JF2190: Begin With House Hacking With Anthony Angotti

Anthony started out house hacking and after some time he met some business partners to begin investing in apartments. When he first started out he took the initiative to do the renovations himself so he would be better equipped for future deals when hiring help. Now he hires help rather than doing it himself since he now owns 76 units.

 

Anthony Angotti Real Estate Background:

 

 

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Best Ever Tweet:

“In the beginning, I was the handyman, leasing agent, I was everything while working a full-time job. If I would have outsourced sooner, I would have been able to leave my job much faster” – Anthony Angotti


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, I’m speaking with Tony Angotti. Tony, how are you doing today?

Anthony Angotti: I’m doing fantastic. How are you?

Theo Hicks: I’m doing fantastic as well. Thanks for asking and thanks for joining us. Looking forward to our conversation. Before we get into that, a little about Tony – he’s a full-time realtor and investor with five years of experience, has a portfolio that consists of 76 units. He is based in Pittsburgh, Pennsylvania, and you can say hi to him at angotti.realestate@gmail.com. So Tony, do you mind telling us a little bit more about your background?

Anthony Angotti: Yeah, sure. I got started with house hacking. So that’s how we got started. We moved into an REO duplex, fixed up one side, lived in the other while we fixed it up, took that, repeated that a few times. We moved from duplex to duplex to duplex. But in the meantime, I met some business partners that were actually realtor clients when I first met them, and we started moving more into the apartment rental space. So we started buying small value add apartment buildings, and that’s how I’ve grown over time.

Theo Hicks: So when you said you move from duplex to duplex, did you continuously house-hack every single year?

Anthony Angotti: We have three, so a couple lasted a little bit longer, but we still live in the third one. My wife and I plan to probably do one more before we get sick of moving. Moving that much is quite the endeavor. So we’ll probably do one more this way and then move to a more traditional single-family house after that.

Theo Hicks: Would you mind telling us the numbers on that first house-hack that you did?

Anthony Angotti: Yeah, sure. So our local market wasn’t as hot at the time as it is now. Pittsburgh, the market’s been a lot more competitive. So we found an REO side by side, three bedrooms both sides, each one had a garage. So it was a pretty nice setup, pretty solid building outside of the repairs we needed to do. We bought it for $155,000, and then we used a 10% down portfolio loan on that. So with a local bank, it was an owner occupant loan, but we didn’t FHA or anything with that one. And then we did all the work ourselves other than there was a repair to the sewer line, and all the initial repairs cost around $15,000. So I don’t know if you have any questions on that specifically, but I could just go into the rents and stuff too, if you want.

Theo Hicks: Yeah. So you said you did all the repairs yourself. You did all the labor yourself?

Anthony Angotti: Yeah, yeah. Bought the materials, did a lot of the labor. That was a super beneficial experience to me because I learned a lot. I wasn’t particularly handy before. My father was helpful and YouTube was exceptionally helpful, but I had no real experience. By training, I’m a microbiologist. So it’s not like I came from a contractor background or something. But by doing that work, it really helped me understand what goes into projects, which then has led to a lot of benefit where I am now, because now I don’t do any of the work. But when I talk to contractors about different jobs or repairs or things, I’m a lot more knowledgeable because we’ve done that thing.

Theo Hicks: Did you just do the repairs yourself in that first house hack, and then after that contracted all that out?

Anthony Angotti: The house hacks – because we did three that way – each one that we did that way, we’ve done most of the repairs hands-on, at least for the unit that we lived in. For the properties that I didn’t live in, other than a couple at the beginning, we hired everything out. The apartment buildings, I haven’t really done any personal work in. But some of the smaller buildings at the beginning, that’s what we did, because we didn’t start with a ton of money, so it would have been very difficult for us financially to pay somebody to do every little thing.

Theo Hicks: What was the rent you demanded for the other three-bedroom and then about was the rent that you demanded for your unit once you moved out?

Anthony Angotti: So at the time, our total rent with garages is around $2,550 a month. Each apartment, before pet fees, they rent for $1,200 a month now. At the time, I think we rented the other side for $1,050, but the rents have gone up since then. And then we rent our garages separately from the tenants. So we pull in different rents for those.

Theo Hicks: So you rent the garages to someone else?

Anthony Angotti: Yeah. They’re detached garages, so I actually have a contractor that rents them. It’s my painter. He rents that from us, which is a pretty nice extra revenue source. It’s just on the back of the property, so it’s not like it’s connected to the tenants’ unit. It’s a totally separate thing. We’ve actually done that with a lot of our properties, because in Pittsburgh, there are quite a few properties that have detached garages and tenants are generally used to street parking. So since the market doesn’t dictate having off-street parking, we’ve usually just used the detached garage as an additional revenue source.

Theo Hicks: Is that something that you just proactively asked your contractor, your painter, if they needed a place to rent, or did they come to you, and then that’s how you got the idea?

Anthony Angotti: For that particular one, my painter actually lives on that same street. So I was just talking to him and he was talking about he needs a place for his stuff and I said, “Well, you can rent my garage. I’ll charge you $100 bucks a month for it,” and that’s what he did. But I did think about that initially as what I was going to do, and we’ve had good luck just renting them on Facebook groups for contractors. I’ll just join a contractor group on Facebook and list it for the area, or Craigslist or stuff like that. We found pretty good luck with that on the other ones.

Theo Hicks: Nice. And then last question about the house hacking before moving to the apartments. You said that you got a 10% down portfolio loan. Is there a reason why you didn’t pursue the lower down payment 3.5% FHA loan or one of the 203k loans that would include the rehab costs in the financing?

Anthony Angotti: I think, at the time, we had already just engaged that lender and I was brand new, so I wasn’t hooked up with a mortgage broker or anything; I just knew that bank. Additionally, that 10% down loan didn’t have PMI or anything because the bank kept it in-house. So if I would have done an FHA, I would have had PMI until forever unless I refinanced the mortgage insurance, if people aren’t familiar with the abbreviation. So we went with that, and the rate was a little bit higher, but the underwriting of it was nothing. Our documents we signed at closing were probably 15 pages. So compared to a secondary market loan that they sell to Fannie or Freddie, our underwriting and our document package was nothing. So it was a super easy loan. There were repairs on the property. There was a cracked vertical sewer stack, so that would have never passed FHA or something, and the bank was the one selling it, so there’s no way we would have got that repaired prior to closing. So that wouldn’t have been an option for us.

Theo Hicks: This portfolio lender – did you use them for all of your house taxes and also these apartments?

Anthony Angotti: We used them for the second house hack. We did FHA for the one we currently live in. I used that bank’s commercial division for some of my apartment buildings, although I do have other banks that I use, too. We have maybe three main local commercial lenders that we use for our apartment buildings.

Theo Hicks: Perfect. So let’s talk about the apartments. So I guess my first question is what’s the biggest apartment that you have?

Anthony Angotti: 10-units. So we focus primarily in smaller buildings. Two reasons. One is that’s what’s in Pittsburgh. There aren’t a ton of large apartment complexes. There are some, but they hardly ever come up for sale, and they’re just not very prevalent. Most of the apartment buildings are going to be in the 5 to 20 unit range, but that’s the biggest one that we have right now.

Theo Hicks: What was the second reason?

Anthony Angotti: Just how frequently you encounter them in the market. There just aren’t a ton, especially because we keep our portfolio pretty geographically tight. So it’s not Pittsburgh as a whole. We focus primarily around where I live. We can touch on it a little bit, but our strategy is to in-source everything. So we have an in-house property manager, we don’t have a third party company. We also are hiring an in-house handyman… So we try to keep our portfolio hyper-local to cut down on their windshield time, so they don’t drive as many places.

Theo Hicks: So let’s talk about the 10-unit deal. So the same run that you gave me for the house hack – How’d you find it? What were the numbers, and then what was the business plan?

Anthony Angotti: So the first one that I did was a 10-unit. It’s set up a little bit like a complex. So there’s actually a 5-unit building, 4-unit building and a little house all on the same parcel. So the way that we found that was actually… I have a few different partnerships. The one partnership that I worked with here, this building is a little bit further away from our normal geographic range, but the current owner was somebody I used to work with. So we’ll talk about it too later, but one of my biggest piece of advice is just to tell everybody that you know that you’re in real estate investing, because you never know where the next lead comes from. So this was just a former coworker and he had an apartment building that they were way under renting. So the market rent for the units– right now, we get $750, but he was renting everything between $350 and $400 a month when we bought it.

It was funny, because I told him what the market rent was, I was transparent with him, and I was like, “Why are you only getting $350 or $400 on this?” He said, “Well, we like a certain type of tenant and we fill it really fast when it’s like this.” And I said, “Okay” Then I found out later that the only place he was marketing his apartments was in the newspaper. So he was still just posting newspaper ads. That was the only way he was finding tenants, which explains why most of the tenants there, they’re all social security type tenants. They all just get their security checks, which is nice.

But we bought that for — I believe, it was $255,000 was the price… $255,000 when we bought it, and then part of that in first position was a commercial lender and the second part of it was seller-financed. So I believe about 70% of that is through the bank loan, and about 30% of that is the seller finance. So that’s the purchase info on it.

Theo Hicks: And then was it a turnkey type of deal, or you just took it over and turned the units over, or was there some renovations that needed to be done?

Anthony Angotti: There was nothing immediate that was pressing. However, like I said, when we purchased it, everything was super under rented. So our strategy when we went into it was to get everybody up to at least $600 a month. So we sent everybody, right after we bought it, a letter, everybody that lived in the building. They were all pretty decent tenants. There were no troublemakers in the building when we bought it. But we just said, “Look, we bought the building. All of your rents when your leases are up, they’re going to $600 a month. If you want to stay, that’s great, as long as you pay the rent. If you want to move out, we gave you plenty of notice. You should have time to find a place. All good there.” Over time, we’ve had five people leave, and we’ve just been renovating the apartments as they’ve left and our rent’s now, like I said, are around $750. I think all of them are $750 for all the ones that have left. So we have five tenants left at $600 and five tenants left at $750.

