JF1183: How Relationships Are The Driving Force Behind Crunch Fitness’ Success With Founder And CEO Ben Midgley

Listen to the Episode Below (35:36)
Join + receive...
Best Real Estate Investing Crash Course Ever!

Rather than have 400 owners and 800 franchises, Ben envisions having 40 owners and 800 franchises. He says that relationships are the key to any business, and the better your relationships are, the better you will do. Crunch fitness has a strong emphasis on building communities with owners, staff, and club members. Hear how Ben has been able to grow Crunch Fitness into the fastest growing gym chain in the country. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

 

Ben Midgley Background:

-Founder and CEO of Crunch Fitness Franchise, the fastest growing gym chain in the country

-Crunch has recently reached over 1 million members and has more than 225 open locations

-2010 to started franchise arm of Crunch Fitness, then coming out of bankruptcy.

-Never graduated college, started cleaning machines at Gold’s Gym

-Still works out in his basement, treats his franchisees like family (he knows the names of all their kids) and loves to serve his community

-Began his journey to fitness entrepreneurship when he realized he wanted to get healthy

-Crunch clubs are growing at a 77% compound annual growth rate & member growth 42%

-Say hi to him at crunch.com

 


Made Possible Because of Our Best Ever Sponsors:

Fund That Flip provides short-term fix and flip loans to experienced investors. If you’re looking for a reliable funding partner, their online platform makes the entire process super easy, and they can get you funded in as few as 7 days.

They’ve also partnered with best-selling author, J Scott to provide Bestever listeners a free chapter from his new book on negotiating real estate. If you’d like to improve your bestever negotiating skills, visit www.fundthatflip.com/bestever to download your free negotiating guide today.


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and 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 of that fluffy stuff. With us today, Ben Midgley. How are you doing, Ben?

Ben Midgley: I’m doing great. How are you, Joe?

Joe Fairless: I’m doing well, and nice to have you on the show. Best Ever listeners, Ben is the founder and CEO of the Crunch Fitness Franchise. Let’s talk a little bit about that and then he’ll elaborate more in detail. In 2010 he took that franchise from out of bankruptcy to now Crunch has been named the hottest new franchise by Entrepreneur Magazine, a top franchise to own, and the top global franchise… Just grown this thing tremendously. It has reached over one million members and has over 225 open locations.

We’re gonna be talking today — as real estate investors, clearly we’re entrepreneurs and I think it’d be beneficial to learn from someone who has taken a company that was past the point of failure and has grown it to where it is today, because as entrepreneurs, as real estate investors, that’s what we’re looking to do as well.

With that being said, Ben, do you wanna give the best ever listeners a little bit more about your background and your current focus?

Ben Midgley: Sure. I’m gonna put a little collar on that… So Crunch is a brand that’s actually been around for almost 30 years. I’m not the founder of Crunch on any level; that was founded by a gentleman by the name of Doug Levine – a very good innovator, a very unique marketer, and he kind of brought Crunch on the scene as what you’d consider probably the first ever boutique fitness studio.

I don’t know if you’re familiar with the term boutique fitness, but they’re the smaller-based fitness centers, about 2,000-3,000 square feet, very specialized on a certain type of exercise, whether that’s cross-fit or spinning studio, or something like that. Almost 30 years ago, those studios weren’t there.

Crunch started in a basement location in East Village in New York, and Doug was doing some really dynamic marketing in order to get people attracted to the brand. So the bran grew up to about 20-30 clubs, changed hands a couple of times, he sold out, and due to a little bit of mismanagement got into some financial troubles and then went into bankruptcy.

That was managed though through the ownership, which is a combination of New Evolution Ventures, which are fantastic operators. They’re a fitness management platform and the private equity investors in the space… Along with Angelo Gordon, who’s the current owner of the group.

So Crunch has been here the whole time, then Crunch was brought out of bankruptcy, and that’s when I was brought in, because I have a lot of relationships with the folks NEV, and I’d previously been with Planet Fitness at the president, executive vice-president level.

We looked at the industry and we said “If we’re gonna start a franchise with this great brand, where should we go?”, so we decided to go into the low price space, which is memberships that are $10-$20/month. Planet was really in charge of the market at that point, so we tried to go in with a better value for the consumer, where they’d get a lot more for those same dollars, and a better proposal for the franchise investor.

So we tried a bunch of different things, and we got it to the point that we now have (to your point) over a million members, we have the most competitive platform in the space for what members get and the franchisees get. Now we’re just consistently faced with “How do we innovate? How do we keep franchisees profitable?” and “How do we stay ahead of competition?”

Joe Fairless: You all chose the low-price space versus the premium model where it’s more high end, but I’m guessing on the more high-end luxury the margins are better – at least traditionally – across different industries, so why did you choose the low price space?

Ben Midgley: Yeah, you’d actually be surprised that in most cases the margins are much better at the lower price space, only because you have to take a very specific focus on your main drivers of expense, which primarily is real estate – that’s your biggest expense in this model, so you have to be very aggressive on the types of leases you negotiate. I’m sure we’ll talk about that more in a little bit.

Your payroll is much less in these clubs, so that’s more of a fixed cost than in most traditional health clubs, and then you do drive large membership bases. Our average membership is about 6,500 members. So if you’re managing your expenses and your profit lines profitably, your margin could be upwards of 30%-40% in the box, which is really good. You’ve gotta run it right to do that, but that’s where it should play… So yeah, very solid in the low-price range.

Joe Fairless: How much does it cost to be a member?

Ben Midgley: It ranges now. We’ve found over the years that we’ve been able to modify our pricing. Originally we started at $9.95 and $19.95. Since then we’ve [unintelligible [00:05:43].20] a health club company in the low price can’t run on a $10 membership.

Joe Fairless: Right, that was my follow-up question.

Ben Midgley: So we’ve modified our prices to $9.95, we have $19.95, we have $24.95 and now we have $39.95 or $49.95. Now, the reason that’s good for us, as opposed to a competitor that maybe only has $10 and $20 is when we added the extra amenities that low price traditionally didn’t have – and this is the difference between low price versus high value low price… A low price club – for example I would just throw Planet out there, because they’re  all over the place – basically has a [unintelligible [00:06:17].06] and amenities. No personal training, no group fitness classes, no small group training areas…

Then with us, when you add in this fantastic Crunch Fitness proprietary group fitness programming, it brings in a lot of female members; they love it, it’s great energy. We add in small group training sections like your own in-house cross-fit, with 100 feet of turf and specialized equipment with boxing bags, and [unintelligible [00:06:40].07] and tire flips and all that, and you have great personal trainers on to of all this additional equipment that we have, because we have a greater variety of equipment. Then you’re having different amenities you can place in different sections.

What we found is rather than just going $10 and $20, we can put certain amenities on your base level membership, then you can charge a little bit more for the group fitness; you wanna add in the small group and all those things, you can charge a little bit more… So on and so forth.

