KGCI: Real Estate on Air - Pulling Back the Curtain on General Contractors

Episode Date: February 12, 2025

Hey, and welcome to this week's episode of the Top Producing Zone podcast. I'm one of your hosts, Michael Jin. And I'm Shane Carvalho. So today we have Frank Contrart's general contractor for 34 years. So it's safe to say he knows this stuff. Amazing knowledge and experience when it comes to renovations, modeling. Plus, I think, Shane, we need to have a new term. And I'm thinking like we should call it Foss, Friends of Shane, which is what Frank is.

So it naturally makes him an amazing guest for our podcast. Frank is also kind of Shane's go-to partner for flips in a Santa Cruz area. He's dabbled in rental properties and now is investing out of state. So with that, Frank, welcome to the podcast. Thank you guys. It's great to be here. Great to see you again, Michael. We almost met over on Feld Street a few years ago, but you were able to go quick.

I didn't get to say hello. I know. Well, we'll have to find time to actually sit down and get to know each other. a little bit better. Frank, let's start with a fun one. You and Shane have known each other for a while. How long do you guys go back? And any fun stories you want to share about my podcast partner here?

Yeah, it has been a while. Shane, when I met Shane, he was in the mortgage industry. It must have been 2006 or seven. And he, when we first started trying to invest in rental properties, Shane helped us with the loans on two properties up here in Sacramento. And I kind of dove in without any knowledge. And we ended up losing those properties along with the loan. Oh, geez. Thanks, Frank. I wasn't the realtor.

No, but actually, you know Shane, I was thinking the other day. When I first started that, I was really gung-ho. And I was just looking and looking and looking. I was ready to buy more. And you actually told me to put on the brakes and stop. So otherwise I probably would have lost more. And I was trying to remember actually how we started working together. I don't recall.

I know we ran across each other at Home Depot after we had gotten those properties in Sacramento and you needed some little thing done somewhere and that's where it all began. Well, so the realtor, actually the realtor brought you to me and I forget who it was. And actually it was even further back. It was like 2000. Let's see. I came back 2000, so I opened that office, that office where you met me opened in 2003, four, right in there.

So I met you probably 2004. So it's been 20 years, actually, believe it or not. But, you know, it's funny that you say Home Depot because the odds of running into their high because you are there, how many days a week, Frank? Yeah, they open at six. So I'm usually there. A couple minutes before six. Confessions of an addict.

There's a certain block in the morning when it's just perfect. to be at Home Depot. Insider secrets. Best time to go to Home Depot. I got to say, like, if you're a general contractor and you're not spending every day at Home Depot, that's going to be a problem, right? Yeah, it's my favorite place no matter what. I remember when I first got introduced to Home Depot, we lived in Fremont.

That was about 2000. And I was just amazed that there was a store like that. You know the store better than the employees. If I ever get a regular job, I think it might be there. Right. You better be a shareholder by now. Yeah. I was going to say at this point, not even a regular, you should just be running Home Depot.

How is that? I was just going to say back in the day when Home Depot just started out, they used to have what they called homers. And they were like retired electricians, plumbers and contractors that actually worked in the aisles and knew what they were talking about. And they, there's something like that. Yeah, it's too bad. It's gone down. Hill, fast. All of the kids just direct you to the app on your phone to go playing stuff.

I was going to say, Frank, the one thing you shared, I always learned something new about Shane, I think, when we bring on one of our guests. And the thing I think I learned that's new today is Shane being the voice of reason telling you to slow down and stop. Normally, I feel like in our partnership, he's the one that's like, go, go, go, go, go. And I'm like, yeah, listen. That's evaluate a little bit. Yeah, well, he's been looking out for.

for a while. I appreciate hearing that, Frank. No, definitely that's, that's one thing that holds true. I've always looked out for people's best interest. I'm more challenged about my own best interest. I think, yeah, I think the tape is a better now. We got to watch out for him. Yeah. No, we definitely made some changes going forward. That's for sure. Anyway, go ahead, Michael. Well, so Frank, you've you've been in the business for 34 years. So, you know, that indicates a few things to me. and that's, you know, longevity. That's also a track record of success. And that you've been able to kind of sustain your business for so long.

So what are some of the things you say that you've done that's allowed you to, one, build your business and then be able to maintain such a long career in general contracting? I think probably the biggest thing to date is that I've kept it really small. You know, Shane gets on me sometimes for that I should grow and hire more people. but that's always been a challenge for me because they're, especially today, I mean, nobody wants to work. They just want money to come to them magically. And nobody, I've never found anyone that would take care of my business the way that I do,

you know, take care of my clients and just be respectful, be clean, be courteous and that kind of thing. It's kind of, that's kind of gone out the window over the year. So honestly, it's just myself and my cousin's been with me for like 25 years. My son helps us when we need help. I've had other good friends who are other contractors that lend the hand when we have larger projects. But most of our stuff is pretty small. A lot of kitchen and bath remodels that we can handle ourselves. And I think over the years, we've had a lot of repeat customers once they get to know how we work and the quality of work that we want to put out.

then, you know, they come back. I'm even starting to work for some of the children of my original clients, and that's been a real honor. You know, Frank, I was just going to mention something about that. We're aging, man. Like, I've actually been experiencing the same thing. When you said that right now, I'm laughing because I just had a client last week called me. He's like, yeah, she's working at Stanford.