Theo Hicks: And then I don’t know the exact number, but I’m just curious… Let’s say you bump the rents up by $150. How much money did you invest into those units to get that $150 rent bump?

Anthony Angotti: Depending on what we’ve done, because the building does have older wooden windows, so on a few of them, we’ve taken the opportunity to replace the windows… But we’ve spent anywhere between $5,000 and $8,000 per unit. The units were in pretty good shape. They pretty much just needed paint, flooring, appliances, basic bathroom reno, just a surround and some paint and a ceiling fan, and then the kitchen was just painting cabinets, new countertop, that sort of thing. So it wasn’t a very expensive turn.

Theo Hicks: So you mentioned– and I hope this isn’t your best ever advice. I want to focus on this a little bit. So you mentioned that one of your good piece of advice is to tell everyone you know about investing in real estate, because you don’t really know where your next lead is going to come from. Have you ever done a deal off the MLS, or have all of your deals come through these word of mouth types of referrals?

Anthony Angotti: Well, the one I just mentioned was off MLS. A lot of what we do is off-market. Now, at this point, we send out a lot of mail and stuff like that, so we get a lot of leads that way too. But most of my smaller buildings, most of the house hacks that I’ve done– actually, all of those have been on MLS deals. That’s nice for me because like I said, the most recent one we did, we used an FHA loan. I’m also a realtor, so I got my commission. So this place was a free house. We used our seller assist and I got my 3% commission, so we’re out half a percent for down payment, so that’s pretty sweet.

But most of our buildings have either come off-market through our own efforts, whether it was mail or networking, or off-market through broker relationships. So we’ve had a few that came just commercial broker pocket listings that way. I don’t know that we bought any apartment building that has been publicly listed, to be honest.

Theo Hicks: And then the last question before the best ever advice, going back to the house hack. I house hacked, but I was single. Were you married for all of these house hacks?

Anthony Angotti: We were together.

Theo Hicks: Maybe give people some advice on how to navigate doing a house hack when you’re married, when you’re living with someone else.

Anthony Angotti: The funny thing about it is whenever we were renting, we were probably ready to get married then, and I was not thrilled about working for somebody else. It wasn’t really even a problem with a specific job, I just didn’t like it. So my wife just was introducing me to different things, and she introduced me to the Bigger Pockets podcast. She was like, “Hey, maybe this is something you could do to quit your job,” and I think the first episode I listened to was about house hacking. And then I told her– I was like, “Look, we have money to do one of two things. We can either get married or we can get this place and live for free.” Initially, she was obviously like, “Well I don’t know about renovating a house. I’d probably just get married first.” Then I said, “Well, just think about it for a week. Let me know.” After she looked at the numbers of that, she came to the same conclusion that I did – that you just save so much money that it can accelerate everything else in your life financially. So that’s what led us to do that the first time. I was just showing her the benefits, and also at the same time saying, “Well, we can still get married, but when we do get married, we’re gonna be in a way better place financially.” So for her, she’s been supportive from day one, so it wasn’t super difficult. But I think that having her see all the benefits financially of it was the biggest thing that helped her get on board with it.

Theo Hicks: Thanks for sharing that. Alright Tony, what is your best real estate investing advice ever?

Anthony Angotti: My best advice ever is to just not wait to outsource your tasks. So I think personally, I waited to hire somebody to help me for way too long. We’ve grown fairly quickly in five years, but I probably could have been, at this point, quit my job way sooner had I just hired out a lot of the stuff. At the beginning I was the handyman, I was the property manager, I was the leasing agent, I was everything, and I was also working a full time job. So my time to focus on growth, both of the portfolio and personal growth was just non-existent. So I think outsourcing, whether that’s to an employee or a third-party manager, third-party handyman, whatever, you’ll see double the return in income easily over what it costs to actually pay that person.

Theo Hicks: What’s the first thing people should outsource?

Anthony Angotti: If you’re self-managing, I think probably property management is the first thing that you should outsource, unless you have one or two properties. But once you get past two properties, you have to take management off your plate.

Theo Hicks: Okay. Are you ready for the Best Ever lightning round?

Anthony Angotti: Yep.

Break [00:18:57]:03] to [00:19:59]:07]

Theo Hicks: Okay, Tony, what is the best ever book you’ve recently read?

Anthony Angotti: Best ever book that I recently read was actually The Millionaire Real Estate Agent. So it’s not geared specifically towards investing. Like I said, I’m also a realtor. That’s by Gary Keller. The thing that I took away from it the most was just, like I said, about outsourcing, about building a business that works for you and you’re not so much working inside the business. So that advice really resonated with me. I believe he also has a book, Millionaire Real Estate Investor, that’s a little bit more specific towards investors. But that book was very useful for me.

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

Anthony Angotti: Start building it again.

Theo Hicks: Very simple. Alright, what deal did you lose the most money on? How much did you lose and what lessons did you learn?

Anthony Angotti: We haven’t had one that’s lost significant money yet. The one that we’re currently in, the house hack that we live in now, was pretty costly. I did it because it was the last deal that I used my W2 income for before I quit my W2 job. So I would say that just being a little bit more patient to find a deal was what I learned from that. It’s not going to lose money long-term, but it’s definitely not super profitable.

Theo Hicks: On the flip side, let’s talk about the best ever deal you’ve done, and this is the deal you made the most money on whether it’s in rents or equity created.

Anthony Angotti: Oh, so the deal that I made the most money on… Probably that 10-unit that we talked about. We easily added just in expense reduction and income creation, over $175,000 on new value, and our cash flow is pretty ridiculous right now. I don’t have it up in front of me, but when it’s performing– it varies month to month, but we make easily over $2,500 a month in cash flow on that one. So that’s a pretty good one.

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

Anthony Angotti: To the investor community, I host investor meetups locally, and I think even though the business benefit from that has declined a little bit the more business I’ve done, just helping everybody out with questions and their deals and stuff, if that’s useful. And then just in the general community, I coach ice hockey. I played ice hockey in college, so that’s something that I like to stay involved in.

Theo Hicks: Nice. So then what’s the best ever place to reach you?

Anthony Angotti: I just started a podcast called Be Free RE. You can find us on any of the platforms, but the unique thing about our podcast is that we actually answer listener questions on air. So people can call in and leave a voicemail, we play your voicemail on the show and then answer it. The number for that is 412-212-8366. And then if people want to reach out individually– I’m sure a lot of your listeners are on Bigger Pockets, so I’m on there as Tony Angotti, and then they can find me there.

Theo Hicks: Perfect. Best Ever listeners, definitely take advantage of that whenever people give out phone numbers or email addresses. Alright, Tony, I really appreciate you coming on the show. I always love talking about house hacking, because I did it and it’s always interesting to hear how other people have navigated that interesting strategy especially when it’s–

Anthony Angotti: It’s the cheat code to life; financial life, at least. It’s the biggest cheat code you can do to fix your finances.

Theo Hicks: Yeah, it really is. So you went into detail on the first house hack that you did. We went over the numbers. We also talked about how you were able to do all the repairs yourself, except for obviously that sewer line by using YouTube, as well as help from your dad, and that’s been beneficial to you when talking with contractors on future deals. You talked about how you were able to rent out the detached garages to someone who wasn’t the tenant for extra source of income, then we transitioned in talking about your apartments where you focused on that first deal and how you were able to increase the value substantially because of the fact that the rents were so under market rent. You learned to focus on the smaller buildings because of the supply in the area and you also like to make sure that everything is in-house, so you’re hyper-focused on a certain area so people aren’t driving around all the time.

And then you also gave us some advice on how to find the deals and that’s telling everyone you know about what you’re doing in real estate, because you never really know where that next lead’s gonna come from. You gave us advice on how to do the house-hacking when you’re married or dating someone and it’s really just explaining the benefits to them, and letting them agree and come to the conclusion that it’s a good idea themselves.

And then lastly, your best ever advice, which was not waiting too long to outsource some of the tasks like property management, leasing, doing the repairs yourself, things like that. So Tony, I really appreciate you coming on the show and sharing your advice. Best Ever listeners, again, make sure you take advantage of his offer to answer some of your questions on the podcast. Definitely call into that number. Thanks for listening as always. Have a best ever day and we’ll talk to you tomorrow.

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Joe Fairless and Ryan Scialabba on a flyer for the Best Ever Show

JF1443: Keeping Cash In The Business To Scale Faster with Ryan Scialabba


Ryan and his business partner have a successful flipping business which will net 1.8 – 1.9 million this year. With the large income, you would think they’re giving themselves large salaries. That couldn’t be further from the truth, Ryan and his partner only pay themselves $60k a year. Hear how they’ve grown to where they are and why they leave so much cash in the business. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Ryan Scialabba Real Estate Background:

  • Started investing in real estate at 19 – currently 25
  • Met business partner in 2015, formed Urban Capital Group
  • Had first seven figure year in 2017
  • Will buy and sell about 50 houses in 2018, netting over $2M
  • Based in Pittsburgh, PA
  • Say hi to him at: http://homebuyersofpittsburgh.com/
  • Best Ever Book: Extreme Ownership

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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, Ryan Scialabba. How are you doing, Ryan?

Ryan Scialabba: Doing great, Joe.

Joe Fairless: Your last name is very fun to say, by the way.

Ryan Scialabba: [laughs] Thanks.

Joe Fairless: Ryan started investing in real estate at the age of 19; he’s currently 25 years old. He is the co-founder of Urban Capital Group, which was formed in 2015. Last year he had his first seven-figure year, and this year will buy between 45-50 houses. Based in Pittsburgh, Pennsylvania. With that being said, Ryan, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Ryan Scialabba: Yeah, absolutely. Again, I appreciate having me on. I’m a long-time listener of the show so it’s pretty cool. I started wholesaling back in 2013. I was 19 years old at the time. I was in college, and I just decided that it really wasn’t for me… So I had a lot of conversations with my old man about wanting to go into real estate, get my real estate license, get into some form of investing… I didn’t know anything about that yet, so we ended up going to a flipping seminar; we joined up with some really good guys, some good mentors, and just started rocking and rolling from there.

