JF2126: Questions to Consider With John Bogdasarian #SkillsetSunday

John is a returning guest from episode JF1308. He is the President of the Promanas Group, a real estate investment firm and he has a book called “Do the work once, get paid forever: How Smart People Invest in Real Estate.” In this episode, John shares different questions you should be asking yourself when you’re looking to invest.

John Bogdasarian Real Estate Background:

  • President of the Promanas Group, a real estate investment firm
  • Began with nine initial investors, has strategically guided the firm to serving more than 300 investors today
  • Recently published his first book “Do the Work Once, Get Paid Forever: How Smart People Invest in Real Estate”
  • Based in Ann Arbor, MI
  • Say hi to him at https://promanas.com/ 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Don’t focus too much on the deal, because you have no idea, it could look like the best thing in the world. I can make anything look like anything on paper.” – John Bogdasarian


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks, I’ll be the host today, and today we’re speaking with John Bogdasarian. John, how are you doing today?

John Bogdasarian: I’m good, Theo. Thank you.

Theo Hicks: John, thanks for  coming on the show again. John is a repeat guest; this is Sunday, so we’ll be doing  a Skillset Sunday where we talk about a specific skill that our guest has, and how you can apply that to your real estate business. Before we get into that skill – John’s biography. He is the president of the Promanas Group, a real estate investment firm. He began with nine initial investors and has strategically guided the firm to serving more than 300 investors today. He recently published his first book, “Do the work once, get paid forever. How smart people invest in real estate”, so definitely check that out.

Based in Ann Arbor, Michigan. You can say hi to him at Promanas.com. As John said in the beginning, it rhymes with bananas. So John, before we get into the skill, do you mind telling us a little bit more about your background and what you’re focused on now?

John Bogdasarian: Yes. Essentially, my background is real estate agent, to real estate broker, to commercial broker, to developer, and now pretty much purely private equity. So what we do today is we act as the equity source for developers that have projects teed up and ready to go. We go in,  we put another layer of due diligence over the top, and then we write them a proposal and say “Yeah, we wanna be your equity under these circumstances”, and they 99 times out of 100 say “Great. Awesome. We don’t have to think about raising money.”

And then the value that we’re kind of creating to the investor side of the equation is that we do have a whole other layer of scrutiny that comes over the top of the deal, obviously, but we also negotiate structures where there’s very little dilution in the deal itself. Investors’ dollars come back first, and some type of a preferred return comes back to them first… So what we like to say is that we’re giving investors the best possible chance of getting solid double-digit returns in real estate, with the least amount of downside potential. And that’s kind of the unique proposition in what we do today.

Theo Hicks: Okay, thank you for sharing that. So this skill is going to be for passive investors… We’re gonna talk all things passive investing. To start off, you mentioned that you are the equity source for developers. Are they developing multifamily, are they developing office, or is it kind of just a combination of all types of developments?

John Bogdasarian: Yes. [laughter] We have condominium projects, we have hotels, we have office buildings… We have not developed ground-up and industrial property, but we’ve purchased millions of square feet of industrial properties, again, using investor capital. So I think we’ve done pretty much almost every type of asset class. The only thing we haven’t really done much of is retail, but other than that I think we’ve seen pretty much everything.

Theo Hicks: So as a passive investor, I’m looking at your deals that you have available… Give me some tips on what I should be looking for… Because again, I’m not sophisticated. I don’t know about development, or hotels, or office buildings… I just know that  I’ve got a lot of money and I wanna get, as you mentioned, the best possible chance to get a solid return with the least downside. So how do I as a passive investor determine if a particular deal I’m looking at fits that criteria?

John Bogdasarian: Yeah, it’s a great question. That’s the question I’ve had thousands of times over the last ten years… And that’s basically why I wrote the book. It’s titled “Do the work once, get paid forever”, which used to mean to me “Put your money to work for you, get enough passive income.” Maybe owning apartments, or whatever it is, so that you can get paid forever and you don’t necessarily have to show up to a 9-to-5er job if you don’t want to anymore.

