MMM Edition: The 3 R’s Every Investor Must Know — Retail, Rentals & Risk

The fastest way to learn what really builds wealth? Put your hands on a live business and a real project—and learn to love the work. We open with retail not for nostalgia, but because it spotlights risk, revenue, and the difference between buying a business and buying yourself a job. You’ll hear why “revenue cures all” is more than a slogan, how to price a small business without fooling yourself, and why a franchise or brand moat can turn effort into equity. We dig into SBA and seller financing, the hidden cost of owner labor, and the smart way to avoid the cheap-deal trap.

Then we pivot to rentals and the move into development. When value-add margins compress, construction skill becomes your edge. We walk through the ladder: years of flipping heavy rehabs, small new builds, and finally modest multifamily that teaches lessons without blowing up budgets. Land basis and entitlements drive appraised value, banks prefer multifamily over speculative office or retail, and co-GP’ing with an experienced sponsor can open doors when you don’t yet have the balance sheet. Returns look exciting—2x equity multiples for LPs and even bigger upside for GPs—but only if leverage stays disciplined and reserves are real.

Underneath it all is a hard truth: cash flow alone won’t pay most people’s bills. Active income—brokerage, flips, or a real operating business—funds the holds that compound over time. We share the “Amazon chaos” method to manage spikes in workload, the speed tactics that still win MLS deals, and a candid take on why short-term rentals in certain markets often disappoint once the sugar high fades. If you want durable wealth, focus on repeatable revenue, protect your downside, and build skills before scale.

If this hit home, follow the show, share it with a friend who’s eyeing their first development, and leave a quick review so more builders and operators can find us.

VCap Real Estate Podcast

Transcript

Should Investors Diversify Into Retail

SPEAKER_01 0:23

You learn how to five renovate manage and still feel like you can actually do it every day. I'm gonna hold out. Let's talk. All right, so I want to go into the one thing you probably don't want to go into, which is retail first, if you don't mind. And I want to go into retail just because I I find it so interesting. And I think a lot of everybody here is basically real estate. And I think a lot of people don't understand retail. And I think you have a very unique perspective on it. So my first question is just should somebody, anybody here diversify into retail or something similar? Is it helpful?

Revenue Cures All In Retail

SPEAKER_00 1:05

So I think retail is a great way to make active income and make a pretty high return for every dollar that you invest with a lot of risk. But it is how it is how I cut my teeth and made a lot of my money. It is painful sometimes because you deal with low uh low-cost labor, which always has its issues. Um, but yes, it is a great way to kind of make money. You can use SBA financing, you can use a lot of avenues, seller financing to buy um you know existing businesses and stuff like that, um, or start your own retail. If you have construction experience, uh you could build retail uh for cheaper than what it would cost most people. Um but I don't know Pennsylvania retail, like I know Long Island retail. So like I know roughly what an area can do and support in terms of revenue. Um and a lot of times you'll see retail in Pennsylvania um be owner operated where people are just buying themselves a job. Um and they'll suck. Um but like some places do kill it, and they definitely have more than um the owners might work there, but they still are doing enough revenue where they could hire a manager. Um like for example, all these halal places that have opened in the valley, like some of them are absolutely fucking killing it. Um like sizzling bites in Bethlehem, I wouldn't be surprised if he does a million and a half to two million in sales.

SPEAKER_01 2:46

So on that note, right, like what is like the key factor that differentiates somebody from let's say uh the the business owner versus like the employee or manager? Like, how do you not become an owner operator? Like, what do you have to watch out for?

SPEAKER_00 2:59

Well, first is you need revenue, right? Like, unfortunately, every business owner has to do everything initially, and then hopefully you do enough revenue where you can hire out. But like, it is impossible to have low revenue businesses be managed for you. Like, I in retail especially, I say revenue cures all. Like, any fucking problem you could have will be cured if you make more revenue. So, like, there's like kind of a break-even point, and after that point, you need just that's when you can start hiring managers and stuff like that. So, like, you might find an easy deal, like a cheap deal. Cheap deals are not good deals, especially in retail. So, like, if you look at something, they say they make a hundred grand and they want two fifty for it. Um, probably a shitty deal because that hundred grand probably includes no manager salary and doesn't include and probably doesn't even put back the owner's time that he's putting in. And you know, he's working 40 hours a week there. So it still might be worth 250 to someone else because there are people out there that want to buy a job because it's still more money than they make today. So it's not it still might be worth 250, it's just not worth 250 to you.

