He has done just about everything in residential real estate, and he did it as a foreigner. Hear how he thinks anybody can jump in the real estate game regardless of their background.
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Andrey Sokurec Real Estate Background:
– Founder of Midwest Real Estate Investment Association, as host of the TV Show “The Real Deal in Real Estate
– Co-founded Homestead Road to integrate the process of buying homes and “homesteading” families
– Purchased first investment property in 2005 and has completed over $40 million in real estate transactions since
– Native of Belarus, after coming to America worked as a manual laborer, and by night he read books on business success – Based in Minneapolis, Minnesota
– Say hi to him at www.homesteadroad.com
– Best Ever Book: Shoe Dog by Phil Knight
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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluffy stuff.
With us today, Andrey Sokurec. How are you doing, Andrey?
Andrey Sokurec: Joe, I’m doing fantastic. How are you?
Joe Fairless: I am doing fantastic, nice to have you on the show. A little bit about Andrey – he is the founder of Midwest Real Estate Investment Association, and is the host of the TV show The Real Deal in real estate. He co-founded the Homestead Road to integrate the process of buying homes and homesteading families.
He purchased his first investment property in 2005 and has completed over 40 million dollars in real estate transactions since. Native of Belarus. After coming to America, worked as a manual laborer and by night read books on business success; based in Minneapolis, Minnesota. With that being said, Andrey, do you wanna give the Best Ever listeners a little bit more about your background and what you’re focused on?
Andrey Sokurec: First of all, thank you so much, Joe, for having me on the show. Everything that you said is true. My main business is Homestead Road, and we are dedicated to serve people better than anyone else. When people have a house to sell as is, I have a team of about 18 people who work for me.
I have rental properties, and my biggest belief is that anyone – it doesn’t matter how old you are, where you came from, whether you came from Africa, Russia, Australia, or you’re being born and raised in America, anybody can become financially successful through real estate investing. This is the easiest way to go, and you don’t need to spend hundreds of thousands of dollars of college education; you can start with wholesale, and build your rental portfolio and be happy and wealthy.’
Joe Fairless: I love talking to people who came from another country and have done incredibly well in the United States, because so often we get fixated on what we don’t have… And holy cow, people who aren’t even from this country and come and are able to be successful – they likely don’t have the same resources that the people who were born here have, but hearing someone who is successful without those resources, it’s an inspiration, and I’d love to learn a little bit more about your story.
I mentioned (because it’s in your bio) that you have a TV show. Is that on TV, or is that just an online show?
Andrey Sokurec: It’s actually on a local cable channel. I go to the studio and we record an actual TV show in the studio. It’s a little bit time-consuming, but I love doing that, because first of all I have access to a lot of high-profile people, and when I do a TV show I learn personally a lot from them.
Joe Fairless: Okay, that’s interesting. How long have you been doing the TV show?
Andrey Sokurec: Three years.
Joe Fairless: Three years… And how much do you pay for the news station to have the show?
Andrey Sokurec: I have a producer, so it costs about $500 to produce each show, and just the engineer and the producer to follow up with the guests. It’s a little bit expensive, so now I’m thinking to switch to have more guests and go to YouTube, because it’s cheaper and faster. Because if I wanna talk with someone, I can just reach out to them, my assistant can talk to them and I don’t need to go to the actual studio where you have to do make-up, and people get embarrassed when they see a lot of cameras…
Joe Fairless: What business results have you seen from doing the TV show for three years on your local cable channel?
Andrey Sokurec: Well, a lot of people who are successful at what they learn, they either have a radio show or a podcast or a TV show. With this TV show I build relationships with a lot of people… Harry McKay became my personal mentor; I had the chance to interview Michael Gerber, Kevin Harrington from shark tank, and a lot of local high-profile people who do business. That’s the way to actually get access to them, because you don’t see them often in the street, walking around and giving you their personal cell phone number.
You can get access to those people when you have a TV show or a radio show or a podcast. When you tell them “Hey, I have a TV show on a local channel. Would you be interested in my TV show?” and a lot of people are actually excited to be on the show, because they have never been on a TV show before.
Joe Fairless: This is beautiful, thank you for sharing that. You’ve been doing it for three years… Your business is Homestead Road, and it integrates the process of buying homes in “homesteading” families. Excuse my ignorance – what are homesteading families?
