Don’t Invest in Real Estate Until You Watch This!
for somebody watching right now that wants to get into real estate investing what would be the first couple steps they need to take right now we actually started out with barely anything you're probably looking for off market deals so we bought it for 155 000. we can make a hundred thousand dollars for this in five months that's not bad we'll take that in terms of your growth incredible last three years more than 500 percent and our revenue last year was 2.1 million you have a lot of opportunity to make some good money on this episode we are interviewing santino philippelli a 32 year old who owns a real estate firm two construction companies and an investment company and today you're going to learn how to be so successful at such a young age so the last like five years have just been it's been a good yeah good five years right like every month has been great you have a number of llc's why don't you break it down real quick in a nutshell for our viewers what you have so far so that later on a video it makes sense to people we're talking about fair enough so yeah uh i have modern realty which is our real estate brokerage okay and then we have modern construction and then we have northwest home investments which is we use to acquire property and we have urban rentals and a couple other ones but those are kind of the main ones that we use you'll see modern construction with us home investments in modern realty modern realty is kind of the hub because we get so much business whether it be through people looking to sell or buy so we might come across a client they want to sell their property we say hey how about how about this what if we just paid you cash and we skipped the whole on the market process clever right so that's the option that we bring that to but we really don't advertise it but i mean you see a lot of these people right now yeah signs all over [Music] all right you guys we're gonna go check out one of his projects and give you guys an inside look in terms of revenue cost and everything you want to know so let's go check it out all right so here we are at one of santino's projects i believe it's this flip so let's go talk to the man and uh dive into some more details before we jump into this project of yours tell us a little bit about what the startup costs were for your multiple companies starting real estate brokerage we actually started out with barely anything it was like a 10 by 10 office we started out with two agents and essentially grew from there so don't need much you need to get a business license for like a hundred dollars you know your real estate brokerage fee is like 2 000 bucks i mean you could really start a real estate broker for cheap construction company depends on what you want to do how involved are you going to be working on the job physically then you need some tools you're going to need some stuff but if you're just gonna have a license and sub it out you kind of don't need a lot of money unless you want to actually like market it right and then the investment company obviously it sounds like it's just paperwork licensing and then go after those deals and make 100 yeah so and and those are costs to buy deals you can leverage whether it's hard money or if you have cash you know different ways to finance them exactly all right well let's go warm up a little bit as we go to his other location which is his airbnb and we'll tell you guys what he paid for what it's earning and a lot more give us a quick summary of what we got here it's an airbnb what did you pay for what's it earning for you now paid 188 000 for it uh back a few years ago uh got in with five or six thousand dollars down first we were renting out long term for like 12 1300 a month we let it appreciate and then we went in did a complete renovation and now for an airbnb it's generating about forty five hundred dollars a month dang yeah good so yeah thank you yeah super fortunate the way this area downtown vancouver has grown and that's another thing if you're a real estate investor and you're looking for investment opportunities one thing is looking at areas that are gentrifying or like areas that are like up and coming right and trying to get in there beforehand nice maybe you might buy an ugly property but at the end of the day if you can see in two years that it has potential you have a lot of opportunity to make some good money [Music] when it comes to acquiring or finding new deals as a real estate investing yeah where do you find them what platforms redfin zillow what else works for you yeah so definitely not redfin or zillow you're probably looking for off market deals some of the best platforms that you can find are like batch leads or batch dialer remind.com there's a lot of resources