Buying Jobs Vs Real Businesses

SPEAKER_01 4:19

I know you used to have your edible arrangements. Do you still have that? Nope, thank God. Can you tell the story on that? And I just say that, and you don't have to go into nitty details, but I remember that you did it for a bit and it worked really well, and I don't know how it ended.

The Edible Arrangements Playbook

SPEAKER_00 4:31

Hopefully, yeah, oh it worked out great. I mean, it was a miserable time, but um my my wife got pregnant in April. I started freaking out in the summer of I have a kid coming and I need to make more money. Um, so sometimes you're forced to do things that work out very well. Um so I bought that during COVID, 2020. 2020, I think. No, I think August of 2020. I think I closed that December, December 8th is when I closed it. I bought it, it was a dark store, meaning like it closed down during COVID because they had lost their staff, so they couldn't get top dollar for it. But the old sales numbers were all like seven, eight, nine hundred thousand a year, which is great or relatively good. Um I paid 160 for it. I worked probably a hundred hours a week the first month because it's a very holiday-centric business, and uh it COVID was great for edible arrangements because they did everyone was just ordering everything. Um so that month I did 90,000 in sales, so it was insane. Um, but I was there from like 4 a.m. to 11, 12 o'clock at night the week before Christmas. Um so I made a great amount of money. I think overall I owned that for two years. I made like probably like 170,000,000 the first year, 155,000, 160 the second year, and then I sold it for 350,000. So 160 turned into you know 700-ish, 800 in two years. So pretty good return.

SPEAKER_01 6:17

That's awesome, and I just like that story because I feel like as investors, we look at you know the different business opportunities, but it's myself speaking, at least, it seems so complex, it seems so completely different, and I'm like, that sounds good. The fundamentals seem relatively the same, but I don't even know how to attack that.

Risk, Returns, And Real Estate Tradeoffs

SPEAKER_00 6:34

So yeah, so the the returns are way better, but like everything, even a cap rate is a measure of risk, right? So like lower cap rate doesn't mean it's a worse property, it just means it's usually less risky. Um, and that's the same thing in business. Like, yes, you can make 50%, 100% on your money, but like just know there's a likelihood of losing it all. Where in real estate, you trading that off to uh the trade-off is like you're most likely never going to lose all your money.

SPEAKER_01 7:03

So good. Are there similarities between I mean you kind of just mentioned a couple, but are there any stark similarities or differences between like real estate, specifically investors, let's say, and retail?

SPEAKER_00 7:15

Um yeah, I mean one of the big issues you have in retail and real estate is every idiot thinks they can do it. So like there's no like they don't think of like the science or the art of it, and they just think it's easy. And I mean, it it you don't need to be a genius to do either, but like you just have to kind of grind and do the work. Um and uh yeah.

SPEAKER_01 7:39

Love it, love it. All right, last question on retail is like if I wanted to get into this tomorrow, where would I start learning about this? Do you find a mentor? Do you start Googling? Like, how do you step in?

SPEAKER_00 7:51

So I learned from my dad, so like it's a little unfair, and my like friends and stuff, because like all of our parents own businesses and stuff like that, so it's kind of like born and bred into me. Um, there's a thousand YouTube people now that like will teach you business brokers and all that stuff, but I would try to find the people that are a little bit more realistic and don't make it sound so rosy because like now, unfortunately, the guru business is a full-blown business, and like it is not as easy as any of them make it seem.

SPEAKER_01 8:22

I like that one last question. If you were to do that, would you always suggest buying a business that's operating versus starting one from scratch?