But I took that same philosophy and I said “Well, how does an accredited investor figure out how to do that?” If I’m a doctor, or I own my own business, whatever it may be, I don’t have time to make all the mistakes John made in his career, or somebody else, and figure out how to get to that point.

The book really answers that question, and what it says is it says — so you don’t have to buy it or read it, because it’s written like a third grader; I’m not really a writer… But it has this conversation where it says “Out of all the investors I’ve worked with and had conversations with, the most intelligent ones, the most sophisticated ones ask their questions more about me, the person they’re investing with, than they do about the specific deal that I have sent out to them.” So the book really is designed to say “Alright, you’re a potential investor, but where do you go?” So how do you find people that have good deals ready to go? What is a PPM and a subscription agreement? What does a typical deal structure look like in that subscription agreement?

So really, I think most people can read this thing in about two hours, but it’s sort of how to start out, how to find the right partner to invest with? What’s the philosophy behind it, why is this person doing this? What kind of due diligence can I do on this person and/or this deal? What are the various types of real estate investments I can get into?” So it’s not as detail-oriented as, say, Sam Freshman’s book Principles of Real Estate, which is like a textbook… But that also won’t tell you how to find people that know what they’re doing; that just tells you how to become a syndicator.

So this is really designed to say — for instance, you ask, Theo, “Where would I go? What would I do? How do I find deals to invest in?” So it gives you some tips. Like, when you’re driving around in your town, do you see cranes in the air? Or if you’re visiting a city, do you see cranes in the air? And people are going to hot places, right? And I don’t mean temperature-hot. You’re not going on vacation in Milan, Michigan, or wherever. You’re gonna go to Denver, Nashville, Sarasota, mountain towns maybe… And there you’re gonna see developments going up.

So the developers’ names are all listed right on the signs; just making note of them… Get online, send them an email and say “Hey, do you ever consider taking on investors?” That’s one way to find potential deals. Maybe you won’t get into that deal that’s going on right now, but people are always looking for money for deals… And it even explains why people are looking for money for deals. Because one of the things that I always thought about was “Why would this guy take on investors and make them money? Why doesn’t he just keep all the money himself?” It just doesn’t work like that. It’s impossible. You can’t possibly move fast enough or do enough. And plus, having started out at zero myself – a very good upbringing, but zero money… I don’t have any money, so how am I gonna go do this? I had to take on investors. And now my whole mindset is “We like making people money. It’s fun.” And it’s not all about the money, it’s about taking care of people and giving them access to things they don’t have access to, and whatever. So there’s a pretty good digression for you.

Theo Hicks: That was great. So you gave a lot of questions that passive investors should be asking, and you mentioned how they’re answered in your book, you gave a few examples why are people looking for money for deals, and then you gave an example of how to find people who have good deals. You gave the example of cranes in the air… What are some other examples of ways that I can find people to invest with?

John Bogdasarian: I’ll tell you, as dumb as it is, you’re in your doctor’s office; you’ve gotta be there anyway, you’ve got a few minutes… “Hey doc, I appreciate you taking a look at (whatever it is you’re getting checked out) my arthritic knee. I’m just curious, have you ever invested in any real estate deals? Do you know anybody locally who puts these kinds of things together?”

You can do Google searches and try and find developers and contact them and do that, but the internet is kind of a strange place for that. You now have, as  you’re aware of, I’m sure, the investment portals, where you’ll see all these deals on there. “Oh, this one will make you 18%, this one will make you 13%. This one will make you 16%”, and you can just point, click, ship and invest money in these deals. Well, I don’t like that disconnect. I’ve been strongly opposed to people investing through those portals… Because we have talked to all of them, and we’ve talked to them about getting our deals on their sites, and we don’t do it because we don’t like the process. The disconnect between the developer, sponsor and the money creates too many problems.