being a real estate agent as well that you have to find off market properties so there's both ways tell me a little bit more about the batch uh is there a subscription to that yeah yeah it's kind of like it's like a combination of like skip tracing and they use data based upon people's time in the property equity so forth interesting likelihood to move and then they feed you this list and then batch dialer is like based upon volume of lead but you're looking at first subscription of bash dollars like 100 bucks a month and then they charge you per the amount of leads that you want gotcha and you got to go through obviously pick up the phone and yeah all these people i mean that's the big example what it comes down to yeah picking up that phone i mean that's probably the biggest thing is if you're wanting to pick up a phone and knock on a door phone's a little bit faster but knocking on the door meeting someone face to face and say hey have you ever thought about selling you know i'm in the neighborhood just saw your house i really love it [Music] all right let's go check out his other property across the fence give us a quick uh background on what did you pay for what it's it rented yeah and what are you doing with it now sure so we bought it for 155 000. seven years ago yeah unheard of prices nowadays we got it for with five thousand five hundred dollars down and then now it's uh basically sitting at a value of close to five hundred thousand wow 475 yeah as well just praise that and so we're renting out one side for 1250 which is not that great but solid tenant the other side we completely renovated it tore out gutted it and then it's actually gonna be an airbnb and that's kind of what we've been doing with a lot of our property yeah why are you give us an understanding of why you're converting to airbnb is there a shift in the market that you're seeing you know here's the thing with airbnb you actually eliminate um a lot of difficulties you have so such as like tenants that may not pay landlord tenant rights evictions turnover you know also what you're seeing a lot especially if you have a property that's well located airbnb is just a great opportunity where you can preserve the condition of the property and not have so much damage done over a period of time but you have a high turnover yeah so we just literally have the cleaners come in they come right out but normally you have kids or dogs or pets or families the longer they stay there the more damage is gonna be done having short term less likelihood that they can damage it plus the deposit they put down in insurance and all that stuff covers any damages nice yeah we may have to interview somebody specifically who just does airbnb because that's an interesting business model yeah we have we have we own like four of them nice okay so they're pretty great so talking about real estate investing for somebody watching right now that wants to get into real estate investing what would be the first couple steps they need to take right now yeah first thing you want to do is figure out how your risk tolerance is going to be do you want to get pay everything cash do you want to finance it where is it going to be your money that's going to be the first thing because in order to do real estate investing you need money or you need leverage so some good credit scores write some experience so that's the first thing you want to do is figure out where you're going to get your money from how much you want to have on your profit margins and then after you figure that out i would begin to look for a deal i would start out really small and start to leverage that would be my best advice leverage early on so that way you're not risking a lot of your own money so that's the way i started and for me that was something that was really great so if i ever lost everything i was like you know what i only have six thousand dollars and my credit score is bad now right at worst case scenario when you mentioned research determining whether this is a sale or a long-term rental what are you using to make that decision yeah so good question basically we look at first of all what are the margins here if this looks like it's a property where we're not going to hit that 50 000 mark but we see that it's a really good area and there's a lot of people coming in good towards attraction right basically we say let's turn this into an airbnb but if we say hey we can make a hundred thousand dollars for this in five months that's not bad we'll take that so it just depends interest rates play a role as well okay [Music] you know you've got a construction company you've got your investment holdings and then you've got a real estate company yeah what's the advantage of marrying those two and kind of having that structure yeah so it's like a perfect marriage uh that you can have we started out with real estate being a real estate agent if you didn't start out or if you aren't a real estate agent that's a different story but having all those together you're able to acquire properties access to properties that maybe other people may not have that's the real estate brokerage yeah then the construction company you have tax breaks and write-offs through that and you also separate your liability so you don't have to worry about and then obviously the home investment again another entity that you're able to filter through so that can be used to go to the real estate brokerage talk to clients tell them a real estate firm they'll buy their properties and a construction company fix it or even have a client that wants to sell we say hey we have a construction company right that's how you can win that client but again you know real estate investing all comes really from having those three things tied together perfectly when it came to starting some of your companies is there anything worth mentioning in terms of how you finance them it's interesting when you talk about starting a company i mean depending on the company like a real estate brokerage there's not much financing unless you're trying to go really big really fast or buy a brokerage out i see right but if you're just starting a business you really just need enough to get a license some basic fees but once you start those companies you might have some financing issues such as like buying a building so