SBA Financing And Roll-Up Strategy

SPEAKER_00 8:31

Yes, I would always suggest buying something. I would always suggest if you can, either you buy a business that has a moat or you buy a business that is a franchise because there's some like brand recognition. Opening up like your brand new coffee shop might be great like as a passion project, but like do that when you've already made millions and like is you're probably gonna lose it all. Um and usually what I mean I kind of some regrets that I have is like I know a couple people roughly that started buying rental. When I started buying rentals in 2017-18, they started buying businesses, and these aren't guys that ever had any experience in business, but they were like NBA types, like think prize back, and like one guy I know is down in Atlanta, he's probably worth 10 times what I'm worth, maybe more. Um, and he started buying the same time, same everything. He started like 150 grand. And what he's told me is like you always buy businesses that are big enough that you can support like a manager's salary and and the financing and all that, but then small enough that like private equity's not looking at you yet, and then in a sector where you can buy up more. So, like he's in healthcare, like he owns like ambulance companies and stuff like that. So, like ambulance, yeah. So, like he'll buy up like stuff like that. Because with the SBA, once you own a business, let's say in healthcare, you will get almost 100% financing on your next deal and your next deal and your next deal because you're already experienced it.

Shift To Real Estate: Rentals And Cycles

SPEAKER_01 10:13

So interesting. I guess it's a good point, just something about the risk, like you said, real estate to get rich for sure, basically, and then the retails maybe, maybe not. So interesting. Alright, I want to shift to obviously real estate, the whole core of this. So, what's your bread and butter?

Why Development Became The Focus

SPEAKER_00 10:28

Um, bread and butter is rentals, you know, crappy rentals in Allentown, uh, for the most part. Um, all value add stuff. Um, it has shifted now. Uh, real estate's funny because like the same thing is not gonna exist forever. Like back in 2018 to like 2022, all we did was value add uh real estate. So buying really shitty properties, renovating, re buying out, buying more. Um, the last two years, probably, we've almost bought nothing that's value add for the most part, or not good enough to re buy out. Only made one or two. Um, the nice thing is now we continually kind of buy rentals because like you sell one thing, the 1031 into another, so we're still growing units. Um, but the more lucrative play for us now is development.

SPEAKER_01 11:20

Is that cyclical because of the market that the rentals slowed down, or is that just because the market specifically blew up and it just changed?

SPEAKER_00 11:29

Yeah, I think investors kind of found the valley more and more. So like there's just more and more like investors jacking up the prices in in Alltown. It is definitely cyclical because you'll see markets like Allentown, all the like the secondary markets and tertiary markets basically get pummeled when the economy gets goes down. So like wherever people are going, like now everyone's going up north. They're they everyone chases yield basically when they get priced out of their own market, uh, and that's fine. But you know, when the market goes down, they're gone.

Pathway To Development Experience

SPEAKER_01 12:02

Love it. So I want to go into developments. I know you got some development going on. I got so many questions about it. So how does somebody, I guess to start, how does somebody transition into doing developments, right? Let's say you're an investor, you have a steady base, and you want to build something. Like, what's that look like?

Small Projects, Big Lessons

SPEAKER_00 12:22

So I wouldn't start uh just like being like, hey, I want to build something. Like that's probably not the best idea. Okay, um, I think real estate, the problem is like you don't get you don't make money like cash flow in real estate, you get wealth in real estate, um, and you can build an active business within real estate, so flipping or being a broker or whatever, um, but you're not gonna like develop and you know make money to pay your bills because like the development timeline is anywhere between two and five years. So, like, how are you paying your bills for that long? Um, but to get experience, like I'll tell you what we did. Like, we cut our teeth as flippers, we flipped a shit ton of properties from like 2011 to 2020 basically, then stopped for a little bit. We did a bunch of new builds for people in 2020, and then we went back to flipping in probably 2022. Um, flipping is a good way to kind of learn construction first because like you can't develop if you don't know construction. Um, and then not just lipstick on the pig flips, like real flips where you're like doing some like heavy lifting. Um, and then after that, you kind of do projects to learn where you gotta make sure you have good enough margins uh and a little bit of luck so like you can develop like a smaller property and you know build up. So that's what we're we did. We just finished our first seven unit. Um, we're building another five units, we're doing another conversion of a six unit, and then we're in like basically entitlements on a third unit. Um, but like I'm okay on like the seven unit, we went over budget and everything, but like we're in it for like a million million one, it appraised for a million five, so like we still made money. Um but when you fuck up on a 30 unit, you your problems are just exacerbated. So like, and you learn things on the way, right? So um yeah, it's it's really just building up.