For me, when I started out, it was all friends and family. That’s it. It’s all friends and family. Who else is gonna give me money? At the time  — how old was I…? I don’t even know how old I am now. I guess I was like 39 or 35… Anyway, so I don’t know that many people. So I had to go friends, family, people in the community… And you better believe that that deal structure was exceedingly weighted towards the investor, as opposed to the deal sponsor, syndicator, developer. And we’ve kept that same philosophy throughout, because — I now have just over 400 accredited investors participating in deals with us, and while I don’t know all of them anymore (that’s impossible), pretty much everybody I know or deal with on a day-to-day basis is invested in my deals. So for me, that’s a  system of checks and balances. It says “I don’t ever wanna do something just to create fees and make money and fly around in my private jet, and all these people have lost their money.”

I think when you get onto these portal sites, that’s a problem. People can just throw them on there… It’s just different to me. I think it’s way better in real estate. Real estate is so unique. Everyone’s trying to create a system whereby it’s a robo-advisor, and your deal fits into this format/formula… And that’s the whole message – don’t focus on the deal, because you have no idea. It could look like the best thing in the world. I can make anything look like anything on paper. And most of the deals we put out, to be perfectly honest with you, experience something major throughout the development process. A major challenge or setback that we did not anticipate or could not foresee. So I think if you have the right person running it, then they have the ability to create solutions and even opportunities out of these things that happen throughout the process. If you have the wrong guy, who’s just interested in the fee, and he doesn’t really have a whole lot of experience of knowledge or understanding, you’re gonna get soaked and the deal is gonna go under.

So again, I’m probably answering more than you asked, but I steer clear of advising people to do the portals… But you could do Google searches on people in your area, you can read news articles… Most people have a local real estate publication of some kind. Ours is called Cranes here. You’ll see people in there, mover/shakers. Don’t be afraid to call them up, look at their website, see if they take on investors… It’s what I call prospecting. You’re just looking for good people… Usually, you’re gonna get  it  all word of mouth. These are what used to be referred to as country club deals. So if you’re a member of a country club, if you’re an accredited investor, chances are you associate with other people who are accredited investors, and chances are you know people that are in deals; they just don’t talk about it, or run around promoting it. So you have to ask. You have to say “Hey, have you ever invested in real estate deals? Do you know anybody good who puts real estate deals together?” Ask that ten times and I guarantee you’ll have some opportunities in front of you.

Theo Hicks: Okay, so we hit on the prospecting aspect, how to find these people. So once you find them, you did mention a few things to look for – favorable returns to the investors, as opposed to a bunch of fees and stuff for the sponsor… And then avoiding those types of investor portals because of that disconnect. What are some other specific questions or specific things I should be looking at as a passive investor once I’ve found a handful of potential people to invest with?

John Bogdasarian: I think people have different reasons for doing things, but motivation in and of itself boils down to a handful of categories. If you wanna understand motivation — people tend to do things for recognition. They want awards, they want recognition, they wanna feel like they’re important… People will also do things for a sense of contribution, contributing to the community… “I’m creating something good here. I’m doing whatever.” Money is a motivator for people. “I’ve gotta pay the bills.” When I started out I had to do deals; I’m now in a position where I don’t have to do any deals. So when I question motivation, that’s the question I would ask “What’s your motivation for doing this? Why are you putting this deal out and taking on investor capital?” It seems like a lot of work and a lot of time, energy, and it could potentially be stressful.

Funny story – I have probably 20-30 heart doctors invested. We probably have 70-80 physicians in our group at this point, but we have a number of specialists, and a number of them are heart doctors. A few routinely perform emergency open heart surgeries… And one of them in particular was sitting in my office and said “Boy, I just don’t know how you can do it.” I’m like “Do what?” And he said “I just don’t know how you can work with other people’s money. That’s gotta be so stressful.” And I’m like “Doc, half your patients could die. [laughs] I don’t wanna do what you do… No way. I’ve gotta come out and tell the family “Sorry, he didn’t make it.”

Anyway, so I thought that was funny, but it is true – there’s a certain amount of pressure associated with generating returns for people, especially when you know them intimately, and you eat Thanksgiving dinner with them.

