Escaping the Drift with John Gafford - Flipping Success: How 21-Year-Old Donovan Camarotti Built a Real Estate Empire

Episode Date: October 22, 2024

Meet Donovan Camarotti, a 21-year-old entrepreneur who is making waves in the real estate world by flipping an incredible 80 houses a year on Florida's Treasure Coast. Donovan's journey from a car detailing business to a thriving real estate empire is nothing short of inspiring. Hear how he bypassed the traditional college path and leveraged a passion for property to build a successful career, all while navigating the support and concerns of his retired teacher parents. Donovan's story is a compelling testament to the power of taking decisive action early in life, offering insights that will resonate with young entrepreneurs eager to kickstart their own ventures.   In our conversation, we dive into the nitty-gritty of real estate flipping, from smart pricing strategies and financing options to the importance of team building and efficient project management. Discover how Donovan manages multiple projects simultaneously, selecting the right real estate agents and organizing tradespeople to maximize efficiency and profitability. We also discuss the critical role of marketing and acquisition strategies, comparing the effectiveness of Google vs. Facebook ads in generating quality leads, as well as regional market dynamics and challenges, including the impact of rising interest rates on the industry.   We round off the episode by exploring Donovan's approach to real estate investment and management. Delve into the intricacies of wholesaling, flipping, and property acquisition, discussing strategies that keep his business thriving amid market fluctuations. From the significance of new roofing in home sales to the delicate balance of profit margins when buying from wholesalers versus directly from sellers, Donovan shares invaluable lessons from his experiences. Tune in to gain actionable insights and strategies from a young entrepreneur who's redefining success in the competitive world of real estate.   CHAPTERS  (10:27) - Lessons From Flipping Real Estate (21:51) - Growing Your Real Estate Team (27:38) - Effective Construction Project Management (32:25) - Real Estate Project Management and Marketing (36:11) - Real Estate Market Trends and Challenges (39:53) - Roofing and Property Acquisition Strategy (43:28) - Real Estate Wholesale Acquisition and Management (53:35) - Real Estate Investment Strategy Discussion   💬 Did you enjoy this podcast episode? Tell us all about it in the comment section below!    ☑️  If you liked this video, consider subscribing to Escaping The Drift with John Gafford  ************* 💯 About John Gafford: After appearing on NBC's "The Apprentice", John relocated to the Las Vegas Valley and founded several successful companies in the real estate space.   ➡️ The Gafford Group at Simply Vegas, top 1% of all REALTORS nationwide in terms of production. Simply Vegas, a 500 agent brokerage with billions in annual sales Clear Title, a 7-figure full-service title and escrow company.   ➡️ Streamline Home Loans - An independent mortgage bank with more than 100 loan officers. The Simply Group, A national expansion vehicle partnering with large brokers across the country to vertically integrate their real estate brokerages.   *************   ✅ Follow John Gafford on social media:   Instagram ▶️ / thejohngafford   Facebook ▶️ / gafford2   🎧 Stream The Escaping The Drift Podcast with John Gafford Episode here: Listen On Spotify: https://open.spotify.com/show/7cWN80gtZ4m4wl3DqQoJmK?si=2d60fd72329d44a9 Listen On Apple: https://podcasts.apple.com/us/podcast/escaping-the-drift-with-john-gafford/id1582927283    *************   #escapingthedrift #donovancamarotti #realestate #entrepreneur #flipping #teambuilding #projectmanagement #marketing #markettrends #propertyacquisition #roofing #wholesale #investmentstrategy #youngentrepreneur #college #financing #construction #partnerships #syndicators #hardmoneyloans #profitmargins #capitalgains

Did you find yourself chronically unemployable? Most high-level entrepreneurs are. I think that was really the only job I had. Really? That's the only job you had? For like a month, you know? And then I was like starting detailing at the same time. And I was like, man, you know, I just made my whole paycheck in a day.

And now, Escaping the Drift, the show designed to get you from where you are to where you want to be. I'm Jon gafford and i have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness so stop drifting along escape the drift and it's time to start right now back again back again for another episode of the podcast like it says in the opening man that gets you from where you are to where you want to be and today you know here's a funny thing man i'm gonna tell you i always tell people when they come on this show and they ask me what it's about,

I say, this is kind of a love letter to my dipshit drifting along with the current 25-year-old self. So it's always, I don't know if it's bittersweet or if it's just unique or if it's just exceptional when I can get somebody on here that is doing something at an incredibly high level at an incredibly young age. Because when I was this dude's age, I'm trying to think back what I was even doing when I was 21, and it was not what this dude's doing. So this is a guy that lives in, from my home state of Florida, God bless for Floridians out there, from my home state of Florida. And this is a dude that at 21 years old is flipping 80 houses a year in the Treasure Coast. And that's a lot, folks.

I mean, that is a lot of houses to turn and burn. He has just done so much at such a young age. We're excited to get to that. So if you're one of my younger listeners that is listening to this, man, this is one you probably want to pay attention to. Because this dude's doing it and he didn't wait so welcome to the program ladies and gentlemen this is donovan kind of marati how are you buddy good man how are you good to have you man so good to have you in studio so i you know this is i it's like normally we start these things out with tell me the origin story of donovan tell me the backstory of what made you you could dude you're still i do no

offense you're still a kid yeah right yeah so. So, uh, you know, tell me the backstory, man, but where'd you grow up? Like obviously where'd you grow up to start with that? So I was, um, born and raised for a little bit in Miami. Okay. Um, so where my parents lived, um, you know, I spent a lot of time with my grandma, where my parents were at work. Then my dad retired and we moved up about like two hours North to Port St. Lucie, Florida. Um. My mom continued her career for a few years and then she retired. During that time, I was, you know, I had gone to like middle school, high school, and even a lot of elementary school up north. And in high school, I was, you know, it was in my senior year.

I was like, well, I really should probably figure out something to do with my life, right? After high school. My parents- Did you get good grades? Were you a good grades kid? Yeah, I was pretty good. I always got mostly A's, you know, one or two B's. Um, so I mean, it was decent. I wasn't like, you know, always straight A's, but you know, I was, I was decent in school. Um, but you know, my parents, they, they encouraged me to try college. Right.

Um, and so I did, I did it for a year and I went to FAU. Yeah, there you go. Yeah. So I tried it for a year and a week of my second year. And then I called it quits. We could, we could get into that. What was the catalyst that caused you to call it quits? What was the thing you were like, this isn't for me. So it was about an hour and 20 minutes from where I lived, or, you know, back home at the time. And, you know, I would stay on campus and I was like really, you know, getting into real estate pretty seriously at the time. And, you know, I would stay on campus and I was like really, you know, getting into real estate pretty seriously at that point. And I would have to like go see properties. I drive, you know, an hour and 20 minutes there, hour, 20 minutes back. Like it didn't really

make sense. So you are, you essentially were doing what you, what you thought you were going to do, going to school for anyway. And you were like, why am I going to school? Exactly. Like the classes were so slow, you know, and then they weren't teaching you like, you know, real estate investing. They were just like, you know, real estate law or real estate, you know, taxes, whatever it is. I have a similar story. I was in a beverage class because I was going to school for a hospital administration. I opened my first bar at 20 years old in Tallahassee. So you couldn't even drink and you opened a bar? No. Yeah. I was literally writing checks for like 150 kegs at once.

Nice. And I wasn wasn't enough drink which is pretty funny i don't know if van huyser bush could get trouble for that but that's that's true story and uh i remember they were talking about liquor tax in florida and how you pay beverage tax and they were like okay so every quarter barrel is 15.5 gallons that's how you do the math blah blah and i'm like you can write off a gallon of every, of every keg for spill and foam. And they're like, no, you can't. I'm like, I just fucking did it. Right. I just, I literally just did this. And that's when I decided the institution is going to have nothing further off.