Land Basis And Finding Deals

SPEAKER_01 14:20

So if if somebody wants to do the development, so what is like the strategy to do it? And I guess what I'm asking is you either need to have a hell of a war chest or active income to fund it, or some sort of private house. Yeah.

SPEAKER_00 14:33

Um the first thing you need to worry about like in a development is like finding a good basis for the land. And that's just like luck of the draw. But like I'll tell you, um, the first steel I bought, which is a conversion, was just off a friend. Um, that was a seven unit. The four unit was at the auction that I got. I bought it from another friend who bought it at the auction, then I convinced him to sell it to me. And then the third unit was just fucking actually luck. And I was buying a single family flip from an owner um on 2nd Street. I made I went to closing, asked him what else he has. He had his house in Salisbury. Um, I was just like, hey, like, would you sell that? He gave me a crazy price. I told him hell no. And then I realized you could build on it, and then went back and forth over like probably four months, and then we bought that. We bought it, we paid$315. The land right now after entitlements is probably worth$900 to a million. Wow. So triple your money.

Entitlements And Value Creation

SPEAKER_01 15:38

And I guess there's no fast route to it, right? So you gotta start small. Let's say start with something like flipping per se, then start small, then start leveling up. Like anybody that's doing some massive development that you see in the city didn't just do that. It's like years and years and years of building up.

SPEAKER_00 15:53

Nobody did it early. Another way is honestly what I if I could redo everything, is right after college, I just would have worked for a developer and like just got paid to learn. You know, and like even for me, like I did get paid to pay to learn, but I was on the brokerage side in commercial real estate. So like I learned the finance side of it, I never learned like the development side of it if I did it.

Spec Office Vs Multifamily

SPEAKER_01 16:16

Makes sense. Is there a huge difference between like developing, let's say, office space versus apartments, besides like the obvious that it's different, but it's like the fundamentals the same or is it different?

Building Teams The Hard Way

SPEAKER_00 16:28

Um, it's a different skill set. Um there's so many like niche ways to build retail, industrial, office, it's all different. Um, and it's very hot hard to build spec office or spec retail, meaning like you build it and then you're gonna rent it out because like banks hate that. So like building spec multi is easy. Banks don't care because they know you'll find a tenant for anything basically. But you can't usually build, you know, so a lot of people in like retail will come from a retail background, like they're either leasing brokers or work in-house in leasing, so they have the connections to like go to a Wawa or someone and be like, Oh, you want to be here? Okay, I'll I'll be your spec builder on this. Gotcha. So that's more of like a niche that like gets developed over time.

SPEAKER_01 17:17

Gotcha. And I guess on that note, like building the team, is there any good way to do it? Or is it kind of just like anything else?

SPEAKER_00 17:23

Same way you do a flip, you start pulling your people together, or you unfortunately learn the hard way and it costs you a shit ton of money. Like, contractors, we went through a thousand of them. Um you know, the kind of the same way in everything. You know, you kind of you don't know how like you don't know people until you do business. So, like, unfortunately, you just have to take that risk. You know, like because you'll meet contractors that are honest and great, but then their work sucks, or their work's great, and everything else sucks. So, like, it just it just experience.

SPEAKER_01 17:58

So, it all sounds kind of doom and gloom. So, what's the upside then? Like, if you could highlight what you're most excited for, is it just the wealth building and the equity, or is there more to it that's like kind of worth it?