Of course, we have the amenities like guest privileges – you can bring a friend in at no cost if you’re on a higher level membership. You get reciprocity to all the other clubs in the country…

We give folks a free license to what’s called Crunch Live with the only company in the industry that gives people their own streaming video service with their membership. So if they’re out at a hotel or somewhere else, they can just plug in and get their Crunch classes right on their phone, on the internet. We’re the only company that throws that in. We give them an online license to a company called dotFit, which allows our members to track their nutrition and their programs online.

Those are the extra amenities that we throw in at different levels, but what that has done – without boring you to death there, and I’m sorry for going on too long – it’s driven our average membership very close to $20/month, which is the highest in our space for a low-priced player, which makes it much easier for our franchisees to be successful when you’re getting a higher average [unintelligible [00:07:54].07]

Joe Fairless: So you’ve got the baseline and then you’ve got incremental pricing based on offering different amenities, and by doing that, you start in at the low level but perhaps you upgrade them throughout the process by offering them these high-quality amenities. Obviously, that principle or that approach can be applied to any type of business, not just what you’re doing.

Ben Midgley: Yeah. We have four options. When somebody comes in, the menu is four options. We don’t get any more complicated than that. We probably have a 60% to 40% split from the higher offerings to the lower offerings. So more people tend to go up higher, which is great, and it works out well so far.

Joe Fairless: Let’s talk about a challenge. Can you tell us a story — within these seven years, what’s been a challenge that you’ve come across and how did you overcome it?

Ben Midgley: You know, I could probably give you 100 challenges.

Joe Fairless: Whatever one is your best story…

Ben Midgley: In general, to summarize — I think I’m gonna talk on a little bit of a broader scale…

Joe Fairless: Do you have a specific story versus a broad scale? Is there a specific story we can get in there and just learn as you were learning in a certain circumstance?

Ben Midgley: Yeah, I’m just trying to think of sort of confidentiality…

Joe Fairless: Right, yeah. You can tell us everything, we won’t tell anyone; we promise. [laughs]

Ben Midgley: Let me start off this way…

Joe Fairless: Yeah, fair enough.

Ben Midgley: So when you work with franchisees — first of all, our philosophy has always been “Stay small to grow large.” It’s something that’s a lot different from other franchise companies. We’ve sold over 800 franchises and we only have about 65 ownership groups.

So we started with that philosophy because we wanted less people to own more units, so we could balance the culture. If you’re a franchise owner, I can know you, I can know your kids, you can know me… We get to know each other much better, therefore we end up over time being able to work through any challenges that we might have a little more effectively.

When you’re trying to manage 400 franchisees, 800 clubs, then you can’t get to know everybody; you just can’t. So we’ve spent extra time, painstaking time trying to develop the culture in the business… And sometimes it cuts both ways, because sometimes people can say “Hey, we know each other. How could you  push me too hard on that?” The other side is if there is something that you’re at odds with each other on, you work through it.

Certain examples would be – for franchisees, they’re required to stay on a schedule. So if you come in and you buy 20 clubs, that’s the territory and the rights to buy 20 clubs… So I’m building up to a specific instant. You’re required to build two clubs a year, or sign two leases. The investment for each of these clubs is a million and a half to two million dollars, so this is a fairly significant commitment if you’re gonna do 20 of these. You’re gonna have to invest one way or another 40 million dollars over the course of the next ten years.

So you get out and you open the club, and usually the clubs take off as well as they should. They trend perfectly, they cashflow… It’s just great. In our industry you end up with a portfolio; generally a couple clubs that don’t perform anywhere near what you thought they should, and some that are incredible.

Joe Fairless: Our industry too, in real estate. It’s the same thing.

Ben Midgley: Yeah. And then you’ve got the middle ones that pretty much do what they want, right? But let’s say your first one, for whatever reason – whether it’s operator deficiency, or wrong location or what have you – doesn’t take off, and maybe it’s trending in the wrong direction, and this isn’t a normal case, but it can happen in any… Then that creates a lot of stress with the owner, but the owner is required to stay on schedule, they have to stay on schedule, so they’ve gotta reach in there and invest another couple million dollars to open another studio or health club to offset any potential challenges they’re having in that one.

That’s a real challenging thing to get someone through. “Well, I just invested this. How do you expect me to invest something more if this isn’t trending right?” “Well, you have to, and here’s how we’re gonna work through it”, and that can become a very contentious scenario, so you’ve gotta make sure you throw as much support as you can behind the operator to make sure if there’s something you’re not providing them as a franchiser, that you engage in that and you make sure they get that. You have to look for more creative ways to drive more revenue into their system. Maybe you have to dive in their P&L, they’re spending too much overhead and that’s the cause of that, or you’ve gotta get behind them 110% to get them through that.

The first level then becomes get them to breakeven so everything’s comfortable and there’s less stress, and then still you’ve gotta also apply the pressure on the other side to remind them of their obligations to continue, and if they decide not to, well then you’re at an impasse. “If you’re not gonna develop, then we have to default the relationship, resell to somebody else” and then you’ve got that person sitting there.

That’s a specific situation that we can work through and how skillfully and appropriately and respecting the respecting the relationship between the franchiser and the franchisee you work through that, and ideally you come out with the best outcome, where the franchisee is satisfied, understanding, feels supported and moves on to the next level.

Joe Fairless: Yeah, those have got to be some sticky conversations, at least initially, if it’s not performing, and you’re like “Well, you had a commitment. Let me help you get that thing to perform.” You mentioned some creative ways to drive more revenue; one of the things you said is too much overhead. What are some other ways that you help drive revenue for a franchisee at a particular location?

Ben Midgley: Sure. We have a fantastic marketing department, we really do; we’ve got a great team. But we have essentially an in-house agency within Crunch. You’ve got all your creative, all your media buyers, your social media workers, all the support at the coordinator level and manager level that will help the franchisees analyze their sales and the average due…

You can do things as simple as modifying your pricing, so your average price point starts to tick up, and then that will compound as you move along. You can do things with the interior element of the club. In certain regions of the country you have to sort of approach the community a little bit differently. I’m sure you’ve seen different franchises that had different looks in different areas, so you may have to adapt a little more to give it a little cooler feel, or a little more comfortable feel, or  help it appeal to a broader audience than perhaps your standard design does.

You can change elements like music, lighting, inside promotions where you’re going to the member base to promote different activities, help them successfully facilitate community outreach… In our industry, as a health club offer, you’ve got to be outside of your club. People have to know you’re there, and you’ve gotta be shaking hands and kissing babies; you’ve gotta go to the hospitals and the schools and the municipalities, and you’ve gotta set up your corporate agreements and making sure everybody feels welcome at your club.

So you’ve gotta execute on all these things, in addition to just marketing. So you have to go in there and almost forensically get involved in that, and then guide them through the process. It’s not gonna be the same for everybody, but it’s generally gonna fall into one of those buckets, so we have to get in there with our team and we support them from the marketing standpoint, the operations standpoint, the personal training standpoint… And that’s another revenue line that I didn’t even mention – personal training. There’s a fairly significant amount of models, so if they’re not running that effectively, you’ve gotta give more training there.