She's ready to buy house. So I'm like, dude, she was like in the stroller. a minute ago. She's in the medical field, buying a house in the Bay Area. Holy moly. That makes you feel good, though, right? I mean, because that means you care and your quality of service. Your clients come back.

Why do you think they come back? I mean, why do you think you've built such a good relationship with them? What would you say is key? Well, I think, especially after we work for them, sometimes when a new customer asks for an estimate or something, sometimes they think maybe our prices are a little bit high, and that's something that we've always competed. against in the past where, I don't know, just whatever you're bidding, an interior paint job,

for example, and, you know, things cost what they cost. And I know the level of expertise I'm going to bring to their home. But then they think, well, I'll just go grab a guy from Home Depot or something because he'll do it for half, you know, and that most of the time they learn their lesson. But once in a great while, that customer will be happy with that person's loving pain on their walls and then you still look bad. So you can't really think about that too much. I think where it comes into play more often is after we've done something for a client and they see, you know, I mean, we chased dogs down the street that got out. We made sure the dog had water and the homeowners give us their keys and they've been locked out so we can drive over there and,

you know, let them in their own house. There's different things like that. We've done to go beyond what I guess a typical contractor would do. I've had some clients calling that they weren't to get on time and their dogs had to be let out. So, you know, we'll drive over there and let the dogs out. And just weird little things like that. And I would say now the majority of our clients have become friends over the years. So we really don't want to let them down after that, especially. That's a common theme, huh, Jane, like full service, right? Just you take care of your, your clients, they become friends, they become family. And, you know, then you're, then you're talking about like, to both Frank's example and yours, like, generations of clients.

that you start working with. I actually just realized for the first time, Frank, that that's very similar to how my business runs. Like, I mean, I know the kind of service and that, you know, people like you and stuff, but it's interesting because I didn't even think about that. You've been applying the same principles in your business. Yeah, and it's taken us a long way.

I mean, you know, we really haven't, you mentioned the investing again in rental properties and stuff for a long time. well, my clients would always tell me, you know, as soon as you're finished with my house, you need to raise your prices. So we've had to, you know, pump up our prices a little bit over the years. And someone told me, which is actually a fact that it's expensive to live here where we live. And that cost, you know, it gets spread around from, you know, maintaining your home and just living here in the area that we're living in. I don't think I've ever seen a decline in purchase prices or anything like that in this area.

So it seems like it's got its own little mini or micro market, you know, compared to some of the surrounding areas that do fluctuate more. But, yeah, I think, and it's a super huge compliment for them to actually want us to work with, on their kids' homes, you know, so that was kind of cool.

Besides the fact that feeling, you know, older. Well, so, Frank, it's interesting. So you talk about like, you know,

With existing clients that you've built a relationship with, you know, that's kind of funny that you do a job for them and tell you, oh, after you're done, raise a price. But then you also mentioned with new clients sometimes they don't, they haven't worked with you before, obviously. And so they don't really totally understand the quality, the amount of effort, the cost that goes into doing a job that you and your team do.

And it's funny. I always have this opinion, especially of clients here in the Bay Area. Maybe it's because I think about my parents or I think about other, you know, Asian clients in there. And I was, I'm always of the opinion that like, this is my hypothesis. The first bid that they get, no matter what it is, they're always going to think that it's expensive. So I'm just kind of curious because, you know, from a general contracting perspective, like when a new client comes to you and it says, hey, I have a job for you. How do you go about

evaluating it? How do you go about scoping it out? Like, how do you put together a bid? Like, what do you look for. Most of the time I have, well, obviously we have a list of things that we do do. Like, for example, I don't play with roofs or anything like that. So that if that's the question, then we can't help them. But we do have referrals for good roofing contractors. But most of my stuff, we've done it so much that we did have to make a slight adjustment after the pandemic, you know, with prices of materials going up. And I didn't realize that until, you know, one day I was just in home people picking up some number for a job. And, I checked out and it was like three times a price.

I'm like, you know, when did that happen? But other than that, I usually just figure out how much time it will cost us. I don't like to work time of materials because the clients don't know how faster, how slow we are, you know, and that it just seems to get people in trouble all the time doing it that way. So I'll just give them, you know, a bit. And once in a great while that that has raised some eyebrows because, you know, take flooring, for example, I charge so much per square foot for flooring. And we've done it so often that we do it, I guess, too fast.