SPEAKER_00 18:08

No, so like I wouldn't do this business if I didn't like real estate. Like, I just like real estate. And like I think most people here probably just like real estate. Um, I think if you're just doing it for money, like there's so many other fucking ways to make money, like just do something else. Um, real estate is nice that like it's something I'm passionate about. I look at all the time. Like, even if I'm in a new area, I just look at what house prices are for some reason. Um but uh I was gonna say it's been a long day. Um there's so many, oh, there's so many benefits like tax-wise, like you pay nothing in taxes like if you do it well. Like there's so many benefits to it, like you have you know, debt pay down, you have appreciation, and then like usually after you do something for a decade or longer, you start like really snowballing your net worth. And like right now, I I tell you, like, yeah, I would I maybe would have done different stuff if I was passionate about different stuff. Um, but like I I don't have a like a stop date or like a dollar amount. Yeah, and it does seem like it just snowballs even faster. Because like I didn't think I could do better, and then like you just make more and more money and do cooler deals and different deals, and you're like, okay, this is fun.

SPEAKER_01 19:30

It's almost like the paradox, like when you don't need it, it just becomes so much easier, and when you need it, it's hard as fuck.

Can You Raise For A 30-Unit Today

SPEAKER_00 19:35

So yeah, exactly.

SPEAKER_01 19:36

Um let's say for fun that I don't have a war chest, but I want to go build a 30 unit today. Can I raise it? Or is it a terrible idea?

Co-GP Your Way Into Development

SPEAKER_00 19:48

There's almost there's a 10% chance or less that you would even get approved for the loan for that. Um can you do Sure, like hey, maybe you know some really rich people that trust you with money. Um, but no, um, but you can there are ways. So, how like, for example, like affordable housing is really tough. I want I would want to develop develop it, it's just it's the regulatory stuff is is insane. So, like what you do there, and what you could do if you wanted to on the free market stuff is you basically find the deal, then you find the sponsor, so you co co-GP it basically. Yeah, you know, you're basically gonna make nothing or very little. Um, they're gonna sign for your the risk and everything else, you're gonna be involved, you they'll help you raise, but like no investor is really giving you money anyway to do it.

SPEAKER_02 20:43

Right.

SPEAKER_00 20:44

Um, and then yeah, you could do once you have that first one under your belt, it gets a lot easier. You can get approved for loans, yeah, that kind of stuff.

Multiple Income Streams Beat Cash Flow Dreams

SPEAKER_01 20:51

Makes sense. I just it's you hear the stories and you always wonder, like, what does that take? But it's I feel like it's really cool just because it's so elite, right? It's almost like the most elite investing in a way, because you're just taking literally nothing, building this crazy thing, but you not everybody can just do it. It's like all the prereqs, basically.

SPEAKER_00 21:10

So I just think it's such a neat Well, you probably know this, like, so in like your syndications, like you know, you look at equity multiples, like development is usually a 2x at minimum for investors. Oh, yeah. But like the GP multiple is like 5x.

SPEAKER_01 21:22

Yep.

SPEAKER_00 21:23

So it it is a crazy return.

SPEAKER_01 21:26

I love it. Alright, so one of the other things I always talk to you about, and you're always a big advocate for, is just multiple income streams. And we kind of chatted about this, but if somebody here doesn't have multiple income streams, or maybe they're just trying to rely on cash flow or something like that, what would you tell them, or why do you think that's important?

Time Management And The Chaos Method

SPEAKER_00 21:43

Well, I think everyone needs active income. Like, you can't make money in real estate like to pay your bills, like it's just fucking impossible. Every single person who has ever made money in real estate did it did something else. You know, they had a job in real estate, like, those are the only people that like did it in real estate. Everyone else did something else, they made their money some other way and then invested in real estate. Um, so like I would focus if you want to be in real estate full-time, become a broker, flip, do something that's active, that's like paying your bills, and then anything you make above the that you spend, you put it into rentals and and whatnot.

SPEAKER_01 22:26

Love it. It's funny because I feel like I learned that lesson the hard way, and I just always thought like I'll just cash flow, I'll just keep buying rentals, and you know, years later you're like, I'm still fucking broke. Like, this is insane. And yeah, I think a lot of you guys know the fame.

