In another life, Len was responsible for a $16 billion trading portfolio on Wall St. When he realized that he was not fulfilled, he moved his family to Florida with no real plan. Fast forward to today, and Len is the owner of multiple successful companies, including his most profitable business, vacation property management. Hear how he was able to build these companies and how his story can relate to you. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Len Giancola Background:
- Owner/President of several corporations including Success Beach
- Over $100 million in sales in the last decade, including vacation rentals and his Success Beach Family platform
- Contracting firm, has over $30 million in sales, a successful property management company and an online educational venture, assisting future entrepreneurs
- Over 25 years of experience in Management and Small Business Ownership
- Formerly a Managing Director responsible for a $16 billion trading portfolio on Wall St
- After experiencing 9/11 firsthand, he decided to cash in and retire from the financial industry and moved his family to Florida
- Based in Ponte Vedra Beach, Florida
- Say hi to him at www.successbeach.com
- Best Ever Book: Relentless
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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, Len Giancola. How are you doing, Len?
Len Giancola: I’m doing great, Joe. Thanks so much for having me on.
Joe Fairless: My pleasure, nice to have you on the show. A little bit about Len – he is the owner and president of several successful corporations, including Success Beach. He has built a homebuilding company, he has done vacation rentals, and he has done various other things as an entrepreneur. Len, with that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Len Giancola: Absolutely, thank you. I grew up in New York City, and I did the traditional path of go to college, get a good corporate job and start saving for my 401k. Luckily enough, I was blessed to rise through the ranks pretty quickly and became the youngest managing director for my firm on Wall Street at an early age, and by the time I was in my early 30’s I was making seven figures a year, but I wasn’t fulfilled. I figured if I’m making that much, how much are they making? And I wanted to almost be selfish in a way and go make that money for myself and my family.
So I moved our family down to Florida, with no plan, about 12 years ago, and basically became a serial entrepreneur. I created a category called the revolving door theory, if you will, and basically we were the only company in the state of Florida to have retail real estate property management, vacation rentals and custom home building under one roof at that time. And it was a revolving door of leads, which basically just — people would buy a lot from our real estate company, build with me, and then put it in our vacation rental program, and it was just a nice revolving door of leads… So I kind of feel we created a little category in our niche here in North-East Florida. Since then it’s just branched into a whole bunch of different opportunities that I guess we can discuss as we go forward.
Joe Fairless: Wow, I see what you did there. That’s really interesting, as far as the revolving door thing, because you’re serving the customer in every step of the process and you’re helping them out along the way, where they buy and/or they build, then they put the vacation rental in your portfolio for you to manage. What type of business right now is generating the most income for you?
Len Giancola: That would definitely be the vacation rental business. Our company, Cinnamon Beach Vacations in Palm Coast, Florida, we manage about 75 high-end properties on the ocean. Cinnamon Beach is a unique community on the ocean, with amenities, so it’s a nice little destination, for people who haven’t heard about it. Many people haven’t, but the people who have, come back year after year. It’s been wonderful. Plus, I own several of those properties and I’ve built probably over 25 of them, so it’s become an annuity for my family, for sure.
Joe Fairless: Is it profitable or lucrative because you originally built them and now you manage them, or is it for other reasons?
Len Giancola: No, it’s lucrative because we collect a 25% management fee from all of our owners, and I also own some of the properties myself, so it’s a double gain for me personally, because I get income from the management company, and then on my own, for my own properties as well.
Joe Fairless: What are some ways that you’ve improved your process on management since you started?
Len Giancola: The reason we’ve been successful is because we didn’t try to get too big too fast. We literally started with one property. I never put a dollar into the business. We started with one property and got a reservation the first day, and used that money to build a website… Because the reservation was several months out, we actually used that money to build a website and start marketing a little bit locally. And instead of trying to attack the 800-pound gorilla in the area, we decided instead to create a niche as a family-owned property management company that really cares about your property, not just about every last dollar of rent to get to anyone on the internet. We actually created relationships with our guests and we have that concierge feel, as opposed to just a factory feel, and that’s been a huge, huge boon for our business.
We’ve grown at the minimum 30% per year for the last seven years, and we’ve had a record year this year as well.
Joe Fairless: What’s an example of having a concierge feel versus a factory feel?
Len Giancola: A factory feel would be just anyone books on the internet, take any booking that comes in and just worry about the bottom line dollar and that’s all you care about. Instead, our staff creates a relationship with each guest. We actually speak with each guest on the phone, create that family atmosphere. When they check in, we actually go see them, make sure they’re okay; we have a human being to welcome them, and actually make them feel like they’re on a special vacation.