Joe Fairless: Which seminar?

Ryan Scialabba: We went to a Fortune Builders, actually. [unintelligible [00:02:18].17] So we’re rocking and rolling… The first three months was really rough; I didn’t get anything done. I didn’t really even take any action… I just kind of danced around the perimeter. I ended up getting my first deal about six months in, and then actually in October of that year — and a lot of people who know me have heard that story… I actually lost my dad in a motorcycle accident in October of 2013, so the world just kind of stopped there at the moment, and I really had to decide what I wanted to do moving forward…

And after it was a pretty tough couple of months, but really thinking about the long-term and everything — one of his greatest experiences that I got to experience with him was just that feeling of freedom after having worked for someone his whole life, and just us doing things on our own… That was something that gave me the drive to really wanna go and build something entirely for myself and my future and my legacy.

In 2014 I started ramping back up, and then I met my partner in ’15. That’s when we formed Urban Capital. Now, fast-forward to 2018, we’ve got our team fully built; 14 employees, and then Arch and I. Most of the employees are on the construction side. We’re gonna do somewhere between 1.8 and 1.9 in this year on the flipping side, do between 12 and 13 million in retail sales, and traveling the world, having a little bit of fun, starting to get things to run a little bit more independently of ourselves, starting to head down that path.

Joe Fairless: Let’s unpack this a little bit. You gave some pretty phenomenal numbers and I wanna make sure I’m tracking properly… Because one thing I did not mention, that you had in your bio – because I wanted to clarify this… You’re gonna buy and sell approximately 50 houses in 2018, netting two million dollars. In my mind, netting means you’re going to make two million dollars in profit. Is that correct?

Ryan Scialabba: Yes. We’re pumping out somewhere around nine million dollars in sales at the end of the year. That’s gonna bring back in around 4.7, and then take away all the overhead and everything like that, we’ll break into that 1.8-1.9 margin there.

Joe Fairless: And is that split 50/50 with you and your partner?

Ryan Scialabba: Yup, exactly.

Joe Fairless: Let’s see… 2017, last year, was your first seven-figure year. What does seven-figure year mean exactly?

Ryan Scialabba: Well, we broke a million dollars in — let me clarify on that one, because it’s one of those things… We had a seven-figure year, we brought in well over a million dollars in gross profit, but the net number at the end of the year on the P&L was 986k.

Joe Fairless: Oh, man… [laughter] You should have done like a little donation, or something…

Ryan Scialabba: It is what it is… You know how the calendar year goes, but… I always joke around, because it really ticks me off, you know? [laughter] But no, I mean… It’s set up for a really good year. 2017 was a big team-building year. We made a lot of money, but we also invested most of that back into the company itself, ramping up the marketing, hiring all these employees, taking on the overhead, and bringing construction in-house… Because the goal was for us to be able to begin running independently and get out and travel a lot more, and still run the volume that we’re running at.

Up until six months ago Arch and I didn’t even take a salary. Arch is my partner. Now we only pay ourselves 60k/year and we just invest everything back into the business. The business itself is cash-rich; we have a lot of equity in some deals and we’re starting to get into some multifamily flips, some larger developments and stuff that’s sucking up cash, but all of it is just to continue driving the company forward itself.

Numbers are good, numbers are big, but it’s just to keep pushing forward.

Joe Fairless: Just so I’m tracking, you mentioned 1.8 million this year in income, on flipping, then 12 million income on retail sales?

Ryan Scialabba: Yeah, we’re agents as well – myself, and then we have an employee in our office now that handles all of our retail and wholesale disposition, and then I’m also an agent as well. The nicest part for us and our business – a lot of people see retail sales as a distraction when they’re investing, but a lot of times they’re right, it doesn’t make sense when you’re on 50/50 commission splits and things like that. We’re with a very, very investor-friendly brokerage overall where I’m on a 100% commission split. So when you start looking at the numbers that way, now your retail pipeline becomes that much more viable to really spend the time and money going after that.

Joe Fairless: Yeah, there is no commission split if it’s 100%, right? What do you pay on a monthly basis or annually for that?

Ryan Scialabba: We’re at $299 a month, and then $299 per transaction.

Joe Fairless: Got it.

Ryan Scialabba: It’s money, it’s really good.

Joe Fairless: Yeah. Okay, so 1.8 million in income and flipping 12 million in income and retail sales. Are those the main two income sources?

Ryan Scialabba: We wholesale too, but we don’t do that that much.

Joe Fairless: Approximately how much of income do you get from wholesaling?

Ryan Scialabba: 110k or 115k so far this year.

Joe Fairless: 115k?

Ryan Scialabba: Yeah, so we might tap out at 150k.

Joe Fairless: Okay, 150k. Got it. And then of the two million dollars of projected profit this year, what percent comes from flipping, versus retail sales, versus wholesaling?

Ryan Scialabba: Our 1.8-1.9 is directly profits from flipping projects, the sales of our actual rehab projects.

Joe Fairless: Got it. So now let’s talk about your business model, because we go into the numbers — we did this in reverse; usually I do the opposite, but that’s okay, it’s good. Now let’s talk about how you’re generating the income. Help me understand the math though – if you’re bringing in 1.8 million dollars in income from flipping, how are you making 2 million dollars in profit from flipping?

Ryan Scialabba: No, 1.8-1.9 is the profits. We’re gonna bring in around 4.7 in actual revenue.

Joe Fairless: Okay, got it. So 4.7 in income on flipping, and then 12 million in retail sales.

Ryan Scialabba: Yes. And the 12 million at the end of the day – that brings in like 200k, wholesale is like 150k, and then we’re projecting somewhere between 1.8 and 1.9 on the flipping side… So we will break the two million dollar mark this year.

Joe Fairless: Got it.

Ryan Scialabba: For me, I like to focus mostly on the flips, because…

Joe Fairless: It makes you more money.

Ryan Scialabba: Yeah, and the other things are ancillary, right? Flipping and internal construction is our core business, and what we’ve done is just we’ve got our core to where we’re comfortable, then we started building our retail, then we started wholesaling properties. We weren’t trying to do all of this at once, and I think that’s where a lot of people get caught up – looking at one deal eight different ways, versus being very niche, very in their lane, and then after building up experiences, building up a good pipeline of income, then bolting things on. That’s what’s really happened in the last 18 months for us, is the bolt-ons.

Joe Fairless: So each house is on average about 110k at the end of the project?

Ryan Scialabba: 150k.

Joe Fairless: 150k. Got it. Alright, so that’s where the 45-50 homes come into play, where you’re selling them…

Ryan Scialabba: We run off of 20% margins on the buy side, but we’re doing bigger flips… We’re buying them for 100k to 125k, we’re putting 150k into them and we’re selling them at 400k+, so we’re making 100k whops on those. We’re doing 6-8 of those a year; sometimes it’s good, sometimes it’s not… Sometimes we make over 100k, sometimes we make 80k.

Then on the smaller stuff, our bread and butter – these are those little ranch flips, the little Cape Cods, just like the stuff you have over in Cincinnati…

Joe Fairless: Hey…!

Ryan Scialabba: We’re buying them for 60k, we’re putting 30k into them and we’re selling them for 140k. So we’re making 25k at the end of the day.

Joe Fairless: I think that was a subtle jab from someone who lives in Pittsburgh to someone who lives in Cincinnati, but I’m not sure…

Ryan Scialabba: No, dude… We’ve got ugly housing stock. It’s not like flipping homes in Texas or California or New Mexico, where we’re talking about saltbox ranches on slabs. We’ve gotta be picky and choosy about the types of houses we buy, because they’re not extremely desirable on the resale side, you know what I mean?

Joe Fairless: Okay. How are you finding these properties at the volume in which you’re finding them?

Ryan Scialabba: Agents is really big for us, wholesalers is really big for us this year, and mostly direct mail marketing; we do pay-per-click, SEO, all of that… But I think the biggest thing too is that we’ve really positioned ourselves over the last two years as one of the larger companies in Pittsburgh, so it’s nice when — a big tactic for us is when the flipping seminars come into town, people know our name, and when they start wholesaling, we want them to start driving their leads to us.

But when I look at our marketing metrics for this year, at the end of the day, direct mail isn’t performing the way that it did last year. Our biggest buying this year has been from wholesaler agent referral and MLS, so far this year. It’s pretty interesting, actually… But we’re still spending the money on direct mail, because we know it works.

Joe Fairless: When you say it’s not working that well or as well as before, what metric are you basing that on?

Ryan Scialabba: Cost per buy. Last year I was at $2,500 cost per buy on direct mail. This year I’m up to $4,740; I’m looking at it right now. $4,740 cost per acquisition on my direct mail, so it doubled.

Joe Fairless: Same list?

Ryan Scialabba: We’re running different lists. I think a lot of your regular lists are getting tapped by many people… So the basics  – your absentees, your owner occupieds, your equity lists… What we’re doing is we’re hitting those, but we’re also trying to tap into new things and just adding little nuances to the lists to see if they work or not. So it’s just been a big experimental year for that.

Joe Fairless: Your company has been around for about three years, and you said you’ve positioned yourself as one of the larger companies in Pittsburgh… How?

Ryan Scialabba: By saying it and doing it. All of our Facebook groups — I mean, as far as we know, we are the highest volume rehabbers in Pittsburgh; that is actually out there marketing, that’s in the communities… If there are other people that are under the radar – hey, that’s great, and props to them; we’d love to meet them. But as far as we know, we have positioned ourselves as the team that’s actually growing a team and investing back in… Because I think a lot of what you find in Pittsburgh is — if you came over here and you said, “Okay, who are the couple of companies?”, you’re gonna hear of a big landlord company called RE360, and you’re gonna hear of our company.

