The Science of Flipping - What No One Tells You About Rehabbing Houses | Ryan 'Rotty' Garcilazo

Episode Date: March 29, 2024

In today's episode, we dive deep into the world of virtual real estate investing and the critical role of construction management with our expert guest, the KING of rehabbing, Rotty Garcilazo. Known formally as Ryan but affectionately called Rotty, he oversees all construction for my extensive portfolio of 28 single-family homes and multiple apartment complexes, all managed virtually. This episode sheds light on the unique challenges and solutions in virtual real estate investing, the complexities of construction management, and the art of working with contractors to achieve success in the flipping and rehabbing market. Rotty is the CEO of The Rehab Depot Inc. He is an author, speaker and consultant. He started in this business without any formal training or experience in this niche field of Real Estate Redevelopment. He owned one of the largest General Contracting Redevelopment Companies in Chicago (The Garcilazo Group). Rotty has walked thousands of properties on behalf of investors. His company has flipped over 1000 properties over the last 15 years. They have flipped millions of dollars in real estate. Ryan has worked with the “who’s who” of the industry and is respected amongst the elite.  Ryan has consulted over $250mm in real estate redevelopment. He has trained over 1,000 investors with the largest rehab academy in the world. His bread and butter have always been both single family and multi family properties. The construction projects that Ryan general contracted were as high as $500k, consulted others on million-dollar projects and he has managed portfolios in the tens of millions for other organizations. Follow Rotty on Instagram - @rottyflippeditLearn More about Rehabbing with The Rehab Depot Academy - go.therehabdepotvip.com   The #1 training and coaching system to launch, grow, and scale your investing business! 𝐋𝐞𝐚𝐫𝐧𝐌𝐨𝐫𝐞: http://www.thescienceofflipping.com Turn cold real estate leads into engaged motivated sellers on auto-pilot using the power of A.I! 𝐋𝐞𝐚𝐫𝐧𝐌𝐨𝐫𝐞: https://www.rocketly.ai/ Have a question? Ask me anything at https://www.askjustin.ai/ 𝐀𝐛𝐨𝐮𝐭𝐉𝐮𝐬𝐭𝐢𝐧: After graduating from UCLA in 2003 with an English degree, Justin went directly into business for himself. He has never had a W-2 job. In 2005 he got into real estate by co-founding a brokerage in the Northern California area. Quickly he realized that being a realtor was not for him.In 2007 he got into real estate investing full time. 16 years later, Justin has flipped well over 2600 properties, accumulated millions in rental properties, and is an active investor to this day.His success in real estate led him to start The Science Of Flipping podcast and education company, where he has coached and mentored over one thousand aspiring and active investors. He is a nationally recognized speaker and is on a mission to educate as many people as possible on becoming a successful dynamic real estate investor. 𝑾𝒉𝒂𝒕𝒕𝒉𝒆𝑷𝒓𝒐𝒔𝑯𝒂𝒗𝒆𝑻𝒐𝑺𝒂𝒚𝑨𝒃𝒐𝒖𝒕𝑱𝒖𝒔𝒕𝒊𝒏: “Justin is one of the best trainers in this space. He really gives everything to his tribe.” – Brent Daniels (TTP)  “Justin’s ability to connect with people and help them understand what he is teaching, is unparallelled” – Kent Clothier (REWW)  “We have been in the trenches flipping homes in Phoenix for over a decade, he is one of the best to do it.” – Sean Terry (Flip2Freedom)  Subscribe To Justin Colby: http://youtube.com/justincolbyView All My Videos: https://www.youtube.com/c/JustinColby 

All right, Science Flipping Podcast listeners, as always, this episode is brought to you by Rocketly.ai. If you're looking for a seller lead generating system that has automation in AI bot and has sellers coming to you, then Rocketly.ai is your choice. Make sure you head over to the website, fill out an application and schedule a demo now to see the power of Rocketly.ai. What is up, ScienceFluving podcast listeners, the family? We are back with another incredible episode with another incredible guest.

Here with me today is, well, I affectionately call him Roddy. But his real name is Ryan. But let's just go with Roddy listen he is the guy that runs all of my construction I have 28 single-family homes with them at this moment he is running all virtual I'm buying him virtual I'm remodeling virtual I'm getting a virtual bid I am also having him run my three different apartments that I have already bought this year. And as we record this episode, it is March 8th. And so we are running fast and going strong. And he is a major component of it. He runs all the construction right now for us, all virtually. But I'm going to shoot you straight, Roddy, for the 16 years of my career, the bane of my existence, I have hated contractors.

So welcome to the Science of Living Podcast. Well, let me tell you this. Well, thanks for having me. But let me tell you this. First and foremost, everybody hates contractors, and I don't blame them. So I've been a contractor for like 20, legitimate contractor for 20 years, but I've been in construction since I was a teenager, so I'm about 14. The reality of it is I don't blame you, dude.

I hate contractors too and what were the realities of why we got into what we're doing now with the not only the construction management but like we've had the academy and teaching is because i know you hate contractors and i think and i've learned over the years that the best solution for this is to start teaching people right like this is what we do this is the day in the life of us. This is the bullshit we've got to fucking think about. Here's the things that we think about on your behalf that you only think about on your behalf. We think about the finances just as much as you do, but the reality of it is, let's just be fucking frank. Nobody ever really came into

the game and was actually thoroughly taught, you know, here's how to wholesale. Here's how you invest their property. Here's how you analyze a deal. Here's how you negotiate and sell. Here's how you close, right? Here's the ISPO. Everybody misses the missing piece, which is construction, rehabbing, right? So it's the first people,

the people that hate contractors hate rehabbing, right? Because every sale experience that they've ever had, obviously this shit experience. But if you fundamentally understand that there are complex issues and challenges that our industry faces had, obviously, this shit experience. But if you fundamentally understand that there are complex issues and challenges that our industry faces just like yours, right, then you'll understand that we just need to figure out how to meet in the middle.