That has given us the ability to have repeat guests at a high rate, and our reviews just blow away the competition as far as the condition of our properties, and just that special feel that these people have on their vacation.
Joe Fairless: Do you do anything in particular while they’re staying there, after your staff member initially meets them that is different?
Len Giancola: We give them five different phone numbers. We give them a phone number to our maintenance person, our property management relationship expert, our salesperson for possibly repeat booking while they’re there, because they’re already in that vacation euphoria, which is a great time to capture repeat booking, and then the owner of the company (like myself) will touch base with them as well to make sure everything’s going okay; “Is there anything else we can do for you? Would you like any recommendations for activities in the area?” – all of that stuff is provided to them as well.
Joe Fairless: I was writing these down – salesperson, maintenance, owner… Who are the other two?
Len Giancola: A maintenance person, like a relationship expert, a salesperson to try and get a repeat booking, and then the actual owner of the company, just to make them feel like they’re the most special guest we ever had, and we treat each guest that way.
Joe Fairless: Got it, okay. So you’ve taken it to another level and really put emphasis on customer service. Was that intentional?
Len Giancola: Yes, that was intentional because there was a larger company already sort of ingrained in the area, and they’re more of the factory feel and they do well on their own, but we wanted to create our own little niche. I don’t wanna have 1,000 properties under management, I like the amount we have, and we go up a little bit each year. That’s all I want. I don’t wanna be a big, giant monster. We find that there’s a law of diminishing returns after a certain number of properties, so we wanna keep it right at that peak performance level.
Joe Fairless: Have you purchased any properties from your clients who like their vacation rental but want to sell it for whatever reason?
Len Giancola: Yes. Actually, I’ve done that over the last probably 7-10 years. After the market started recovering I’ve been doing that a lot. I either have flipped those to other investors, or I’ve kept some for myself for a while. I can give you some numbers on it.
Joe Fairless: Yeah, please.
Len Giancola: Last year we did one which was great. The owner of the house was unable to sell their house because they had never rented it before, so they didn’t have a vacation rental track record, so it was not attractive to investors because of that. We jumped in and made them a lowball offer. We purchased the property at $600,000 – I’ll use round numbers to make it simple – with 100% financing, so we never put a dollar out of our pocket, no skin in the game. We rented it for four months, grossed about $35,000, and listed it for sale and sold in one day for $715,000. Basically, free money.
The way you do that is you have to create a proof of concept to an investor. When they see a house that has never been used in that fashion before, they don’t believe it can happen if you’re not familiar with the industry, so we then proved that to them. We have something on paper where we can show that proof, and then it becomes that much more attractive.
Joe Fairless: The investor who’s purchasing it from you?
Len Giancola: Correct.
Joe Fairless: I ask that question because I thought based on what you said earlier, the revolving door approach, I figured you’d also be getting leads from your current client base when they wanna sell, and you’d be hopping on that and finding a way to make money on that, too.
Len Giancola: That’s exactly what I’m talking about as well. That was just one example, and then remember, we sold it to the investor, and then now we manage the property.
Joe Fairless: Right, yeah.
Len Giancola: That’s number one. And then I’ve done in the past the way that you’re asking, which is maybe someone just has to get out of a property for whatever reason – can I get that at an opportunistic price level for me to just keep in my own portfolio? And yes, I’ve done that as well.
Joe Fairless: Why vacation rentals over apartments, office, retail, regular single-family homes?
Len Giancola: Good question. I get it a lot, and a lot of people aren’t really big on vacation rentals, compared to the others. The reason I like it – I live locally; have an intangible factor that’s important to me, and that’s experiences with my family and usage. I’ve owned plenty of single-family rentals in lesser areas that you can’t use, that you’re almost not even proud of. These are higher-end properties; I’m proud of it, I can have my own events at these homes, which I’m doing several events in the fall for my other companies, where they actually house some of our clients… So that’s another revenue stream, and an experience stream that I place a lot of value on, and our family uses it as a beach house as well.
Joe Fairless: That makes sense. When I mention Airbnb, what comes to mind for you as a vacation rental owner?
Len Giancola: I personally do not like Airbnb in our market, because I find that the quality of inquiry from that source is not high. We prefer VRBO and HomeAway, and our own website, as it produced better and more qualified leads for the type of properties we have. Airbnb, so far our experience – I know it’s very popular across the world, but in our experience in our little niche it has not produced quality clientele.
Joe Fairless: Your properties are more high-end, therefore you’re looking for a higher price point than perhaps the Airbnb shoppers.
Len Giancola: Yeah, they rent from $2,000 to $7,000 a week, our properties.
Joe Fairless: Alright, so when you have a customer who comes and rents a $5,000/week house and they leave, how do you stay in touch with them, if at all, after they leave?
