking for money, they're looking to connect, they're looking for business coaching. How can they find you?
Speaker 2:Yep, primarily on the socials, on Facebook and Instagram. Sean Magner, Sean Magner, Sean Magner, that's the same. Fortunately there's not too many of them on social, so I don't have to get any creative name. So Monument City Capital is our website for our lending business. You can just find me on social, Instagram and LinkedIn. I'm sorry, Instagram and Facebook primarily. Nice, you're not dancing on TikTok yet. No man, I'm not. I know I need to embrace it, but I haven't done it. We just started TikTok.
Speaker 3:I do associate everybody.
Speaker 2:If you have a TikTok account in my mind, you're dancing behind closed doors. I don't care what you tell me, I know you're doing it.
Speaker 1:We have a TikTok account for the podcast, but Marcus made it and my-.
Speaker 2:Does he dance behind the doors? Yes, See somebody's dancing. You have TikTok, you gotta be dancing.
Speaker 1:But our VA manages it now, but it is one of the just like you gotta.
Speaker 2:I feel like you gotta just have to do all of them. You do YouTube shorts. I mean, I was paying a company to do all of our posting last year and we were on five platforms five days a week and I'm like I don't even know that I spent all my time on two platforms because I just prefer the user experience of those interfaces more than, say, linkedin, even though I know there's a lot of fire on there.
Speaker 2:I just tend to gravitate to what I'm used to, but you have to be on all of them.
Speaker 1:Yeah, you have to spread yourself across them and you have to manage them, right? What a task that is. Yeah, hire somebody, oh my gosh.
Speaker 2:Yeah, I'd hire somebody, I'd be doing it full. Yeah, if I manage my own social all the time, I'm not good at it. I do it, but I'm not good at it, so it's a lot of it is outsourced.
Speaker 1:And I think getting out there, putting your stuff out there and like people hate on it you get hate all the time but like, if you don't put yourself out there to do it, then people don't ever see it. If it's not there, they can't see it right. So, like I feel like for people like us that are doing it, are trying to build businesses, like you do need to put yourself out there, you need to post, you need to help people, you need to talk to people, interact, engage.
Speaker 2:It's all important. There's definitely a theme of vulnerability in this conversation that you're right it is. You've got to check the ego and just what's best for the business. It's often not the same as what's best for your ego.
Speaker 1:And if that kid from high school that still follows you is like hating on you and like talking to your other friends that didn't do anything with their lives and still live in their fucking parents' basement, that's great. Like I love the fact that those people are hating somewhere.
Speaker 2:I hope they are yeah same.
Speaker 3:I'm sure they are yeah absolutely Well, sean.
Speaker 1:I don't want to take any more time from you and your family. Thank you for coming down.
Speaker 2:Thank you guys for having me.
Speaker 1:Yeah, I appreciate you taking the time.
Speaker 2:Anytime, guys, it's a lot of fun.
Speaker 1:January 11th we are having another event I know I've snuck it in there CBP's in Towson. It's up on the screen here, 6 to 9 pm. We're looking for more sponsors we're going to have. Goal is 200 plus people this time, so hit me up if you're looking for a sponsor. Brian at PE Property Management. The event is on Facebook. It's the real estate, the everyday millionaire show. Real estate investor meetup Right, Yep, All right guys, see you next time.