And more often than not, you'd be wise to collaborate with your contractors more often because you'll fucking figure out that's a bad deal in the first fucking place. You can't squeeze it. The lemon has no fucking juice, right? As Tim Herridge would say, there's no sizzle to that steak. It doesn't sizzle. So you can't squeeze it. The lemon has no fucking juice, right? As Tim Herridge would say, there's no sizzle to that steak.

It doesn't sizzle. So you can't force it. And I think that being the country who's had the opportunity to kind of look at everybody over the years against the third world, why'd you fucking buy that? Like, why did you, what did you, all you had is $50,000. You think that's all you're going to spend? Like, let's be realistic about that. Every house has a change order. It's going to happen.

It's redevelopment, not development. We're not building something new unless it's a new construction project. Different story. But 9 times out of 10, you're buying a house that's over 60 years old, right? So you're taking an old 1937 2x4 that actually was a 2x4 with today's modern 2x4, which is like an eighth-2-8 smaller shit doesn't get fit. And construction really

stands for make it work. You just have some code to follow. But construction means get creative, make that work. And I loved it. These Cubans have built these houses with make it work in mind. Put it together. Like I bought this home and it was already

remodeled already and i'm bougie and i have my taste so of course i'm gonna go you you you bougie i can't imagine bougie so it's uh my contractor comes in he's like he's cuban and he's like cussing these guys out because the guys who built this home, like the walls are crooked, right? Like no one can with their visual eye tell. But when you have to do certain things of what I was asking him to do, he's like, you can't hang a cabinet on here without it being like there's a bend to it because the wall. So now we have to fix the wall. We have to, you know what I mean? And so trust me when I know the make it work model.

Now, the challenge I have always found, and if you're a fix and flipper and if you're not, you really need to pay attention. Roddy is the guy running all of my construction. And so, you know, we're going to have a very truthful, brutal, honest conversation about the pros and cons of everything that he does. And the things I've always found and some still remain true is, you know, the assumptions contractors make, right. And to some extent you need to make certain assumptions, but the other part of it is we can't assume all of it. I mean, you highlighted one point. You can't assume there's not going to be change orders, right? It's safer to assume change orders, right? So depending upon what coin I want to flip when I talk about assumptions,

I would rather the contractor assume longer, meaning I would rather say, hey, this is going to be a four-week project is what you tell me. But then you say, you know what? Let's make it an eight-week project. I think it can get under four. If it goes to six, you're safe. If it goes to eight, that's what we expected. But I think it's a four week project. I would rather a contractor tell me that because someone that raises money

and monthly has debt servicing, I would just rather put it into my numbers. So I'm conservative. So I'm not coming at a contractor later saying, Hey bro, like I'm 12 grand over budget on this deal because I thought it was going to be the four weeks you told me. But you have these change orders based around whatever's happening. Does that make sense? Yeah. No, 100%. So we could squash that shit right now. The reality of the business is there's always going to be change orders. So you have to make peace with that. So the challenge when an investor is looking at a deal, and we teach this all the time, I'm like, you have your investor hat on, analyze the deal.

You're focused on a little bit of rehab, like what is it possibly, maybe $30 a square foot in these or whatever. You're doing your process, as you should, right? But then, of course, you're sitting there trying to think about, I still got to close this deal. I've got to negotiate. I've got to go as low as humanly possible anyway, because I want the wiggle room in the long run, and I want the profit.

We all know that. I'm an investor as well. I know the process of the investment hand. What investors are failing to do, which we're changing, is cool. You've done that. You've walked the house. You've made the call. You've had the phone call. You've talked to the agents. You've got the appraisers. You've got all this shit. You have all the intel you need to make an educated decision, right? Then you've got to take all that off and then go put your contractor head on. And people don't do that. If they did that, they would understand the risk and preparation that goes into it, right? The risk and preparation. Now, do you teach contractors or do you teach investors or inspiring investors to think more?

All of the above. I would tell everybody, if you're watching this on justincolby.tv, if you're listening to this on Apple Podcasts, Spotify, reach out to Roddy because if you're going to be buying and flipping, if you're going to be buying and holding, and I'm not talking about interest rates, understanding the fundamentals of the construction side,

understanding costs, understanding timeframes, understanding the subcontractors and all the other things that Roddy has done for 20 years. It is imperative because there's like, I know it after 16 years of doing this. I even have Roddy come into my coaching and he'll do a coaching call with my clients, but you need to be taught this. And Roddy does that. Where specifically in general, can they go to find you just to reach out and say, Hey, dude, I need to know more about this before I buy a flip? Find me on Facebook or Instagram easily.