Right. Right. Summer stories. I get it. So when did you start in real estate? So I started really trying to like learn real estate as much as I could, like my senior year in high school. What was the catalyst for that? You know, my parents had a family friend, um, who he flipped houses and I was like, Oh, that's cool. Like he just bought this ugly house, you know, fixed it up and then sold it. He made like 60 grand. I was like, well, you know, kids out of college make 60 grand. I gotta do this a lot sooner. I get multiple. Right. So I was like, yeah, this, this seems cool. And originally I wasn't even going to flip. I, um, I wanted to hold like, yeah, this seems cool. And originally, I wasn't even going to flip. I wanted to hold and have rentals because everyone says passive income, which is great when you have money already and you have a good active income.

Me, I was like, I put all my money into my first deal. And then I was going to hold it. And I was like, wait, I don't have any money anymore. Well, let's back up. Where did you make the money for your first deal? So I had a little car detailing business in high school for like a year or two. Oh, let's talk about that. i mean it was just you know i liked cleaning my car right is this the first hustle was this the first real hustle you had or yeah

okay yeah i had like a little um local restaurant job for like a month and i think maybe in that month i made like 600 bucks like it was a total waste of time did you find yourself chronically unemployable most i think that was really the only job I had. Really? The only job you had? For like a month, you know? And then I was like, I was like starting detailing at the same time. And I was like, man, you know, I just made my whole paycheck in a day, you know, at the

restaurant I was detailing. So I was like, all right, cool. I'm going to, I'm going to do detailing, right? I'm going to go in on that. And it's like a low barrier to entry. You know, we maybe bought everything for like, you know, 2 then um you know made that back fairly quickly what'd your parents think about you about you doing all this hustling what do your parents do what do they do so they were both um retired teachers and coaches okay yeah yeah all right so um yeah they i mean they always supported

me like my dad he would always say like hey you know whatever you do man like i'm gonna support you you know what i mean um and then he'll encourage me like he was never the type to like you know like cut me down or anything like that, which I think that that played a big part, you know, my mom, the same way, you know,

my mom, she was a little more concerned when I got into real estate. She was like, Oh, it's a lot of money. You know, you're risking whatever this and that, which is true.

But then, you know, I think she saw like, you know, some of the success and like, I showed her like, Hey, like these are some of the wires that are coming in.

And she's like, Oh, okay. Maybe it does work. Maybe this works. So, so you saved up your, your these are some of the wires that are coming in. And she's like, oh, okay, maybe it does work. Maybe this works. So you saved up your 2,500 bucks from your detailing job. Yeah. And you bought your first deal.

So, well, I invested like 2,500 bucks into like starting it just, you know, from little money I had saved up here and there. Made some money in that for a while. I, you know, when crypto was a big thing, you know, in like 2020, you know, I put some money into that. It went up, you know, a little bit,

but then it went down and then it went up a little bit and I like cashed out. Put that money into a down payment on the first place. It was like around, I think, 30 or 40 grand. All right. So stop. So you started to get to this point. So you saved up money. You did a little crypto play, which was we all know was like it's like frack. I casino.

We get it. Yeah. It's luck. Yeah. You hit on a shit coin. I get it. It's fine. Do it. Okay.

Oh, it wasn't even that. It was normal stuff? Okay, cool. Yeah, it was like normal. It was like Bitcoin, Ethereum. It wasn't like- Okay, cool. All right, fine.

So you weren't hard gambling. No, no, no, no. You were just riding. Okay, you were riding the wave. That's better. That's better. So you did research on how to do this. You learned pretty much everything from where, like YouTube, did you buy somebody's course?

What'd you do? YouTube. YouTube University, man. Everything YouTube, man everything youtube man yeah and i mean youtube is great because it's when it's free right yeah um and then you can just like you you can learn a lot of like how to get started right like you know if you want to really grow and scale then yeah you should probably do some type of coaching or mentorship um which is what i'm doing now but um youtube is great starting out you know i learned how to comp properties. I learned how to, you know, what to say to sellers, how to estimate rehab costs all on YouTube.

And then, so I had learned for maybe like nine months or so to before the time, like I started walking properties, like making offers. Right. So I just like absorb that information as much as I could. And then like the summer after high school, I started walking properties and, um, you know, making like a couple offers here and there. And then I was moving into my college dorm when my real estate agent gave me a call and he's like, Hey man, I got this property you might really like. It's a little condo by the beach. Um, and you know, they're, they're going to sell it off market. I was like, Oh, cool. Like, that's awesome. Um, so then I had moved in and then like immediately went back to see the condo up North, back home. Um, saw it, uh, wrote an offer on it and I didn't hear from, hear from them for like, you know, maybe a week or two. Um, and then it was like my first week in college. I think it was like a Thursday or Friday. I was like sitting

in front of the cafeteria waiting for it to open. And my agent gives me a call. He's like, Hey, you got the house or you got the condo, right? So, okay. Well back up though. So, so to get it, to get in, yeah, there was no marketing. There's no bandit signs. There's no, there's no direct mail. This was just straight MLS. It was, it was MLS, but this one specifically was like a off market. Right. But what I'm saying is you went to, you went to an agent. Yeah, I did. And said, okay. So if you're thinking you got to start out with some huge marketing budget to get started doing this, you don't. You just got to find a good agent that can hopefully find you a deal.

Yeah, absolutely. There's so many free ways to get deals. You know, agents, wholesalers, whatever it is. I mean, yeah, obviously, you know, in the future, you're going to want to do your own marketing, control your own deals. But I mean, we still buy, you know, from other people. You know, it's easy. It doesn't cost anything. No, of course.

A little bit of time. And if it pencils, it pencils. So it's good. All right. So keep going. So he called me and said hey they accepted your offer i was like jumping up like i was so excited you know um went and then ended up closing on it uh my parents had like this uh handyman that like kind of did like little stuff um around the house for them every once in a while and i was like hey like you know um do you want to like renovate this condo i was like do you do this he's like yeah i could do it um and so he did like the bathrooms the kitchen paint and then i had to like find another guy for the flooring

which is fine and you know that kind of like started me getting into like how to find you know the trades right yeah because that's a big one like that people seem to have trouble with well you know i personally i always tell people i say dude if you to start flipping, you need to figure out who their trades are first. Who's going to, who's going to actually do it because here's the, here's the, and for me, right, this is the mistake that I find so many people make when they flip houses or start flipping houses. They don't factor in the carry cost of the interest on the money into the, into the overall deal. And every day you're trying to figure out, holy shit, who's going to do this drywall. Holy crap. I can't find a plumber that will come out. Who's going to do this every day you're trying to figure out, holy shit, who's going to do this drywall? Holy crap, I can't find a plumber that'll come out.

Who's going to do this? Every day that you're jerking around with that, those decisions cost you money. Yeah, absolutely. Every day. And so line your trades up first, I think is a good piece of advice. Yeah, at least have some type of idea, right?