And they're saying, well, you know, I don't want to pay you $400 for one day of insulation. And then I've just had to remind them that we're doing it by the square foot. Then they can check their prices against, you know, they can check with Home Depot and see what they're charging and different things like that. But most of the stuff we do now, we've done, I mean, we can do it in our sleep. so I can just kind of, and I'll usually let them know ahead of time. I'll give them like a ballpark price and if they want an exact itemized estimate, then we'll do that. But I have found in the past that sometimes they'll just use that as a shopping list.

And it takes us quite a bit of time to figure out a good, a reasonable estimate for their project. And a lot of people don't realize that. That's always been one of the things I've struggled with. Shane knows when I have to do estimates for a large project, it takes me a while. I just want to get there and do the job, you know, do a good job and keep going. But figuring out all the costs. And now I think people are surprised if they do want an itemized estimate, actually how much everything costs or how much goes into a project, right, from nails, glue, cock, plastic, whatever it might be. And paints gone up quite a bit over the years.

and you know sometimes they'll want like a benjamin more product and they're like 70 bucks a gallon they can't even believe it but then you know you can get the same color at home Depot for about 40 and I really like that product as well so just all of those things come into play and I guess we have to try to keep educating our clients as we move along that you know and maybe it's been 10 or 15 years since they did a project too so back then it was quarter of the cost that and that That's a great point. It's a matter of kind of perspective and where, like, clients are grounded in terms of their past experiences, right? And I mean, when you say that, my head goes to like, you know, I have friends, and I'm thinking about that from an age perspective, but it's, it's kind

of a similar approach is like, I have friends that I've, you know, I've known since I was in high school. And when I knew them in high school, they were like 25 years old, right? And so now today, when I look at them, I perpetually think they're 25 years old. And even though obviously they're not, right and it's just a matter of like where like where your frame of reference was grounded and so i think you actually bring up a great point there and the other thing is interesting is because it is like we don't like a lot of people that want to remodel they haven't done this job before they're not familiar with kind of where the current market and industry is even though like you know they probably work in tech and they probably talk about cost of living over there too you know and how and from that perspective

they probably know how high it is but then maybe they don't necessarily always make that connection from you know, what they're focused on to, you know, this job that they're in this. I guess one aspect that's kind of unfortunate is like the client that I'm working with now, we're doing a couple bathrooms in their home. And once we go through the process with them, because I like shop, you know, I'll go to with them to Evo or to pick out slabs, no granted, or whatever they're picking. And just, once we go through the process, that that's probably going to be the last bathroom that they'll ever going to do, right? So they've learned a lot and it helped. It would help

them if they had another bathroom to do, but they don't. But with these folks, you know, they had to do in their home and they're having us do both. And they learned a lot on the first one. So on the second bathroom, they were able to make better, quicker choices, you know, the first bathroom for a long time because we kind of educated them on what's available now and how things are done now, newer products and things like that. So on the second bathroom, they were ready to go. So, but yeah, most people don't have that luxury unless they're flipping houses or something like that. Right, exactly. And just a quick question before I hand it back to Shane is, you know, for our listeners out

there who don't know, like, what do you mean by when you say time and material? Yeah, basically, that's just when you're, when you take on a project, say it's, I don't know, maybe building a deck and we will, either we can purchase the decking materials or sometimes the customer will pick up and have them delivered and we're basically working by the hour. But that's what I mean. So if you, let me jump back to flooring. For example, Home Depot will charge you like two bucks a square foot to install. That's how they bring you in, right?

Get you to come in. I typically am closer to $4 an hour. So when people think about that, they think, wow, this guy's nuts. I'm not going to use him. But then so if we're doing it in time of materials and I know we can lay three or 400 feet in an afternoon. you know, that's what, like $1,600 in labor, but that's pretty much the whole project. So that's why I don't like to do it that way, because if I take a project on and it takes me longer, but I've already given them my price, then I'm the one that's going to have to do it for the same price,

not, oh, this guy's dragging his fee just so he can get some more money out of me by the hour. So that's always been, I don't know. when I very first started out back in, well, it was around 1990, between 90 and 95, I did have a client like that, you know, and I worked hard all day long. I had by myself installed around 300 feet and she paid me for the day. And then she kind of flipped out like once she realized how much money she was given me for the day. But then I had to remind her that we were by the foot and that the foot price was pretty comparable to all the other guys that were out there. Shane, what's your opinion of this?