RE360 is a landlord company, but we’re really the only two that have even built out teams. You’ve got a lot of solo flippers, husband and wife flippers… And that’s great, because the standard of living is so low in Pittsburgh… If you come here and you flip four or five houses, you’re living really, really good. You’re just not gonna find too many companies out there that are really looking to go and do high volume.

Again, it’s not like your Texases and your Florida markets, where people are doing high-volume wholesales and things like this; it’s more of a smaller community market.

Joe Fairless: Do you have to have your high volume in order to support the overhead that you have now with the 14 employees?

Ryan Scialabba: Yes and no. I’ll give you a couple of metrics that we track, and this is kind of gonna be where my best advice comes from. The way that we look at things is we have ten in-house construction employees – and this was a big hurdle for me to get over, but my partner explained it best… He goes, “When we’re talking about construction money, it’s anyway money. Now we’re controlling the material, the process and who’s on the job. So we’re gonna spend the construction money no matter what, whether it’s going to GC’s or subs. We would rather control the process, and the system, and  everything that goes into the houses, because we feel like we’re that much more efficient than the best GC’s in Pittsburgh.”

So that part of it is “anyway money”, and that’s funded by lender draws. So whatever our overages are, including our overages on the year – let’s say they’re 10%, and then our insurance, that’s our actual overhead on the construction team; let’s call that about 70k, or two extra houses.

So if our team in-house can knock out two extra houses per year than a GC team, well I’m gonna take that deal all day long, because I can control the process.

So the way that we track this – our teams are built out at $75/hour, whether it’s three-man teams or four-man teams. That’s $3,000/week in labor. In your lower-end markets, or middle-markets, whatever you wanna say, that’s what flippers can afford anyways to get $30,000 flips done.

If we’re talking $7,500/week material and labor, well I want a $30,000 job to be somewhere between five and six weeks. So we build out based on $75/hour teams, and then we say okay, if our one team – as long as they can do eight houses per year, we’re in really good shape. If we get anything above that, that’s gravy.

That’s how we initially started building out these teams, and now we’re up to four internal teams. Basically, we said okay, our in-house guys can very easily complete 32 $30,000 rehabs per year. Then you tack on your bigger projects where we’re subbing out and putting GC’s on those, like our gut jobs – we run those like new construction… Like I said, we do another 6-8 of those.

So we’re averaging 15-17 active job sites going at a time, to where guys are bouncing on and off of them. So it’s really kind of become a beautiful little orchestra that I give all the credit to my partner and project manager for building that out, and I just track the numbers and make sure it makes sense.

Joe Fairless: Where are you getting your money from for these properties?

Ryan Scialabba: Private money. I actually have kind of a crazy story, man… I’m back in scramble mode. We actually just lost our largest private lender; he had a heart attack at 52 years old… And he had somewhere around 1.3 with us.

We don’t need that much money. We usually have about four million going for these projects. We basically work with four or five lenders, so him passing away has put me in this major money scramble, because I’m like “Oh my god, a quarter of my money is kind of off the table…” So I’m having to learn how to go back to the basics of raising money, and I’m not gonna lie, it’s kind of uncomfortable and challenging again, even with such a track record, just going out and finding these guys. It’s put me back out of my comfort zone, but I kind of like it.

Joe Fairless: What are the terms?

Ryan Scialabba: 12%. We pay everyone 12%, and then the biggest thing that we try to do is get interest defer at least three months. That’s why we try to do, where about half of our money is about three months out interest-deferred. Because for us, that’s just — are you gonna put your cash out up front, or are you gonna put it out at the end? I’d like to put it out at the end, you know?

Joe Fairless: And no points, or anything?

Ryan Scialabba: Yeah, no points.

Joe Fairless: How long does the project typically take?

Ryan Scialabba: $7,500/week is the metric that we try to hit, so if it’s gonna be a $30,000 job, we try to be in between five and six weeks. A big metric we’ve been tracking this year and trying to get better at tracking is the time it takes from when we say a job is complete to the time it actually goes on the market… Because that last year was a major killer for us; it literally stalled our business out. We would get to 98%, and then we just couldn’t get these dang houses on the market.

It’d be like, “Okay, it’s a five-week job, but it took us nine weeks to actually get it on the market; what the heck happened here?!” If you’re not looking at your numbers, tracking things, then you wouldn’t know that… So that was something we tried to close the gap on this year, and it’s been a challenge, but it’s getting a lot better.

Joe Fairless: So from the lender’s standpoint, what is it, on average? Eight weeks, or nine weeks total?

Ryan Scialabba: Well, in and out of a project we’re averaging right around four months on the smaller ones. When you’re getting into 50k-60k rehabs, I would jump that up to six months, and then our 100k to 150k rehabs we’re usually 8-9 months into those projects front to back. And obviously, that’s conservative. A lot of times our biggest thing with our guys that give us three-month defers – we try to not make an interest payment. That’s our goal. If we cannot make an interest payment or just make one, then we consider that a win.

Joe Fairless: I’m thinking about my investors, and how most of them are more interested in assessing an opportunity and then getting locked up with terms, so they don’t have to continually reassess opportunities. I imagine that’s gonna be a challenge, or you’ve come across that challenge with investors… Larger investors; not investors who are putting in 50k or 100k, but another four million dollar investor – I’m guessing that they’re gonna want something that they have to continually put focus on every nine months. How do you solve for that?

Ryan Scialabba: I’ve never even been in the room with a four million dollar investor.

Joe Fairless: I thought you just —

Ryan Scialabba: 1.4.

Joe Fairless: Oh, 1.4. Oh, you usually HAVE four million dollars out. That’s — I’m messing up your numbers all day long, aren’t I? [laughter] I love misquoting people, and then that way I can tell the story that I’m looking to tell. It works out for me.

Ryan Scialabba: I know where you’re going with it. So for us, we’ve been working with these guys — I mean, I have one guy, I’ve been working with him… He lent to me on my first flip… So what happens is he went out and he started raising money at 10%, and then he gives it to us at 12%. Now, obviously, not everybody gets the same terms, but because we’ve been with him so long, he’s kind of been raising the money for us… And that’s happened with two of our guys.

The guy who just passed away – his first loan with us was $100,000. Then as we built trust and as we built rapport, all of a sudden he had half a million, and then all of a sudden he had a million with us… Then we looked at the board and we’re like “Man, where did you get all this money?” [laughter] He’s like, “Well, I’ve been slowly pulling out of my other investments, because you guys have been my safest bet when I look at the real estate.” Because a big thing that I’ve been  — and I’m obviously kind of like a numbers guy, but I think that that’s very important with this business… A number that I tracked at the end of last year was “What did we borrow at?”, so our initial ARV versus what our loan was – what was our LTV? It’s always 70%, right? For us, it is. We always borrow at 70%, we don’t borrow any more.

So I said, okay, based on that ARV, and then what did the projects actually sell at? What was their ending LTV – it ended up being at 60%. So I went back to all those lenders and I said “Look, I just wanna prove to you how conservative we are as investors, because look at where your LTV started and look at where it ended. It wasn’t the other way around.” Some of them didn’t even understand what I was telling them, but the more sophisticated ones – that was their favorite metric they had heard. They went “Wow, no one’s ever showed us this.” They’re numbers guys, so they loved it.

I think if we are getting back into working with higher net worth guys, they just wanna see the proof, but you’re right, they don’t wanna get caught up in the details of the deals.

We’re working on a development right now where we just raised 2.4 million from the builder, and it was a handshake. We ended up doing loan paperwork and stuff, but they were just kind of like “Alright. Yeah, here’s the terms, and we’ll let the attorneys figure out the rest.” That was a massive eye-opener for me, because I was just like “Okay, this is how business gets done at a higher level. Let’s figure out the x’s and o’s and let the rest of the team dot the i’s and cross the t’s.” That was the insight.

Joe Fairless: What’s your best real estate investing advice ever?

Ryan Scialabba: If you’re just getting started, you need to decide whether this is gonna be a hobby for you, or you’re gonna turn this into a business… Because those paths are two completely different paths. If you’re gonna flip four or five houses a year, 90% of what we just talked about probably doesn’t pertain to you as far as metrics and tracking and reinvesting back into your business and looking at cashflow and things like that.

But if you’re going to run a business, be very prepared to constantly be investing back into your business, to be uncomfortable, to make those hires and to build out that team, because that is where momentum is built. I always say “Entrepreneurship is simple – it’s a multiplication of efforts and how efficiently you can make those efforts happen.” If you’re not willing to reinvest back in and continue to build out that team, then it’s gonna be a very tough go.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Ryan Scialabba: Let’s rock and roll.

Joe Fairless: Alright. First, a quick word from our Best Ever partners.

Break: [00:24:37].03] to [00:25:40].29]

Joe Fairless: Best ever book you’ve recently read?

Ryan Scialabba: Extreme Ownership by Jocko Willink.

Joe Fairless: Best ever business decision you’ve made recently?

Ryan Scialabba: Hiring a team and building a team.

Joe Fairless: Best ever deal you’ve done that we haven’t talked about?

Ryan Scialabba: Last year we made 295k on one single-family flip.

Joe Fairless: What’s your average profit margin?

Ryan Scialabba: In between 45k and 50k.

Joe Fairless: Okay, so what’s the reason…?

Ryan Scialabba: We bought a house at just a higher price point; we bought the house for 200k, we put 120k into it and we ended up selling it for 630k. I actually screwed up at the end of the day… I thought the house was worth 450k, 475k, and the market shifted and all of a sudden we were sitting on a goldmine. We had comp pop down the street, I looked at price per square foot, and we went for it and we got it. Some people out of California bought it cash, so… I guess I got lucky.

Joe Fairless: What’s a mistake you’ve made on a transaction that we haven’t talked about?

Ryan Scialabba: I bought a house recently with no plumbing in it, and I’ve also recently bought a house that we thought was gonna be like a $3,000 foundation bid, and it ended up being $15,000 worth of work. That’s probably gonna suck.