Like don't go buy a house and then have no one to work on it. Oh, 100%. At least like, you know, talk to some people, interview some people, like, hey, you know, if I buy these houses, would you be down to fix them up? And then, you know like okay cool now i have that so that first condo was it full rehab or was it light did you do light or i mean i put like cosmetic or what was it yeah i put like 26 grand into it um it was like you know two bathrooms you

know floor paint kitchen i mean it was it was you know easy stuff that require permits or no no okay cool so it was light it was light work easy work good. I mean, I think if you're perfect for a first one, if you're getting a flipping again, you know, don't, don't, you know, people watch each TV, HGTV, and then they see like walls getting moved structural happening. I'm like, Oh, we'll just rip out this bathroom. Move it. Like, dude, no, your first flip should, it should be cosmetic and should not require permits. Yeah, absolutely. Yeah. Um, so then got that one renovated, um, you know, listed it for sale. This is a little too high, which, you know, learned that lesson. Um, you know, ended up dropping it and getting a decent offer on it

and then sold it. Cause that's another nugget. You, you bounced over it in the S solid. Yeah. You know, people don't understand that when you go to price a property, talk about how important it is to price it, right. What happens if you price it too high and what happens if you price it a little under? You know, if you, especially like, you know, back a couple of years ago, if you priced it like a little under, you would probably end up getting bid up and going over a lot of the times. Yep. There's the answer we're looking for. Keep going. You know, pricing it right is like, so for example, like how I always price stuff now, it's like, Hey, if it's worth 450, I'll try to price it like, you know, four 39 or something like that. Just to, you know,

try to get some good interest on it. Cause you know, we're in a business or at least I am sure of, you know, selling houses and moving them and not holding onto them. Cause we don't have tenants in them. Um, and you know, it's very expensive. Like right now I'm spending like 160 grand a month on holding costs for all the properties I have on the books. So like that really adds up. But back then, you know, it was worth like 300 grand fixed up. Um, I had an agent, different agent, which, which, which was a mistake. Um, cause I was going to rent it and I got that agent to list it as a rental. And I was like, Hey, just out of curiosity, what would the property be worth if I went to sell it? And she was like, Oh, you know, maybe three 25. I was like, Oh wow, this makes way more sense for me to flip it. So ended up not being worth it and she was like oh you know maybe 325 i was like oh wow this makes way more sense

for me to flip it so ended up not being worth 325 was worth like 300 just fine um and so what you make on that first deal like 27 grand okay yeah which is great for a first first deal so but the finance of it so what did you put what who did you finance with i just got like hard money lend okay from local hard money um yeah okay cool so i'm like a local ria so you found a local ria okay they gave you hard money what was the rate got like hard money. Okay. From local hard money? Yeah. Okay, cool. So I'm like a local RIA. So you found a local RIA. Okay. They gave you hard money. What was the rate on the hard money? Do you remember? It was like 12 and three points. 12 and three? It was expensive. I paid for it. All right. So those of you listening to this don't know what that means. That means that 3%, the three points means you got to pay 3% of the total loan for acquisition costs. And then it's 12% running on the interest, which is, that's a lot. Yeah.

And what was the LTV on it? I think they gave me 82 and a half percent loan to value on the purchase. And then they gave me a hundred percent of the rehab and draws. Okay. So which means, okay. What that means was they had to, he had to come up with 18 and a half percent down and then they finance the entire rehab costs based on the ARV value, which is the finished value of the property. So they take the finished value of the property. They give them 82 and a half of that, which included the rehab costs. They hold that money in escrow. And then as long as you're going along, you submit work, you like take pictures of the work and you submit like scope reports and you say, this is where we

are. And then they essentially release money as you go along. They don't just hand you the money. No, no, they don't do that. You have to prove that the work is getting done and they release it back to you. But the thing that people, you're paying juice on that money, even though you don't have it the whole time. Yeah. So yeah. And that depends on a lender too. It's like, you know, that lender, I think they did charge me on everything. Oh, I'm sure they did. I definitely paid for it on the first deal, but it's fine. You know, I always tell people, I was like, Hey man, like, you know, just, just get in a door, right. Account for it in your, in your calculator. And just get it like, yes, you're going to pay, but now, you know, now I pay like, you know,

0.75 points, you know? And then like, you know, sometimes less than 10%. So it's, you know, the more you have experience, it's going to go down. Well, the good, the good news is, is there's a lot of good institutional large lenders that do this. It's what they do. And the more of a track, you know, it is, there's a lot in the more of a track record you can build with them, uh, the better off you are. And even through some of the networks you can be in and some of the groups you can be in, you get better pricing just by being a member of some of these different groups. Yeah. I'm a collective genius. You know, a hundred percent financing with, with, you know, certain lenders and, you know,

like a point low. Just because you're in Joe Polish's group. Yeah. No, a hundred percent. Yeah. And so there's things like, there's,

there's a lot of ways to skin this cat is what we're saying. Finance was okay. Go back. So first deal goes pretty well. Make 27,000. First deal goes well. Second deal goes even better. You know,

again, really hot market. Had to compete with a bunch of offers to get this under contract. Got it under contract for, let me think now, I believe $200,000. And put about $49,000 into the property. And then sold it, listed it on the market for $339,000. Ended up selling $16,000 over asking price. Great.

Hot market. Right. It doesn't happen all the time now. Um, anyway, so that one went great. We're like, wow,

this is easy. Third deal went horribly. Right. So third deal ended up owning that house for like a year. And over the course of that year, lost like 50 grand on that house. Um, they're not all winners.

No, they're not. Anybody that tells you they've made money on every house they've ever flipped is lying to you. Yeah. And then, so the good thing is though, it's like,

you know, throughout that time, it wasn't the only house, right. I had gone and gotten other houses, you know, to flip and, and,

you know, those made money and those, you know, are what basically facil facilitate us to survive that right um because if that was our only house like we would have lost like everything you know um without you know having to figure out some other financing source yep so ended up um losing like 50 grand on a house way bigger renovation than i should have taken on um as like a third flip right bought the house now it would have been fine would made money. But what I did is I made the mistake of thinking my handyman was qualified to do a

four bedroom, four bath, 3000 square feet. That was in like horrible shape in, you know, it was like an 800 plus thousand dollar house. Not the guy for the job, right? At all. So that taught me a very valuable lesson of, you know making sure you hire the right people right yeah and you know you don't have the one guy doing everything right like you have the plumber doing plumbing you have the drywall guy doing drywall you have the electrician doing electricity you don't have one guy doing all those things because he's not going to be great at any given you know trade like, and chances are your house is going to fail. Yeah.

Yeah. Right. So, and the reason we lost so much money, I mean, the holding time was one thing, but we ended up renovating this house like three times because first time the guy underbid the job and then,

you know, towards the end, he like ran out of money. Right. And then he just like ghosted us. I was like, all right, well that sucks.

Anyway, roll, roll, roll number, roll Anyway, rule number one with contractors, never let them get ahead of you. Yeah, absolutely. Just like we talked about the draws earlier. You've got to slow roll that money out as slow as you can and they can never get ahead of you for that very reason. That was a lesson learned. Yeah, lesson learned.

Expensive lesson. That was the hard way. I've learned that same lesson. So I feel, yeah. And then, so I had another guy come in and he finished the house. He did well. The only thing is that when you kind of like pick up on someone else's work, like,

you know, the quality wasn't quite there, especially for, you know, an expense. You're trying to get top dollar. Yeah. Right.

So put the house on the market. And then it ended up not selling because of all these like little weird defects. Right. You know, little stuff that is basically we're, we're cosmetic. Um, and it just caused people not to buy the house.

So I ended up having to pull it off, um, the market, redo all those things we had to do, redo all the drywall texture. We do like most of the trim, you know, floors were scratched cause it's a bad contractor.