SPEAKER_00 22:41

Yeah, if you think about it, like what's a good return, like cash on cash? Like if you make 15%, you're doing pretty well. So even you need a million dollars just to make 150 grand. So yeah, if you have a million bucks, go for it. You know, but you still need to get to the million first.

SPEAKER_01 22:56

Right, and most people are starting from scratch, like brutal. Um you have so much going on. I literally don't know how you do it. So how do you prioritize? How do you manage everything? Like, what do you focus on when you have so many things in the day hitting you?

Speed Wins: MLS, Zillow, And Calling

SPEAKER_00 23:14

Uh I like to say I work off the Amazon chaos method. But like, have you ever seen like their videos of how their warehouses work?

SPEAKER_01 23:20

No.

SPEAKER_00 23:21

So their warehouse, and they realize it is actually the most efficient way to use their warehouse, is their robots and whatever basically know where there's it's a piece, it's a game of Tetris. Basically, like this will fit here. So then they just put it there. And if there's no like, oh, this is the section for iPhones or this is a section for TVs, it's none of that. It's wherever it fits, it fucking goes. And that's unfortunately kind of my life of like it's fire to fire. Um, it's not pleasant sometimes. But uh it's funny, like, even in real estate, like we you have we we talk about this all the time. It's like sometimes you'll just have fucking nothing to do, and you're just like, oh, like this is kind of like we're we're chilling, like we're there's nothing to do, we're good, and then you just get hit with a flurry of activity, and like unfortunately, I don't know how to predict that. You know, maybe AI can do it one day, but like, you know, like I went I think for like four months with zero deals, like didn't buy a single flip, nothing, and then I got like seven contracts signed in a month that all had to close within like 45 days. So, like, yeah, how the how would I know that? Yeah, you know, right? Um what I tell most people is you just stay active and manage your time properly and you know, kind of work down your priority list and just stay organized. That's really it.

SPEAKER_01 24:41

I love just the basic one of stay active because I think so many people just turn it off and then take a break, and it's that's how you lose, I think.

Valuing Small Businesses By Multiples

SPEAKER_00 24:48

So yeah, I mean I listen, I I remember when I started in Allentown and like you'd I would meet other investors, and like we started our portfolio with 12 units, so we never started at like one or two, and we had like 25 or 30 within a year. Um, and I would meet these people that are like had a job and were like, How do you manage? Like, I have three units. I'm like, how do you not manage three units? Like, you do not need a property manager, like, especially today with all the technology we have, like, it is a joke how easy it is. Um, but I I also say like you need the hard part of nine to five and investing is like you need flexibility more than you need like hours.

SPEAKER_02 25:27

Yeah.

SPEAKER_00 25:27

So like fortunately for most of us, like if you have a job that has some flexibility, then you're okay. If you have to be somewhere from seven to seven, it's it's hard.

SPEAKER_01 25:37

Yeah. Alright, last of the major questions. What is something that you think we should talk about that we didn't talk about? Um yeah, there's like there's always risk in real estate.

Why Short-Term Rentals Often Fail

SPEAKER_00 25:57

I think most people just I think a lot of people get into real estate because they don't they just look at the money. Like that's the only reason they're here, and they don't realize how little money there is if you do it for them. You know, like and most people don't realize they're not good investors, they're the market is saving their ass. You know, and I've seen that left and right, especially the last like couple of years. Like, even for me, I was like, dude, I like we weren't like we were lucky, like since we started in 2011, the market's basically been on our backs, you know. Um, I've seen other people through like the great financial crisis get totally fucking burned. Um, so like you know, leverage is important. I don't like to lever out any more than I put into a project, so like I'm never you know taking extra money out, like stuff like that. Like being as low leverage as possible is definitely important. Um, having some money set aside for CapEx, stuff like that is important, or actually at least having the ability to pull some money. Um, most people lever up way too much.

SPEAKER_01 27:06

Let's talk about that real quick because I just think it's so interesting. So you would say error on the side of less leverage for safety, of course. But like, is there a time and place to lever to the moon, or is it always kind of a dance?