So gauging someone’s motivation I think is probably the most important, and I think you’ll get  a sense of whether or not you’re dealing with somebody honest at that point in time. Also, I wouldn’t be opposed to having somebody review the private placement memorandum if you’re not familiar with them. If you’ve read a number of PPMs and you know what they’re all about, then fine; it should be pretty simple, and spelled out very clearly in terms of who makes what, when, and how it works… But if it’s complicated to you at all, have someone else look at it. Find a legal guy to review it for you and give you the nuts and bolts; at least the first couple times get some of that third-party evaluation done.

Theo Hicks: Alright, John, is there anything else that we haven’t talked about already as it relates to a passive investor getting started, growing, scaling their passive investing business that we’ve not talked about yet?

John Bogdasarian: Not that I’m aware of. I think mostly for us it’s unique to the person. What I find interesting is — let’s say we’re putting out a deal and we’re raising 20 million in capital. Well, most of that will get spoken for pretty quickly off of our existing list, and it won’t even get questions on it. So people will just send an email and say “I’m in for 200k” or “I’m in for 500k” or whatever. So we’ll fill most of our deals, probably 70%-80% of them with existing investors. But every single time there’s gonna be at least 15-20 that are on our potential investor list, that have never invested with us before, that wanna have a conversation about the deal and they ask very specific questions.

Oftentimes those questions are never the same. One person might be focused on the city that we’re developing in, we’re building in. Another person might be highly focused on how much money I make, and my team, and how we get paid. Another person might be focused on the asset type, and they might think hospitality is a dead sector. Or condominiums are over-built. Or whatever. It’s almost like no two will be the same, but they’re all focused on one thing.

So by definition, I kind of think they’re focused on the wrong thing, because if I address this issue for this guy over here, and say “Well, here’s why we like it, and here’s whatever, and here’s this and that”, the reality is they’re not necessarily asking the questions that they should be asking… And that’s more about the track record of the deal sponsor, the track record of the developer person, whatever it may be, the contractor, what kind of due diligence do you guys do… There’s gobs of questions I would ask, and I think one of the most revealing – one more little tidbit – is “Tell me about some of the deals you did that didn’t work out, or weren’t gonna work out, and how did you address those concerns?” I think that gives you a few more things to focus on.

Theo Hicks: Well, John, again, I really appreciate you coming on the show and sharing your wisdom on passive investing. A lot of great content here. I’m just gonna quickly summarize some of the main takeaways. We first talked about how to analyze deals, and you kind of quickly shifted it from – well, you’re not necessarily looking at the deal itself; the most intelligent investors are focusing on the person who’s actually sponsoring the deal, as opposed to the deal… So we went into the details on how to find these people.

You said “Did you see cranes in the air? Find the developers’ names and reach out.” That was unique; it’s something I hadn’t heard of before. Also asking people who are other accredited investors; for example, when you’re going to the doctor’s office, ask them who are they investing with. And you gave a few other examples as well.

We talked about things to avoid, which is those investment portals, because of that disconnect between the sponsor and then the investors.

You mentioned a lot of things of what to look for when you’re screening sponsors… Something that I hadn’t heard stated this was asking them what their motivation for doing deals is, and based off of what they say, you can gauge if you can trust that person or not. And then also asking about specific deals that they did that did not work out… So again, John, I really appreciate it. Thanks for taking the time to speak with us today.

Best Ever listeners, make sure you check out his book. Again, that’s “Do the work once, get paid forever. How smart people invest in real estate.” The website is promanas.com. Again, thank you, John. Best ever listeners, thanks for tuning in. Have a best ever day, and we’ll talk to you tomorrow.

John Bogdasarian: Thanks, Theo. I appreciate it. Thanks for having me on the show.

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JF2069 : Improving Your ROI Through Energy With Scott Ringlein

Scott is the Founder and CEO of The Energy Alliance Group of North America, who was raised as a farmer, educated as an engineer and trained in the auto industry. In this episode, Scott goes into some details on what you should be thinking about when it comes to reducing your energy cost and improving the efficiency that can help improve your ROI. 