So like how to redo all that stuff. Anyway, um, put it back on the market a third time uh or i'm sorry the second time and it sold right because was it okay was this the first disaster house was okay so were there were there moments in this time in this time when you were like i'm fucking done with this like i just want to do anything else but this i'm just so done this is just this is not what i thought it was gonna be with that house yes absolutely um but

i if if you're asking like you know flipping as a whole yeah no i still i still liked it because i had other projects that were going well right yeah um you know this house i hated seeing it you know i was just like every time i would go drive up there for like a year i'm like oh man here we go again i'm going back to this house and it's still not done. You know? Um, so anyway, that house sucked and I wouldn't recommend, you know, someone to do it, but I'm very happy that I did because I learned all these valuable lessons on it. So you said you were flipping, that was an $800,000 house. Yeah. Is there a price point that you try to stay in to keep things moving or you would flip anything? So I'll flip most stuff. I mean, I won't go like crazy multi,

multi-million dollar stuff. It's not good. Yeah. I mean, I know some people have made a lot of money doing it. It's just not, not for me. Well,

the reason, the reason you gotta be, I like to address the price point when I'm talking about flipping with people, because everybody thinks, Oh, I'm going to buy this multimillion dollar house. And then,

you know, if I put in 200,000, I'm going to make 400,000. It's just like, why would I run around to five job sites when I can put everything here and do this? And speaking from experience, when the interest rates changed on us, when they turned back in 2020, late 2022, early 2023, when the rates shot to the roof,

I was sitting on a $4 million house in Sedona, a $3 million house here, two or three $2 a half million dollar houses I mean we got caught with a lot of cards in our hands I mean a lot our hand that's a lot of exposure it was massive exposure yeah and and yeah and took and took a pretty deep you know some of the like the Sedona house Sedona house was good we made I want to say that turned almost a million and a half okay on Sedona But we took a beating on everything else to the point where we really kind of broke even on it. Right. On a lot of it through that turn.

And so, yeah, you got to kind of stay within yourself, within those price points. Make sure it's always something that's going to sell, which I like that. So keep going. Yeah. And to that point, too, is like recently recently and this is just like our market specifically, like everything, you know, five hundred thousand and under is selling, you know, pretty fast. Right. Anything like a million and over a million to like two million selling pretty quickly as well. It's like that middle ground, like, you know, like six, seven, eight hundred thousand dollar price point. That's like,

just not moving for us. We're going to do something crazy. So we do it like the Joe Rogan podcast here where like people get up and use the bathroom. I just, I just got to check a camera real quick. It is Saturday here in the studio, which means that my help is not here, but I just want to, I'm looking at this camera and I'm worried it's blurry. So I'm going to check. Okay. Hang on a second. Yeah. Yeah. Yeah. right for the podcast because i don't want to get the whole thing done i hear chris good okay i'm just blind cool that's how it works yeah sorry you got me concerned there no you're crisp i just i just for whatever reason i looked up there and i'm like man does he look blurry i'm like no it's just me there you go i'm just blurry today i guess that's how it works um so you did the mod you did the crazy house you were three houses how many

it was so at what point did you start to scale so first year did like nine houses okay so you're doing kind of one or maybe twosies at a time yeah yeah exactly um then what's your team look like when you're doing this um it was nine so with those um, so first one I did it by myself. Okay. Okay. Like you did the work? No, no, no, no, no. Okay. Um, like no partners. I mean, but it was you and handyman handyman, um, realtor basically. Got it.

Okay. That's the team. That's number one. Okay. Got it. Number two, um, brought on a partner because I needed to show reserves, right? Cause like the hard money, um, you know, lenders, they want to see like, Hey, you can pay the interest for, you know, six, nine months, whatever it is. Um, so I had to do that, brought a partner. I mean, we did probably number two through the number, like maybe 14 together.

Okay. Um, and then after that, we kind of just went separate ways. Nothing bad happened. We just had like different visions for it. Okay. So, well, can we talk about that? Yeah. Okay. So where did you find your partner? Um, local RIA, local meetup group. Okay. So you just found this person, a local meetup group and they were like, yeah, cool. Okay. So where did you find your partner? Local RIA, local meetup group. Okay. So you just found this person, a local meetup group and they're like, yeah, cool. Okay. I like what you're doing. I like what you're doing.

Let's, let's do it. Yeah. Was there any formal agreement about how things would go up front? Okay. There was. Okay. Was there any part of that agreement that involved the dissolution of what happens if things didn't go well? I don't believe there was, it was just a very basic, like we had an LLC together and, you

know, just very basic operating agreement. Um, and you know, we, it was, it was, it was a very mutual thing and it really went well. Like, you know, we're, we're still, you know, very friendly today. You know, we'll see each other every now and then. Um, but it, you know, obviously it could, you got lucky. You got lucky. The point I was going to make is in a lot of people that, a lot of people that a lot of people that jump into partnerships earlier especially around real estate like you had a need you needed his capital to back up your reserves yeah they could make you more bankable you needed that i understand that so and probably from his end of it you brought the expertise of the project management

is that is that accurate you know trades the trades yeah and you know i was going to like see properties make offers yes so you were the sweat he. He was the back end capital at that time. He would do work, though. It wasn't like he was totally silent. I'm not saying he was a silent partner. But my point being is there was a reason for both of you at that time in the equation. So many people, especially in real estate, flipping, just want to do it with somebody else because they just don't want to do it themselves. They want to go.

They're scared. Yeah, they're scared. They just want somebody to do it with them. And we can do this with them. That's a terrible reason to get into business with anybody is because you don't want to do it themselves. They don't, they, they, they want to go scared or yeah, they're scared. They just want somebody to do it with them and we can do this with them. That's a terrible reason to get into business with anybody is because you don't want to do it by yourself. Absolutely. Um, so make sure that there's something that you both need to do the equivalently on both sides of it. Now, the reason he got very lucky, you got extremely lucky that it was a good amicable split and everybody's happy. So many business relationships do not end that way. They end very poorly.

And the best way to avoid that is if you're going to get into a relationship with somebody contractually that involves what's going to happen and what my end of the business is, your end of the business is, make sure you include kind of that prenup. What happens when you break up? That way, if things aren't going the way that either party wants, you just trigger the dissolution clause that says, I'm going this way, you're going this way, you get this, I get this, this is how everything breaks down and everybody's good. And the people that I've given that advice to that have gone into business, that I've seen those businesses stop for whatever reason, they're always still friendly with the people that they were in business with because it's just a dissolution clause.

You have those expectations set up for it. Yeah, you know, if this doesn't work, this is what's going to happen. And then there's no money grab, there's no asset grabs, there's no there's no there's no money grab there's no there's no asset grabs there's no relationship grabs there's no reputational damage there's none of that stuff it just hey man we just we got to a point where it was the end and we moved on glad that worked out for you so that was good so the team with this guy when you were with this guy what was the team like other than that it was basically it was it was him. It was me. It was our realtor and, you know, just our, our subcontractors. Like that was it.

We didn't have any employees. Oh, we had, well, we had a bookkeeper, which was like, you know, a vendor, you know, which is great by the way. Everyone should hire a bookkeeper. So your subs, you weren't doing, you weren't doing anything GC? Nope. Okay. So you weren't, at this point you're still doing roughly cosmetic stuff Cause you're not pulling permits. Yeah, no, we didn't really. The only thing we

really pulled permits for were like, you know, roofs or ACs or, you know, just like majors. But in Florida, if I'm not mistaken, the subs, a roofer can come pull his own, he can pull his own permits and plumbers can pull their own permits and all that. You don't need a GC to oversee that stuff. Okay, cool. So the trades you're using are licensed trades are pulling permits where you need them. That's fine. Okay, good. Keep going. Yeah. And then, you know, we obviously like, you know, we blew through a lot of trades just like, you know, we didn't have the process there. They weren't capable of what we wanted. So, you know, we cycled through a lot. But then, you know, after a while we figured out like,

hey, these are our good guys. You know, let's make sure, you know, we can keep them. And now a lot of them, you know, so work for us, you know, or me. And he'll do like, you know, a couple of flips here and there. So the question, okay, let me ask, let me ask you this. So how do you keep trades happy? Number one, the, one of the hardest things in the world, especially at scale, flipping houses is, or the worst thing ever is pulling up to a house when somebody is supposed to be there and they're not there.