I know because you and I have had a discussion about, you know, time of materials versus not. I'm done with time of materials forever. And I shared my frustration with Frank. You know, now that we reactivated the license and have had crews working on projects aside from our listings, it was almost like being a rookie again. I went through a lot of losing money before we started being profitable. One is I never want to charge enough, which Frank knows I've always been guilty of that. But secondly is the fact that, you know, clients, if they start having you kind of follow

their lead on time and material on things they want done, if there isn't really a laid out game plan with tasks to accomplish, they're not going to see progress. And so when they get these bills for time and material, they're like, but what did you do? And it's like, that's just that that's horrible. Never again. I mean, I, you know, lost about $6,000 the last time we did that. And, um, Yeah, it's better for a client to know, like, look, we can accomplish this project. This is what's going to cost. And then they just know. And then whether you finish in a day or three days, that's what it is.

But at the end of the day, it's like, sure, they can go get the cheap guy. And even growing up with my dad when my dad was running his company, you know, my dad always used to say, you know, it's just, it's better to do it right the first time, you know, and it costs you less. And it's true. Like, my dad would stick to his guns on his bids. and sometimes the clients would make the mistake and come back. Like what Frank was saying earlier on the paint, they might get lucky with somebody that it might work out. Most of the time it doesn't.

The other thing now that people are learning is licensed contractors versus unlicensed. I mean, one of the jobs we're on right now, they wanted to make sure everybody I brought in was licensed and insured because one of their colleagues just got sued because somebody fell off a ladder. So one of our colleagues was having his house remodeled, and now there's a major lawsuit because the guy fell off a ladder and broke his leg or something. And so it's like, I think that clients are so concerned about what they're going to pay

for the job, that they're not taking into account, you know, all these additional things. Like, what if something bad happens? Or what if they run off with the money? Or what if they don't finish the job? What if they take the material? You have no recourse. When you have someone who's licensed and insured, you have protection, you have recourse. The other thing, too, is when they compare pricing, I mean, I'll tell you right now,

workers' comp, it's 27%. Like, if you got people on payroll, you got to understand that we're already handicapped almost 30% right out the gates on hourly wage. And we pay our people good. That's why our people work hard and do a good job. So, I mean, I don't want to carry this subject on too far. But no, I totally agree with Frank. And these are very, very important things that, you know, consumers need to know and they need to think about all of it. They just, so many people are so used to getting laser focused on cost that they don't think about all these other things. And Frank, we've learned a hard way. Yeah, it was, you know, you bring some thoughts to mine.

Back when I first started out, I worked without a license for probably 10 years. And, you know, everything was great. But I did get some flak from other contractors. And I didn't understand it at first, you know, until I really started thinking about it, that they do have much more overhead than I did. if they have an office or a building that they pay, you know, rent for to keep their, their trucks and tools and things like that, that costs a lot. And back then, not as much as it does today, you know, with real estate and retail space

and that kind of stuff being sky high. But, yeah, I then I started to understand why they were a little bit upset with us coming in and, you know, working for half of what they had to charge on a project. So now I'm the one that gets to get upset about guys who are not licensed. Full circle, Frank, full circle. Well, and I just love this exchange because, I mean, to what we were talking about earlier, it does give people just more in-depth insight into like, you know, what it, like, what it means to run a business, what it means to run a general contracting business and

what you guys have to think about and, like, work through. Like, Shane, you're comment about like workers' comp. I bet you 95% of people like would be surprised by that because you just don't think about it. Well, and being that high. And that's just one of the insurances we have. You know, we pay other insurances as well. So, yeah. And that became fresh to me again, obviously when we reactivated a license a couple of years ago.

And it actually started, you know, being in that field. I mean, I've always respected it. And I know that it's there. I just didn't realize how it would expand. have had gotten. And so it made a lot more sense for some of the expensive bids I was getting. Although with Frank, I'm one of the guys that told him to raise his prices in the past. So definitely he knows I'm a fan because I definitely have never knocked his prices. Well, and I think there's also a theme here that Shane you and I have talked about that relates to realtors as well.

Right. Like when we deal with clients on the listing or the buying side, a lot of times, like it's the same thing. They want us to cut on commission because they want to, you know, because they go to the, the other platforms that are charging, you know, like one and a half percent for listing. But it ultimately does come back down to like you kind of get what you pay for, right? You start seeing listings with like photos that when we look at it, you like 100 percent, taken with an, take it, taken with an iPhone and not even taken well with an iPhone, right, versus the level of service, the building of that relationship, the full service that, you know, other agents can offer. And it makes a difference. For some people, for some,

you know, for some clients, maybe it doesn't matter and they have a great experience when they go forward. Well, like, that's totally great for them. And we wish them the best. And others, you know, sometimes in Shane, you have stories like this where, you know, you'll lose a client because they wanted a cheaper rate only for them to come back to you because they, the agent that they ultimately went with didn't do a good job for them to begin with. And then you talk about, okay, how much cost time, lost opportunity, right? Did you have for just wanting to save a little bit? Well, in our business, too, it's one of the similarities, you know,