So on Facebook, it's Ryan Roddy Garcilaso. And then on Instagram, it's Roddy Flipped. You'll see a link over our social media where you can join our academy. Our academy is $25 a month per person. We just relaunched it after four years. We actually, it's funny you asked that question. We just taught, the first class was yesterday, for four years, was yesterday at noon. Every Thursday at noon is our live class. We have 60 topics, 60 weeks in a row of this shit for everybody to learn the game. Investors, mortgage

brokers, developers, architects, contractors, it doesn't matter, to learn the niche that we are in. Rehabbing is a niche of remodeling and renovating. Rehabbing is a niche of residential remodeling, a niche of multifamily remodeling. You could do commercial, hotel, retail, anything, right? Whole idea is to understand your options as an investor with the investor mindset to say, okay, I think I have $65,000 in my budget. Take that head off, put the contractor head on and go, what can I do for $65,000? Meaning, what must I do to get it to pass code and sell for $65,000 before I do what I want, right? And oftentimes when you do that, and this is exactly what we thought

our first price system was risk of preparation, which is what I was going to tell you, is there's an imaginary risk wheel that you, Justin Colby, should be fucking thinking about every time you look at a house. Okay, here's the deal. Here's the asset. Here's the returns. Here's the cost.

Blah, blah, blah, blah, blah. We can close this deal. I got my funding partners in place. Great. Now you got to think about, well, where's some of the risk? Location. Safety. What's the budget really going to be?

What's my time and schedule going to look like? What are my sub-inventory? Do I even have subs for this type of project? How is my funding? Experience. People sleep on experience. Like, what's Justin's experience versus Roddy's experience versus the agent's experience versus the city clerk who just got a new job? The weakest link is the worst person on the team.

That's as strong as you're going to get. People fail to sleep like, oh, you're an agent. You automatically are one of the best agents in the world. Oh, you're not? Oh, you're an investor. You must know exactly what you're doing. No, you don't. Oh, you're a GC.

You can build anything. No, you can't. You see, my point is you have to understand experience is a major risk. Weather, time of year, right? Buying a house in Chicago where I'm at right now in November to take you through the winter months is fucking stupid. Unless it's a massive multi-unit building that's going to carry you for a few months. But a single family, no. So there's so much you have to look at because all of that's going to change your budget. And if it changes your budget, it changes your timeframe. And the key KPIs on

this, one of them is a change order. And I gave you a case study like on our portfolio we did together, right? And I looked at some of these things that I do for our clients. I said, man, change orders killed our time. Change order in every house killed our time on this. And they're not major change orders. They weren't like make or break change orders. They were change orders that required a licensed professional to do. Therefore, the three, four garage band that we have rehabbing, they're not skilled to do it,

nor can they pull the permit to get it done. Therefore, you can't sell it. So we got to go, oh shit, now we're going to lose three weeks on this because I've got to get the plumber who's already booked up, but he's the guy that's already signed up. So I got to wait three weeks just for plumbing. That means other tasks set to wait, or we got to reopen a wall and sit there and go, okay, when's he coming back oh on the 19th fuck it's the second really right these are the things you've got to consider and we we really really harp on our teams and i actually work with your team way more than we ever have i'm on anthony's s daily i'm with carson talking about numbers from like listen guys you know i don't like this deal

here's why like this is this is what we're gonna fuck up again i don't want to deal. Here's why. This is where we're going to fuck up again. I don't want to do that. We're not doing that. I don't want to rehab that. And I tell them, if I'm not going to rehab it, who the fuck's going to want to rehab it for you? Nobody. So listen to what I'm saying.

And I actually put Carson and Anthony in my classes. I'm like, just sit in on Thursdays and just consume. Just consume. Ask questions. Network, of course, but consume. And the idea is what you just said. If you literally will look at the asset at the very, very beginning and consider the risk and the preparation involved, that's when you could potentially see what those change orders might be. And that gives you closing time in

diligence time period, sit there and go, okay, I might have a change order with the roof. It doesn't look too bad. It doesn't look too old, but it's obviously got a couple of leaks. Can it be patched or does it have to be a tear off? Can we do a layer or does it already have three layers? Right? These are the things that actually matter because at the end of the day, a $700 roof repair is cheaper than a $7,000 tear off. Amen. Well, let's talk a little bit about your model. I think- Stop it, bro. I go. I go. I'm sorry. Right. Well, because you can get in the trenches. Like me talking about investing and wholesaling and marketing, I can get in the weeds. But I want to talk to people about, like, I go, I'm sorry. Right, well, because you can get in the trenches, like me talking about investing and wholesaling

and marketing, I can get in the weeds. But I want to talk to people about, like I obviously, and maybe it's not obvious to some, and if it's not, you should look me up, right, if this is new to you. But I teach how to be a virtual real estate investor. And what I mean by that is you shouldn't just wholesale, you shouldn't just fix and flip,

you shouldn't just buy and hold, but you can all do it anywhere you live. You run a very similar business model for construction, which I think most people don't even understand how I do it. Meaning how do you live in Miami, but you're buying three different apartments in Alabama, two in Birmingham, one in Mobile. How do you live in Miami and you just bought three flips in Pensacola? How do you live in Miami? Because there's a real process, there's a real system, there's a real strategy to do what I do.