Right. It's the, you just like the rage button just goes through the top of your head when this happens and it happens too much. So do you have a way that you incentivize your contractors? Do you give them bonuses for finishing early? Are there anything you do like that? Yeah. So, I mean, one big thing to keep trades happy is like, you just pay them on time, right? Like, Hey, there's no way to pay them like that day. Right. Um, or, you know, maybe next day at latest, it's like, you know, I, I talked to so many guys, it's like, they work for other flippers. I like pay them at the end of the month or when they sell the property, which is even worse, you know, and then, then that screws them up. Um, but to, um, like to answer your question is like, what we'll do is like, Hey,

um, you know, if you're done by this date, you know, you get X bonus. Right. Um, and I, now that I have like project management, you know, now I, I do that, um, with them for the subcontractors, they're usually like in and out doing like their own job. So it's not really totally necessary. It's more like an overall project thing. Um, but like, you know, we do have one general contractor that we use now. Um, and he's, he's like, Hey, we need like this payment schedule. Like I can do your jobs really fast, but I need to like get paid X amount every week just so I can have more guys at the house, you know, which is a little bit nerve wracking.

And I wouldn't do it unless I completely trusted them. But we also have, you know, it's, it's this, if this work is done, right. It's like, Hey, you can get paid on Friday, but this amount of work has to be done. You know, my favorite thing about construction is it's like a three-legged stool. One of them is good. One of them is fast and one of them is right. You're going to get two of those three legs, but you're never going to go all three. If you want it done, if you want it done right, and you want it done cheap, it's going to take a long time. you know just it's yeah good fast and cheap you're just never going to get that you just those three do not go together you get two of them but that's it so you you got through so now you at what point did you decide

you needed a project manager because it's because i love that so well that was honestly probably like the biggest like difference in in my business and like hiring a project manager made me do, you know, we were doing, I was doing one or maybe two at a time or like one or two a month, almost immediately within a month, I did four or five in consistent just by having, just by having at the job sites,

running the job sites, make sure that we're really now it was a lot of work, you know, to train them upfront, like on the first couple of projects after that, man, it's like, you know, they,'s like they're sailing.

Well, you're essentially teaching somebody from scratch to be a super. Yeah, basically. That's exactly what it is. That's exactly what you're doing. Yeah. To work with. And that role for you is they handle all of your construction. They make sure the jobs are on time.

And you're bonusing them for work being a part of time. Exactly. And the reason is in our market, if we could use our market, like if we could use the GC man on every job, I would totally prefer to do that. It's just so much easier. It's less risk, you know, like, and they kind of just got their bid.

And you know, if they go over, they go over, you know, reasonably. But where we are, it's like the general contractors are extremely expensive. So it's like,

man, like we're doing stuff that. Can you get, you got cost plus 10 doesn't happen. No, no. With our one guy, it's like, you know, he'll, he'll basically just say, Hey, like we're doing stuff that can you get cost plus 10 doesn't happen. No, no. With our one guy, it's like, you know, he'll basically just say, hey, like, you know, this is the best I can do. This is my cost.

And this is what I want to make on it. He will do that. But most of them are just like, no, kick rocks. Like, we're not doing that. I have friends in the trades here in Vegas that are contractors that will say stuff like, like, dude, I went over to this lady's house and she wanted me to redo her bathroom and I did not want the jobs. I gave her the stupidest number on the planet. And she's like, yes, I'll do it. And now I've got to scramble to find jobs to get to this bathroom job.

Because there's just so many more people. It seems like every year skilled trades are getting less and less of people that are really talented at what they do and can do things on time. They're more and more in demand, which is pushing that price up. So I'm guessing that when you walk a property for acquisition, like we'll talk about acquisition first. So when you walk a property for acquisition, I'm assuming you have your term sheet and you know, you do it and you have your budget that you fill out. How often is your budget that you fill out the house in line with what you end up paying the subs or the GCs? Um, it's, it's usually fairly close, obviously, you know, line item by line,

it might vary a little bit, but it's, it's usually pretty close. And that was not always that way. It was like, you know, the first maybe 10 properties were like, why are we going over budget all the time? You know, did you pull the, did you pull your, did you pull your cap rate sheet off the internet, your walk sheet? No, I really just kind of like pulled it from my head. I was like, okay, this bathroom cost, you know, 3,500 in labor and it costs about, you know, 1,700 in material. And I would just kind of like take that, you know, from job to job as it grew in my head. Then where I really got, you know, kind of screwed up is, well, I didn't realize like, you know, a five by 10 bathroom is not going to be the same price as a, you know, six by 15 bathroom. Right. I was like, oh, well, you know, it's about the same. So I was like, well, maybe $500 more, not the case. Right. And I think that's, that's

what happened. You know, now we're, we're fairly close, you know, I mean, only really if like something unexpected comes up and, you know, Hey, we might go over, but, um, and it also depends on the project manager too. They have one project manager. We'll get that stuff done super fast, but he always tends to go over budget a little bit because I'll just pay for

the person that can do it sooner. Whereas I have another project manager who's a lot slower, but he's always on budget every single time. Um, so maybe, maybe others. So, so yeah, there's a given, there's a given take there. It's like, you know, it's like Cody Sperber always talks about real estate levers, right? There's, there's lever here,

lever there and on budget and over budget, but faster, but you're paying the carry time. Right. So it ends up being the same. It ends up washing out, right? One lever turns the other. Yeah. Which, I mean, if I i if i had a preference i would say probably do it faster because you just you know get the property listed and you know get your money back turn the money you know yeah um at the same time though it's like hey if we're going over budget you know ten thousand dollars on every house over 80 houses that that's a lot of money well let's talk about your acquisition model um So where do you get, so obviously you still work with wholesalers.

You still work with, you still work with realtors, but do you have a direct to consumer marketing you're doing now? Yeah. Yeah. Google, Google's been pretty good. So you're on Google. Do you do direct mail or no? We, we haven't, we will do like some here and there, just on like specific ones. Like if we, you know, like a specific like, uh, specific, you know, property or owner or whatever, um, you know, has a high, um, a high equity. Yeah, no, like a high, um, what's the percentage chance of like selling, you know? Um, other than that though, no. Um, I mean, we might roll that out in the future. Um, but you

know, we, we did Facebook for a while. And the Facebook didn't really convert how I wanted it to. And I know it works for some people. But for, you know, me and in our operation, it didn't really work the best because I think what happened is it was very competitive, right? Like with Google, we're number one on like not a crazy ad spend in our area. Yeah. So the leads that come through google a lot more qualified because think about it right they're saying hey i need to sell my house faster cash today specifically right they're looking for it whereas on facebook they're like oh it's

entertainment yeah they're like i'm scrolling through facebook on my lunch break and then oh i guess i do want to sell my house let me fill out this form well i i always compare that to like same same thing with with residential real estate that we do if somebody searches in you know, what's my house worth, whatever, same thing, they're looking to really sell it. But if they're on Facebook and it's like, what Game of Thrones character are you? I don't know. How much is my house worth? I don't know.