Essentially, a practice any other successful franchise would follow – just diagnose, review and see where you can fill the gaps and add value.

Joe Fairless: I like the philosophy of staying small to grow large. If you weren’t in the industry that you’re in, and I know you’ve been in this industry for a very long time, but just taking a step back and applying it to — it doesn’t have to be real estate, but let’s do a hypothetical… Let’s say you were just hired as a CEO, or maybe you’ve managed to duplicate yourself; you’re the first person in the world, you can duplicate yourself, so you’re still at your job, but then your other you is a CEO for another company. How would you implement the “stay small to grow large” approach? What does that look like?

Ben Midgley: Well, it’s very applicable to franchising, because it’s based — first of all, for me, in my career, everything I’ve learned is based off of “the more successful your relationship is with the party on the other side, whether it’s just one-on-one sales, where I get to know you on a more genuine matter”, it takes down a lot of barriers when you’re trying to sell something. You don’t come across as a salesperson; you get interested in the person first and legitimately respect person, and ideally you get a good relationship, so you become friends, and then the sales happen much easier, the referrals flow… It all works together.

So in franchising we apply the same principle just because everything’s based on the relationships. I think if we were to look at specific industries, I could give better examples, but to me almost any business is based on relationships and how the business conducts themselves, how they interact with people.

If you’re in a retail type format and you’ve just gotta move product, I don’t know if it applies the same way because staying small is only gonna give you so many locations or so many outlets to move your product, unless you’re an online company. But I think it comes down to compounding the positive experience that you get with your customers over time. Because if we sell you something at one point in time, we haven’t really proved ourselves yet; we’ve gained enough trust to get you to make the transaction, but we haven’t gained your trust enough that you’re gonna continue to do transactions with us and tell other people about it… So making a sale is just the first step, and then I think the “Stay small” approach on a different level just relates to consistently repeating that sort of track record of trust you have until it just gets deeper and deeper and deeper, and that’s the stickiness of the customers of your business.

Joe Fairless: I love the quote “the more successful a relationship is, the more successful you will be together”, and it’s clear that you’ve taken that approach throughout to build this thing… What is a way that if you were speaking to some franchise owners and they’re like “Hey, Ben, how can I build a better relationship with the customers that come in the door?”, what are the top two or three things that you tell them?

Ben Midgley: That’s pretty simple, actually. When I was a lot younger – I’ll just give you a personal example without trying to focus it on myself, but… I won this award which was called the URSA salesperson of the year award, so our industry trade associates; I was the top salesperson for the fitness industry. This was back in 1995. But the way that happened was, first, looking at a health club – this is what we tell owners… The health clubs are a community; Starbucks has done an amazing job of calling themselves as the third place – there’s home, there’s work, there’s Starbucks… But you’re just going in there to quickly grab a latte and move, right? So the goal is to have all the baristas know your name and talk to you, and you have a little chit-chat, and they know your drinks, and then you sit down and all that. I love Starbucks, I’m a huge fan of everything [unintelligible [00:18:11].13] but no barista knows my name, because my interaction with them is quick.

In a health club you’re there for an hour, an hour and a half, multiple times a week, so if you’re the owner of that facility and you take that community aspect seriously, first you’re gonna lead from the front, you’re gonna establish that within your employees, that “Look, everytime Joe comes in, say Hi, Joe.” Know something about Joe, get to know him, and the same with every single member that comes in. Sometimes you’re gonna have members that don’t wanna see you at all. They just wanna walk past, they wanna go do their thing, and that’s fine, that’s their business, but you still say hi to them, you still work with them, and then you’ll be surprised that one day you don’t say hi to that person, and even if they never say hi back, they’re gonna notice… You know what I mean? “They didn’t say hi to me? What’s going on?” Then you know you’ve kind of cracked through that outer shell, because there is some interest in interacting with the staff, even though they’re not interacting back and it’s just you going one way.

But what works great for the owner is to quiz your team on knowing names. When I was younger I’d go into the center of a club and I would practice naming every member in the club at any given time, whether it’s six in the morning, 12 in the afternoon, 3 or 7 o’clock at night. Different people come at different times, different people hang out with different groups within the clubs, but the more you know everyone’s name and everyone’s social circles and then you sort of integrate yourself into that… If I see you in the club six times and I ask the front desk and they don’t know who you are, and the training staff doesn’t know who you are, because you will check with them first to get your name, then you go down and introduce yourself. “Hey, my name’s Ben. I’ve worked here for a long time; I see you’re working out all the time, I just wanted to introduce myself.” “I’m Joe.” “Great, Joe. Thanks. Anything you need from me?” “Great. Alright, we’ll see you tomorrow.”

You just have to get that process going, and sometimes people are uncomfortable with it, sometimes they’re not, but at the end of the day even though it may seem like unproductive time, because you’re not on the phone trying to close another deal, or this, that or the other thing, you can never underestimate the value of those relationships, because then you create this aura about yourself that drives people to you, and if you can create a team of people like that within your club, all 20 of your employees, [unintelligible [00:20:12].06] the community aspect of it thrives. I’m sorry if I went on…

Joe Fairless: No, it’s helpful.

Ben Midgley: That is the key in our industry – get a community going within your club.

Joe Fairless: What’s another way that you all build a community within your club, other than making sure that all team members know the names and acknowledge and have relationships with the individuals?

Ben Midgley: I think building relationships  – there’s not a textbook to it, right? A part of you has to be a genuine person that’s interested in having a relationship… Look, we’re dealing with people, and not everybody’s the same; everybody’s got a different personality. If you just get that process going where – let’s take out the using the names – the employers care enough to interact with the customers and they have a genuine type of personality where they’re interested in people, it happens by osmosis, it happens organically. It just becomes this good feeling, enjoyable place to go.

Everybody’s been to businesses — I remember this one market that’s actually closed right now; it was in our hometown. Every time I went in there, I’d get a certain bean salad which was delicious, and I was like “What’s in this?” “We don’t share our recipes.” “Okay… Cool, sorry. I just thought this was great.” I wasn’t gonna steal your recipe and open a store right next to it, you know what I mean?

Joe Fairless: Yeah…

Ben Midgley: But that’s completely the opposite of it. So do I stop shopping there? Yeah, I stop shopping there. But if it’s totally different… “Oh, the bean salad? We use vinegar, we use this, we use that. It’s fantastic. By the way [unintelligible [00:21:34].03]” “Oh, this is amazing. Thanks, great job!” I’m going back. So there’s no science to it.

When I was younger and someone interviewed me about how we sold so many memberships, after talking to them, that person said “Well, you basically told me nothing.” [laughter] That was one of the first interviews I did. They said “There’s no system there.” I’m like, “Well, there’s not a system. It’s people.” Just getting to know people, and it works.