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

Ryan Scialabba: I do a ton of free content on my Facebook and my Instagram. I’m not selling any courses, I’m not doing anything, I’m just passing on what I learn. Then I also partner on Flip Talk Podcast with Don Costa, and I do the Rookie Playbook with him, so… Just helping people get started from zero experience all the way through their first year in business. It’s been a really cool project.

Joe Fairless: And how can the Best Ever listeners get in touch with you and learn more about your company?

Ryan Scialabba: They can find me on Facebook. Just go to facebook.com/theurbaninvestor. On Instagram I’m @urban_investor, and then our company website is homebuyersofpittsburgh.com.

Joe Fairless: Lots of lessons learned today, from how you’re making the money that you’re making, where that’s coming from – it’s coming from flipping the projects – how you approach flipping, and how you’re getting deals now, through agent referrals and MLS… How you used to get a lot of your deals – through direct mail – and how that’s gone up and how you’re assessing that… The approach that you’re taking when you work with private money lenders, and everything in between. Very detail-oriented conversation, I’m grateful you were on the show. I hope you have a best ever day, and we’ll talk to you soon.

Ryan Scialabba: Thanks.

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Best Real Estate Investing Advice Ever Show Podcast

JF1191: This Is How A Financial Planner Invests In Real Estate with Brent Sutherland

As a full time financial planner, Brent had a good W2 income to show the banks. With financing easily attainable, he bought 8 houses in his first year! He’ll give us great tips on how to use our savings/retirement accounts to buy real estate. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

 

Brent Sutherland Background:

– Owner of his own CPA firm, Ntellivest

– Certified Financial Planner and have worked in financial services for nearly 12 years

– Real estate investor who currently owns 8 rentals

– Works to help individuals think outside the box and better plan for financial independence.

– Based in Pittsburgh, Pennsylvania

– Say hi to him at: http://www.ntellivest.com/

– Best Ever Book: Behavior Gap by Carl Richards

 


Made Possible Because of Our Best Ever Sponsors:

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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 fluff.

With us today, Brent Sutherland. How are you doing, Brent?

Brent Sutherland: I’m doing fantastic, Joe. Thanks for having me on the show. First off, I have to admit I noticed on some more recent podcasts that you’ve had some heavy-hitting athletes on board, so I’m worried that your listeners might look at the podcast theme, see my name, and be rather disappointed here.

Joe Fairless: Get down and give me 50.

Brent Sutherland: [laughs] That’s right…

Joe Fairless: We have had some football players, and actually a couple of Pittsburgh Steelers recently. I know you’re in Pittsburgh, Pennsylvania… A little bit more about Brent – he is the owner of his own CPA firm, Ntellivest. He is a Certified Financial Planner and has worked in financial services for nearly 12 years. He’s also a real estate investor who owns eight rental properties. With that being said, Brent, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Brent Sutherland: Sure thing, Joe. I like to refer to myself as a financial planner, rather than a financial advisor. First off, I am a Certified Financial Planner, but the reason being most people who I know who are financial advisors, people that state themselves as financial advisors, they tend to be more focused on just investing your money, as opposed to looking at your whole picture and making unbiased recommendations on what you should probably do to get you to what your financial objectives might be.

So I consider myself more of a coach instead of a money manager, but this was an evolution that occurred over time, because I did come from the traditional advisory world, but along the way I got tired of the long work weeks under someone else’s system, so I started looking for ways to get myself a little bit more financial flexibility and freedom, to do something that gave me a little bit more fulfillment. It was neat working on a traditional road – you get to meet some interesting people, successful people, but I wanted something else with my life.

So I reached out to a guy at that point locally, who was my same age, but he was already retired financially, and he did that through real estate investing. I sat down with him, I picked his brain, he gave me a lot of good pointers, but then I started educating myself on real estate investing, what that was, what it entailed… I got caught up a little bit, I have to admit, like a lot of people do, in that analysis paralysis stage for a couple years, but I finally jumped in and started buying properties in the beginning of 2016, and it’s been really snowballing ever since.

From there, I got that bug, I wanted to help out others who were kind of stuck in their journey towards more financial independence, on that similar path as me… So I started my own company at the beginning of this year, to do just that. I feel like I have a unique set of skills, knowing the traditional planning world, and how it can be integrated into real estate investing with a passive income focus, and I feel like that can really benefit other people in their journey towards financial independence.

So I’m not a hands-on investment manager, as I stated. Instead, I like to charge a per-session fee that’s very transparent, understandable, and I think it fits most people’s needs at a reasonable cost. So that’s kind of where I am today and what my focus is.

Joe Fairless: How do you take the planning skills from your professional background and apply it towards real estate investing?

Brent Sutherland: Well, it’s interesting because you start looking at some of those creative aspects of financial planning, and what happens is most people who I’m talking to now, they wanna get started in real estate investing but they come to me with this question and this challenge that “Hey, I’ve been on this path for probably 10-15-20 years of saving in traditional investment accounts (usually the 401k or the Roth IRA).” These types of accounts have rules set in place where you can’t really access that money without paying a penalty, or other rules that [unintelligible [00:04:50].02] “All my money is here… How do I get started in real estate investing?” That’s where some of the traditional planning aspects can come into play, because there’s some workarounds you can really think about.

One, the first thing I always bring up to someone is I ask them, “Do you know what types of accounts you have? Let’s talk about what your current investment picture looks like”, and 99% of the time they’re gonna say “Well, I have the 401k at work, I have a Roth IRA on the side”, so then we start digging into what are the rules and the [unintelligible [00:05:14].14] with some of this money if you wanna start converting those into money that you can actually put towards a real estate property.

I think it’s important for people to know the traditional IRA, which is more of the one that you put in money now and you get tax deduction upfront, then that money grows tax-deferred, but it has rules in place where you can’t really take that money out until age 59,5. Now, I don’t know about anyone else, but to me, early financial independence doesn’t mean saving into an account that you can’t access until age 59,5, so we have to start talking about how can we pull that money out so you can utilize those funds for the investment products today.

Now, there’s a couple different methods we can talk about; I don’t know if you wanna go into detail here now, but it’s something that’s more of the typical conversation that I have with people, and that’s how we start.

Joe Fairless: Yeah, sure. Please.

Brent Sutherland: Great, we’ll kind of dig in then. The IRA – one thing you can do with that is that you can actually convert money into the Roth IRA each year, but you have to keep in mind that when you do this conversion, you have to pay ordinary income tax rates on that money that you converted from the IRA to the Roth IRA. Now, the reason why you’d wanna convert to a Roth IRA, and for people that don’t know what the Roth IRA is, it’s something that you put money into today, you don’t get tax deduction today, but it continues to grow tax-free, and you can pull out money later in life tax-free, whenever you hit the retirement age.

But another beauty and benefit of the Roth IRA is that you can always access that money that you contribute. You can’t access the growth on that money until age 59,5, but you can access what you’ve put in. Now, when you make this conversion from the traditional IRA to the Roth IRA, that acts as a contribution. So there’s one specific rule that’s in place when you make that conversion – you can’t access that converted money until five years from that point of conversion. So people have to keep this in mind – if they’re converting, a lot of people make the mistake “I’ve converted that money into the Roth IRA, now I can access that money right away towards a real estate investment holding.” No, you’ve gotta hit the brakes a little bit; five years need to go by before you can access that money… But it kind of works out, because if people are going to go this path, [unintelligible [00:07:20].27]

One year you convert a little bit, so you don’t get hit too hard with taxes. The next year you convert a little bit more, and do this over a period of maybe 5, 6, 7 years to convert that money. Then you’ve got this kind of trailing contributions that you can access five years from now, six years from now, seven years from now, and kind of buy properties down the line.

Now, for a lot of people – they say “I don’t wanna wait five years.”, I get it. If you catch this real estate investing bug and you wanna invest today, five years is a long time to wait, but IRS also allows you, in accordance with the rule 72(t) of the IRS code – it’s called the SEPP, the Substantially Equal Period Payments – where you can take a traditional IRA, you can basically annuitize it, so you can start converting money today… It just means that you have to take a certain amount each year, for the rest of your life, if you do this and [unintelligible [00:08:13].16]

There’s three different calculations they have in place for this annuitized method, but it allows you to pull money out penalty-free; you still have to pay the ordinary income tax rates when you pull it out, but you can start using this money when you annuitize it today, and start utilizing that towards savings, towards investment property or whatever you’d like to do.

So again, that’s another tool that you can use towards your path, towards buying investment properties or just buying some other assets that might generate passive income for you, to help on your path towards financial independence today, rather than traditional retirement ages of 60, 65, or what have you.

Joe Fairless: So one is the traditional IRA to a Roth IRA, and the other is the SEPP? Did I get that acronym written down correctly?

Brent Sutherland: That’s correct. If you wanted to find the calculation for that – and it’s called Substantially Equal Periodic Payments – you can just google search “72(t) calculation.” There’s a number of different calculators that come up that show you what your amount would be if you decided you wanted to convert some of that money into annuitized form today. Bankrate has a really good one, and there’s a couple others that really do a good job of making it simple for these calculations, so you can kind of see what that would look like today.

Joe Fairless: That is a new term that I have not come across before, thank you for sharing that. Which of these two methods do you use?

Brent Sutherland: I think it depends, and I hate to give that answer, like “it depends on the unique situation”, but sometimes planning can come into play here, too. In my particular situation this year, when I started my own company at the beginning of the year, there was a lot of startup costs involved, and my income streams are probably gonna be lower, that if I do the Roth conversion this year, so I take some of that IRA money – which I did – and convert it into Roth format, I have to pay ordinary income tax rates on that, but my income tax this year is gonna be low, so I encourage someone who’s listening, if you’re going through a period of transition or maybe you lost your job and you’re thinking about going into real estate investing, this year when you particular tax rate is gonna be low would be a great time to convert money from a traditional IRA to Roth IRA; it gives you a little bit more flexibility with that money down the road, and since you’re not gonna pay that much on taxes, you won’t get that penalty either by pulling out before age 59,5… So it depends on the situation.