 

Scott Ringlein Real Estate Background:

  • Founder & CEO of The Energy Alliance Group of North America
  • From Ann Arbor, Michigan
  • Raised as a farmer, educated as an Engineer and trained in the auto industry.
  • He Suddenly Lost his job after 20 years of working as a Chief Engineer in the Auto-Industry.
  • He Has been the Technical Advisor to the U.S. Dept of Energy in 2009 and 2013
  • Developed and executed global strategic business plans to secure incremental business with sales revenues of $250+Million.
  • Managed a 50+ member international design and development program team.
  • Say hi to him at : www.energyalliancegroup.org
  • Best Ever Book: Credit Secrets

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Investing in efficiency conservation and renewable energy solutions definitely help the bottom line. They can generate cash from day one.” – Scott Ringlein


TRANSCRIPTION

Theo Hicks: Hi, Best Ever listeners, and welcome to another episode. I am your host, Theo Hicks, today, and I will be speaking with Scott Ringlein. Scott, how are you doing today?

Scott Ringlein: I’m doing super, thanks Theo.

Theo Hicks: Good, and thank you for joining us. I’m looking forward to our conversation. Before we begin, a little bit about Scott – he is the founder and CEO of the Energy Alliance Group of North America. He’s from Ann Arbor, Michigan. I made a joke about going to Ohio State, but he is a Spartan fan, so there’s no issues there…

He was raised as a farmer, educated as an engineer, and trained in the auto industry. He suddenly lost his job after 20 years of working as  a chief engineer in the auto industry. He was the technical advisor to the U.S. Department of Energy from 2009 to 2013. He has developed and executed global strategic business plans to secure incremental business with sales revenues of 250 million plus. He has managed a 50+ member international design and development program team, and  you can say hi to him at energyalliancegroup.org.

Scott, before we go any further, do you mind giving us a little bit more about your background and what you’re focused on today?

Scott Ringlein: Yeah. Like you referred to, I was in the automotive industry  for almost 30 years, and then in 2008 with the collapse of the automotive industry, along with the financial market and everything else, I was one of literally thousands in the state of Michigan that their career in automotive abruptly ended, and I had to find a different path.

The first thing I did was I got an office at a local incubator in Ann Arbor, and hired an executive coach, kind of got a feel for “Okay, what are some of my skillset? How can I apply it to this new world out there?” I started my first company in 2009, called On Point Business Planning Solutions. I did strategic planning for startups.

One thing led to the other, I got asked to come and work for the Department of Energy in the Obama Administration on the American Recovery Act. I did that for a couple of years. That was my first introduction to the energy field, the efficiency. At the wrap of that in 2011 I started looking into the field and funding tools that were out there, and that was really the a-ha moment.

I started the Energy Alliance Group in 2012, and since then we focus on large-scale industrial-commercial energy efficiency conservation and renewable energy projects. And not only are we working in that field, but we also help clients bring in the funding to do it, identify the technology solution, and then get into the incentives and tax credits that are out there that make it all happen.

Theo Hicks: Okay, thank you for sharing. Let’s start with where you are now with the Energy Alliance Group. You mentioned that you work with these large industrial and commercial people. Is it the owners of the actual properties you’re working with?

Scott Ringlein: Yeah.

Theo Hicks: Okay. So some people listening to the show do own commercial real estate, industrial real estate, other people own smaller portfolios, single-family homes… So I want to know if you could let us know some of the opportunities there are at these commercial sites, at these industrial sites for energy conservation, and then the cost savings that are associated with that. Once you say that, we can  figure out how this can apply to us as real estate investors. So what are some of the things that you identify when you’re working with a client?

Scott Ringlein: First of all, in regards to the real estate side of things, a lot of our clients are commercial building owners, but they’re also multifamily. So we do a lot of multifamily. We don’t do a lot of just single-family home; they’re gonna be a multifamily home or apartment complexes.