Joe Fairless: I think the key there is hiring the right people, because as you said, everyone’s got their own strengths and weaknesses, and some people just genuinely connect with others and generally are curious, and others aren’t.

Ben Midgley: And nowadays you’ve got these, right? So you’ve gotta just stop the kids from looking down… The worse thing to do is come into a health club and see somebody looking down to their phone… Or any business. “Excuse me, can I put that down so I get a coffee?” Or you’ve got eight people behind the desk and nobody’s looking at you and you’re just wondering what they’re all doing…

Joe Fairless: Oh, yeah.

Ben Midgley: Maybe they’re all good and busy, but the customer is there… Or the customer on the phone is more important than the customer right in front of you… And we can go on for days.

Joe Fairless: Yeah. I ask this question to all guests, and since you’re an entrepreneur and a successful professional, it will be a slightly different slant than real estate investors, so I’ll change up the question a little bit… What is your best advice ever for entrepreneurs and business professionals?

Ben Midgley: Well, the cliché is “Don’t give up.” I tell my kids that every morning when they go to school. Make good decisions and then never give up. But one of the things that served me well is not rushing the judgment on anything. Taking the time to take in information and understand the whole scenario that you’re dealing with. Sometimes when you’re growing a business or your business has got momentum, you’re very caught up in the pace of things. “What can I do to move faster, make more money, get better, expand?” or what have you, and then sometimes decisions are done quickly. Now, you are forced to work quickly, but you’re not really forced to move quicker than you should to make an appropriate decision.

It’s been hard for me at least personally to slow myself down and not react to things as much as you would want to and then tell yourself “Get more information, get a clearer picture of what’s going on, make sure you talk to all parties, make sure you look at things from all the different angles, then proceed to make the right decision.” I know it’s not specific best advice lesson ever, but you can apply it to pretty much anything, whether you’re signing a lease… Do you know how many people will sign a lease just because they like the site, and they think it’s gonna be a great site, but the lease is 50 pages long? How many things can screw you in that lease if you didn’t really go through it?

Did you sit in the parking lot at the front of that store and watched the traffic, as opposed to just looking at the demo reports? Did you talk to the owners of the stores next door? When was the last vacancy? Did you talk to the manager  to say “Are you one of the top stores or one of the poor stores in the network?” People will tell you a surprising amount of information, but that’s just information gathering. If you’re prone to making decisions quickly without all the information, you’re probably gonna be prone to make some mistakes.

Joe Fairless: That’s a good segue into some of the real estate stuff… You said on the expense front you’ve got to be aggressive on the types of leases that you get, and make sure you’ve got the proper payroll etc. Let’s talk about the types of leases… I wrote down three, you might have said four; you gave three examples of what you look at whenever you’re evaluating an opportunity for where you’re gonna be. One is to talk to people next door, two is to sit in the parking lot and watch traffic, and three is to actually read through all 50 pages, and then more importantly, also have an attorney read through it.

What are some other things that you’d like to mention as it relates to the real estate front of your business?

Ben Midgley: Well, real estate, as you know, is changing dramatically. There were I think 8,000 retail closures just over the last year, in all different segments, so for our industry it’s becoming very positive for us to go out and negotiate with the landlords, because we’re taking anywhere from 20,000 to 50,000 square feet, and there’s not a ton of those tenants running around looking for those spaces.

For us, you’ve got three elements that you have to look for. One is your gross rent per square foot. And we only talk on gross terms, because in some municipalities the triple nets are — it’s unbelievable. In some places they’re $12, in some places they’re $3, so we just talk in terms of gross, because you’re still paying that money one way or another.

Your tenant improvement allowance – if you’re a sophisticated investor, you don’t like to take a tenant improvement, because it’ll drive up your monthly rent, but most folks in the franchise industry like to do things on a lever basis, where they’ll finance it rather than just putting 100% equity… So generally the TI makes a lot of sense, because it’s reducing your cash out of pocket.

And then third, what is your free rent periods? Those are the three main factors in negotiating a good health club lease. And then of course, your landlord work letter. What’s the condition of the space? How much work do you have to do? What is your HVAC? How much electrical is running into that? What’s the condition of the facade? Where is your plumbing stubbed in?

There’s so many different things you have to consider when doing it, again, because you’re looking at a million-and-a-half to two million dollar investment just to get out the door, not counting what your overall operating expenses are gonna be and your cashflow needs once you get it going, because you know how much your [unintelligible [00:26:31].21]

We encourage people to look at all those aspects very closely, protect themselves on the guarantee… The guarantee is a tricky spot. You’re gonna have a ten-year, a five-year, a rolling, something that just runs out after the TI expires… So you obviously know all those inside and out, but we go through each of those scenarios with each franchisee, and they’re always different based on the type of landlord you’re dealing with. Are you dealing with a REIT? Are you dealing with a big shopping center? Are you dealing with a mom-and-pop that have owned that building for 50 years and there’s no debt on it? Are you dealing with a small real estate owning group?

It’s very unique, and that’s why you’ve gotta have people behind the scenes looking over the franchisee’s shoulders to make sure that someone who’s never done a commercial lease before can get through it without being damaged, really.

Joe Fairless: You mentioned free rent periods. Can you elaborate on that?

Ben Midgley: In the health club industry most folks pay on a monthly billing system; they’re paying through their checking account, or a credit card that’s recurring, and then you have a certain period to cancel. That’s why a lot of investors like the fitness industry, because it’s just recurring, repetitive monthly dues, no problem. It’s not like a lot of people do it… If you’re doing storage on the iCloud, or Google or something, they’re just debiting you $3/month or $5/month every month for your extra storage in the cloud, or what have you… That may not be a great example, but the same principle applies. But when you open a health club, it takes a while to ramp up to your mature membership base, so what you want is a free rent period from your CO (certificate of occupancy) so you have an opportunity to get more and more people on the monthly membership system, so when your full rent kicks in, or you actually get a deferral on your equipment lease, then you’re meeting your monthly cashflow requirements, as opposed to running in some deficit for a few months until you reach that level.

Then when you’re in the negotiation, we look at it as having three different levers – you’ve got your gross rent, your tenant improvements and your free rent periods. So if your gross rent is higher, then your TI either has to be higher, and it equals out in the equation. If you’re not gonna get any TI at all, I’ll see if we can get three years free rent, if you believe it. So then you’ve gotta figure out how to cover the build-out costs, maybe through a finance or something like that, so you don’t really come out of pocket too much and leave yourself short.

I won’t bore you with any of the real estate scenarios we run through because you know them all obviously, but those are the ways we have to look at each and every situation with our franchisees and assess the space on whether or not it’s gonna be a worthwhile move for them.

Joe Fairless: We’re gonna do a lightning round where some listeners have come up with some questions… I’ve handpicked some of the questions. Your answers don’t necessarily need to be lightning quick, but I just like calling it the Lightning Round. Are you ready for the Best Ever Lightning Round?