working with trying to grow the real estate brokerage and working with trying to obtain a building right we didn't want to spread ourselves too thin so we tried to leverage as much as possible so we actually did an sba loan the sba allowed us to leverage with 90 percent ltv low income value so you only put down 10 exactly which is huge right the building was a million dollar building right so a hundred thousand dollars that was still a lot with sba whenever you occupy 51 of the building you're able to use that 90 10 ltv and then you can also have a renovation budget put in there that's a good tip for you guys yeah so if you have that option um they'll look at your income from a company and if it's good you'll be able to get finance so we pumped up our income really well the first couple years which allowed us to tap into that a resource of the sba specifically talk about northwest home investments yeah which is one of your llc's yeah where does your profit come from do you lease or sell properties and what's the most profitable i know a loaded question but give us a better understanding on how you structured knowledge home investments started out of having a real estate brokerage right and or being a real estate agent so the profits that we get are basically based upon what we want to do with the house so if it's a fix and flip we'll basically put it into that and our construction company will come in flip it we look for margins they have to be pretty significant anything uh over 50 000 and up so if we're not hitting at least a 50 000 profit margin it's probably not the deal for us okay or we'll take it and if it has more of a long-term potential it's in a really good downtown area we'll take it we'll turn into like an airbnb and we've kind of switched from long-term rentals to like more short-term because they've been way more profitable they do better yeah what are you looking for revenue on that side of the business when it comes to airbnb and rentals yeah so what we look at is we look at like basically what is the average if we were to do long term right and so if we can 4x that so let's say a property is renting out for fifteen hundred dollars a month but we can get five thousand dollars a month like doing airbnb or four thousand dollars a month based upon what's around we'll do that we'll turn into that but if we say hey you know what this property we can make way more money if we just put some money into it and flip it [Music] out of your companies what brings the most revenue so uh i would say modern realty our real estate brokerage and that has kind of been pumping all these other businesses and our revenue uh last year was 2.1 million 2.1 was our gross income for the brokerage and then we netted about half of that so nice yeah it was good good good year pretty good here let's quickly touch base on brand awareness right just overall what can you say how important is it for your businesses uh what are you using what can you share with our audience yeah so right away brand awareness i think is one of the most important key factors identifying what your value proposition is is going to be huge and then putting that out to the public right and so brand awareness really comes out from putting out content valuable content video content is like the number one things that people are going to go towards and keeping you know your content and your brand awareness concise to the point to where people can click on it get value and leave because the attention span is low and your brand's pretty cool for modern realty because it's it's beautifully built i just want to give a quick shout out to our new sponsors you guys if you're looking to build your brand awareness you guys look no further than fiverr it's a marketplace with graphic designers website designers the best professionals out there that will help you build your brand awareness and most of all they're giving you guys 10 off so click the link in the description below and use the code up flip 10. thank you so much [Music] santino tell us a little bit about this project behind us what did you buy it for what do you expect to put in after repair value everything that you can share yeah three years ago i contacted the owner their renters here asked them hey would you want to sell this off market and so we made a deal and he started somewhere at 450 and i said listen i don't think this one worked we got down finally to the final price was 325 okay got this place for which is steel of a deal in this market because the average purchase price is around 450 000. so we got it for 325
knowing that we're going to do a bunch of work to it and so we put a renovation budget 150 000 150 okay so 325 150 or 475 into it what's your goal is it to sell or rent out so actually the our goal is to actually lease this to airbnb [Music] so running multiple businesses can be challenging what systems are you using to keep track of everything give us the names costs involved with that that was important important so in the beginning we had no systems right we were like kind of winging it but then after a while if we started scale and grow we were like we need some really consistent systems so for our construction company right we use contractor foreman it's only 99 a month and it's really like an epic project management program that's also an app so that's great what's really a game changer do you think tops the list in terms of systems that our audience can implement today in their business that will really help them yeah i mean if you're looking for real estate