is the hidden things that the consumer's not thinking about. They're so focused on saving commission. In that case, versus the insurance like in construction and all that, you know, are they licensed insured? In our business, it's like, hey, you're so focused on the 1% of like, let's say 600,000, which is only $6,000 for God's sakes, that you're forgetting about the fact that I could probably help you make an extra $50,000 selling your home. It's like they don't think about the investment part of that. That's what's different in our business. But it's, you know,

there's obviously some related stuff to construction. And I've learned over the years, those just aren't your people. You just got to keep going. You got to find the people that actually value you. And there's enough people that do value you. And I mean, as a lot of as you value yourself first, then you know what your worth is, then it should be easy to plug in to, you know, people that can relate. And when you do find your clients, and Frank, you can speak to this, you naturally become friends because you naturally align. Like, it's so weird, you align with your clients in so many ways. If you start, you know, you're not supposed to talk about certain things with clients, right? But I mean, a lot of times you'll find that

your like political, spiritual, like lifestyle, familial. Like, it's weird how everything will align, right? So it's like kind of like the same value. It's like you start working with people that have the same values that you do. And those are your people. And there's someone out there for everybody. So, and you got to be okay with walking away. It took me a long time to be okay with walking away or to not worry about what these people thought.

Like, you know how it is, Frank. Sometimes you feel bad. You put a lot of time into a bid. you didn't get the job. And then you're like, you know, I really thought this would be a good connection or whatever. But hey, you probably just dodged a bullet, man. Well, and I think that's key is like knowing your value because we've talked with a lot of

agents who are like, well, I don't even know like where to even begin to talk with my client who wants a discount. And I think part of it is if you know your value, the way that you carry yourself, the way that you communicate to your client will come out because you believe in yourself. If you don't know your value first, that's going to come out in your communication. And then, of course, you're not going to feel comfortable talking to your clients about why they shouldn't be looking for a discount from you and all the things that you bring to the table. And, Shane, the last thing you did bring up is, yeah, at some point, be willing to walk away. Because sometimes you don't, you never know, like you billing, you believing in your value, knowing your value, being able to walk away may actually bring that client back to the table because it's like, okay, hey, if he's if if my agent or my general contractor is willing to, they, they see themselves in, in, in the.

certain light, they see their value, they're willing to stand up to me. Imagine what they're going to do when they have to deal with other agents. And I, you know, I feel more confident in knowing that they're going to stick up for me because they can stick up for themselves. That's true. Totally true. And now, Michael, I wanted to kind of, you know, move from, because, you know, Frank's like, hey, this construction thing's been great, but I'm kind of in my final stages there. Yeah. Frank has actually turned a new, a new chapter here. He never forgot about his, desire to invest. Yeah.

He actually went and found his way on his own. He literally went out and found so, so Frank, obviously earlier you mentioned how, you know, things went south back during the crash when you first started. But obviously you really, you and your wife, who's been your partner in this, you guys have really gone out and educated yourselves and really learned the game on your own, which is impressive. Because a lot of times people like, you know, go pick on one of their realtor contacts or maybe their financial planner. You know, a lot of times people will kind of start with people in their circle that know that stuff.

You guys just said, you know what, we're just going to venture out on our own and see what we come across. So talk to us about that journey because I know that's been something that's up and coming and become more prominent in your life. Well, it's inspirational. You know, you know us from way back when. And I've never had myself. I've never really had like a 401k or any kind of retirement. I was just working, you know, and we were, for the majority of that time, we were really, I would have to stay paycheck to paycheck kind of living, even though we don't live, you know,

high on the hog or anything like that. But when we tried that back in 2007, we, and we lost those properties, the concept was right, right? You know, people say, you know, pick up some rentals. the tenants are going to pay the costs and everything's going to work out just fine. But back then I didn't think about, you know, I was just thinking about the rent covering the mortgage, not property management repairs that come up and different things like that. And we hung on for a while. But when it started to go south, it was really like I've never lost so much sleep in my life.

And we, I didn't want to go through bankruptcy. You know, we were always brought up to pay our bills. work hard and all that stuff. But one of our attorneys at the time just said, you know, don't, he told us not to feel too bad because big corporations do it every day, you know, just to reset their, their, not their lifestyle, but their business, I guess. And if you think about your life as a business, then we were able to, excuse me, we were able to move through that a little bit easier without without so much guilt. And then that was in 2010.

And it was selling the back of my mind for a while because obviously I hadn't come up with any retirement money. So I thought I was digging, looking for a way to build that up. And in my search, I started out looking at like retirement accounts and just dumping whatever I could into like a 401K or accounts like that. And then after a little while, I realized that wasn't, going to do it fast enough. I was, well, I was 58 already, 57 or 58. And then through that search, I found things like bigger pockets and started listening to a bunch of that content. There was just

one specific interview that really sparked it again for me. That was Brandon Turner and David Green. You guys might have heard of them before, but David Green was a police officer that had started buying rentals in the hopes that he could replace his income, you know, in his future. And so from then, from there, we just started taking it all in and we ran across some other people on the, on the channel that introduced us to the turnkey model. And that sounded really interesting because California was a little bit too expensive for us to start out with. So we ended up looking at the turnkey model.