And once you dial it in, it's a rinse and repeat model. So for me, I buy and remodel everything. You know that? Because you run every single property for me as a moment in time, right? And so I don't care. And you can verify this. I do not do the

lipstick and, you know, paint bullshit. Like if I'm buying an asset, I'm doing a full remodel. I very rarely, I mean, rarely keep the cabinets. Right. I very rarely don't, you know, change out the floors and redo the kitchen like very rarely, But it's because that's the system in the process. And A, you know how to do that. So I have someone who were locked, you know, step with that. But B, it's because there's just a simplistic financial model that I can run each and every time to say, if I buy it for this, and I'm willing to put this into it, I know my ROI is going to be this, right? How do you run your construction business in a similar fashion? Or is it not similar to what I do in the real estate space, doing all the deals that we do together? And I know I'm not your only client. How do you do this

all nationally living essentially in Chicago, but I know you have spots here in Florida as well. All right, everybody, before we get back to the episode, let me give a big shout out to Roddy at The Rehab Depot for sponsoring this episode. Listen, everybody, if you want to work with the number one contractor across the country, please reach out to Roddy at The Rehab Depot. This guy runs all of our construction nationwide

and works with thousands of other investors across the country. He is entrusted not only to put together the budget and manage subcontractors, but to start and complete and close out projects from A to Z. Roddy runs the largest rehab academy in the world. If you want to learn more about how to become an elite rehabber, you have to follow his program for only $25 a month. That is it.

It's that simple. Go to go.therehabdepovip.com. Go.therehabdepovip.com and sign up for weekly classes live with him. This will be the greatest investment you could ever make if you want to rehab houses. To answer your question, it's always been a hub and spoke model, right? And I call it a business ecosystem. And one of the things I teach in our academy is the business ecosystem, right? What is

your core skill set? For us, it's construction. All right, so what can we do with construction? So over the years, I've been in it 20, going to be at 21 years now, man, strictly reinvestments and rehabs, all I've ever done. I had the hub is construction. Then I'm like, well, you know, I'm realizing I should probably learn how the funding works, right? So I go to the hedge funds and learn high level management because they were my clients when I was like 22, right? So I'm like, well, if they have an idea, I was like to get out. That was like a couple years ago, wasn't it? Bro, don't even start. Hey, we're both little dog.

At least you got that wig looking good though still. Hey, man, starting to think from this shit. But no, so I learned from the hedge funds about management and finances and how they manage their money. And I'm like, all right, if I could take that little bit and implement that in my little

anybody construction company in Chicago 20 years ago, I'm winning. And we did that. And then we started winning all these awards and getting all the notoriety from the magazines and all the big shit back then. And I'm like, all right, well, we've got credibility. What can we do with it? Hub and Spoke, right? I'm like, what other Spoke can I use?

So I said, well, the industry needs education, right? And that was something that was trending around the last recession of 2008. That's when a lot of education came up. Ocean Builders, a lot of things were happening. So I launched the first education program. And I said, well, they're learning how to invest. I need to teach them how to rehab. Cool.

No problem. It's complimentary, right? It wasn't even a competition. It's a value add. Which is what I believe in, a value add. Why compete when you don't have to compete? Let's figure it out, right? So we did that.

And in doing all of that, they became a spoke. And then they it out, right? So we did that. And in doing all of that, they became a spoke. And then they became a bootcamp. So we started doing bootcamp scrunchies. I was another spoke. And then I'm like, damn, we're really good with numbers and budgets. I wish I could create a software program that existed. Nothing existed. I was using Builder Trend, but that was for custom home building. So I pay $400 a month to utilize 25% of the system. It didn't make sense to me. So I'm like, all right, I got a buddy of mine who's in development. We built one. We built Roddy PM before the recession. I sold it two years ago to John

Nolan, who's also in the park of mine now, but we're still redeveloping a lot of that program now for the academy, for project management, and for lenders to manage their draw process. So we're still in the SaaS platform business. Again, another spoke. You get the idea. When you create a hub and spoke business ecosystem,

you can go virtual. Because when you're going virtual like you are, right, you've got a hub, right? I'm a spoke to your hub, right? In essence, you're a spoke to my hub, right? So it's how you look at the resources around you and utilize them to your fullest advantage. What is your singular skill set?

Fucking stay there, right? I don't give a fuck about tech, but tech is my life. Find the tech guys that are passionate about that, pay them to do it, right? Bootcamps, I love talking to people. I love being on stage and showing people what they're doing right and wrong and just watching them grill like a fucking plant.

I love that. It fills my heart, right? Maybe that's probably what I'm supposed to do all along. Who knows? But that's where my passion is, right? But that's probably what I'm supposed to do all along. Who knows? But that's where my passion is, right? But that's a spoke to everything that we always do, which led us to the virtual call center. I'm like, you know, I've always virtually rehabbed for myself.

And technically, I kind of virtually rehabbed for a lot of our clients at the time. Why not offer it as an actual service? Man, I just had a podcast this morning. I was talking about this exact thing. What a great fuck up. Because I generally thought like, oh, we're going to offer virtual construction management and I'm going to put project managers on it.

But is this going to be another service, another spoke? No, bro. That literally became its own wheel, its own hub. Because running a call center virtually in construction management all across the city or across the country, that takes up all my time, right? So for a year and a half,

I didn't do anything but be in this business operationally 24 fucking 7 like i was before and then you go through your career and you realize you could pull out of your business around 38 39 i had to really self-evaluate and say do i have the balls do i have the testosterone do i have the fucking desire to know i gotta go back in with an unknown time period of when it's going to end do i have the fucking desire to know i gotta go back in with an unknown time period of when it's going to end do i really want to fucking do that and i said yeah i want to fucking do that i still got the dog in me so here we are and i'm glad i'm doing it because it's working and it's we learn something new about it every day and what we're learning is from you

a need that you may have that we overlook like fuck we can compliment that or shit i can take care of that or we can handle title like our virtual title partners we're bringing in more resources so to go virtual like you do and to go virtual like i do it's really called the hub and spoke business ecosystem right every spoke is a resource you help me i help you we scale overnight it's a very fast-paced thing why deal with construction if you don't like construction right don't aesthetically i donaced thing why deal with construction if you don't like construction right don't aesthetically I don't even like dealing with construction I don't even like contractors I'm not even lying I can call one of

my subs right now and just cuss him the fuck out because it just aggravates me when I hear his fucking name I just want to punch him in the fucking face but he's good at what he does and he knows that he'll tell me that he's like but you know I'm good at what I do I'm like I'm good at what I do. I'm like, I'm going to knock your fucking teeth out, dude.