How much is my house worth? They're not really, they're just entertainment scrolling. So I can definitely see that. With the Google ads, are your competitors also running, even though you're number one, are they also running there? Yeah. Do you find that when, because you're on, and I have found this in the past with direct-to-consumer like that doing acquisitions, that because it's on Google, how many competitors are you

normally up against or do you assume you're up against when you go to the walk-in house? It's a lot less. It's a lot of times we're the only ones. Really? Yeah. Good for you. I probably shouldn't have said where you work. Probably shouldn't have. I'm going to edit that out just to protect your business a little bit yeah well but the the other thing is too is like our competition has gone down a lot too

so like you know whereas when i used to walk properties and i would go to like a wholesaler's deal or like an mls deal that was like priced very well yeah um maybe like 20 people at the house right now it's like there may be three people so it's just like a lot of people got out of the business just, you know, in the past couple of years has been more difficult. Um, so our competition has definitely gone down. So less competition. I know that, I know that Florida's Florida's markets are a little bit in turmoil. You're, you're sort of to a beach city just North of Palm beach. So you're, you're probably, you may be a little more protected than some of the more rural areas. I don't have any idea what's going on with your market. Yeah. I your market. I'm very aware that markets are very, very micro, not macro. I'll tell you,

like the houses that I bought at like the end of last year, I just had to take else on, right? Like interest rates, we got affected. Like where you guys here are in Vegas, like you guys got affected like six months before we did. So it was interesting. So like you guys were saying market's bad. I was like, man, market's great. What are you talking about? And then we got hit. Oh, no, no. I mean, the market here has been great. You know, those high-end flips, we got caught in the shock of when the interest rates first went up. And it was like that, holy shit, what just happened, right? And everybody kind of put the brakes on everything, which is why we got kind of zapped. But as far as overall sales here, man,

Vegas has been great.gas is an anomaly to this thing interesting just because if you look at the growth pattern that we've had in the city over the last 10 years what other city in the history of the united states has gotten every major sports team in the period of 10 years yeah right it's crazy you're right it's a good point it's crazy the growth that we've had in the city so and it continues to grow um but yeah keep going so so port st lucie isie is the market receding? No, I wouldn't say that's receding. I would say there are some

pockets, you know, maybe a little north, a little south of us that are. But there are other parts. There's a water over there if you want to grab one. You know what, I will grab one. Yeah, see, this is how we do it. We don't care. We keep it real in this thing. That's what we do. It doesn't matter. Yeah, dude, it doesn't matter. That was a real joke right there it was authentic the authentic joke

that's exactly why we keep those things over there so there you go yeah they're just sat down um what were we saying uh oh market yeah um so i would say where we're at in person is growing very fast as well so that's been good. And there's a lot of new construction, which obviously as flippers we're competing with, but you know, it's, it's interesting because the new construction is not for the price point, not quite as nice as,

you know, where we're doing flips. Like they have maybe, you know, they don't have quartz countertops or they don't have, you know, tile shower. They maybe have like fiberglass or,

you know, for Micah. So we're around the same price point older house but much nicer you know so you know we still sell our flips even in highly new construction areas which is good um that being said though there are certain things with hoas i know you guys have a lot of hoas here um but like florida is very mixed right certain cities are like all hoas certain cities are none certain cities are 50, 50. I would say certain cities where it's 50, 50, those H-way communities, especially with high fees, get like no buyers. Really? Yeah.

And condos are even worse because no one wants to buy condos. Yeah, dude. It's funny. You did your first deal and people probably hearing that and they're like, Oh, I'm going to buy a condo. This and that, but I wouldn't recommend buying a condo. No, no, no, no, no. Well, I don't like flipping condos. I don't like investing in condos. I'll tell you why. Florida's a little different because you've got those big ones on the beach. That's fine. But I'm talking about here, the mid-rise, not even mid-rise, you're talking about two-story condo complexes that have a gazillion units in them. To me, those are like cans of soup on a shelf, right? I don't care how far you improve your product. Like somebody else can sell their, the neighbor can sell their identical unit that maybe doesn't have as nice as cabinetry and flooring and demolish your pricing. So you really, uh, to, if I like single family homes, cause it's a, it's, you're able to create a level of uniqueness in that product that'll hold your pricing much better than the con. Yes. And well, one thing that's bad in Floridaida is like you know i mean i'm sure you've probably heard of it but like you know buildings over a certain age um they have to get their

milestone inspections to make sure the roofs yeah roofs um like all the structure because you know we had that building in uh miami collapsed like a few years ago now everyone i think by like 2025 has to have their milestone inspection they have to have so much in reserves like per unit um and if they don't then it it's bad with huge assessments that's a good point dude in florida is a new roof part of your standard scope of what you do we do new roofs on like 95 of our houses yeah yeah it's like you have to that we don't do a new roof yeah because that's what that's one i'm guessing that's one of the first questions buyers there ask is how's the roof yeah well because number, cause number one, if they need to get insurance and if they can't get insurance, then, you know, they have to buy cash. Most,

most retail buyers aren't buying cash. Yeah. Then if they can get insurance and it's an older roof and it's probably going to be more expensive. Right. Um, so yeah, I mean, we, I've sold houses with new roofs and without the new roofs always sell way faster always so fast always so it's worth it because yeah we had um a few hurricanes coming like you know oh four or five oh six and like so everyone's roof was like you know five oh six and now those are coming to the time where they need to be replaced yeah so even though they're perfectly fine a lot of them we still replace them dude a buddy of mine uh i won't mention his name he's he's in he's in my mastermind group just to exit his roofing company nine figures wow that's huge and dude and you want to talk about a dude that you look at his face that he used to be like the most stressed out guy i've seen but you look at him now and he's like it looks like he just floats in on a pool of jello

yeah i don't blame you dude it's good but yeah he does a lot of business in florida so he's oh yeah he's from the midwest but he's grown his business all through Florida. Yeah. That's a, that's a big one in Florida. Like there's, there's so many roofers. There's so much business. It's crazy how much business. So when you're doing your acquisition on the acquisition end, you do your walk, you run your bids. You've obviously run your bid sheet comparable to what you're spending currently in the marketplace. Adjust your bid sheets, kids. Make sure you adjust your bid sheets to what current pricing is for materials and for labor both. So you do that. You come up with your number. What margin are you looking for on a house when you make your offer? Yeah. Great question. So for anything that's like we're buying from

a wholesaler or on the MLS, it's easier, right? Because we don't have to market. We don't have to lock up the deal. We just basically tell my price. Right. Um, so that being said, we shoot for like a minimum $40,000 profit on every deal or 10% of the sales price, whichever is greater. Um, so even if it's like a $300,000 after repair value, we're still going to shoot to make 40 grand. Um, for properties that are, you know, direct to seller where we have to pay for marketing, you know, pay the sales guys more on it. Um, and you know, there's just more work, right. Um, those properties we should make 65 grand or 15% of the after repair value, whichever is greater, whichever it is. Yeah. Um, and obviously now I guess with less competition, you're, you're able to buy that deep there. Oh yeah, absolutely. I bought my personal house, um, for like less than 50% of what it's worth. And it

wasn't even like that bad of shape. What, what person, I mean, I'm not personal. I'm sorry. What percentage of deals you walk and offer at that deep are you getting? I don't really walk any anymore. Right. Your acquisition people. I thought the company model, not so much you. But the, the guys, if, if there is access and we're close in price we will walk it um if there's no access and you know you're going off the wholesale pictures from investor yeah and if they're good they're good pictures they're good walkthrough videos obviously we're still going to offer a little bit lower if we can't get access sure um what percentage of the i guess a better

question rather than walk is what what percentage of the offers you're writing? We usually, we'll usually up the, um, the, uh, what do you call it? The rehab budget by like 10% minimum, you know, or 10 grand. No, no. But I'm saying what KPI, KPI wise, if I write 10 offers today, how many of those am I going to be able to lock up? Oh, if you write 10. So normally the guys will lock up and it depends on the, on the sales guys, but usually like one in 20 offers.