Len Giancola: We have an e-mail campaign. We have different groups that we set up and we use constant contact. We just follow up with them weekly. We do two different things – we send out certain e-mail streams or campaigns to people who have enquired and not booked with us, and then repeat guests. So we have two different e-mail campaigns that we send to keep in touch with all of those people that have shown interest and/or stayed with us.
Joe Fairless: What’s the flow or what would I expect to receive from an “it adds value to my life” standpoint if I haven’t booked and I’m in the stream?
Len Giancola: If you haven’t booker?
Joe Fairless: Yeah, if I’ve never booked with you.
Len Giancola: It’s similar, but yet different. We’ll send them specials on last-minute bookings, upcoming events, and then we’ll do the same for people that stayed with us; we’ll give them a discount just because they’ve stayed with us on any stay they wanna have with us in the future. We kind of show them specials and show them new properties. “Hey, before we release this new property, we just signed this one up. We wanna give you a first crack because you’ve got interest before and you’ve stayed with us before.” So we make it different, but it’s the same message.
Joe Fairless: Based on your experience in multiple areas of real estate – primarily we focused our time on vacation rentals and the management of them – what is your best advice ever for real estate investors?
Len Giancola: My best advice ever is protect your downside by making sure whatever you invest in cashflows at 2008 and 2009 price levels.
Joe Fairless: And how do you do that with vacation rentals?
Len Giancola: I do it because when I acquire a property I don’t buy anything at retail. I almost use what you were referring to earlier – I know when people in my niche, I know a lot of the owners, I know when some people are having some financial issues and they need to get out of the property, and I generally try to pounce on those opportunities to either help them get out of the property, but also get it at a discount for helping them. Then I will purchase stuff at a discount, I will build at my own cost, and I will manage at my own cost, so I know that I’m going to cash-flow even if 2008 happens again.
Joe Fairless: We haven’t even talked about the building aspect… Your background from what you’ve described wasn’t swinging a hammer, if you’re the youngest managing director at your company, and I know that it’s quite an honor and quite an accomplishment on Wall Street for sure… So how did you set up a construction company where you’re building homes when you weren’t doing that professionally before?
Len Giancola: My end of Wall Street was in sales and client relations, so I used those skills and came down here and I became the face of the company and handled all the client relations and sales, and I made sure that I hired the best people in the field to actually build the houses.
I’m not the guy who put two pieces of wood together, I’m the guy that built the business and makes sure the clients are happy, and provide a nice product. But I have people in the field that actually do the day-to-day.
Joe Fairless: How do you quality assurance in that scenario?
Len Giancola: It was easy for me because coming from New York, where as you can tell, I talk fast, I walk fast, and everything I do is fast, down in Florida everything is much more laid back and the complacency level is high. So I came down here and I used my skillset and my background of being a fast-talking New Yorker to be different. So I was different than Billy Bob the Builder down here; I was a city guy who just cracked the wood a little more and was a perfectionist, and most of the people in Florida that came to be my clients were transplants from bigger cities, and they appreciated that and it allowed my company to soar.
Joe Fairless: What’s one example or one way that you’ve — maybe a process you implemented with builders and with their team members to help mitigate the risk? Because building something from the ground up – there’s risk, as with any type of investment, but I’d say more risk than other types of investing, so what’s one way you’ve mitigated that risk?
Len Giancola: As far as — what type of risk are you talking about? Liability risk?
Joe Fairless: It not happening. When you buy something and the building not being built properly; maybe the permits aren’t pulled properly, time delays, running over budget… That sort of stuff.
Len Giancola: I was completely hands-on with those processes, and I made sure that my subcontractors and my crew did not get paid until the job was done. So I don’t pay people upfront and then hope they show up; if you don’t show up, you don’t get paid and you get fired. That’s the kind of person I am – you either perform, or you’re gone. That’s the way I run the business, and I never once had an issue, I never once was behind schedule. The only time we were is if it was a weather event, but that’s it. Otherwise, we were spot on through our whole career, and I actually shut down the building company a year ago and retired from that. We built about 70 homes, and it was an amazing ride.
Joe Fairless: Speaking of weather… Hurricanes, insurance – how much does it cost per house to ensure?
Len Giancola: Nothing, about $1,200 to $2,200/year. It’s nice, because the area that we’re in has a very high dune built in between the ocean and the community, and they don’t consider it a flood zone, believe it or not, even though it’s literally right on the ocean.
Joe Fairless: Wow.
Len Giancola: There’s a dune walkover, so we’re not in the flood zone A, I believe it’s called, the bad one, I forget which one it is… We’re actually in X, which is the good one, and the cost is much lower.