Just, I don't like it. Well, so when you are running virtual, what processes do you put in place, right? So when I run a virtual business, the process of finding the lead is in place. The process of analyzing the lead is in place. The process of the underwriting and the construction piece is in place. The process of how are we exiting the construction piece is in place the process

of how are we exiting are we listening on the mls are we refining out all that becomes in place so i mean we could literally make a decision within five minutes of whether we're going to be buying the deal or not yeah but i put all those pieces in place how do you run a virtual construction business where many people are going to be like yeah but don't you have to go see the home before you give the actual construction bid? So here's exactly our process. We look at the cost to build new construction in every market. We cut that in half. That's our mid level, level two rehab in that market. You don't fucking know this shit. I'll teach it to you tomorrow. That's our level two. I cut that level two and a half. Let's say it's 150. It goes down to 75. I cut 75 and a half, right? Like what? 34, seven, 35, seven. Okay. That's level one.

Level two, 75. Now I know what level three is. It's over a hundred. Logic. You send me a deal. Our process is simple. Your team fills out our property intake form. We receive it. I analyze it. All the information you get, we go online. We do the same shit. Title searches. We go look at the local circuit courts to see what's going on, any leads that we can find. If we feel comfortable with it, we give you the ballpark initially, and we text back that number. In your case, I know your boys,

I just text them right back and say, you know, you take 65, it's going to be 74.9, let me know if you greenlight it. That's how fast that happens, no matter where we're at in the country. I could be on a fucking roller coaster, and anything could be like, hey, real quick deal in Texas, which we looked at recently.

And I said, it's a small house. It's going to be a full good, yeah. We just said to the Texas market together, right? So like, you look at that, I said, small house, 924 square feet. I said, I know it's on the center block with an air foundation issues. You just know. And that goes back to my risk and preparation. I said, experience.

That's a piece of your risk either you have it or you don't and i looked at those houses are all all in the south they're all built very similar because of hurricanes and the type of storms because weather is a risk right the way they do a roof is not the same as the way they do roofs in chicago the type of windows you need in tampa and miami are not the type of windows we need in Chicago. So by using that experience and knowledge, we can give you a ballpark. And the idea is for you not to buy a lemon. I'd rather my clients walk away from a bad fucking deal if I told them, I don't think it's a good deal, dude. Go to the next one.

That's what investors need is that mentor in the ear saying, maybe, but here's your complications, man. So you better have a side pot. They're going to have a side pot next. Well, what I like about you, and first of all, again, if everyone's like, dude, I want to learn more about construction. This is the missing link. Where can they go to get a part of your

community, your group, the $25 a month? Where can they go find that? Join my private Facebook group. It's called The Roddy Rehab Academy and Mastermind. The Roddy Rehab Academy and Mastermind. I will put that link in the comments below. I always post that link. I post our academy links

in there all the time. It seems like every single day we're getting more and more guys and girls and teams. Whether you're enterprise and have multiple offices and multiple staff, put the staff in. I've got people like RCN Capital who put their acquisitions teams in there just to learn how to re-edit a little bit better so they can ask better questions. I've got sales reps in there. I've got mortgage brokers. I've got contractors. So my point is, everybody involved

in the aspect of the asset of real estate should be in this because all we're teaching you is how to manage that asset and get out of it or pass on it yeah yeah and listen at the end of the day the the thing that stops most people is they don't know how to analyze not whether they know how to analyze what the end value is the arv that usually most people can learn from myself and others they get pretty darn close their challenge is they always underestimate the the rehab value. And you and I have done plenty of this together where we'll have a group of my members and we'll say, okay, here's what we call some Bubba math. And every time you and I go head to

head, you have 20 years experience. I have my 16 and doing it, but you're the contractor. And my Bubba math is within usually like 5% of your number. Very rarely are you at a number that is like, whoa, how did I not see that? But my bubble math is $30 a square foot if you're going to do lipstick and paint, which I don't ever essentially run that model personally as a buyer. $50 a square foot, which is where you were talking about is like your level two or your level one, I think. Well, level one is think um well level one about 40 45 see that's the only thing to answer your question like we've had so many opportunities

to re-evaluate your numbers and the type of projects that you're buying and i was able to really really dial in where you need to be and we determined that your level one's like because you're between your level one and level two is like $40, $45 a square foot. That's a fucking home run. Because now I could say, hey, listen, unless we all do MEPs in the roof, 45 is getting it done, bro. And that's a win. You know what I mean? And I've locked in so many of our crews of so many markets across the country

that I know their labor percentage. I know their material percentage. I know that their market percentage. So I put all that into a budget and say, all right, dude, it's going to make $39,000. Like I'm like, I can award a contract for $39,000 of a $52,000 contract. We control some of the materials on our end. We control the markups and we control change orders. So we, that's the other thing is like the big key to your success and the success of most investors is when you can create your own budgets and then award contracts. Because theoretically, if you hire us, young us, we've already bid it for you, essentially.