Andrey Sokurec: It’s a good question. We’re changing the market scene a little bit, but when we started originally, we were thinking to buy houses and sell out of houses on the contract [unintelligible [00:07:25].13] and help people to become homeowners, so we sold quite a few homes on a contract [unintelligible [00:07:31].19]. Then with the new regulations (Dodd-Frank act) we stopped doing that, because now you cannot have balloon payments, and it’s become complicated.
So what we do is we build our own niche, we market to people who wanna have easy, stress-free sale; our average customer is 45+ years, who wanna sell their parents house and they don’t want realtors; they also want to have easy, stress-free out, they don’t wanna have strangers in the house. We built a really nice process to serve them better than anybody else.
I don’t believe that anyone in the country has the same process that we have and what we do for customers.
Joe Fairless: I’d love to learn more, because on the surface what you described, in my opinion, is you’re wholesaling the house, where the owner wants a stress-free sale, no realtors, not a lot of people coming. That sounds like it would be a wholesaler who is just tying it up and then finding a buyer with cash. Are you doing something different than that?
Andrey Sokurec: Yes, first of all we don’t do wholesale. What we do is we buy every house, and probably 70% of the homes we renovate ourselves, and 30% we sell to smaller investors. We decided to change the whole marketing message; we don’t use any “cash” words in our marketing, and we’ve built quite a unique process. For example, when somebody sells a house to us, after it’s done – and a lot of people have emotional connections – we do a final “say goodbye” tour, where they might tell the relatives and [unintelligible [00:09:21].26] actually painting the house, and we collect the best memories from the family and put it right below the painting.
It’s interesting, but let me pull out my Facebook page – when we give the plaque with the painting of the house people are actually crying, because it’s so emotional. Let me just recap some memories that people put. This is the best memory – a house on 10325 Clinton Avenue; the basement door became the measurement board for the height and growth records of children, grandchildren and great-grandchildren. The second-best memory, Christmas Eve with children [unintelligible [00:10:10].03] pajamas for the long night of opening presents and songs around the piano.
So what my point is — because everybody can offer a better competitive price, and we offer a competitive price because we are efficient, but not a lot of people actually strive to serve people better than anybody else. When I got into this business, I saw a lot of ads like “We buy houses cash” and it sounded like a used car salesperson, and there is a negative connotation about what exactly it means; it’s like, “Hey, you flip houses?” and a lot of people are skeptical and then go negative.
We decided to change it to build a really nice process with people. I actually brought my entire team to a company called Zappos. Amazon bought them for 820 million dollars, but they have an office in Vegas, and they have a really nice course – it’s called Zappos Inside. It’s a three-day training, and they let any person come in and spend three days to learn how they hire people, how they fire people, to listen to their customer service… This company is considered one of the top 5 companies to work for.
So I brought my entire team there so they could learn and see what’s possible and why a lot of people become loyal to that brand. For example, let me ask you this – do you use Amazon?
Joe Fairless: I do.
Andrey Sokurec: Why do you use it?
Joe Fairless: Because it’s so easy to buy books.
Andrey Sokurec: Yeah, would you recommend Amazon to anyone?
Joe Fairless: Sure, absolutely.
Andrey Sokurec: So that’s what I wanted to change – we wanna provide so much value, so people can start recommending our company to someone else, because selling a house… It’s lots of life experience for people [unintelligible [00:12:11].15] but a lot of people didn’t pay attention to the fact that those people have the same friends, the same people who have the same income level, and they also wanna get out stress-free from their situation.
Joe Fairless: Thank you for sharing that. I want to make sure I’m understanding… I get the plaque that an artist paints that illustrates a story about the house, and you provide that to the seller, but just so I am understanding your business model real quick – you said you buy all the houses, and 70% you what, and 30% you what? I wanna make sure I have that in my notes.
Andrey Sokurec: You cannot do a lot of wholesale because the Department of Commerce actually regulates you and they want every purchaser actually to close on the house. So we close on every house; we use our own money, and we work with private money and bank money. 70% of the homes we renovate ourselves, and 30% we sell; we just clean them for rehab and sell to contractors, to smaller investors who have more time and lower overhead to fix them up.
Joe Fairless: Okay. And 70% that you renovate and keep – do you keep them long-term?
Andrey Sokurec: Most of them we sell, and for rental properties we have a completely different model. We’re buying lower-income homes, like section 8 type of homes who [unintelligible [00:13:44].11] back in 2008, and by now they increased in price by two-and-a-half times. So we have a different formula for how we calculate the offers for rentals. So rentals is a separate business from flipping houses.