But first and foremost, investing in efficiency conservation and renewable energy solutions definitely help the bottom line.  They can generate cash from day one. So the first question that most will have is “Hey, how  can that be?” It’s all about the financial side of the transaction. So while you have to have a technical solution, typically that’s the first approach. “Oh, I should do lighting, I should do this.” Well, that’s all good, but you really need to look at the transactional side with the funding mechanism, whether it’s gonna be cash or some type of investment dollars or whatever. But that’s really what drives what can be done, and then how do you achieve cashflow-positive from day one.

The thing that most people don’t realize is there is a vast amount of money out there for doing these specific things, and there’s moneys out there that you can get 25-year term, fixed rate, non-recourse funding to do it. So when you’re looking at roofs, and windows, and insulation, and HVAC systems which are capital-intensive, don’t have a big return, you have to use these types of funding mechanisms along with what we call the cherry-picking, where you have a high return, like lighting and controls… Mix them together and now you can do a whole building, rather than just individual pieces of it to improve its efficiency, make it a better building, make sure that it’s financially healthy for the owner, but then provide a much better place for the tenants… And that’s really important also.

Theo Hicks: Okay, so you talked about there’s the larger projects you can do, and then the smaller, higher return solutions. Could you just maybe list off some of those higher return solutions?

Scott Ringlein: Yeah. Certainly controls and lighting are the first things that people should be looking at. And you can’t do one without the other. Old lighting technology and putting them on controls just doesn’t work. You can’t dim a lot of the old technology out there, so you’ve gotta do both at the same time. But then you’re managing when it’s on, how long it’s on, and then also you’re installing a lighting system that’s gonna operate 50% to 70% less.

Then from there you’re gonna get into your HVAC, hot water generation – those are more capital-intensive, but you’re also going to see a better return on investment. The more capital-intensive are when you’re getting into roof replacements, window replacements, insulation, doors, stuff like that. Typically, you’re not gonna get very good terms from a financial standpoint, and you’re just not gonna see these big, huge reductions in your utility cost. They have to be matched together with something that’s going to bring a pretty big return, with something that really doesn’t get a good return, but they go hand in hand. Why would you replace an HVAC system on a commercial building if you have windows that are either single-pane, or maybe they’re dual-pane, but they’re leaking. That’s just not a really good investment, because any of the efficiencies in reduction and utilities you’re gonna get – it’s still going basically out the window.

Theo Hicks: Okay, thanks for sharing that. I’ll make a statement first – I know on Joe’s deals they do green energy programs. They’ll get a consultant to come in who will look at every single opportunity that there is for conserving energy. Some of them have ROIs of like 30 days, other ones have ROIs of 100 years… So this sounds familiar.

Let’s talk about how to get the money. I’m assuming for things like control and lighting – those are things that a multifamily investor can budget for and pay for out of pocket or raising money… But you did mention that people will get financing for the more capital-intensive projects, like roof replacements, insulation doors… So are there specific companies that provide financing for these types of programs?

Scott Ringlein: Yeah.

Theo Hicks: So how do I find these people?

Scott Ringlein: Probably the biggest program that’s going on right now across the U.S. is the PACE program. That’ an acronym for Property Assessed Clean Energy. It started in California back in ’09. It’s now in about probably 35 to 40 states. Basically, it’s no different than the property tax assessment structure that’s used for improving roads, or building libraries or sidewalks. Whoever benefits from it is the one that takes on the assessment.

So in the case of a building, you own it, you raise your hand and you say “Hey, I wanna use this program and take on a property tax assessment that’s going to improve my building in these three categories: efficiency, conservation and renewable energy measures.” The amount you can get is based on the value of the property, and then do you have any debt against it – so there’s restrictions on loan-to-value and stuff like that. But typically, you can get 20% to 30% of the value of the building to do these improvements.

Because it’s a property tax assessment, one, on your balance sheet it’s an expense, it’s not a debt. And two, because it’s property tax assessment, it’s secured by the property itself, not the owner. So it’s non-recourse. And say you’re gonna sell that assessment – you can get up to a 25, some places 30-year period; it transfers with the property.