So why the fuck am I going to ask somebody else to bid it? I already bid it. We know it works. So now we need to negotiate our contractors down and say, hey, listen, they'll never know the full budget. I know I need wiggle room for the changeover, so I've got to control it as much as possible. And it happens time and time again, where I'll say $65,000 budget, I'll award it to a contract for 48.5, leaves a nice little pot there, right?

People are like, oh, you put that in your pocket? I go, no, we're going to fucking use that on a changeover, I guarantee you. Planning changeover, I'm like, he's like, I need $2,400. I'm like, perfect. I'm like, no problem, approved, because I know I have it. So I don't have to tell your team there's a changeover. It doesn't matter, I have it. So then, oh, the roof is leaking again, blah,. Approved. Because I know I have it. So I don't have to tell your team there's a change order. It doesn't matter.

I have it. So then, oh, the roof is leaking again. Blah, blah, blah. Cool. Go patch it. $700. Cool. I have it.

Approved. Right? They don't need to know how to manage the money. I learned that from the hedge funds. So when you look at that aspect of what you're saying, the key really is in the very beginning is learning your numbers and dialing them in. Making some mistakes to figure it all out in the long run, right? Sometimes you got to slow.

You don't have to stop, but you got to slow down, look at things and then speed back up, right? Like a Formula One race car, right? You don't stop on the gas, put the gas in there while still fucking moving at a slower pace. That's it. Yeah. One of the, what do you think the biggest mistake when you take on a newer client or

maybe a newbie, what do you think their biggest mistake is? And then tell them how to overcome that. Having confidence in what they're doing is something I hear in the, in the voice, right? Because we do consulting calls on, on certain projects,

especially a newer investor, because again, I'm not sure where they're taught how to deal with contractors, but it seems like they have no clue where to start. So I like to have a conversation like this and say, well, what's your experience level? You know, is this your first house, 10th house? How often do you buy? Oh, it's like my first house, me and my wife, or it's my 10th house, but in five years. So clearly it's not something they do every day. And we try to walk them through a process and we try to let them know, like, if you follow the rehab depot process, the Roddy way, right? It will work for you, but you have to trust yourself because they buy houses that they're

unsure of. We go a little further in the conversation to go, do you mind if I look at the deal before you close? Like, can I look at what you're possibly buying? And then it's easier to work with them that way because I could look at the stuff we shared on the screen I'm like all right unless you're trying to they were selling it for x you try to buy for this but I'm telling you you really have some more than you think it is I'm like you have to go back to the drawing board and renegotiate with the seller and oftentimes that's where they're just like well how do I do that and I'm like that's not what I teach but I'll teach you how to sell but that that's not what I'm here to do

you know there's many friends I have at but I'll teach you how to sell. But that's not what I'm here to do. You know, there's many friends I have at the initiative. There'll be more to happen to teach you how to sell and close these guys. I said, but it starts with their confidence level. So if they're not confident or competent in the beginning, going through construction is fucking hell and nerve wracking for them. And you really have to hold their hands. I have a lot of students that are a lot of our clients as well. And they're learning and they ask so many questions and i don't have a problem with that but they question everything

from an invoice to a line item to why isn't drywall there on a tuesday the truck didn't get there they'll be there tomorrow do we lose time not really you can make up for it's only a day so yeah it's just things like that right um what about what about like can they make some assumptions is there again and what i call it bubble math i essentially now obviously i think everyone's aware like i have built a business where i have a general manager i am not personally underwriting these deals but the assumptions my office makes and my team makes is roughly every deal we're looking at starts at 50 square foot for the rehab and that includes a new kitchen new bathroom but we're looking at starts at $50 a square foot for the rehab. And that includes a new kitchen, new bathroom.

But we're also staying under a $300,000 price point for the most part. Sometimes, like this Austin deal, I think we're buying it somewhere like mid-threes. But the ARV is like $600,000. I think the ARV is $600,000, isn't it? Yeah, the ARV is like $600,000, so there's room to play there. But it's going to be a six figure remodel right so you know people have to understand right if i'm going to buy mid threes i'm going to have a six figure remodel we'll make some money but it's not like i'm going to make

quarter million dollars right so i think the other thing is they they forget the holding cost it's going to be a nine month project whatever i say all that just say can they make can people start making assumptions on price point and products meaning Meaning I say $50 a square foot anytime I'm buying a home under 300,000. Like that's my starting point. Yes, there are people that if you want to buy a rental and you just want to keep the cabinets and you want to do $30 a square foot can get you there for sure. Right. I just never run that model. I replace everything unless, you know, they literally just put the cabinets in, which is very, very few and far between. It's a valid point. It's a valid point.

Yeah, some steps can definitely be made. For example, I had a student yesterday after our call for Q&A, and he said, how are so many investors able to buy so many deals at once? And I said, well, how many deals have you done? He's like, four. I said, well, that's the difference. I said, you got to understand higher level guys are using lead generation CRMs and contacts, and it's a simple phone call. And they've got tenure and respect and credibility in the industry where people just call you. I said, you got to get there. I said, don't worry about that shit. Just master your lane, stay in your lane. And I say the same thing about single family. Stay in your lane,

master single family, master the numbers. So to your point about is there any way to make an assumption on budgets, there sure is. If you use the formula of cutting the cost to build new down, chop that down and start with those starting points. And of course, there's no guarantee. Budgets are projected, right? They're moving targets.