Alright, perfect. First, a quick word from our Best Ever partners.

Break: [[00:29:10].23] to [[00:30:14].03]

Joe Fairless: Alright, Ben… This one is from Jaymes in Pittsburgh.

Ben Midgley: Real questions from listeners? I thought you were just pulling my leg there…

Joe Fairless: Oh, no, no. He spells his name Jaymes, and he asked this pretty generic, macro-level question, “How big is your vision for Crunch?”

Ben Midgley: I love that one. I told you I’m a Starbucks fan, and Starbucks has almost gotten to the point where they’re synonymous with coffee… Maybe not if you’re on the East Coast, and you’re probably thinking Dunkin’ Doughnuts, but it any case, my vision for Crunch as it’s shared by everyone else on the board, and we also have another great CEO on the own side – his name is Keith Worts – is that Crunch is going to become in time the default definition of a fitness club. So “I’m going to Crunch” rather than “I’m going to the health club”, that’s our goal.

Long-term, we’re gonna be in just about every community we can, and people will associate what we do just with it. That’s the long-term goal.

Joe Fairless: This is from David in Nashville – “Was there one person who was the most influential in your life, either from afar, like an idol, or someone you knew personally?”

Ben Midgley: That’s a funny question… A close friend of mine just passed away, and their service is actually on 26th November. And I think for me anyways, in my life, I’ve had many different people that have been exceptionally influential to me, especially at different stages in my life.

This particular person – I’ll just say his name; his name was Peter Bennett. He was the kind of guy that when I was a kid he gave me a job, and they took me in, kind of toughened me up from maybe being a little too soft of a younger kid, not even more than 13 at that time… So it was somebody who felt like he could take on the world and take care of himself.

And as you go through different levels of your life, you find mentors in different aspects. I think people are drawn to the type of mentors they need based on where they are in their life, and I could give you five or ten different people from business that have affected me in that way, people who have affected me in my personal life… But I think for me it’s been in stages.

Joe Fairless: Makes sense. This is from Jason in [unintelligible [00:32:12].11], we’ll go with this one. It’s worded a little weirdly; I’ll just read it and then we can try and decipher it. “What is more important to do what you do? Either business skills or workout skills?”

Ben Midgley: Workout skills?

Joe Fairless: Yeah.

Ben Midgley: [laughs] Well, I’m 48 now, so my workout skills are still there, but they’re not what they used to be, let’s put it that way. I think you take care of yourself to take care of everything else in your life, let’s put it that way. I’m in the fitness industry, so you’ve gotta exercise, eat right, in my opinion. You’ve gotta take care of yourself, and if you’re working right, then it helps everything around you work better. It doesn’t mean it’s gonna work perfect, but take care of your health, and then the business skills — look, you’ve gotta hone those all the time. Nobody knows everything in business.

I think I’ve just talked to someone else on this point – I think once you are an accomplished CEO (and obviously I’m not nearly as accomplished as thousands of others) and you feel like you’ve got it all sown up, then that’s when your business is already on the downtrend [unintelligible [00:33:06].12]

Joe Fairless: I love that. How can the Best Ever listeners get in touch with your or learn more about Crunch?

Ben Midgley: The best way to learn more about Crunch is Crunch.com. We’ve got a tremendous new website, we’ve just revamped it; it’s been a great investment for the franchisees. For me personally not a tremendous amount to learn there; I’m happy to reach out and get in touch with me if you like. You can reach me through the website as well, and I’m happy to do what I can to support people who are growing up through their business career.

Joe Fairless: Awesome. Well, Ben, thank you for being on the show. Some of the takeaways I got from it is — I mean, surprisingly, margins can be better in the lower price space, and one of the ways to do that is through incremental pricing. That can be applied not only to your industry, but any industry really. So that’s one thing.
Two is the expenses are really something that you all need to get a good handle of, and one of the things, real estate… Specifically, some of the things you mentioned, more peripheral level – the sit in the parking lot and watch traffic, talk to people next door and read through the leases… These are principles that can be applied not only to someone who’s signing a lease, but also someone who’s looking to buy a commercial real estate property. So getting in there and doing some of the softer things that we might not think about, but that you mentioned.

And then the three things you look for in a lease, the primary things – one, the gross rent per square foot; two, the tenant improvement allowance (TI), and three, the free rent periods, and you talked through the approach there.

And then lastly, the overarching theme here, and that is when you said the more successful your relationship is, the more successful you’ll be together with that individual… And that truly is. I mean, it’s clear that’s the foundation of your approach and the approach that you’ve taken to scale the business.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Ben Midgley: Yeah, thanks very much, Joe. Thanks for having me.

JF1001: A Hidden Wealthy Niche that Involves a Fine Tuned Team

Listen to the Episode Below (26:41)
Join + receive...
Best Real Estate Investing Crash Course Ever!

Condo conversions are tricky, and not for the novice investor. Our guest talks about his team including an architect, and Attorney, contractors, and other individuals that are needed to convert buildings into condominiums. This is a great show that has a purpose to give you a little insight into this hidden niche that has made many people wealthy. Tune in!

Best Ever Tweet:

Ricky Beliveau Real Estate Background:

– Owner of Volnay Capital
– Specializes in both buy and hold as well as condo conversions
– Currently have 6 condo conversions in different stages in/around Boston.
– Based in Boston, Massachusetts
– Say hi to him at http://www.VolnayCapital.com

Made Possible Because of Our Best Ever Sponsors:

Want an inbox full of online leads? Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to adwordsnerds.com/joe to schedule the appointment.

 

Best Ever Show on hidden wealth

 

Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Ricky Beliveau. How are you doing, Ricky?

Ricky Beliveau:  Joe, I’m doing well. How are you?

Joe Fairless: I am doing well, nice to have you on the show. A little bit about Ricky, he is the owner of Volnay Capital. He specializes in both buy and hold, as well as condo conversions. He currently has six condo conversions in different stages in and around Boston, and he is from and based in — well, I don’t know where you’re from, but you’re based in Boston, Massachusetts. With that being said, Ricky, do you wanna give the Best Ever listeners a little bit more about your background and your focus?

Ricky Beliveau:  Sure. As you said, I own Volnay Capital and we’re based out of Boston. I started out, I went to Northeastern University, and at Northeastern I actually stuck to a class called Real Estate Finance, and in that class we had to do a paper on some type of real estate investment, and the property that I chose was actually a multifamily building near the college. After graduation and looking through the figures and seeing the opportunity there, that’s what kind of jumped me into the real estate business by buying my first multifamily in 2010.

From that point forward, I’ve continued to acquire rental properties, and about three years ago I made the jump over to the condo conversion side, and doing condo conversions over the past three years, mostly centered in East Boston, which is an up and coming neighborhood, close by to the downtown area.

Joe Fairless: Condo conversions – what do we need to know about condo conversions?