If someone is in a higher tax bracket and it looks like their job is safe, but they still wanna start pulling some of this money out, I would probably recommend a Substantially Equal Periodic Payments – annuitizing that to pull that money out, so that way you’re not getting hit too heavily on taxes, and you’re probably gonna be working for a few more years, so it just doesn’t make sense to do that Roth conversion today. Does that make sense?

Joe Fairless: That does, for the most part. Based on my brain, yes, that makes sense, and I’m sure there’s many sub-bullets underneath each of those, if a Best Ever listener wants to learn more about it. On that note, in addition to googling “72(t) calculation”, which I did, and it came up with some searches that explain the SEPP, what about the traditional to Roth IRA if someone wants to learn more just about the benefits in that process, where should they go?

Brent Sutherland: You can just do a Google search, too; there’s tons of information about that. Investopedia is one, and there’s a couple of other individuals who do a lot of writing about those different rules. A guy who’s a rockstar in the financial planning industry is called Michael Kitces, and he has a website, kitces.com. You can search on his website… He talks a lot about the rules involved with Roth conversions, so if you went to his website and just searched “Roth conversion”, you’re probably gonna get quite a few hits. He goes into great detail…

Depending on how much you wanna know about this, I think a standard Google search will probably suffice, but if you wanna get into the details and the nitty-gritty, he has some fantastic research on his website.

Joe Fairless: Cool. Yeah, I am on it right now, and that search within his website comes up with a lot of posts on that topic. Alright, you’ve got eight rental properties… What was the last one you bought? Can you give us the details on it?

Brent Sutherland: Sure, absolutely. And actually, I’ve just purchased one here at the end of August, and that one has yet to start producing for me, so I’m just gonna go back to the one prior to that. That was last October. It was in the Cleveland market; I purchased it at $88,000. It is running for $1,125/month. I was measuring the actual performance of that particular property… For me, last year it took a couple of months to have it rented, but once it started running, it looks like this year the total cashflow is about 12%, up to the end of the second quarter. But $88,000, and like I said, about $1,125 on rents… I do pay a 10% management fee. I bought this property through a turnkey provider.

I know there’s tons of different ways to invest in real estate, but for me, I wanted to focus on the financial planning aspect and helping other people. I wanted to do something that was almost completely passive on the side, so that’s why I went towards the turnkey property provider for this particular one.

Joe Fairless: Who did you use?

Brent Sutherland: They’re called SmartLand. They work the Cleveland, Ohio market.

Joe Fairless: Okay. How was your experience?

Brent Sutherland: It’s been fantastic, quite honestly. I’ve built up good rapport with these guys; they’re young, they’re hungry, they’re eager, and since my connection to them – at the end of 2016 is when I first touched base with them – their team has grown substantially. It’s like everywhere else in the country – I think that the rental real estate investing and real estate market has gotten fairly hot. They’ve seen a lot of inquiries from the coastal regions, so buyers on the East and West coast and Canada come into their market as well.

So the Cleveland market – I got into that location just because around Pittsburgh I felt like for what I was looking for… I was looking for at least a 10%-12% cash-on-cash return net of all fees; I had a hard time finding that here in Pittsburgh, but Cleveland was a bit more reasonably priced, so I went that direction.

Now, just looking at properties today that they’re offering, that same company, it seems like the appreciation has been about 15%-20% since last year, so it doesn’t make even as much sense for me in Cleveland as it did just a year ago. I don’t know what you’re seeing in the marketplace, but even here in the [unintelligible [00:14:33].18] there’s a lot of demand from buyers in Canada and from the coast, too; they’re driving up to new prices here [unintelligible [00:14:40].07]

Joe Fairless: What about the other seven properties, how did you come across them?

Brent Sutherland: One was through a [unintelligible [00:14:49].01] called Home Union – I’m not sure if you’ve heard of them; they’re a turnkey provider as well. They have mainly an online platform. The other seven that I’ve purchased last year were all through SmartLand.

Joe Fairless: You bought seven homes last year?

Brent Sutherland: I bought eight last year and one so far this year, and the only reason I’ve purchased only one this year is because I had a fairly nice-paying job last year, so the W-2 was good to banks and lenders locally, so I’ve had a bit of a hard time finding lending like I did last year when I going through this purchasing spree. But what happened was I was living in a condo in Pittsburgh – and this was before I really caught on to real estate investing and the benefits of it… And my idea, like a lot of people’s idea, was “Okay, I’m just gonna save everything I can towards paying off this condo.” So when I had a bonus, when I had extra money in the savings account, I would just throw it at the mortgage.

I got to the point where I built up a lot of equity in the condo, and there was some appreciation on it as well. When I started looking at what I could get by investing in real estate properties just from an investment standpoint, as opposed to just putting my money into this really dead asset, with a condo that had a high [unintelligible [00:15:55].03] on it, it just made sense for me… I was like, “You know what, I’m gonna move out, I’m gonna rent, I’m gonna sell off the condo and use all the money I had to build up an equity and put that towards these investment properties.” That’s where I got the funding to buy all the properties the last year that I did.

Joe Fairless: Based on your experience with these eight properties – seven of them you’ve had for a year – what’s a deal that hasn’t gone according to plan?

Brent Sutherland: I’d say the one I touched on that was probably more recent – last October. I expected that one to be rented from the get-go, but it didn’t; that wasn’t the case. In fact, they didn’t get a tenant in until very early of this year. So that was an issue I had… The company is gonna rectify the situation – they gave me free property management and a reduced rate, but when it does kick into play, they gave me [unintelligible [00:16:42].21] for a year, but that’s something I didn’t expect. I would say that that’s been the only real issue so far. I’ve had a pleasant experience to this point in time.

Joe Fairless: Based on your experience as a real estate investor combined with being a certified financial planner, what is your best real estate investing advice ever?

Brent Sutherland: You probably have someone said this before, but I think you just have to jump in. I went through the stage of analysis paralysis, and I kind of regret it, because I wish I would have got in earlier, but I think there’s definitely a period where you need to educate yourself. If you don’t feel like you have the expertise, reach out to someone else you know who is doing this and just get some pointers. Do a little bit of education, but don’t get into the stage where you’re almost frightened to jump on board. It can seem scary, but I’ll tell you what – once you take that jump into this marketplace and you see it working, it’s gonna be addictive.

I have one friend who’s been talking about this for four years, and he literally makes offers on properties, low-balls them because he admitted to me he didn’t want them to be accepted. He said he’s kind of terrified that they might get accepted, so he’s intentionally low-balling the offers, and it drives me crazy.
Don’t get into the stage where you’re just pushing it down the road and you wish you would have done it. Just bite the bullet. Once you get involved, you’ll realize it’s not as scary as you might have anticipated.

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

Brent Sutherland: Sure.

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

Break: [00:18:09].24] to [00:19:12].15]

Joe Fairless: Best ever book you’ve read?

Brent Sutherland: I would have to go with The Behavior Gap from Carl Richards. It’s a very simple book. He does a lot of back-of-the-napkin drawings to break down more complicated financial concepts to make them understandable to all. It doesn’t matter if you’re looking at portfolio investing or real estate investing, I think it applies across the board. It’s fantastic.

Joe Fairless: Best ever deal you’ve done?

Brent Sutherland: It would have to be at the beginning of last year I bought my first property in a lump sum of four properties at the same time. It was just by luck that the Cleveland market turned around and appreciated pretty substantially over this past year, but it cash-flowed really nicely and I’ve seen about a 15%-20% appreciation on the price as well, so I’d have to say just that first initial bulk buy of those four properties has to be the best.

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

Brent Sutherland: Well, I don’t know yet if it’s gonna be a mistake, but I’ve kind of been kicking myself that the more recent (the ninth) property I bought this past month, since I’ve had a hard time finding traditional lending to put in place, I bought it in cash… And I wanted to use leverage; that’s kind of my principle – always use leverage on these properties to get the most benefit… But I paid for it in cash. My goal now is to get a line of credit out on some of the equity to use that towards some other stuff, but we’ll see. It’s yet to be determined how this kind of pans out, but I’ve been kicking myself a little bit for buying this in cash.

Joe Fairless: What’s the best ever way you like to give back?

Brent Sutherland: I think right now what I really enjoy, and I found I enjoy it more than I thought I would even, is that with my new business I feel like I’m really providing value to people. There’s people out there who are stuck, and with the model I’ve set up, I feel like I’m not [unintelligible [00:20:47].25] and I’m providing them value to give them confidence to go forward in their journey towards financial independence.

I’m a big believer in providing free resources, so I have some calculators on my website, I provide a lot of content… But aside from that, I’m involved with two charitable organizations around town that I really believe in, and they give back to the community. All those as a whole I feel like they really sum up [unintelligible [00:21:10].27]

Joe Fairless: What’s the best place the Best Ever listeners can find you?

Brent Sutherland: I think the best place to contact me would be through my website, ntellivest.com. You can schedule an appointment there for a consultation, or you can just reach out to me, just send me a question and whatnot through the portal there.

Joe Fairless: Best Ever listeners, that website will also be in the show notes page, a link to it and you can just click on it.

Brent, thank you for being on the show. Thanks for talking about how you acquired seven properties last year, one property this year, and the numbers behind one of them, which sounds like that is a typical deal that you’ve done – the 88k purchase price, $1,125 in rent… That’s on average what you’re doing with your other seven?

Brent Sutherland: Exactly. They’ve been in-between 77,5k and on the high end 88k was the last one, last October.

Joe Fairless: And those rents are around 1,1k or so?

Brent Sutherland: Yeah, on average.

Joe Fairless: Cool. Well, thanks for being on the show talking about that, as well as how you apply your certified financial planning background to real estate investing, in particular two ways to get access to the cash that you’re building through your real estate investments… One from converting a traditional IRA to a Roth IRA, and two is the SEPP, and two resources for those. One is the Kitces website, searching on there, and then two is just googling “72(t) calculation” and learn more about that, that way you don’t have to wait until you’re 59 years old to get access to that money.