Schedules are projected. They're moving targets. So the only way to track your metrics is the law are projected, right? They're moving targets. Schedules are projected. They're moving targets. So the only way to track your metrics is the law of averages, right? You got to do three projects to figure out how many change winners did we have? Were they all total? Then you have your average that you're missing. How many days or how many weeks were we late on these three projects? Then you have your total.

Then you can figure out your middle. Same thing, right? You got to look at those things. How many times were we inaccurate on the bid, on the budget itself, right? You can measure your metrics, but you got to make some mistakes. You got to fail forward to start making better assumptions. That's the only way to do it. Because there is no, there is no, this is how it's made, right?

This Pellegrino was made exactly like this. That is a science, the science of flipping, right? That's a science. You have to get that over and over and over again to get to a point where you feel you've mastered the science of flipping right that's a science you have to get that over and over and over again to get to a point where you feel you've mastered your science of flipping that may take several long-term mistakes but you got to be fearless man but being around guys like you and me being out around friends of ours right like there's plenty of help in the industry that can help you make those assumptions more and more accurate.

At our academy, my goal is to put you comfortable making an offer on a pretty decent budget. If you're like, I only have $45,000. Well, you're going to need $65,000. Then they're going to say, let me know if you've greenlighted it because our next step is to break out of your budget and get the contracts, blah, blah, blah. They come back and say, oh, we reimbursh it. I was able to lock it in. I'm like, good job. All right, now we can make this work.

But that's the interesting thing. What you just said is really everything, Roddy, because we are able to go to you, and this is why I would really implore you guys to go find Roddy on Instagram, find him on Facebook, join his Facebook group, and be a part of his community because I have access to Roddy,

which I don't know if you offer this to everyone, so I don't mean to blow up your spot, but we literally will make a buying decision on what he basically comes back to us, usually within 15, 20, maybe 30 minutes max, because he's getting into his car. He's like, I'm getting in my car, give me 20 minutes. He will say, hey guys, you're at 50 on the remodel, you got to assume 65 out of the gate. Here's why, boom, boom, boom. We will make a decision whether we're going to buy the deal or not. We will figure out if we need to go renegotiate right then and right there it allows us to buy

better the power of understanding your numbers the power of understanding construction allows you to be a better salesperson that's what i think a lot of people don't understand it allows me and my team to acquire more properties because of the confidence i have in roddy or if you don't have roddy or don't use them you you should. But if you have confidence in your contractor, contractors are so transactional because if I have confidence in my contractor, they're going to get all 28 properties of mine. Or they blow it once because they want to over-promise, under-deliver. They fuck that one deal up. They get no more business. Contractors should be better business people because if you do it right the first time, the business will continue to flow to you.

And so that confidence, though, again, going back to the confidence I have, my team has, because of Roddy, allows us to renegotiate based around when we get a true itemized bid back from them. In the inspection period, we say, oh, man, there's 12 grand worth of whatever the hell, we got to go get a reduction. I thought what you just said is gold, bro, because that is funny. I was thinking that as you were saying that. I'm like, this actually allows you as a company, right, on the investment side, on the acquisition side, to put more effort, maybe more education,

it's like an Anthony and Carson for the sales aspect of it. Because if I'm saying, hey, we can make it work, we can go deeper, hey, let's focus on our sales skills because we do the same thing we're saying we have to analyze properties all the time and say how do we make the budget work all the time it's every client every property everywhere across countries and they're going you know can we absolutely salvage those cabinets though they are in mid condition they're just older can we actually give it texture new hardware new hinges can we make it a soft close is it worth the effort time and labor we're problem solving just as well for example one of the things we were working on especially on your account right is is it butcher block is it granite is it quartz so we brought hannah in

right our agent i'm like hannah all i need you to do is when you give us the cop is really tell me the material cop because I want it to sell from these guys fast. I don't want to put in butcher block if everybody expects granite because that's only a $1,200 to $1,800 difference. I'll put the money in for that shit. But if that's going to cost us three months on market, fuck that.

We're putting the granite in day one. So again, like you're saying, the more effective you are on your side of the business, the more effective we can be on ours and then vice versa. And we're trying to complement each other so that each deal gets deeper, more efficient, faster sold repeat, right? The rents and repeat model. So that was a goal of what you said about learning the sales aspect, going deeper. Well, this is why I understand.

So like even for a wholesaler in general sense, right? The more I know my buyer and what they buy at, the easier I can negotiate, the better a salesperson I can be because I know my buyer, their buy criteria. So even if you're a fricking wholesaler, listen to me here. If you're watching this on YouTube, justincolby.tv or listening to this, listen to me here. Even if you are a wholesaler, you need to be learning what Roddy teaches because you can be a better salesperson, negotiator when talking to your homeowner for your end buyer. You're not buying it. You may not be using Roddy, but you learned his skill set so you can analyze the remodel component.

So when you present it to a buyer, it's at a price they can afford because they might be using Roddy or a Roddy type person. You just need to understand the skill set. It is imperative for $25 a month, by the way. Let me sell you. That is an absolute no brainer, everybody. That is insanity, right? And, you know, I tell you.