investing and you really want to like actually tap into the properties off the market i think the best one probably is going to be bash dialer or remind.com i think those two one they show you the property the value the owners they show you so much information likelihood to sell and then uh bachelors to get a hold of them or to speed that process up is great so those are probably going to be the two biggest ones in my opinion there you go do it today you guys if you don't already have it [Music] if you're not a real estate agent what would you tell him yeah if i wasn't my best advice would be link up with some real estate agents right uh it doesn't hurt to have them in your back pocket they don't cost you anything right no literally as a buyer yeah we're gonna work for you for free pretty much as a buyer the seller will pass but find real estate agents because there's some hungry ones out there and if they know that you're looking for a deal and you have one and you're willing to buy cash or hard money or whatever you're able to execute you'll have agents eventually on a regular basis yeah exactly get a part of some facebook groups some wholesaling groups get on some lists where they're gonna send you properties on a regular basis that's also a great way to you know find deals and not have to put so much time into it maybe right so that's another way [Music] in terms of your growth incredible last three years more than 500 percent i want to know what challenges come with that kind of growth i think one of the biggest challenges is as you grow with people right you need more space and then you need more staff and so i think those are probably the two biggest challenges just people in space people in space i mean more having good staff good systems in place that's a big struggle right going from just like this little office to suddenly exploding and having 40 plus agents and so it's a managing your time and all that it's crazy give me a quick snippet of the timeline so year one just you year two and so on what does that look like so really interesting been in real estate for 15 years right but actually you started the real estate brokerage year one it was like me and two other agents right from there we grew that first year to like 15 agents and then from there we grew to about 20 and then from there we grew about 30. it was really fast growth and it really just came from like a lot of social media presence and our brand in the way that we actually put people for profit [Music] what business is the most difficult to find people to hire for us the construction real estate and construction is right up there i mean finding good contractors and depending especially in this market right now where we have more probably construction than there is actually construction workers right right so they're that's a challenge that is challenging but real estate brokers are almost just as hard because their independent contractors kind of do whatever they want so it's really hard to find good real estate brokers they're going to stay there be long term and be reliable actually be producers yeah i know yeah in our world there's a lot of license agents that do absolutely nothing yeah and there's some brokerages for them this isn't one of them [Music] what do you think has the highest profit margins uh what have you what have you seen in the beginning i would say flips had the highest profit margin but now we have a really hot real estate market everybody wants to flip property right and so the profits have shrink yeah right and so we're finding that sometimes having a more consistent cash flow from keeping the property might be better and letting appreciate over two or three years and then we cash out on that so rather than a flip so in this case the house behind us right we're gonna have as a long-term rental or i mean short-term rentals at airbnb we're gonna hang on to it for a couple years let it appreciate and then you know potentially sell it got it okay you guys tell us in the comments below what your profit margins are also the tools that you're using in terms of financing we talked earlier when starting a business we'd love to hear from you and i know that our audience would read those comments and learn from them as well so we appreciate that how seasonal is the business for you uh can you give us an idea on a bad month versus a good month revenue wise yeah so the last like five years have just been it's been a good yeah good five years right like every month's been great if you look at the market it's been crazy yeah we've been on a bull run so interest rates have obviously been super low so it's hard to have a bad month i mean unless you're doing just horrible i mean even your average real estate broker right now can do well if they put some effort into it right and in terms of flips though has that changed yeah so think about it the more as the market's grown the more appetite for investors to jump back in and more people want to flip especially shows out there like chip and joanna you know everybody thinks that flipping's super easy so everyone wants to get into it or like you know some of these other podcasts and stuff [Music] how's your leadership style what do you think is a good trait to have for an exceptional leader as an entrepreneur or business owner my leadership style is empowering other people i'm not a micro manager so like my leadership style is like hey i hired you for the job i trust you and that some people are scared but it actually really helps them grow and empowers them because if they