Ricky Beliveau:  The condo conversions market – you’re able to create a large amount of value by taking a single property and splitting that into three individual units, and updating the deeds with the city, and then you’re able to sell those off to individual buyers. By doing that, on what would be a single project, you’re actually able to create three sales out of that one project.

Joe Fairless: From a fundamental standpoint, that sounds great – you buy one and you get three at the end of it. Tell us one deal that you’re working on, and the numbers on that deal.

Ricky Beliveau:  A deal that we just finished up – it’s actually one of the most successful deals that we’ve done to date… The acquisition price of the property was for 650k, and at the time that was about the going rate on the market; it wasn’t that I got a great price on it… It was a pretty good deal on the purchase. The renovation cost on that project was 575k, and the building was 4,300 square feet, so it’s a large property. That brings the total project cost on that into $1,225,000 all-in project cost. The sell out on that was 1.7, so it left a profit after fees of $447,000.

Joe Fairless: How long did that take?

Ricky Beliveau:  We tried to turn it around 10-12 months. That project actually spread over the year mark. We had some issues when we were trying to get started, so it kind of delayed the beginning of the project, but all in we were about 13-14 months on that project.

Joe Fairless: Okay, 14 months worth of work to make about $450,000.

Ricky Beliveau:  Correct. ROI on it was around 36,5%.

Joe Fairless: Okay. What are some challenges that came up in that one that made it take longer than what you projected?

Ricky Beliveau:  When we acquired the property, the property was tenanted, which when you’re getting in the business of doing condo conversions and there’s tenants in place without leases, you can kind of expect that there might be some issues getting the property, relocate those tenants, find them a new place to live and then be able to start the project. That’s what happened here – when we acquired the property, one unit was vacant and two units had tenants. We were able to relocate the top floor tenants into a new apartment, but the second-floor tenants, we were going back and forth for a few months regarding what their needs were. I was finally able to relocate them into one of my rental properties around the corner. Just that process delayed us about 3-4 months.

Joe Fairless: How were you able to eventually relocate them? What convinced them to do that?

Ricky Beliveau:  The property they were currently living in, which was the one we wanted to put under construction, their rent was currently $1,200/month. What we agreed upon to have them moved is I was able to lower their rent to $900/month. Then I also had my guys move them from that property to the other. So with a reduction of rent by $300, as well as me covering moving costs, we were able to finally come to an agreement to have them relocated.

Joe Fairless: What did you propose initially?

Ricky Beliveau:  The initial request was that they don’t have a lease in place and that they would relocate. In this market it’s tough, because as the rents are continuing to rise, a lot of these people are not able to afford in that neighborhood anymore, so it becomes tough for them. We try to really work with the tenants and find ways to find resolutions, instead of having to go to court.

In this case, once we started the negotiations, the first attempt was just to work with them as we had the other units, and find them a place to move and pay for the moving costs and pay for their first month’s rent. They weren’t open to that idea. They were really set in stone that they wanted to stay in that neighborhood in that area. As we went back and forth, an opportunity came up that I had just acquired another building that was a block away, and I was able to use that property as an offering and move them over into that building.

Joe Fairless: Did they ask to have some sort of agreement so the rent wouldn’t go from $900 to $1,900 after year one?

Ricky Beliveau:  We signed them up on a two-year lease, but actually backdated it with the date because of the four months that they had held up the start of construction, so it ended up being a little bit less. I think instead of a 24, about 20 months. So it was a 20 months lease at $900, and then after a year it went up to $990. So I was able to build in a 10% increase after year one.

Joe Fairless: After year one, okay. And if you didn’t have them relocating to that unit, how much would it rent for?

Ricky Beliveau:  That was a third floor, three-bed apartment; we probably would have gotten around 1,600-1,800. It definitely was a financial hit, but when you have approved plans and you’re able to start construction on a property that can create the returns that we just discussed, those are small potatoes in the long run.

Joe Fairless: Yes, a no-brainer. You said there was one vacant and two were leased; one was more challenging than the other, they left… Was that the primary reason why it was held up for 14 months?

Ricky Beliveau:  Yes. That cost us about four months before we could start the demo. So in the end, the project timeline was still around 10 months, but from demo to completion we lost four months in negotiations.

Joe Fairless: What do you have to do when you demo?

Ricky Beliveau:  When we started out three years ago, we would be more selective with our demo. We wouldn’t get into the property and take everything down to the studs. We realized that to create the quality product that we want to and build the reputation that we have, you really have to start from scratch. Demo days — it takes us about 2-3 weeks to demo a property. We’ll send in a team of guys and they will take it all the way down to the studs, remove everything and we’ll start from scratch.

Joe Fairless: So you’re basically building from the ground up, but you have the framework, or the studs there.

Ricky Beliveau:  Exactly, keeping the exterior skeleton of the property, and then rebuilding from there.

Joe Fairless: So you do the demolition, and then what part of the process tends to go, or is more likely to go over budget than others?

Ricky Beliveau:  At the beginning we were seeing more items going over budget than we are now. The recommendation I would make is to really know the numbers and negotiate the prices upfront. When you’re getting into one of these projects, we sub out everything; it’s all subbed out. We hire a GC firm to handle the project, and then the GC firm hires all the subs. So before a project even demos, we’ve already negotiated, and the majority of the expenses of the project are already locked in with those subs. The fact that we’ve done so many now and that we have these long-standing relationships, and that they know that it’s consistent work, we’re able to see those numbers come in much closer to budget than we did when we were first starting. I think having clear cut budgets upfront with these contractors and with the subs is very important.

Joe Fairless: And you talked through at the beginning of the high-level summary of doing condo conversions – creating a large amount of value by splitting them into (in your case) three units, from one to three, updating the deeds with the city, and then selling to individual buyers. Can you elaborate more on the splitting it into three individual units? Explain how the thought process works for someone like myself who hasn’t done this.

Ricky Beliveau:  The actual process of making the switch from a single property into three condos – it really would depend on your state and also on your city. Using Boston for an example, the process is we work directly with our attorney, as well as our architect. Those are the two parties that are really involved. From the architect standpoint, they need to redraw up the documents to submit to the city that will show now what the assessment should be for each unit. Now when the city looks at this property, they need to know what is the size and ownership of each unit. They require an architect to do that section of it, where then they stamp that and they submit that.

The second part is with the attorney. The attorney takes that information and they’re gonna compile that along with the condo documents. Those are guidelines that are set up on behalf of the association, showing the rules and regulations of the building you’re creating. That’s all put together and then submitted to the city. So it’s really a team effort. You need an attorney involved, and you’ll need an architect involved.

Joe Fairless: Where do you spend most of the time managing? Is it the demo, the architecture process or the attorney process?

Ricky Beliveau:  For our condo conversions, I think the most involvement I would have is with the architect. That’s just because we need to meet at the property, and he needs to take exact measurements of the whole space. So we would walk through the property and go through everything and make sure that we’re properly calculating the unit square footage, which is also very important to me on my sellout side – I wanna ensure that we’re properly calculating and that my buyers are getting the square footage that actually is there, and that they’re not paying for something that’s not correct. So I would say working with the architect on his end.