SPEAKER_00 27:18

And when you're building, it's tough because like you're just grinding and like you know, but I my our rule was almost always never pull out as much money as you put in. So if I got all my money out, and now I have an infinite return, you know, don't get greedy at me. You know, like and that's usually where I see people getting screwed long term.

Leverage Discipline And Surviving Downturns

SPEAKER_01 27:42

The greed gets it. Alright, a couple questions that I like to ask everybody, and I'm curious if your answers may have changed, but and then we'll jump into QA. But first one, what separates top performing investors from everybody else?

SPEAKER_00 27:57

Um usually activity level. You know, I'd say uh I've never met someone super successful that's not super active in something. You know, it might be physically, it might be at work, but like usually they're very active people. No one usually that's lazy is getting anywhere.

SPEAKER_01 28:15

Love it. What is a daily habit that contributes to your success?

SPEAKER_00 28:22

Coffee. Um I am always looking at deals. Like literally every day. I call Christine randomly all the time. But like, yeah, I'm literally always looking at a deal.

SPEAKER_01 28:35

Love it.

Habits, Books, And Constant Deal Flow

SPEAKER_00 28:35

And actually follow-up. So like I call everyone and ask for a deal. Most people don't even call like people they know for deals. And it makes no fucking sense to me.

SPEAKER_01 28:46

What is I you said this already, but what's a piece of advice you give yourself if you were starting again? Would it be to go learn from somebody that's done it, or would it be something different?

SPEAKER_00 28:56

Yeah, like the only thing I would have done, I mean, I truly believe everything happens for a reason. The only thing I would have done differently, probably, is work for someone else and learn the business.

SPEAKER_01 29:09

Favorite real estate or business book?

Final Q&A And Closing

SPEAKER_00 29:12

Um The Liar's Ball, which is about the GM deal, uh, the GE building or GM building in Manhattan, uh, about Harry McLeod. It's like I don't so I don't like self-help. I don't like like do this and you know work four hours in a week. Like I'm not that guy. I like like um nonfiction about real estate or stuff like that. So it's just a great book of like the personalities of real estate at the highest levels. Um and like there's a book called, I think it's called The Asters, it's about John Jacob Astor. Um it's just about how he basically made his empire. Um he basically is was worth like I think he was worth one percent of GDP uh at some point. So he was like one of the richest people in the world. Um and basically like he made his money in the fur trade, um, but then bought up like New York City, like Manhattan real estate. And there's some lessons you learn from that book, like the family basically split off into the family that inherited the real estate in like the Hudson Valley and upstate, and then there was a family that inherited in New York City, and you can see where that went. Um and uh yeah, I'm more nonfiction than I think.

SPEAKER_01 30:36

Yeah, what were the two names again? Asters and Flyers Ball. Combining both of those.

SPEAKER_00 30:45

Let me see, I'll I'll find you the right one. The Asters by Virginia Cows. That one is there's a bunch of those.

SPEAKER_01 31:16

Cool. All right, I know we got some time, so questions? I don't like that guy. I don't know.