To give an example –  you go in and you buy a commercial building that’s tenant-based, and it needs a lot  of stuff. So you’re buying it cheaper, because it needs a lot of improvements. You can use the PACE program to make the improvements without any out-of-pocket cash. It’s paid through the property tax system; it’s set up so that the reduction in maintenance and utilities – that savings is gonna be greater than the cost over the assessment period. It’s not secured by the owner, so it’s not gonna show up as a debt, or affect their credit rating… And then if you sell it in five years, it just transfers with the property along with the improvements.

So in that case, your investment is the building, you’re using other people’s money to improve it, now you can get better tenants, you can draw higher lease rates, and you’re not bogged down by “If I sell, I have to come up with this money to pay off this assessment.” It just transfers with the property. So the only thing you’re focused is on your initial investment.

Right now that’s one of our go-to programs that we’re utilizing for a lot of the projects that we do. It can be used for new construction in some states, you can use it for multifamily, you can use it for non-profits… Every state is gonna be different, but certainly it’s something that everyone should be looking at.

And then for the listeners — you asked, “Okay, where do I find out about this?” So there’s a non-profit based in DC, and it’s called PACE Nation. If you go to PaceNation.org, you can click on your state and you can find out whether or not the state has it… Because it’s a state law, first of all. But then it has to be approved by the tax collector, because property taxes are collected locally, so they have to create these PACE districts.

All that information is out there, lots of resources out there about how it works, the benefits of it, lots of white papers… And then, for the non-believers, lots of case studies of projects that are being done or have been done. And then you can talk to people like ourselves, that can at least guide you through this process to kind of get you started.

We work anywhere in the U.S, but we wanna hook you up with somebody that’s gonna be local, and they’re really gonna know the ins and outs of the program in whatever location they are. And this is a program that’s not only being used by the U.S. It’s now in Canada, it’s in Europe, and other countries are looking at it to improve buildings, which are finally being considered infrastructure, like roads are.

Theo Hicks: Okay, thank you for sharing all that. So your company would be someone that would be a consultant of sorts, that would work with PACE on my behalf as an owner of a commercial building, correct?

Scott Ringlein: Yeah, we would come in and basically — we’re gonna come in, we’re gonna work on the financials first… You need a budget, you need to understand how much is available. Then we do the assessment of the building and identify, as you mentioned before with Joe – we’re gonna identify everything that qualifies under the program. Then we’re gonna take that and narrow it down to what you need versus what you want. Everybody wants all the fancy stuff, but there’s certain things that  you need. Get that down to that, and now we have a scope of work. We would manage everything after that – identifying the technology, bringing in the companies to get it done, handle any of the incentives that you would qualify for, whether they’re local utilities or maybe state or federal tax credits, and do the entire thing for the client.

Theo Hicks: And then when I’m working with a program like PACE, for example, I’m assuming that once I close — is the money access through a draw program?

Scott Ringlein: Yeah.

Theo Hicks: Okay, so for that draw program they wanna make sure that the dollars are being used specifically for the energy conservation solutions, and not anything else.

Scott Ringlein: That’s correct, yeah. There’s a checks and a balance that’s in there. Also, some states — we’re based in Michigan, and any project greater than $250,000 there’s also an annual audit and verification, to make sure that “Hey, the program’s working. You’re following the maintenance requirements”, and stuff like that. It’s a pretty well thought out program. And again, it’s giving access to funding that typically you just can’t get, especially the terms that you’re able to get through the program.

Every program has its nuances, but for the most part at a high level that’s really what it is. You’re able to use your property value and the property tax assessment system that’s literally been around since the 1700’s to actually improve your building.

Theo Hicks: Perfect. Alright, so I wanna get your best ever advice, but I want you to gear it towards someone who is wanting to get started in this. So what’s your best ever advice for the first thing someone should do that wants to get started with taking advantage of these cost savings that come with these types of programs?