And we were, that was in 2019 when I started reeducated myself. And from then on, met a lot of good people that could teach us what we didn't know or start to teach us what we didn't know. I mean, we're always going to be learning. We're never going to know at all. But just in these three or four years, we've learned so much. And we've been able to purchase a few out-of-state rent. And I think after we purchased our first one, even though we learned quite a bit, once you get the first one, there's so many more lessons to learn. And I think a lot of people are afraid of that.

But as long as you have enough reserves to help get you through those first couple of not really emergencies, I would say. Because when we bought our first one, things like heating units went out, you know, that's $3,000 or $4,000. and a tenant moved out. So you have a $3,000 or $4,000, you know, make ready on a unit, things like that. If you don't have any money set aside, that's going to just, that's going to stop you in your tracks right there. Luckily, we had some reserves and it helped us keep moving forward now. I think right now we're up to five properties and we have eight doors in five different states. So that's been kind of a thing we get ribbed on, you know, being all over the country without just settling on one market and learning that first.

but we've learned a lot and now we're kind of pointed in the right direction to on some areas that we really like and have started building a team there with property manager and real estate agents and things like that that are helping us out. So Frank, you kind of talked about the states that you're currently investing in now. You kind of talked a little bit about everything that you learned. I'm going to take that a step further. If you could like encapsulate for us like reflecting back on your journey through investing and building, out your portfolio, like if they're just like one or two core principles that you feel like you want to leverage for your next like five properties, what would that, what would that be? Well, I think right now we're going through the qualification process with a couple of new

lenders because we were qualified with a lender here in, I think they're in Arizona as security national mortgage. And we were pre-qualified with them. So we were looking for properties. But two of the markets that we like, well, the one that I really like is St. Louis and the purchase prices there are, you know, 75, 85K. And our lender didn't go that low. So we found some other lenders in those markets through, one through an agent that we work with in St. Louis. And the other through the turnkey provider that I mentioned earlier. And they have, they have lower loan limits, they go down to 50,000, which makes sense for the markets that we're in. So that's one thing.

I mean, lending is different all across the board. Some companies have, you know, different products. They're not all the same, which is one thing that we learned. And one thing that's always kept me hopeful is that, you know, you think one, one program might be ending, so you think you're done and you can't invest anymore. and then next week they have a brand new something that's going to help you keep moving forward. So that's been great. And I think falling into the community that Shane mentioned that we're in has been super helpful.

It seems like most of the people in this group have just recently started, you know, back around 2019, 2020 like we do. So everybody's kind of at the same place, but there are some people that don't have any units yet and some that have, you know, 10 or 20, 20 units in our group. A couple of our mentors have 100 plus units. One's in Fresno and one's in Massachusetts. So that would be, I think the biggest thing for us was just falling in there and just learning even the language, you know, to be able to speak with, well, you guys or our lenders or our realtors and let them know that we know what we're talking about. you know, we've done some research and I think that helps them take us more seriously when, you know, you just call somebody in St. Louis and say, hey, I'm looking for, you know,

an investment property and they might not take you too seriously at first, but once you get to speak with them and they, they know that you have at least a basic idea of what you're doing, then they're more apt to work with you. And on that page in St. Louis that we're working with, we found her on a couple of different platforms after we were introduced, her. She was also an pro agent on bigger pockets. And then another group that we're in, she's, there's a group called agents invest and there are a bunch of agents in the Midwest that try to find deals for investors. So with her being on those two platforms, it gave me a little bit more confidence in her. That's, that's a real good niche too, because obviously

we're in the real estate industry. And in those markets where, you know, long term rentals do make a lot of sense. That's a great niche. Like the agents that get involved in that, you know, they're obviously savvy because they're thinking about how can we build our business. But then just like you, you know, once they get entrenched on that and they build a repetition, then they get really good at it and then they get connected. Kind of like me, like with the flips and stuff here, like all the different people I've connected with the relationships, you know, like wholesalers and just people out there always looking for deals. It's like once you're in that game, it creates a lot more opportunities. And, you know,

been obviously ramping up again and it's amazing almost every day getting calls. And so those agents do become an asset, especially if they know what they're doing. That's great. And then those property managers, I love that you're, you know, following the referrals. If one of those property managers are already taking care of 40 or 50 doors for one of your partners, you know they're going to do a damn good job for you because they don't want to blow those relationships. Yeah, that's a good point.