Okay. Well, so one in 20 is your, is your closer in that closer in like API. What, how are you incentivizing your acquisition? So they get paid a certain fee for, you know, any deals that are, that they, you know, bring in that are MLS wholesale, you know, that's, that's a lower fee. Anything that gets direct is a higher fee because a lot more work to do. so now you're but so you're also doing you're doing direct through google so you're also wholesaling now you're a wholesaler now as well yeah i'm getting more into it for sure okay cool so do you have a dispo team that's handling that or not i yes so i have i have an in-house um real estate agent um that is just like on salary to

list all our retail stuff but But for wholesale dispo, we actually contract it out just because the price is like, basically what we would pay, you know, take like 10% of the assignment fee. It's like, I'd pay a dispo person that. Yeah, who cares? Plus they already have,

they're paying for investor lift. They, you know, have like, you know, collar and everything. Like it's well worth it. For those of you who don't know what that stuff is, there's like a marketplace, kind of like the Mls for off-market properties from wholesalers that they will run out to investor lift where you can put in your search

and then they'll send you stuff that's off market um out here we just see the wholesaler fees are just stupid yeah they're crazy they're just i mean you know i i swear it's like youtube just spun these guys up into a frenzy we're like you can make fifty thousand dollars a deal by wholesaling it and you're like you get these numbers and you're like, I literally got one yesterday. So I can find it. I got one yesterday and this is, I'm hoping this was a mistake, but this was the dumbest shit I've ever seen. Hang on a minute. Let me look up investor left. Yeah. I paid a $50,000 assignment fee. Hang on. Here we go. You ready? Here we go. And then you could read

that. This is, I'm really reading this. It says, hi, John price for investor lit deal in Clark County, Las Vegas, eight, nine, one, but there was reduced to 640,000 ARV is six 50. So where was it before? I don't know. I'm praying this is wrong, but I'm like, what are you doing? What are you doing? And I mean, you look at some of this stuff and it's like ARV 515 asking for 50. Like, dude, there's no meat on that bone. Like, it's just, it's stupid what some of these things are coming back. Yeah.

So when you deal with wholesalers, let me ask you this in Florida, when you're dealing with this, how much are you undercutting their investor lift how much you undercutting their investor left after ask, ask just, here's what I can pay. And that's it. If you want to take it or leave it. Yeah. So basically,

yeah. So it's not like, you know, we're not going to say, Hey, you're asking for 20, four 20 works for us, you know,

screw you three 80. You know, we're, we're, we'll just tell them. And this is our number based on, yeah, this is our number.

Um, can we get it done? Yes or no. And if we can't, can you go get a reduction if you don't sell it to anyone else and wholesalers seem to appreciate that i mean i know like you know myself like you know i was like hey guys even if you have an offer give me the offer even if it's a low ball tell me what you can actually do like you know be real with me and if i don't sell it i'll go try to get a reduction and then sell it to you with that sure i you know i i love in in

residential real estate it's so funny man that and i tell, you know, we have 585 agents here and I tell preach this like the gospel. There's no such thing as a bad offer. There's just no such thing as an offer. An offer is an offer because an offer in the residential side of it can be used to show your client what the market is currently thinking of your house, whatever that may be. Absolutely. It's a best offer.

It's leverage. But you love these you send offers to agents sometimes they're like i am outraged by this offer i am disgusted sir by your offer of compensation for my property i will not even bother to present this to my cell it's like dude calm down yeah i'm personally like insulted yeah why are you personally did you personally insulted? Did you build the house? Did you design the house? Did you decorate it? Why are you insulted? Just use the offer to either A, get me a counter, or B, maybe it gets you a price reduction

on a price that might be overpriced. But there's no such thing as a bad offer. No. Never a bad thing. It's like, hey, do you want to sell it or not? Yeah. What do we want to do with this? Do something.

So there you go. If you're a residential realtor, there's your, there's your lesson for today. No such thing as a bad offer. No such thing. So that's the acquisition. Then you go through your, have your property manager running this stuff. How many properties are you running at one time? So right now we have 37 flips on the books, which is a decent amount.

I think we were like at max, like up up to 40 and then sold a couple recently. It's a lot of properties on the books right now. I wish I would have done that. In 2017, I lost my ass on this one. In 2017, we started Vulture Fund because there were money carriers. We had roughly

$12 million in buying power. Because we were spending on the capital, we were paying juice on the capital, our thought was we got to place this capital. We had 137 flips going at one time. Wow. And it was a mitigated disaster. Wow. It was, it was, it was, it was a disaster. What was your monthly liability on all that? Oh bro, it was, well, it was a disaster. I don't even remember. Maybe I blacked it out or blocked it out, but like my office is in there. Like at one point it just got, it was so hard to manage. Like you see these squares on the, on the, on the wall here. I had pictures of the front of the properties with the address written on them.

And I just had them taped all over the walls of my office. And like, this is like, these were done. And then I'd move them to the dispo section of my wall. And then I'd move them to like, this was all just like paper. And no, no, we were using, so there was a,

there was a, there was a system called Taza REO that I had used. The banks would use during their REO stuff, but it had really good workflow for like for field services and all stuff. And I called them and I'm like, you're pretty much out of business with REO. There's not, nobody's doing REO anymore. Can you tweak this for, for my business so we can communicate, do change orders,

do all this stuff. And they built us really kind of just tweak their system for us. That's cool. So we had a great thing, but even with that many properties, I could get my head around it. So I just literally had to have this stuff. I look like Howard Hughes in there, like just houses taped all over the walls, all the way from the floor to the ceiling, every inch of my office. That's crazy. And it was nuts. It was insane. And it was impossible to deal with at that scale. I mean, look.

That's a lot to manage. Dude, for a couple of guys, and we had like, we ended up hiring like four property managers and it was impossible. It was impossible. It did not go as we would like it to go. Uh, yeah, that was a big L quickly, quickly. We, we, we stopped that quickly. Um, we got through one cycle of the money and then that was it. It was just like, no, we're not doing this because the goal was to try a second. The goal was to cycle that money, uh, two and a half times a year, but there was no way okay there was no anyway back to you yeah um that was just i don't know why i told that story because i'm i'm gonna i'm having

like flashbacks right now um but yeah it was funny uh so 60 10 barbers that's you're running 40 at a time is where you are more or less yeah more or less which is manageable yeah so you because you because on 40 houses you have the trades that can handle that. You're using the same guys. Now, do you have a spec, but is everything the same? Do you have spec using the same flooring,

the same tile using the same everything? Yep. So we have three different design packages. So houses, you know, under 400,000 get a certain design package. It's like, you know,

a little bit cheaper tile, a little bit cheaper, you know, cabinets, countertops, you know, 400, it's like a million.

It gets a little bit, you know, nicer design, a little bit nicer tile in the bathrooms, you different countertops are you buying are you buying that in bulk um so it depends depends on what it is right because obviously if you buy in bulk stuff costs uh money to store right no no it doesn't well no it does not depends where you buy it but drosians we were buying flooring from madrid you have the drosians in florida no okay it's california here i guess whatever it's a big it's a big they're hard scale they're hard surfaces um

we were buying a hundred thousand square feet of flooring from them at a time and they would store it for us they would store it for you really we could go get it because i was i was literally just on the phone yesterday um with this guy who's like hey you know we can we can get this like you know 80 000 square feet at you know a much cheaper price but you have to take it from us you know we can't store it see if they'll start i guarantee you'll find somebody down there that'll store it interesting i'm gonna have to ask that yeah because here's here's what happened like if they're having a bad quarter ask it well you just missed it you just missed the cutoff for the financial quarter but ask at the end of the quarter if you can because they're

having a bad quarter they'll let you buy it in bulk up front and you say i'll buy it your books look great this month but you gotta hold on to it okay and you say, I'll buy it. Your books are great this month, but you just gotta hold onto it. Okay. And we'll just come get out of the yard as we go. So there's tiles easy, right? Slabs are a little harder,

but tiles easy. I just stack this shit up and for you. It's easy. Yeah, I would definitely, that's, that's a really good idea. I'm going to, I'm still going to do that.