fail it's fine it's fixable usually hopefully right but um at the end of the day mine is really just loose the crew that's working here are they on your payroll or the subs subcontractors yeah so our construction company we actually don't do payroll so we use it as a source to be able to manage a project bring the cost down use subcontractors and not have any like employee fees gotcha because then you have workman's car so we just sub all majority of our jobs out very cool building relationships with all the industry you know people what are you doing to successfully nurture that like your subs and everyone you work with what are some tips tricks for audience to connect and be better connected on that scale yeah i think the biggest thing is going to be just especially like in like real estate and time time is a huge factor but really reaching out getting to know a bunch of different people especially with subs subs are hard to find good subs if you're in construction you know this subs are hard to find really it's about testing them on something small having them come out see where they come in with looking at some of the previous work referrals are the best for subs right so at this point of our construction in our investment firm we have a lot of subs that we've been using for last like seven years what are you doing to keep them though because they can go and work for somebody else keeping them busy that's the secret that's the key keeping them busy promising them like hey we're gonna give you volume right and we're gonna give you extra work because we have a bunch of deals on the pipeline and then that really keeps them to give you good deals knowing that they're building a relationship not just trying to get rich in one project you can paint that picture and get them to buy into that you're really gonna have a good relationship with regards to your investment firm or company right were there any particular worthy things to talk about in terms of startup costs and how you use that or is it just licenses because we mentioned that earlier yeah yeah no they're mainly just licenses uh startup costs were virtually none i mean they started coming into play when we want to acquire property but i mean for that you can use hard money cash whatever it is but yeah there's not a whole lot of money when it comes to like starting on now if you want to start like an official investment firm right right different it's a little bit different yeah we use it as a sister company so it separates our businesses and protects us right so that way we're not commingling all of our stuff together okay how do you know it's a good deal that's the other follow-up question is like you may have 10 on the table what process do you go through to determine you know what i'm going to grab these two the rest eight is not for me yeah i think the biggest thing is the amount of time it's going to take right so the amount of time and the amount of money is going to take and then the amount of profit margin so i determined that by going in assessing the amount of fixing that we need to do if we need to perform renovations we do you know how much is it gonna cost and then we subtract them and say how much we sell it for if we could sell for a lot more we kind of filter them out that way that would be the biggest thing is how i find which deal to filter through all right you guys quick fan blitz time let's go not just fans as well what's your favorite business book yeah crushing it by gary vaynerchuk nice what car do you drive uh porsche panamera love it what was the final thing that pushed you to start working on this business overall freedom and endless cap on revenue that's awesome what would your strengths be as an employee if you were to be oh unrelentless work ethic for sure if something happens to you what will happen to your business it'll keep going one two three donata is asking how do you find valuable employees yeah i think the biggest way to find valuable employees is to find employees that align with your vision and your culture for muhammad ali what would your advice be to an 18 year old aspiring to get into real estate investing and own a construction company first this is a two-part question construction company and real estate investing real estate investing my first piece of advice would be buy a house that you're going to be in for a long term but has potential to add value and put down 3.5 percent yeah and then get in as cheap as possible and then over time let that build and if you wanted to bring your construction company into that great you can actually start your construction on your own first house right so one in the same and then my construction company first started out of literally my own places in the state of oregon washington you need to actually have a construction company in order to flip houses gotcha okay yeah um and then bully is asking do you love what you do yeah i do of course yeah i don't think you guys can see it yeah i don't think you'll be in this business 15 years without loving it with what you know right now yeah um is there anything you would have done differently when when you started your real estate firm and the investment side of things what would you do different one of the things i probably would have done differently is gotten with people or mentor or something underneath a company that had better teaching because i look at my agents now and what we're providing for them and the amount of value that we give them or if they need mentorship in investing in real estate like