SPEAKER_00 31:40

A tool? Uh yeah, my phone. Like calling people. Like everyone knows I'll I'll talk to you on the phone for 40 minutes all the time. Um, I call everyone and talk to them, and that's how I get my deals. And actually, one deal, the one thing that everyone likes to say is like you can't find deals on the MLS. Like almost every year I find one or two deals a year on the MLS and I make great money on. And if I could do it and I'm not even like I still have other sources of deals, like someone who's new should be scouring the fucking MLS and Zillow and everything else possible every day. And honestly, like every 30 minutes an hour of the day if you're that like hungry. Because like I remember when a lot of how I started my portfolio was speed. So like I would buy deals and Zillow would actually notify people because like you would get the email from agents in the morning, right? Or whenever it was set up for. So like at 8 30 in the morning, you'd get a deal. But guess what? Like, there'd be deals that would get posted up at 6 30 p.m. So like I remember I won one house on Fourth and Allen, a three unit. It got listed for like$135,000. And he like underpriced it, or maybe it was$150,000. I paid$136. But I remember calling him that night, being like, hey, uh, oh no, it was actually it was listed for$136. I called him, was like, I'll take it. Like, don't need to see it, don't need to do anything. You only put up a couple pictures, I'll buy it. And this like was an old school guy, he was an electrician in Jersey. He's like, No, like I want you to come see it, blah, blah. And I was like, I already got a bunch of phone calls. So, like, you know, I I want to show it to you. So I was like, okay, fine. Like, what time can you do it? And at that time I lived in Queens. Um, I was like, I'll do the first thing, you know. Like, I was like, I'll meet you at 7:30. So he was like, okay, like because I wanted to see it before anyone else. I know no one else is going at 7.30. So he was like, okay, great. So he I met him at 7.30. Within that 30 minutes, locked up the deal, signed contracts and everything, and he canceled all the other showings. He needed exactly 136,000 for like after fees and everything, like 127,000 or something like that for his kids, like college. That's why he had bought them years ago. And I was like, okay, done. And at that same time, I mean that thing's worth probably like three something now, but at that time, that property was probably worth like 180, you know, 170 at the minimum. Um, and it was super clean. He was an electrician, he had rewired the whole place, like everything was really clean. Um, he had like one tenant that we had to evict, and the other two were empty. Um, so like it was just like being quick, like same day, next day, being there, getting under contract as soon as possible. Love it.

SPEAKER_02 34:41

Alright, so I think you were talking about retail stuff. I'm like, how the fuck do I appraise for evaluating operating business for something you can decide?

SPEAKER_00 35:03

Sure, I'll tell you how that's usually appraised. Um that will be like a multiple, it's usually two to three times uh income. So like a bodega's hard is a lot of cash and a lot of you know other crap. Um so what I used to do back in the day when I was looking at a business like that is I would go sit there for two weeks and actually see the sales. Um, because everyone can lie to you. And people will even lie on the tax returns. Like the normal thing for most business owners is to juice the tax returns for the last like two years before a sale if they're smart, and then sell it to you, and then you're fucked. So we'll sit there. Oh, it's a horrible fucking business, and I want to be nowhere near it. Um like uh the poconos like. So I don't even care about the laws per se, uh, because you can just find areas that are friendlier. The problem isn't that pre-COVID, like you have this boom after COVID. Um I looked into Airbnbs in the Poconos just for like personal use, essentially. Like, I was like, hey, it's a great idea. Like I could use it once in a while, and you know, if it would break even, I'd be happy. And I did the numbers, they were fucking horrible. After the HOA fees and taxes and all the other bullshit insurance, like you basically lose money, especially pre-COVID. Post-COVID, when you went to a hundred percent occupancy all year round, yeah, you made money, but like that's not normal, right? So, like, and there's a lot of data out there like um that give you like ADRs, like average daily rates for short-term rentals, and like once you run the numbers of like 80% um or 70% occupancy, you're not making a lot of money. Um, they're usually pretty shitty. Um, and then the Poconos, I not from my experience, but I've heard from other investors, like just like some people now will winterize their properties in the winter because the heating bill is more than any money that they make. So they were actually more profitable if they just shut down for six months, uh, which is pretty funny. Um, I mean, values went up, so like you like I said, most people get like the market saves their ass, um, so they still could have made money, but it's a day-to-day business, and like it's a tough fucking business to be in. Um, I hate it. Um, and usually when you see things that are incentivized through taxes, it's usually a shittier business to be involved in, right? Like the reason why the multiples are so high on like some of these Airbnb properties is because people that don't qualify as um real estate professionals will buy them and use the short-term uh rental local to mitigate some of their taxes. So you have doctors and stuff buying them just to mitigate taxes, which is a whole different you know thing. There's the same reason why car watches were selling for crazy numbers because investors were just buying them for the tax incentives, um, even if the business wasn't good. So I I stay away from that.

SPEAKER_01 38:23

Any more questions? All right, cool. Well, Ted, thanks so much for being here. So let's give them a round of applause. Thank you.