Even though we only have one unit with that company, you know, our friend has. 80. So that brings a little bit more weight with us and we'll get a little bit better attention from that person, from that agency. I was surprised to hear somebody, one of the mentors in our groups was saying, you know, how many real estate agents don't own investment properties. And it's like 90 plus percent. I would think with all the resources that they have. And I mean, they see it, right? They go out and find investment properties for their clients and they see the results, but they still don't take action for themselves. I think, you know, that's a big one. I think you don't need a real estate license to do it, but I think it gives them a little bit more of a jumpstart if they wanted to get into that. And, you know, some people are just nervous about being out of state. I get, flack all the time from one of our mentors because I haven't seen any of our properties in person, you know, and he's like, you need to go check stuff out, at least make sure there is a house there. Yeah, I actually did the same thing, Frank, prior to divorce. Like, I was in a lot of states too, including Florida, like a lot of new construction and stuff. And I'm aggressive like that.

Like, I don't, I support, like, your ventures out of state, especially since you're getting to that point where you want some passive income for your retirement. you're at the right stage in your life where you don't want to take too much risk. And so breaking into these lower price points is actually really smart. Like I told, well, you know, I got your back. I'm always happy to hear about what you're doing out there. But I think that you're mitigating risk. And as far as what you're saying about agents not having rental properties,

a lot of the agents in our network, they're in the Midwest in different places. They do have a lot of investment properties. It's more agents in our market. A lot of them know you have a primary house because it's just such an expensive market. And so I think if you're selling the product, you better be drinking the Kool-Aid yourself. And I'll tell you what, I'm a big proponent for real estate. I always have been.

I mean, for the longest time, I didn't even mess with stocks. So I think that that should dictate who you work with too, like, you know, how much they believe in the product. Because, unfortunately, just like in any other industry, there's salespeople that, are focused on making the money and not being passionate about the product. And so that's interesting. You pointed that out. Yeah, I think, well, these days with technology, you know, it's a lot easier to do these things out of state. One of the big plus is, again, in St. Louis, I'm like in St. Louis, that even there has properties of her own. She's been doing it for a long time. And when I reached out to like she referred

to lender, she referred to property management company and different things like that. Whenever I talk to those people, they're always telling me how great she is and they know of her because of her reputation and things like that. So I think if anybody's looking to

go out of state, they need to find someone there that's doing it already, get an agent that has properties and understands your goals and that type of thing is super helpful. it can be scary to just say, I want to go invest in Cleveland because everybody says it's a good market to invest in. But there's streets, you know, street by street, good neighborhoods, bad neighborhoods, things like that.

That they always one of my first steps, so we still find a property manager if I'm looking at a property and ask them, would they manage it for me? What do they think of the area? And I've had some tell me, no, I won't go there. So you better not buy there. So that's been a great resource. That's really great insight, Frank. And I think that's something that's, I mean, for me personally, it's also been helpful because I'm looking to now like also invest out of state and find some property.

So I think that's going to be. So I appreciate you sharing that. And as we kind of wrap up this podcast, I'm just curious like Frank Contreras, like you the person. Like what are you looking forward to the most this year and kind of what's your vision for yourself as you continue this journey? I think right now what we're going through, like I mentioned, was getting qualified with the other couple of lenders because our agent in that market in St. Louis had brought us properties to

look at a few weeks ago. And at the time, I didn't realize that our current lender didn't go down that low. So I want to get through this process with the new lenders and then keep looking. We're hoping to pick up two more properties this year, probably single-family. And then after that, we will probably be looking at small multifamily two to four units so we can stay with the residential lending products. And then Cynthia and my wife, she's a teacher. So she's hoping that next year teaching will be her last. So we're hoping that the cash flow that we've started growing will help us so that she can retire and do something that's something else that she really likes to do.

She loves teaching, but she's been doing it a long time. You'll be able to retire. That's exciting. And fast, too. I mean, you guys just started, you said, about four years ago with this part. Yeah, we bought our first property on our second go round was purchased in 2021. That was the triplex. So, yeah.

And it's taken a little bit of time. You know, we've had to. So we got the five properties within those two years. and realize that we needed to settle down for a minute and stabilize those, make sure the cash was going to be coming in regularly and things like that. And there were a lot of things that came up that needed to be fixed. And that's part of the learning process. So now that those things are getting ironed out, we'll be able to actually see how much

they bring in each month and then help us make a better decision moving forward. So I have one more question. actually this is something that Michael originally brought up well back, but this is actually a good question for you, Frank, because I've never even going to ask you this, but what are, what would you say are the three principles that you live and breathe every day that have helped you get to where you are today? Because I know you really well, but I've actually never thought to ask you this. So thank you, Michael. That's actually some great insight. Well, as far as things that we try to do every day to keep moving forward, I think one, we've never really been, I guess we've never really tried to live too far up. outside of our means. And that has helped us, again, just a crazy thing when we first started trying to invest. And we really only had our mortgage. We didn't have any credit card debt or anything outside of our mortgage. But since we didn't really earn that much on paper, our PTI was a little bit too high. And so I think we're lucky that we didn't have a lot of credit card

debt, I think it would have held us back even further, but also just trying to help other people has helped us a lot. The more, you know, like you mentioned, we started this, I started a YouTube channel to document our journey since we're still in the beginning stages. And that seems to be where people need the most help. So we're just trying to help other people if they're interested to get going and, you know, pick up their first property. We've done a few mentorships that have helped us a lot. And really, I think that's about it. Just try not to overspend, try to save what you can. And I learned that, you know, having money sitting in the bank isn't really doing you much good. You need to get invested in something that can bring you a little bit better retard.