Scott Ringlein: Get educated. Listen to these shows,  go out to places like PACE Nation, learn about it, and then don’t be afraid to call others for help. That’s what we do for a living. You do what you do for a living. Don’t try and do something that you don’t have a lot of experience in. Because what we see is that they try, they fail, and then they just go back to what they were doing, which is really costing them money.

Something I wanna point out – this is the best advice ever, honestly, Theo. The moneys that you’re going to spend – you’re already spending it. Today you’re spending though on utilities and maintenance. All we’re doing is say — if you’re spending $100 a month on utilities and maintenance, we’re gonna take 90 cents of that, improve your building, and then we’re gonna put 10 cents of it into your pocket every month. That’s how it works. So you’re already spending the money.

Theo Hicks: Perfect. Alrighty, Scott, are you ready for the Best Ever Lightning Round?

Scott Ringlein: You bet. Bring it on.

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:20:45].04] to [00:21:31].15]

Theo Hicks: Alright, Scott, what is the Best Ever book you’ve recently read?

Scott Ringlein: Credit Secrets.

Theo Hicks: If your business were to collapse today, what would you do next?

Scott Ringlein: Go find a job… [laughs]

Theo Hicks: Can you tell us about one of the projects you’ve worked on that resulted in the greatest cost savings?

Scott Ringlein: Actually, it’s the one we’re working on right now. It’s a million square foot facility. We are replacing 3,600 light fixtures, exterior and interior, installing controls. Their return on investment in year one is nearly 70%.

Theo Hicks: What is the best ever way you like to give back?

Scott Ringlein: Through charity. I’m a big fan of doing good and doing well. A couple of years ago I actually got a trademark for a charity program called Kilowatts for a Cause, where through a solar installation – the profits of the operation of it actually go to a charity that’s selected over a 20 to 25-year period.

Theo Hicks: And then lastly, what is the best ever place to reach you?

Scott Ringlein: The Energy Alliance Group, that’s our company name. The website is energyalliancegroup.org.

Theo Hicks: Alright, Scott, thank you for joining us today. I know a lot of the Best Ever listeners are gonna benefit from learning about these programs, and I’m sure they’re gonna enjoy the cost savings as well. Just to quickly summarize what we’ve talked about… You’ve talked about the energy conservation programs that relate to real estate, and that you want to focus on what you can do on the transactional side. What you can do right away, so that you can start generating cash or cost savings from day one, which involves understanding how you’re going to fund these projects. And then the fact that what most people don’t realize is that there’s actually a lot of money out there that you can get, so that you don’t have to get it through your traditional lender, or going out of pocket. There’s 20-year fixed-rate non-recourse loans.

We talked about the PACE program that’s available in most of the states, and that works like a property tax assessment. We talked about the amount of money you can get, up to 20%-30% of the property value. It’s considered an expense, and not debt, and it’s secured by the property and not the owner, and then it also transfers with the property. So the benefits are different from a traditional loan.

You walked us through an example of how it would actually work, and if people want to learn more about this PACE program, there’s  a program called PACEnation.org.

You walked us through some of the solutions – you  said controls and lighting, you talked about HVAC and hot water, roof replacement, insulation indoors, and how a lot of these things are tied together. You don’t wanna replace your HVAC if you’ve got really bad windows. You don’t wanna replace your controls if you’ve got really old lights…

We talked about  your company and how you essentially go in there, determine everything that can be done, and then based on that what you need to do, create a scope of work, and then you manage the process from there, finding contractors, things like that.

And then lastly, we went over your best ever advice for people who are interested in reducing their energy costs. It was to get educated, so go to a place like PACE Nation to learn about the program, don’t be afraid to call others like you for help. It’s probably not the best to do this on your own, because it’s a pretty unique and specialized type of solution.

Then something you mentioned that I really liked is that you’re already spending the money on your utilities and maintenance, so why not spend less money on  a loan of sorts that will make improvements to the property that reduces your utilities and maintenance costs.

Scott, thanks again for joining us today. Best Ever listeners, as always, thank you for listening. Have a best ever day, we’ll talk to you tomorrow.

Scott Ringlein: Thanks, Theo. I surely appreciate it.

 

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