Joe Fairless: How much does that cost?

Ricky Beliveau:  On a project like that we build it into the original budget for the architect. The same architect who does our plans from start to finish, as well as code review and all that – he builds it into his budget. I think it’s around $2,500-$3,000 for his time that he spends on the condo document side.

Joe Fairless: Do you engage either one – the attorney or the architect – before having the property under contract, just to have an idea of what the business plan is and that it is something you can execute on?

Ricky Beliveau:  At this stage, now that I have more experience with these properties, I’m comfortable in making the decision without my architect involved. When I was first getting started I would try to have him come with me to a showing that I thought was a great opportunity, or if I saw a property and I wanted to get his opinion on it, I would try to have him meet me there, as well as my contractor. But now over the years that I’ve been doing this, I’m much more comfortable in making those decisions on my own. So now the process is once I get a building under agreement, I’ll then immediately schedule a time for both my GC and my architect to meet me at the property as soon as possible to start the process of getting the budget together from my GC, and then from my architect get the plan started for the project.

Joe Fairless: With the process of updating the deeds with the city, what type of challenges have you come across that probably are unique to Boston, but maybe some aspects of it can be applied towards other markets?

Ricky Beliveau:  Right. In the Boston market it’s actually pretty clear cut. There  are standard processes followed, and you’re able to do this conversion. I’d say that one thing that your listeners should definitely look into is if they’re going to get into one of these projects, speak to an attorney before you begin, or even before you acquire a property with the hopes of doing this kind of conversion; each market is different. I’ve talked to investors in other markets where the process is not as easy as it is in Boston. You wanna make sure to speak to an attorney and get that information up front, before you’re midway through a project and then you’re having an attorney tell you that that property is not condoable. I’d say do the legwork up front and have those conversations.

Joe Fairless: How do you find the right attorney and architect for this?

Ricky Beliveau:  It’s a great question. I preach to everyone I talk to that networking and relationships is what really makes this business. I try to spend as much time as I can every week meeting with people and networking. That’s the only way you can really know that someone is the right contact – if someone can vouch for them that you really trust. A mentor of mine introduced me to my attorney, my architect I played soccer with in college… Almost everyone in my business that I work with is connected to me in some way, closely in my network.

Joe Fairless: You didn’t do a Google search.

Ricky Beliveau:  No Google searches.

Joe Fairless: If someone doesn’t have those connections, do you have any suggestions? Maybe certain traits or qualifications that your team members have that you would look for if you had to start over in a different city?

Ricky Beliveau:  The first person that I would go to is a real estate agent. If you reach out to a real estate agent who has a large number of listings, or you can pull the data that they’ve been successful and they were one of the top agents in that market, you can then go to them, take them out to lunch and try to ask them to open up their network to you. What you’re offering to them is always a back and forth – you’re saying “Hi, I’m new to this market, I’m new to this business and I want you to be my agent. I’ve done my legwork, I’ve looked into you as an agent.”

If you commit to them that you’re going to bring them business, they’ll then open up the doors to other individuals who could help you out. Obviously, since it’s not a direct connection, you’re gonna wanna do some more legwork before hiring an architect or an attorney, but I think that if you can find someone and get references, and it’s someone who’s very successful in your area, you can’t beat that. That’s what would be my recommendation and that’s what I would do. If you [unintelligible [00:17:38].18] me into Cincinnati and I had to compete with you, I’d go out and find the top real estate agent on the block.

Joe Fairless: I would never compete with you in condo conversions. [laughs] I’d be like, “You win, you win! Mercy, mercy!” Ricky, what’s your best real estate investing advice ever?

Ricky Beliveau:  I would say know the numbers. I think that in real estate now it comes down to the Excel file. I look at the property and the first thing I do is I sit down at my computer and I run the numbers, whether that’s for a buy and hold or for a condo conversion. Before I’m even walking out my door, I have already decided if this is a good buy or not. Obviously, things can come up when you get into the property, but you can know by (I’d say) 95% if that’s going to be a purchase that you’re gonna make before you leave your computer.

Joe Fairless: What are the main inputs?

Ricky Beliveau:  From a condo conversion standpoint, I’m looking at the building square footage… The most important thing from my standpoint is I’m looking at my sellable square footage, so I know that I can sell those condos for a certain price per foot. When I look at a building, if the building is only 1,500 square feet, I know that when I make it into condos I’m gonna lose the common area. There’s gonna be a very small sell-out on that, because the units are very small.

So I’m gonna look at the property and I’m gonna say, “Alright, what’s the total building area?” Usually, you can say about 85% is what you’ll be able to sell, so usually about 15% is a good guessment of common area. So you do 85% of the total square footage – that will give you the sellable square footage. And then since I have a really good grasp of my market, which is also important – knowing where you’re going to invest, I can then take that square footage and I’ll know what it costs me to build with that square footage for my construction costs, I also know what I can sell it at with those numbers, so before I even go see this property, I have a spreadsheet that’s already built out with my profitability.

When I get to the property, there could be things that come up – foundation issues, things that could make me adjust my sheet, but those are all items I’m able to enter in before I even leave my computer.

Joe Fairless: What does it cost to build?

Ricky Beliveau:  Right now we’re running our numbers for [unintelligible [00:19:50].27] renovation at around $150/foot. It ranges. Sometimes we’re under that, sometimes it goes a little over that, but in Boston that’s the calculation we’re using to see if a project is feasible or not.

Joe Fairless: And what’s it selling for?

Ricky Beliveau:  Right now in East Boston the prices have really rose. Now we’re in the high fives, low sixes per foot.

Joe Fairless: High five-hundreds?

Ricky Beliveau:  Correct, yeah. For a property that’s closing 1st May, maybe the average sellout was 573/foot.

Joe Fairless: And then the only other factor is the cost of acquisition when you factor in the costs, right?

Ricky Beliveau:  Yeah, it’s acquisition, and then there’s the other soft costs – there’s the carrying on the interest, the insurance, attorney’s fees… So that $150 is just the cost that would actually go towards the construction of it. There’s still the other soft costs that would need to be added in.

Joe Fairless: Okay. Is there a rough percentage that you use for that?

Ricky Beliveau:  No, I build those out in my analysis. I look at the acquisition price, I know what rates I’m getting from my lender, so I’m able to build that out. I use a 12-month timeline to give myself a buffer, so that I know where my interest will be if it does take me 12 months. It’s always better to overestimate these numbers and then in the end come back extremely happy with your results, than underestimate and then end up losing money.

Joe Fairless: Are you ready for the Best Ever Lightning Round?

Ricky Beliveau:  Let’s do it.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [[00:21:22].24] to [[00:22:17].18]

Joe Fairless: Ricky, what’s the best ever book you’ve read?