That's good. Yeah. Yeah. Check that. We, we, it was, well,

you just saw what was the, what was the discount on the 80,000 square feet you could have. So they were, they were doing it um our original price was like a dollar 66 and then you know we did a lot so they dropped just like a dollar 29 um or a dollar 19 i don't remember that's massive and then and but and then if we bought like the 80,000 it drops to 80 cents dude that's yes it's a huge that's massive yeah and it was just is this tyler vinyl yeah and it's and it's nice. It's good stuff.

It's not cheap stuff from Home Depot. That was the smartest thing they ever did was put that L in front of it. Luxury? Yeah. No, it's not vinyl flooring. It's luxury vinyl flooring. Yeah. Oh, really? In terms of as luxury as you can get with a vinyl.

Yeah. No, no, dude, it looks great. It's very, very durable. And in certain places like Florida, especially near the beach or near the water, it's magical. Oh, yeah, for sure. It's not like, you know, hardwood

that's going to get, you know, like damage with water or something like that. All right, so let's move on. Let's talk about taxes because you're getting killed. You don't hold any of this stuff. No. So what's the tax plan?

Because, I mean, look, the number one reason to get into real estate is taxes. I mean, the tax code is built to essentially as much as possible, wipe out your tax liability by owning real estate. I mean, things like segregated cost evaluations where you can accelerate the depreciation on properties. I mean, this stuff is in the tax code for you to use. What's the plan, dude? Because you got to be getting murdered. Yeah. So the plan is, well, obviously we have to, we're reinvesting into the business big time now. So like I stopped taking a paycheck from July of this year. I took, you know, the first six months, July 1st, I stopped taking a paycheck. So how are you handling the capital gains

on these properties? So I'm not paying quarter lease, number one. I'm just getting hit with the bill at the end of the year in April, right? Also, I got a new office, right? I hired some new staff. And I still had a couple houses that I had to take a little bit of a loss on last year.

So those are offsetting it a little bit. am planning though um to buy some large multifamily before the end of the year okay um and then we're gonna go and you know obviously do a cost segregation study yeah um and you know depreciate what we can of that um there's a lot of good deals man because i'm telling you a lot of syndicators bought those deals and the, the, the bill is due. Yeah. Check is due because they were on teaser rates that are now adjusting and those deals no longer make any sense. Not at all. And there's going to be some fire sales in that. There was there, there's this one from a, from this guy that I know he he was the one with the connection, but it's a, it's a 66 unit And I mean, it's a total disrepair.

Like it needs, you know. Class C. Yeah. Yeah. It's a class C. Needs work. Not a horrible area, but still class C. And fixed up, it's probably worth like seven to $8 million, depending on who you ask.

For 66 units? 66 units. So what's the acquisition cost? Well, we're trying to get it for 900. Guy wants to- 66 units for 900,000? But the caveat is it needs over $3 million worth of work to get it fixed up, which is still a good deal.

Will he carry the debt? Huh? Will he carry the debt? He will carry a good majority of the debt, yeah. But he does need a certain amount of money. 66 units for that that's wild yeah so we're we're kind of in limbo at like 1.4 right now and it's like it's like an okay deal there but it's just a lot of risk what's the vacant what's the vacancy right 100 right now

oh it's just vegan this is a shell yeah yeah yeah this is a this is an absolute shitbox shell that's been sitting there for yeah so zero cash flow no this is you're you're buying a project you're you're going to project yeah you're buying a project okay yeah yeah so you would have to get well you're not going to get i mean the cost seg on that if it's a show you're not going to get i mean you're going to get dog shit for this year you'll be off waiting till so yeah that's that's really going to be like a play for at least next year you know um i mean you know i obviously i purchased some vehicles and stuff, which, I mean, those are like, okay. Um, those are not like, you know, the greatest,

but I mean, it's still right off, you know, a couple hundred grand. I'll tell you again, I have a friend of mine that's a really good cost segregation guys, probably the best guy in the country. And I learned something from him two weeks ago that I didn't even know, which is if you're doing cost segregation reports, you can do what's called a dispo section where like, for example, say you buy this property, right? Well, when you rip the roof off of that thing to redo the roof, say the roof is 40 grand, whatever it is, you can depreciate that $40,000 roof, even though you're ripping it off and throwing it in the dumpster. Really? And then next year, depreciate the roof that you just put on.

Really? Cost. I didn't know that. I had no idea. I didn't know that at no idea so as you're going into this project you might want to have a cost segregation guy look at it first and say i want to get dispo uh i want to get dispo advantage on everything we rip off that's really good it was wild yeah i had no idea i didn't know that either nobody in the room did everybody was like what the

you talking about and yeah nobody knew it was crazy people like really because i don't even know that dude i it was wild yeah no idea that you could do that but yes that's absolutely in tax code it's absolutely this is like i said this guy's the best guy he's the best guy um phenomenal well dude really impressive thank you really impressive um if anybody wants to like get in touch with you and maybe i mean look i'm not gonna say bend your ear because don't blow this dude up with like i want you to mentor me what's going on like look he he's he's i'm sure he help you, but don't blow him up with a bunch of nonsense. It's crazy.

More or less, if you've got a deal or want to do deals or you have capital, want to do business. Like, look, let's talk about that. You've got a guy like this. You want to learn how to do this? Bring some money to the table with this guy. Bring a deal to the table with this guy and partner with him on a deal you guys do that yeah yeah that's um that's actually how i i one of my um really good guys he's actually here on this trip with me is he lent like 50 grand on a deal right yeah

hey just want to like you know do this with you like you know get to know you whatever so let the money on a deal then he brought like a few other deals and i told him they suck and then he kept bringing me deals and he finally got like some good ones. I was like, Oh yeah, man, like I'll partner with you on these. Like, you know, like we just hear the terms. Um, and then now he's like, you know, just, we're basically just full time, you know, working together. Um, and it's, and it's great. I have other people like that too. Dude, I'm telling you that is the, and people look at this the wrong way. They look at situations like that where they're like, Oh, but I don't want to give up profits, blah, blah, dude, you're getting an education for free and you're actually making money. You're making money to get

an education. Absolutely. So that's how you have got to look at it. And you're providing value to whoever you're bringing that deal to, you know, cause they're, they wouldn't have otherwise had that deal. Right. You know, so they're making that money. They're happy. I mean, I, you know, feel free to bring me deals. Yeah. Bring them deals. All right. So what's your Instagram, how they find you? So, um So best way to get ahold of me. I'm very active. Instagram, Facebook, just at Camerati homes. My last name.

You can also look up Donovan Camerati. I should come up. So, and that's C-A-M-A-R-O-T-T-I. There you go. Love it, man. Well, dude, I want you to come back in a year. I wonder how much, how much more you've scaled and where you're growing into and watch your journey.

Super impressive for 21 years old. Thank you, man. Good job, dude. Congratulations. Good job. All right. Well, look, dude, if you listen to this today and you're sitting there thinking, man, I'm drifting along with the currents of life. I'm too old. I'm too young. I'm too whatever. This nobody is to anything to start doing what you want to do. We'll see you next week. What's up, everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it, or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escapingthedrift.com. You can join our mailing list, but do me a favor. If you wouldn't mind,

throw up that five-star review, give us a share, do something, man. We're here for you. Hopefully you'll be here for us. But anyway, in the meantime, we will see you at the next episode.