And because even if it's in a high-yield savings account, it's still not keeping up with inflation. You're still losing, you know, five or six percent on your money. So I would definitely put it in something else. Totally agree. Couldn't agree more. And so, Frank, we always like to ask our guest this one question. You're kind of adjacent to the real estate industry. But one question we'd always like to ask is if you were to put yourself, put your real estate realtor hat on, knowing everything that you've learned today, whether that's building out your general contracting business, getting into investments, if you were building your building your, your own real estate business from the ground up today, what would you focus on and how would

you go about doing it? I think it's similar to the real estate investing side. I think I would try to follow someone who's doing it successfully in whatever market I wanted to start up in. And it's the same thing where if you're thinking about investing out of state, find someone who's already done it, right? they would say you don't try to reinvent the wheel. But I know people like Shane, of course, and his network.

And there are a lot of great agents in our area. I think that would be the first thing I would do would try to try to find someone like that to learn. That's actually, that's interesting because you're not even in real estate. That's like spot on. That's like probably the best advice. And then I think the other thing that you've already done in your construction business is relationships, you know, taking care of the clients, but in the relationships,

like that's, because I mean, Michael, just from me knowing Frank all these years, he's like me, we're relational, not transactional.

Like when we work with people, like we're looking to build long-term relationships. And I, that's something that I probably why him and I've worked together for so long and always have aligned. Because,

you know, recently I've thinned, thin the herd of my circle. And I was telling Frank how much I appreciate him being in my circle. There's only a handful of people at the end of the day that are truly in your circle. So thanks for that, Frank.

20 years of a good friendship, and he's always got great advice. I like, yeah, I like we have to say. So thank you. Thank you for that. Thanks for coming on, Frank, making time. I know you've gotten a little busier lately, so we appreciate you and your time.

Yeah, no, I appreciate being on with you guys. It's been a great time. And that's just what you were talking about. Shane was we hear a lot in these groups that were in. that you need to monitor your network, you know, and if there's people that are holding you back, like you said, you need to thin it out a little bit, not that you don't have to, not that you have to stop associating with people like that, but lean on the people that are doing what you want to do

and going where you want to go a little bit more, and that'll help you get there. And then maybe you can bring some of those other people up with you if they're willing. Yeah, aside from that, there's just got to be a strong cutoff game. Because, I mean, you know me, Frank, personally. Like, yeah, I want to depressed. The problem is bringing everybody along. And Michael knows this from the real estate side. It's trying to bring everybody along.

You can't. But that's you and I's personality. That's what we want to do. I'm trying to get better about not trying to get. But like you said, one thing you said it's so true is that you don't have to go tell them, hey, I'm not going to associate with you anymore. You just don't reach out and just be cordial. Like, don't burn bridges.

But they. reach out. Say hi. I mean, but, but yeah, your network's really important, especially where you're going. So I totally agree with that. Great advice. A lot of good nuggets today, Frank. I'm actually sorry. One last question, Frank. You, you mentioned a YouTube channel and an Instagram. So if folks wanted to connect with you, like what's the best way for them to do that? Yeah, thank you. The YouTube channel is just old guy, R-E-I. And I love it. Yeah, we just started basically started talking about all the people. purchases that we've made and all the lessons that we've made so far or the lessons that we've

learned so far. Hopefully people can learn from that and it'll shorten their journey a little bit, help them get there a little bit faster. But also we have a great network of mentors. They're not necessarily paid mentors, but they do have mentorships you can buy. But they're on YouTube all the time. And if you go to my channel, you talk about them all the time so you can find them as well. and then yeah on Instagram we're trying to post some of the projects current projects that we're working on things like that in the remodeling

side of our business so we're getting a little bit better at that once we figure out how to do it and get them posted we'll put them up there I just I just subscribe Frank I didn't realize that yeah I got a definitely wow you got 75 subscribers already

holy moly man it's awesome we're burning a trail for sure yeah I had seen some of what you send me, but I'll have to get in and watch these episodes. So yeah, thanks for sharing that. All right, Frank. Well, it's been a pleasure. Thank you so much for being on with us. And thanks for tuning into this week's episode of the Top Producing Zone podcast. We'll catch you next time. Take care.