Ricky Beliveau:  I’m not a big book guy, but lately I’ve been really enjoying the How I Built This Podcast that came out – that’s been really enjoyable the past few months.

Joe Fairless: That’s a book, or a podcast?

Ricky Beliveau:  A podcast.

Joe Fairless: Okay, it’s a podcast on how he or she built the podcast…

Ricky Beliveau:  No, How I Built This is a podcast that interviews some industry leaders – Mark Cuban, the founders of Instagram, for example, about how they got started and how they built their business, and the complications that they had to get to where they are. It really relates to real estate. We’re all looking to build these businesses, build our real estate empires or companies, and listening to these really successful people tell their story – it really translates to the real estate business.

Joe Fairless: Best ever deal you’ve done?

Ricky Beliveau:  We already ran through my last condo conversion, but it’s actually the first building I ever purchased. I currently own it today – it’s my largest rental property. My purchase price was $930,00 and reappraised for 2,2 million.

Joe Fairless: That was your first purchase?

Ricky Beliveau:  Correct.

Joe Fairless: Wow, how did you get the funds for that on your first buy?

Ricky Beliveau:  I used FHA Owner Occupant, and in Massachusetts at the time the max one you could get was $816,000 for FHA, and then actually using the paper that I wrote I went to my mother, who had just inherited some money, and I asked her if she would invest in the property with me. So she gifted me $160,000 to get me started on that first property.

Joe Fairless: And that was a single-family home?

Ricky Beliveau:  No, it’s a three-family property. When I purchased it, it was a nine-bed, three-bath; I lived in one of the units and I got my hands dirty and renovated it and turned it into a 12-bed, six-bath.

Joe Fairless: [laughs] Of course you did.

Ricky Beliveau:  I was able to really drive up the rents and drive up the value. And also, I bought it at the perfect time. Boston in 2010 had really plateaued. From 2007 to 2010 it had almost been dead even, and then right in 2010 is when the market started to explode, and it hasn’t stopped since.

Joe Fairless: Best ever way you like to give back?

Ricky Beliveau:  Right now I’m a member of the Venture Mentoring Network at Northeastern. What that is is it’s startups and college students who have ideas and they’re trying to start their businesses. Right now I’m mentoring a bunch of college students, trying to help them get their businesses going.

Joe Fairless: What’s a mistake you’ve made on a deal?

Ricky Beliveau:  Thinking back, one mistake I made from the start was that I tried to self-manage my rental portfolio. I think that you can’t really deliver the high level of service that these tenants need when you’re doing it on your own, at least from my standpoint. I quickly realized that it was a mistake that I was trying to do that on my own, and I was able to correct that by hiring a management company to take over that for me.

Joe Fairless: And where can the Best Ever listeners get in touch with you?

Ricky Beliveau:  You can find me on Facebook, Instagram, Twitter, all at Volnay Capital. You can also find me on my website, volnaycapital.com.

Joe Fairless: And I recommend the Best Ever listeners to go check out Ricky’s website, volnaycapital.com. It’s got pictures of the condo conversions, it’s pretty cool.

I really enjoyed this conversation on condo conversions, and other deals, but really we focused on condo conversions – the challenges that we might come across. Definitely a red flag if tenants are there, there likely will be issues. It’s not a deal breaker, but just expect for there to be issues. And then knowing your numbers, talking through how you calculate the back of the napkin math, and then you have your financial model, so obviously going much more detailed. During our conversation you gave really good, high-level back of the napkin approach for how to evaluate deals. Thanks so much for being on the show, Ricky. I hope you have a best ever day, and we’ll talk to you soon.

Ricky Beliveau:  Joe, thanks a lot! This has been great.

Subscribe in iTunes and Stitcher so you don’t miss an episode!

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Best Ever Show Real Estate Advice from experts

JF816: From Employee, to Owner, to Real Estate Entrepreneur

Listen to the Episode Below (23:04)
Join + receive...
Best Real Estate Investing Crash Course Ever!

He started out as a fencer, and suddenly realize that he did not want to continue down that rigorous path forever, so he owned his company. He then realize that he could simply rehab homes himself! Hear how our guest transitioned into someone who now calls the shots financially.

Best Ever Tweet:

Justin Simmons Real Estate Background:

– Managing partner of S&C Homebuyers and is focused on construction management and property evaluations
– Co-Founder of the Western Mass Real Estate Investor Club
– Buy, rehab, sell and/or rent all types of real estate
– Based in East Longmeadow, Massachusetts
– Say hi to him at http://sc-homebuyers.com
– Best Ever Book: E-myth Revisited

Sponsored by:

Door Devil – visit  http://www.doordevil.com and enter “bestever” to get an exclusive 20% discount on your purchase.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips: https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes and Stitcher so you don’t miss an episode!

Best Ever Show Real Estate Advice from experts

JF814: How He Turned $10,000 into Over $10 MM in Real Estate Developments

Listen to the Episode Below (24:20)
Join + receive...
Best Real Estate Investing Crash Course Ever!

Starting with $10,000 in his bank account our guest was able to surround himself by the right people and begin his fix and flip ventures. Developments, fix and flips, and other ventures have built his total net worth above $10 million. Also, find out how he is able to only do a project the year and make it out alive!

Best Ever Tweet:

Slava Menn Real Estate Background:

– Principal at Labrador Real Estate & Contributing Writer at Inc. Magazine
– Guest lectures at his alma maters, BU & MIT, and writes for Inc Magazine
– Started with a $10K savings and has developed $10M worth of real estate
– Since 2013, Labrador Real Estate has developed over $6.5MM in real estate
– Based in Boston, Massachusetts
– Say hi to him at http://www.labradorre.com
– Best Ever Book: Unique Ability by Catherine Nomura

Want an inbox full of online leads? Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Click here: http://www.adwordsnerds.com to schedule the appointment.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips: https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes and Stitcher so you don’t miss an episode!

Best Ever Show Real Estate Advice from experts

JF799: How to BOOST Your Profits Per Hour, Direct Mail, and High End Construction

Listen to the Episode Below (23:48)
Join + receive...
Best Real Estate Investing Crash Course Ever!

So you’re deciding if you should wholesale or rehab your new found deal… Well have you asked yourself how much time and energy it takes to rehab? Today you are going to hear why some deals are better to simply wholesale while others make more sense to fix and flip. You will also hear about how our guest went from accounting to a direct mail business and why he loves high-end flips.

Best Ever Tweet:

Justin Silverio Real Estate Background:

– Founder of Open Letter Marketing, a direct mail company for investors
– Managing Member at JS2 Homes LLC, his own investment company on rehabbing, redeveloping and wholesaling
– Prior to starting his company, Justin was an accountant in the private equity space
– Over 10 years experience in the investment industry
– Based in Boston, Massachusetts
– Say hi to him at http://www.thebostoninvestor.com
– Best Ever Book: Millionaire Real Estate Investor by Gary Keller

Want an inbox full of online leads? Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment. Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips: https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!