Joe Fairless: Okay, got it. So you have a flipping business, and you have a buy and hold business. And now just coming full circle – when you say “homesteading families”, what does that term refer to?
Andrey Sokurec: We wanted to sell houses with [unintelligible [00:14:15].12] but basically the meaning of that term is when we buy a house, we fix it up and we provide the house for a new family — because a lot of people when they spend their entire life in a house (30-40 years) they really don’t want their house to be turned into a rental property. They want someone else, a nice family to occupy their house. So that’s the meaning for homesteading.
Joe Fairless: Okay. Now I’d love to talk a little bit about the plaque and the artist thing, because that’s unique and I’ve never come across that before. Have you taken a look at how many referrals you’ve gotten as a result of this tactic? I know I’m saying it in a very cold-blooded manner; I know it’s not necessarily about how much business you get from it, it’s about adding value, putting smiles on faces, putting good karma out in the world, but also I’m curious from a business standpoint (cause/effect) have you taken a look at that?
Andrey Sokurec: Yeah, absolutely. I don’t know exactly how many referrals we got from the plaque, but I know exactly how many referrals we get every week, because my [unintelligible [00:15:38].07] compiles the reports weekly. On a weekly basis we have about two or three referrals from people. That’s a really high number, because average lead costs us about from 100-300 bucks, and we can get two leads a week for free from people. Those people who have worked with us in the past who got recommended by their friends, most likely they’re going to do business with us.
So I tell people, when somebody calls in our office, you have to provide value for the people first, and then money will follow. That’s what I see a lot of new people struggle with – they hear about real estate investing, and they don’t do any marketing whatsoever; they try to make every person who calls them for advice, they try to convert them in a motivated seller and make them a cash offer. What I tell my people is “Give the best advice and see how you can serve the customer ever.”
If it’s an outright [unintelligible [00:16:48].18] let’s say for example somebody has a nice house, completely sellable, I tell people “Hey, just save your time and give your best advice.” “If I were you, Mr. Seller, I probably would hire a realtor and sell it on the open market.” Then if the person says “Yes, that’s what I’m going to do”, that’s great, but they will probably recommend you someone from their friends who is in a different position, and in this case you save your time, you save those people’s time. A lot of sellers just tell you, “Hey, I don’t wanna sell a house with a realtor; I don’t wanna have a lot of strangers in my house. I actually wanna have an easy, stress-free situation. I like your price point and I’m okay to take a little bit lower price for the convenience of having my own time for closing, and do it easy and stress-free.”
Joe Fairless: How much does it cost to commission the artist to do that painting?
Andrey Sokurec: I think we pay him like $60 for painting, and the frame costs maybe $60. So it’s about $100/piece.
Joe Fairless: I know I’m being very cold-blooded about this, but I’m just trying to get the numbers – so basically the cost of the painting all-in is a $120 bucks and your average lead costs between $100 and $300; so if you get one lead as a result of giving them that painting, then it’s paid for itself.
Andrey Sokurec: Yes, but Joe, it’s not about the plaque itself, it’s about the process. For example, my lead manager, I tell her “Hey, when you answer the phone calls” – we have a lot of people who call and they’re going through a tough situation in their life; their parents died, or they’re going to die… So I say “Hey, feel free to spend the money – it’s your decision – even if we don’t buy a house, just to do something special for those people.”
So from the time people call my office… People who are listening, just feel free to give a call to Homestead Road (you can Google the phone number) talk to my lead manager and see what kind of experience you’re going to have talking to her.
The seller talks to the lead manager, sales manager; we have nice closing, after closing… It’s an entire process. I cannot say that only that plaque contributes to referrals, but the entire process is what’s important.
Joe Fairless: Yeah, it’s a microcosm of your larger operation.
Andrey Sokurec: Yeah, exactly.
Joe Fairless: What is your best real estate investing advice ever?
Andrey Sokurec: Take action. A lot of people want to be real estate investors. They think “Someday I’m going to be financially independent. Someday I’m going to buy my first house. Someday…” but I tell you what, there’s never a good time. Because it’s never a good time to have a kid, invest in your business, go to get education… But the best time is right now.
If you’re hearing this show and you’re brand new and you wanna change your life, right now is the best time.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Andrey Sokurec: Sure, yeah.
Joe Fairless: Okay, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:20:26].25] to [00:21:08].22]
Joe Fairless: What’s the best ever book you’ve read?