Joe Fairless: Okay. Anything that we haven’t talked about as it relates to your real estate background and experience that you think it would be interesting to talk about?
Len Giancola: I pride myself on doing the vacation rentals because not very many people have been successful at it. I enjoy the vacation rental the most, so that’s my number one focus right now.
Joe Fairless: Property management, even with $5,000/week clientele, it can be a bit painstaking, I imagine, when you’re managing properties, because you’re coordinating a lot of stuff… So how do you do it while maintaining sanity and having a high quality of life?
Len Giancola: You’re only as good as the team that you have around you. We have a small, but efficient team, and our team each knows their roles, and they perform their role at a high level, and I really don’t have to spend very much time per week worrying about that.
The other nice thing about vacation rentals is if you do have one of those guests that are a pain in the you-know-what, they’re gone in a week, so I don’t have to deal with them the whole year. Occasionally, you will get the nitpicky guest, and they’re gone in a few days, so it’s not really a stressful-type thing where if I knew they were in one of my homes for a year it was just constant nitpicking.
Joe Fairless: How many vacation home rentals did you say you oversee?
Len Giancola: About 75, I believe. I don’t know the exact number.
Joe Fairless: So about 75… And talk to us about your team, how do you have it structured?
Len Giancola: Well, the roles I’m gonna say each back each other up, so if anyone’s off or if anyone’s busy…
Joe Fairless: Okay.
Len Giancola: We have a sales executive, we have two maintenance gentlemen, we have a relationship expert and we have a head of housekeeping, and they oversee everyone under those particular avenues.
Joe Fairless: Got it. So do all of those individuals report up to you, or is there someone else?
Len Giancola: They report to me.
Joe Fairless: Okay, so the two maintenance guys report directly to you, the sales executive etc. – they all report to you.
Len Giancola: Yeah. They self-manage themselves pretty well, so I’m very lucky, but at some point it gets to me, correct.
Joe Fairless: Okay. Are you ready for the Best Ever Lightning Round?
Len Giancola: I am ready, Joe.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [[00:19:13].24] to [[00:20:17].23]
Joe Fairless: Best ever book you’ve read?
Len Giancola: Relentless by Tim Grover. Incredible motivation. You feel like you wanna run through a brick wall. If that doesn’t get you going, I’m not sure you’re alive.
Joe Fairless: What did you do (if anything) after reading the book, that you applied to your business?
Len Giancola: It literally just made me wanna get better and better. So each year, as I accomplish more, it’s never enough, and that doesn’t mean I’m not satisfied; I’m very satisfied with my life, but I always want more. And not in a greedy way, in an abundance way.
Joe Fairless: Best ever deal you’ve done?
Len Giancola: One of my rental houses – I call it “The Infinity Return.” I bought the land, built the home, furnished it, added a pool, for $500,000. It appraised for $800,000, I took the $500,000 out so I had no skin in the game. It makes six figures per year, my carry cost is $40,000 a year; that’s a free $60,000+ per year for the rest of my life.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Len Giancola: A mistake I’ve made was chasing retail pricing in 2007, before I knew what I know now. That’s what I mentioned in the advice earlier, as far as protecting your downside.
Joe Fairless: What’s the best ever way you like to give back?
Len Giancola: I am a huge proponent of giving back to the vets and kids. Make a Wish, St. Jude’s, teaching and mentoring kids… My daughters and I just released a family financial freedom video series on the Success Beach platform (SuccessBeach.com). You can see the first video for free, and it’s basically teaching families how to become financially free. We have spoken for free many times – Temple University, Whistler, Canada… We just love trying to teach other families to attain some of the stuff that we have.
Joe Fairless: How can the Best Ever listeners get in touch with you or learn more about your company?
Len Giancola: They can e-mail me at firstname.lastname@example.org, or they can follow us on Facebook on our Success Beach page for daily free content. Or if they’re interested in that video series, they can go to SuccessBeach.com, and get the first video for free and see if they like it.
Joe Fairless: Len, thank you for talking about your unique business model. I love the category that you called the revolving door approach, where you have an opportunity to add value and be profitable every step of the way with the vacation rentals, whether it’s the retail side or property management, actually renting them out or building them.
Then the numbers on a deal – 600k purchase, 100% financing, and proving the business model, since it had never been rented, and then selling it for over $100,000 to someone who wants a business model that’s proven. And then the Best Ever advice, protect the downside by making sure we cash-flow at 2008 levels when we buy a property.
Lots of lessons learned. Thanks for being on the show, I hope you have a best ever day and we’ll talk to you soon.
Len Giancola: Thank you so much, Joe.