Brent Sutherland: 59,5, correct.

Joe Fairless: 59,5. Well, Brent, thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Brent Sutherland: I appreciate this, Joe. Thank you very much.

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Franco Harris and Joe Fairless

JF1109: Hall of Fame Running Back Franco Harris’ First Love Was Not Football

As he says, his first love was business. He always loved business, and since his football career ended he has been heavily building and buying businesses. Hear how he has been able to be successful in all his different businesses. A lot of great insights in this episode for entrepreneurs of all sorts! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet:

Franco Harris Background:
-NFL Hall-of-Famer, playing for the Steelers and Seahawks, known for completing the Immaculate Reception, one of the most famous plays in the history of American Football.
-Franco is the co-founder of SilverSport®, a company using nano-silver technology to naturally eliminate odor-causing bacteria in fitness clothing & accessories without the use of harsh chemicals.
-SilverSport has expanded into the outdoors industry, with the release of their new line: SilverSport Outdoors with Mossy Oak Camo.
-Named Inc. Magazine’s “Next Big Idea,” and one of Entrepreneur’s “Strokes of Genius,”
-SilverSport® has been featured in over 30 media outlets including TheDoctors, Fox and Friends, New York 1 TV, Inc. Magazine, Entrepreneur Magazine
-Products are available at Dick’s Sporting Goods, Sport’s Authority, select Modell’s Sporting Goods, and online.
-Based in Pittsburgh, Pennsylvania
-Say hi to him at: www.silversport.com


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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 fluff.

With us today, Franco Harris. Let’s see, NFL Hall of Famer and co-founder of SilverSport, which is a company – I’m gonna use the definition I have here and then I’m gonna use my own definition – using a nanosilver technology to naturally eliminate odor-causing bacteria in fitness clothing and accessories without the use of harsh chemicals… So clothing that doesn’t make you stink, basically, is what it boils down to.

Franco, with that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus now?

Franco Harris: Well, my background – I was born in New Jersey, I had a great high school, I played football in high school, and because of football in high school, I was able to go to Penn State and play under the great Joe Paterno. And then from there, I was drafted by the Pittsburgh Steelers, and then from the Steelers, I played 13 years in the NFL. But I have to admit, Joe, one of my first loves always, since I was 10 years old, was business. I always had this love of business and getting in business. And so when I retired from football, right away, I delved into a business.

I didn’t have much knowledge about business, I just knew that I loved it, and I jumped in. Now, many years later, I’m still doing business; it has been beyond my wildest dreams, and still doing a lot of new business things all the time. So, it’s been a nice journey, and how lucky am I to do two things that I absolutely love – football and business.

Joe Fairless: As an NFL player – I’ve spoken to a handful, most recently Terrell Fletcher, I’ve spoken to Emmitt Smith and some others… And one thing that Terrell Fletcher mentioned is that when you’re in the NFL, it is your identity because you have to be so focused on what your responsibilities are. If that is the case with you, then how did you transition out of the NFL, where you were so focused on one particular aspect of your life (being really good at football), to business, where you’re competing with different types of individuals?

Franco Harris: You know what, when football was over, I said, “Franco, you need to get busy.” Right? I mean, one thing you don’t wanna do is stay idly by. Even if I had to go work in a fast food restaurant, I’m gonna go do something, right? And so I decided I’m gonna start a little food distribution company, and I called it Franco’s All Natural. This was about 1985-1986.

Joe Fairless: You were ahead of the curve.

Franco Harris: Yup, and I wanted to serve all natural food products, and I just started. I loaded trucks, unloaded trucks, delivered, did all those things, and then around 1990 it morphed into Super Bakery. And Super Bakery has been beyond my wildest dreams where we’ve taken that, and it’s been great.

Then about five years ago, myself and another gentleman, Tom Davis, we were talking about business, and he mentioned about silver, and I said, “What about silver?” And he mentioned about these properties of silver, that silver is in the earth, and it is this natural anti-microbial that deals with bacteria and odor… I was saying, “Silver?” And then I looked into silver, we looked into it, and he said, “Wow, I like this.”

We studied the history of silver and how it was used thousands of years ago for its properties, and around the 1800s in Europe, all through Europe, how all the doctors used it. And you look at the utensil that you put in your mouth, the gateway to your health and well-being – that was made out of what? Silver. And how did they know that way back then to make it out of silver, that that fork and that spoon would never have any germs or viruses or anything on it, even though you don’t wash it? I mean, how did they know that?

So, silver had been used throughout history in many different ways, and now with our technology, our silver clean technology, nano technology, we’re able now to bring the uses up to the 21st century, and all new uses for it and in new areas, and to expand the use of it to really help the fight against bacteria and also the fight against odor in a lot of different ways.

Joe Fairless: Food distribution company, morphed into Super Bakery, and now you’ve got SilverSport… Were there any other ventures that you’ve done between post your last day in the NFL to today?

Franco Harris: Oh sure, there were some little things that I did along the way. I bought Parks Sausage along the way, I did some other little things here and there, like… Even with our bakery now, we’re getting into some hydration business stuff, we’re doing some spin-off of other things from the textile industry… I looked into the medical marijuana business, and I’m still looking in some aspects of that.

So, as I said, I just love business. I don’t mind starting from the ground and building the business up. Matter of fact, a lot of times, that’s what I kind of prefer, and [unintelligible [00:08:22].23] that I like to do. I like talking with people about business ideas… But one thing that I tell players, because you’d make your money back when I was playing, as I’m sure you know, but the money that they make now is pretty incredible and I try to tell players, “Don’t buy your way to the top, to the presidency. Learn the business, learn every aspect of the business.” That’s what really helped me – I delivered, I worked [unintelligible [00:08:57].06] so I know every aspect of it and know how it feels to do it. I know how it feels to unload the tractor trailer myself. I know how it feels to drive an hour to deliver something or drive three hours for a business appointment, and all those sort of things.

Knowing those little aspects of business and what people did to start a business – pretty incredible, and I respect a lot of people who start a business from nothing. When I read Sam Walton’s book, I said, “Wow, that’s pretty…”– but you look at things like Bill Gates, Oprah Winfrey, people who started from nothing, it just makes you feel good that that type of spirit is alive and well.

Joe Fairless: Are you based in Pittsburgh?

Franco Harris: Yes, I am, I’m still…

Joe Fairless: Alright, cool. So, I imagine that people recognize you, especially since you’re living in Pittsburgh, and because of that, I suspect that you get pitched ideas. You said earlier that you like talking about business ideas… How do you determine which business idea you pursue and which one you push aside?

Franco Harris: You know what, there’s no certain criteria. Well, I guess, number one would be the idea, and is it unique enough and is there a space for it? As you said, back in ‘85 when I started Franco’s All Natural – you’re right, all natural food products were not the norm. And so here I go, doing that sort of thing, you know what I mean?

I started the silver business with our different products, with our clothing and with our paint, which happens to be the best paint in the world against mold and mildew, staph, MRSA, E. coli. It’s the best paint in the world, our SilverArmor paint. But you kind of look at an area that is kind of new, not saturated, and start it up. And sure, when you start up, there’s always a challenge, and we know that. There’s a learning curve, as you know, a lot of different things. Even back in the day, I was gonna get involved in water. Way before this water thing, I got involved in a soda that was fortified with vitamin C and vitamin A and vitamin D, but something happened there where it didn’t happen. But I was looking at unique things, things that were different, and that’s what I still look at today.

Joe Fairless: We’re gonna talk about SilverSport in more detail here in a second, but what’s a venture that you’ve lost the most money on from a business standpoint? Something that flopped.

Franco Harris: Well, at one time I started a T-shirt company, and that didn’t work out. But there were some exciting times with that, when some of the things were hot and you’d jump in on that sort of thing.

I bought Parks Sausage, and I tried to turn that around, the whole plant in Baltimore. I really wanted to make that work because that provided jobs. It had a nice plan involved, but we weren’t able to make that work.

Joe Fairless: Was it because they’re all Ravens fans? [laughter]

Franco Harris: Never thought about it, [unintelligible [00:13:44].02]. But then you went in business, and you get in different things and you know you’re gonna fail sometimes. But I guess if you have more successes than you have failures… But also, I look at it as “This is my passion.”

The sausage business – I looked at it, I said, “Hey, this has a great history. I wanna get involved, but they’re going down… Can I come in and help them make a difference?” Then you find that there’s a lot more to it than just how you feel; you have to make it into a successful business, and if you can’t, then you have to go on.

Joe Fairless: What questions would you ask that you perhaps didn’t ask when you purchased the Parks Sausage, that for future stuff you would ask those questions to help try and mitigate the risk?

Franco Harris: Well, as I mentioned, I probably should have looked at it more from a business perspective rather than a social perspective. And the historical perspective. So, that’s probably where — so I let the historical perspective and the social perspective override the business stuff.

Joe Fairless: Okay, makes sense. Let’s talk about your main venture. Is your main venture right now SilverSport?

Franco Harris: Well, Super Bakery and SilverSport. I have to let you know, I mean, Super Bakery is kind of like my baby business, you know what I mean? Now, Franco’s All Natural morphed into Super Bakery, so that’s my heart, my love, and it’s a great business. And right now SilverSport is there also, and I love what it’s all about, I love where we’re going, I love what’s there. So, I would say both of these are my main business.

Joe Fairless: Okay.

Franco Harris: But let’s talk about SilverSport, yes.

Joe Fairless: Alright. So, SilverSport – how did you get involved as a co-founder? Was it through that conversation that you were referencing earlier?

Franco Harris: Right, right, it was the conversation that we had, and then not knowing about silver, and then learning about silver, and then I was like, “Wow, this is pretty incredible.” When you look at the history of silver and how it was used… But then we learned about the new properties and how silver can transform a product and just change the product and the properties of the product a number of different ways as we do with our sportswear, right? Because the whole thing is when you work out, why would you want to work out odor-free? And if you sweat, oh, is that bacteria on our bodies, right? So, when you sweat, that bacteria gets into the shirt, and that bacteria causes the odor.