Andrey Sokurec: It’s hard to say, because I’m addicted to reading different books. I consume them, like, probably a book/week. The most recent book that I read is by the founder of CEO of Nike – Phil Knight. I got really inspired by this book. He’s still around; I actually didn’t know the story of the company. He built this company from ground zero – didn’t have the money, he’s a self-made billionaire, and it was really impressive to read the book. Now I started buying Nike again.
Joe Fairless: [laughs] And that book is called Shoe Dog, by Phil Knight. What is the best ever deal you’ve done?
Andrey Sokurec: The best ever deal that I’ve done is one I’ve never actually done; I walked away from the deal. Because a lot of times, especially now, you have so many opportunities, and sometimes if you think that it smells bad, like you don’t have a good internal feeling, you probably should walk away from the deal.
A couple years ago we started buying so many houses… So we became lazy and we actually stopped inspecting the properties, and we’ve done a couple of deals where we did not inspect the property and we ended up losing money.
Joe Fairless: What is the best ever way you like to give back?
Andrey Sokurec: That’s a good question. We have a company and we do something every quarter; we’re building houses for Habitat For Humanity; this summer I took my daughter and we partnered up with other investors and raised money for the kids in Jamaica and went there to assemble the wheelchairs. That was a really eye-opening experience. But we do as a company something good every month [unintelligible [00:23:05].15] who actually started our own foundation, Homestead Growth Foundation, where we donate the money for the technical college, where kids can get scholarships.
Joe Fairless: And what would you say is the biggest mistake you’ve made on a deal?
Andrey Sokurec: There are so many mistakes that I’ve made… Biggest mistake would be probably not inspecting the property, that was the biggest mistake. Because I became over-confident, I would say, and I was thinking “Now I know everything.”
There was a small mistake that we just recently made – we bought a property, and it’s not in Minneapolis, it’s like 50-80 miles from Minneapolis; this property is a single-family home, but it’s zoned commercial. We didn’t even know about it, we didn’t do our due diligence and now we cannot sell the house because nobody can get financing for the house. It’s a normal, single-family home and it’s impossible to rezone it. It’s kind of seasoned on the books… So again, do your due diligence; don’t be overconfident, inspect every house. That’s my learning lesson.
Joe Fairless: With that particular deal… Usually that’s a good thing where you have a single-family house and it’s zoned commercial, because then you can get it rented for a higher premium than the single-family tenant would pay. Did you find that’s the case?
Andrey Sokurec: Yeah, that’s what I was thinking. Unfortunately, the town where the house is is too small; there’s maybe a couple thousand people living there, so there is enough commercial space. We had a buyer who wanted to get a Fannie Mae loan, and it fell through because it’s zoned commercial, and nobody wants it, basically. But I’m glad that it’s a cheap house, it’s like $50,000.
Joe Fairless: Where is the best place the Best Ever listeners can reach you?
Andrey Sokurec: If you’re listening to this show, you can connect with me by going on YouTube and type “The Real Deal real estate” and watch a couple shows and post your comments. That’s the way I communicate with the people, through YouTube. If you’re here in the Midwest area, we do monthly meetings at [unintelligible [00:25:34].23] and I do a couple events a year where we do three days training, where we take people on a bus tour, show them properties… It’s exciting how many younger people become real estate investors and start making money right out of college, and they become captains of their lives through real estate.
Joe Fairless: Well, I’m on your YouTube channel now. You’ve got a couple interviews that I personally am looking forward to watching and listening to. One of them is “How to succeed in real estate” with the original shark on Shark Tank (the Kevin Harrington interview). I’m gonna listen to that one and watch it.
Lots of great stuff, from having a local cable channel where you’re able to build relationships with high profile people and get in touch with them, increase your sphere of influence, to the giveback mentality first, add value first… You’ve got the unique idea with the painting that you give the sellers when they sell their home – just a phenomenal idea. I mentioned that it was worth from a dollars and cents standpoint, since your cost per lead is 100-300, that it’s basically paying for itself because it costs $120, but that’s not really an accurate statement, because I’m sure your lifetime value of a customer is much more than $120-$300; I’m sure you’re making much more than that.
What I should have said is that your $120 painting is about the same as the low end of a lead, and it continues to pay and pay and pay, because they’re gonna continue to tell that story. What a phenomenal tactic. I know I got caught up on that one tactic, but it’s illustrative of what you’re doing as an overall business plan.
Thanks so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Andrey Sokurec: Joe, thank you very much. I enjoyed being on the show. Thanks!