The truth is, the truth is, is they'll get it because for 10 years we had the Academy, we were charging thousands of dollars for it. To me, I'm'm like i would rather work with 25 000 investors who need the actual help and if you can afford 25 bucks because you really want to get started that's what it's all about because it's the simple information every time i speak it's it's one any time you've seen somebody picked up they tell me all the time every time i just say something my brain just goes that's what i'm going to do apparently it's just one of those things i'm telling you anybody listening right

now it's it's you know and he's got he's got just to call me tv on youtube i've got a youtube channel where i put a lot i've got 300 videos up man of educational videos of just me and a whiteboard thinking about a process or me and a whiteboard talking about top 10 things subs need to learn you need to learn that too i give away that shit all day long. You should follow that on YouTube. That's 100% free. Yeah. And guys, again, I think it's a perfect place to kind of say, you know, we could go in the trenches

and I could pick his brain, but the reality is you guys should just go and find him. You guys pick his brain. What was your Instagram again? And then what is your Facebook and Facebook group? Facebook, my personal Facebook, I have a couple. I have Roddy, R-O-D-D-Y. I have The Rehab Depot.

I have Ryan Roddy Garcilaso. And then I have the Facebook group of The Roddy Rehab Academy and Mastermind. I have four Facebook pages. All right, I'll go through them again. The Rehab Depot, Roddy, Ryan Roddy Garcilaso, and the Roddy Rehab Academy and Mastermind. All right, that's where you can find me on Facebook. On Instagram, it's Roddy Flipped It. Very simple.

Roddy Flipped It. All right, and then on YouTube, it's ReadAgg with Roddy. Say it again? Do you have an event coming up? I have a boot camp coming up in Chicago literally in a month, April 4th and 5th in downtown Chicago with Majiano's in the speakeasy. We're going to go through our boot camps.

People ask me, what's the difference between a boot camp and your academy? Academy is where we can take time, two hours, and really deep dive into a specific topic. Boot camp, we cover every topic in 16 hours, so two days, right? No fluff, it's straight. Our sessions break food.

Our sessions break food. Network, our sessions break food. Same thing next day. And what we try to do in the bootcamp is help you evaluate the moment you're in that room with all different levels of investors, rookies to the biggest veterans you can imagine still learning new techniques for their teams. The first thing they're doing is they're analyzing really bootcamp's going to tell you where is your business at today the moment you're sitting in that chair what does your business look like because when i spit everything you're sitting there analyzing project management these are analyzing but it's looking at time you're looking at leadership we're talking about personality traits we start talking about safety and dangers of project we start looking at how things are

operating you start really evaluating we start talking about kpis and the things that your construction coordinators and positions and the people that are part of your team and who you should hire eventually, how you should pay them. You start evaluating like, you know, on one end, you're going to be like, shit, I got a long way to go. Cool. We're here for it. On the other end, you're like, all right, cool. A lot of it I'm doing right. I just needed that one little piece, right? Cool, it is. So the camp really is a high level overview of where your business is we touch every single topic so when you join the academy then you can sit there and sherry pick the curriculum and go i don't want to miss this one i don't want to miss this one i don't want to

miss this one and with 60 weeks 60 classes it's a lot of shit and we record everything and we put it in our student portal where it's private and you can actually work with the other students the same and you know i see it all the time i can read some of the comments to each other asking questions like hey did you somebody was it me that was lost on the formula or did somebody else get it and you've seen somebody else explaining it it's fucking incredible it's the biggest problem that is yeah hey guys so if you can't where can they go to if they were close to chicago they want to go to it is or their seats left is that something that they can go There are seats left. Usually, the reason why we call it a mastermind is because all of our students

can choose to come for free. That's part of the membership. So if you join the academy at $25 a month, you can come to any camp you want for free if you're a student, right? So offer max capacity in that venue, which I love, is 60. We're at half, but we don't have to market it. The people that attend are already with us.

So if you want to attend the camp, just join the academy and by default, you'll attend it. If not, you're going to pay $4.97 a ticket. No brainer. There you go. Well, it's a no brainer. Dude, I appreciate you. Again, this guy's done this for 20 years.

He runs all of my construction as we're recording this right now, including the three new apartments that we just got. So this guy knows what he's doing. If he's good enough to work with me, he's damn sure good enough to work got. So this guy knows what he's doing. If he's good enough to work with me, he's damn sure good enough to work with everyone watching this and listening to this. That is for sure. Dude, I appreciate you spending some time here making it happen.

Appreciate the transparency, letting everyone know that you even hate a contractor. So if they had more business acumen in the way you do, I think contractors would have a better, would be looked at with a better light right and so 100 100 can i can i leave you with one thought in the audience with one thought with what you just said the key to our success right was the fact that we became a bridge when i learned hedge fund way of doing business and clearly doing low-level construction right somebody had to bridge that gap the hedge funds don't want to deal with a fucking raggedy-ass garage band in Mobile, Alabama,

but they'll go through me to do that because they know I'll get the respect of the field and those guys will listen to what I've got to say because I am them and they know that they're not me, right? I can feed them. Hedge funds know that I can manage them, but also hedge funds know

I can have that high-level conversation as well to make it work at a larger scale. So for you investors out there, and anybody who's watching this who want to get in the game or are in the game or are loving this or inspired by this, think of yourself, but how do you become the bridge to what you want to accomplish? Who are the two people, the two teams,

the two major resources that you need to grow your business? How do you become that centralized doorway? Once you've created that, you're going to be set for life. I'm not saying you're not going to be stressed, but you're going to be good. You're going to have a future. You're going to have a career.

And you're going to have financial freedom. That's it. No doubt. No doubt. Well, brother, I appreciate you. Again, make sure you go follow him. Go rewind this. Listen to it.

Watch it again. There's gold in these hills. And you can go find him on all the social media platforms. Appreciate you showing up, showing out. Thank you. Peace. Peace, bro.