Well, if you have our silver tee on, that’s not gonna happen because that sweat hits that silver T-shirt, and guess what? That silver goes to work and eliminates and destroys that bacteria that hits the silver in that shirt, and so there will be no odor in that shirt. And the same thing with our paints, we have our SilverArmor paint. So, you paint your walls and you get a clean environment, right? That’s what you want, a clean environment, clean work environment, where if someone coughs, or a touch, or bacteria is in — bacteria is airborne, lands on that wall, guess what? That silver clean technology goes to work, eliminates it, wipes it out, and your walls stay clean. So, we looked at this as a new opportunity and a new way to use silver and to bring it to market, but also odor-free fitness, odor-free workouts, and odor-free sports. So that’s been our whole goal with this – odor-free because, believe me, I’ve been in some locker rooms, some dudes where- you know how the odor can get…

Joe Fairless: Oh yeah, yeah.

Franco Harris: Also, the thing that really sold me, I went on a trip when I first got involved in this, and I took one T-shirt, I took our silver tee T-shirt, and I worked out, hung it up. The next day, no odor. I wore it again, sweat it, hung it up, no odor. That convinced me also that our technology works, it performs. Because number one, things ought to perform, right? It has to work. And we put this through many tests. As a matter of fact, right now we sell our SilverSport brand into the military. Well, that’s the first market we want to go into – the military.

Joe Fairless: It’s a big market.

Franco Harris: They go out onto patrol, they’re outdoors, they’re sweating – all type of situations… They can’t change their socks, can’t change their tees… [unintelligible [00:20:15].28] you don’t have to worry about soldier’s feet, you don’t have to worry about odor, you don’t have to worry about smelling. [unintelligible [00:20:21].04] for the soldiers.

Then from the military we said, “Where do we go next?” We said, “Hey, you know what? Let’s look into this partnership with Mossy Oak for the outdoors. We formed a partnership with Mossy Oak with our silver clean technology… So the outdoors can now be odor-free. No matter how long you go outdoors, how long you’re out there, how long you walk in our socks, how long you wear our tee or a sports bra or whatever, it’s odor-free outdoors.

Joe Fairless: Have you all taken on investors?

Franco Harris: Not at this time… No, we haven’t. We’ve been self-funded. But we are now going to the next level, and we are looking at that and considering that.

Joe Fairless: And what would you use investment funds for in order to grow your company?

Franco Harris: Well, we’d definitely be looking at people. And then there’s a couple project areas that we are looking at that if these areas grow how we think they can grow, then we’re gonna need working capital. And probably working capital above and beyond where we can be self-funding.

Joe Fairless: What is your specific role as the co-founder of SilverSport?

Franco Harris: Work every day. [laughter] We talk a lot of strategy… Now, I don’t say this like with our Super Bakery… I mean, I don’t go to the plants and bake, you know what I mean? We have people who do that, but we talk ideas, strategy, future plans… You try to build your culture of what you stand for, what your company stands for. So, it’s really trying to make all the pieces fit and make sure we keep moving the pieces forward, that we keep going forward with our ideas, with our different programs, where we’re gonna be at, what the future is, “Okay, let’s make sure that we focus on this and focus on that, and that we have all the little pieces in place.”

Unfortunately, some people think I’m too hands on, you know what I mean? Like, I wanna know every little thing, and sometimes I know that gets in the way of people, but I just love it. I mean I just love to know what’s going on here, what’s going on there, and contribute this, contribute that sort of thing.

I just love the creative part of business, doing new things, new areas, how can we be different, and also how can we be the best. I mean, when you talk about sports, that’s one of the things that you always work on, where you want to be the best player and you want to have the best team, right? I was fortunate enough in sports to experience that, where I was able to produce individually and also, as you know, at that time, I don’t know how you feel, but I feel we had the best team in football at that time.

Joe Fairless: I’m smart enough not to argue with you. [laughter]

Franco Harris: I was waiting for somebody. And now in business, it’s the same thing where we wanna be great at it, we wanna have great products, and we want great performance from our products. And in our bakery business, Super Bakery, we’ve accomplished that. I mean, it’s been great. And now with SilverSport, that’s our whole mindset. We want to be the best – the best in odor-free workouts, the best in odor-free fitness, and so that’s our goal, and that’s what we focus on. We want to be the best in that category of odor-free workouts and odor-free sports.

Joe Fairless: The listeners are entrepreneurs primarily in real estate investing, but this advice doesn’t necessarily have to be directed towards real estate investing because as real estate investors, we are all entrepreneurs, so, here’s the question – what is your best advice ever for entrepreneurs and real estate investors?

Franco Harris: That’s really tough because advices keep changing depending upon the market, right? But I do want you to know that that’s gonna be my next focus – it’s gonna be real estate investing. So, I might have to talk with you some more on another basis, because like real estate, when I first got to Pittsburgh, that really was the first business thing that I did. I bought a little unit and a couple of apartments in it, but just decided to go into another direction. But I think you’re lucky enough if you’re able to do what your passion is, what you love to do, and really jump into it. And a lot of time, a lot of us hesitate, but if you have something that you love to do, jump in. It doesn’t matter where you start, but if you do the right things business-wise – we talked about some of the things – and you put the time and effort into it, you can really make some great things happen, and at the same time, doing something that you really love to do.

I can do business 24/7, and I mean that’s just what I feel. I mean, when I got into it, I try to read all these business magazines all the time. I mean, I’m just reading things, seeing what people did, how they did it, what was their mindset on when they got into it, and how did they make certain decisions, why did they make this decision at this time? We know a lot of things in life is place and timing, right? I mean, that is so important, place and timing, and sometimes, we’re just lucky to be at the right place or the right time, we get involved in the right thing at the right time, just like with real estate. There were great times to be in it, and I’m sure there were a few times not to be in it. So, it’s a lot of different things make things work, and I just love working on it every day.

Joe Fairless: We usually do a lightning round. We have some Best Ever listeners who have some questions for you. Are you ready for the best ever lightning round?

Franco Harris: Some people have questions?

Joe Fairless: That’s right, yeah, I let them know that I was talking to you before, and they submitted some questions.

Franco Harris: That’s surprising.

Joe Fairless: [laughs] Alright. First though, a quick word from my best ever partners.

Commercial Break

Joe Fairless: Okay, Franco, the first question comes from Grant, and what he asks is what’s the number one skill that you had in the NFL that is applicable towards business?

Franco Harris: Vision, that’s when I would say. I was able to just see what was happening and what was going on and knowing the move I had to make… And I think vision has always been one of my traits.

Joe Fairless: Valerie, who’s actually based in Pittsburgh, asks — it’s kind of a statement, not a question… You’ve been successful not only in NFL but in business – what advice would you give to (this is pretty specific) an 8-year-old who you want to set up for success from a just overall good head on your shoulders standpoint? I paraphrased.

Franco Harris: An 8-year-old… That you could be a champion in anything that you do, that every direction that you go into, that you can make a difference; and I said that you could be a champion, but you have to work for it and put the time and effort into it, and go out into the world and make your mark and also make a difference.

Joe Fairless: And last question, this comes from me – favorite NFL city to visit, not including Pittsburgh?

Franco Harris: Famous NFL city…

Joe Fairless: Favorite.

Franco Harris: Favorite. Well, that’s a tough one. So, I never went to a game there, but one of my favorite cities is New York. I mean, I love New York. We played in Shea Stadium, but now the stadium is in New Jersey, and so how does that fit?

Joe Fairless: Well, so New York City though, fair enough… Well, Franco, thank you for being on the show. How can the Best Ever listeners learn more about SilverSport and what you’re up to?

Franco Harris: Oh, please go to silversport.com. If they’re interested in our silver paint, silverarmorpaint.com. Yeah, please, because our silver clean technology is incredible and I’d like them to learn more about that.

Joe Fairless: Yeah, when you use the example of spoons, what spoons are made of – that really resonated with me as far as bacteria fighting components or ingredients or elements, or composition, or whatever the right word is.

Franco, thank you for being on the show. Thanks for talking about your transition from an NFL Hall of Famer to the business world with Franco’s All Natural, which transitioned or evolved into Super Bakery, as well as your current venture, SilverSport. A life lesson that you mentioned that is applicable to all real estate investors, all entrepreneurs, is look at the things from a business historical perspective, not from a social perspective, and the reason why I say that is because if we look at it from a business and historical perspective and we are successful, then I believe there will be a positive social ripple effect afterwards. But if we’re not successful, then the social perspective, it might be a drop in the bucket, but then it will go away, and the bucket will be dry again.

Franco Harris: Joe, you read my mind. That’s exactly where I was going to go with that.

Joe Fairless: Yup, exactly.

Franco Harris: You know, like, it takes the business-

Joe Fairless: I’m with you.

Franco Harris: [inaudible [00:33:51] happened, and I want you to know that I’m gonna get into real estate one of these days soon. I want you to know that.

Joe Fairless: Alright. Well, you’ve got my info and we’ll catch up again once you do, or maybe before and see what I can do to help you out. But in the meantime, we’ve got a daily podcast, so subscribe to it on your phone, and you can listen to every episode for real estate experts that give their best advice ever. There you go about that. What do you think about that?

Franco Harris: I like that.

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

Franco Harris: Okay. Thanks again.

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Best Ever Show Real Estate Advice from experts

JF729: How to Pre Sale a Fix and Flip Product and What You MUST Know

You have been warned, this method is very difficult and risky. Our guest today pre-sells real estate by allowing the end user to select upgrades, view progress, and watch a house go from beat up to wow! Hear about all the pitfalls and benefits from this technique!

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Taylor Takacs Real Estate Background:

– President at Helping Hand Real Estate
– Flipped dozens of homes with private money
– Based in Pittsburgh, Pennsylvania
– Say hi at helpinghandre.com
– Best Ever Book: Renovating Old Houses by George Nash

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