they're progressing way faster than i did so i think getting with the right people and having a good sphere around you is going to be essential to your success and so i would change that if i were to start over don't be afraid to leave a place that you're comfortable at just because you have a friend there maybe your family member get out of your comfort zone go meet some people and get around the right people [Music] all right santino so we're in what looks like a pretty awesome office space yeah give us a quick tour like how did you set it up and so on yeah so check it out so this is our main conference room that's jess jess hi jess yeah so it's our main conference room we have meetings so we have these doors that we put in open up and we can turn the chairs yeah so big screen so you got a good taste for decor i mean who helped you with all that uh it's actually just uh me nice okay so this is like an admin office place where they work stuff like that another access point over here so anyways uh this is like our little barista area for like when our clients come in or asians if they want us some coffee so they can sit down and enjoy some nice coffee and stuff we got some work areas over here one two three yep for the agents if they come in it's like totally shareable space they're able to come in and just come in and out and then we have this conference room here that has nice these awesome sliding glass doors so it could be open or it could be shut it's pretty cool and this is one of your uh one of three locations yeah yeah we have one in vancouver one in portland our two in portland yeah when it comes to scaling your investment company in this real estate industry what are those main factors to do that quicker i think the biggest thing obviously or just what everyone will know is scaling you more money right so that's a big thing more deals more deals exactly yeah so so really having your hands out there and letting people know what you do is also a big deal because if people know what you do they're just gonna come to you naturally and say hey i heard you do this right and so that's a really big thing is tapping into your network and letting people know hey we're not just a real estate brokerage we also flip property we also will buy you out we'll also so letting that be known to people also what are the best avenues for you to do that and and what are you doing to let it be known yeah i mean basically we train all of our agents that when they go to a listening presentation when they go with a buyer that hey we are also have a sister company that's an investment firm and we're willing to buy your property from you directly so that many agents that many deals we did 250 deals last year so that's a lot of hands out there in people but social media is also a great tool we have a youtube channel people watch stuff like that where we post content of like us doing our flips and that's also a big attraction yeah gives you that brand pumping exposure yeah pumping some money into that video and putting it out on facebook through social media and ad spend just for simply views it actually plays a big role [Music] so you've got kids married how do you maintain work-life balance i mean how many hours a week dave you work dude starting out before kids and family was 24 7. i would fall asleep at the office sometimes and literally wake up and have like my agents come in and they'd be like well you just sleep here you spend night i was like no no i was just resting my eyes but yeah i mean in the beginning i literally grind it out as marriage goes on like you said wife kids i was like man i gotta find some balance here because this is getting crazy so at this point in time i've we just had a son he's one years old so that's been an adjustment and like carving out being intentional about my time and really focusing on where's my time going to spend what's going to generate me the most amount of money for my time as you start to eight hours six hours two hours a day right now what are you doing like literally right now i'm always kind of on call but i've put people in place so i mean the work kind of never stops it could it could literally never stop uh but me personally i put it probably about 12 hours a day in the least really yeah because after my son goes to bed and my wife goes away she'll stay up yeah so i'm getting on average about six hours maybe less to sleep at night but work like balance is super important yeah which i'm working on i mean it's not perfect not perfect yet hopefully one day there you go [Music] do you have a go-to resource to just further your knowledge industry skills etc yeah so i mean i'm always looking at what other people are doing as well but my main resources i i go to youtube and google but when i go to those yeah i mean you can find anything on those youtube university right yeah and then google but i mean if i'm gonna narrow my search there's some like gary vaynerchuk he's great as far as like you know entrepreneurship uh but if you want like actual like real estate investing facts there's some great from grant cardone there's some great from you know a lot of these other bigger real estate investors so you feel useful you follow these other guys that are doing the same thing and you're learning from them anything else that's teaching you to be better and smarter in this industry yeah i mean failure i mean is one of the biggest things just failing your way forward not being afraid to go out there and just try it out and then as you're in it all of a sudden you're like man i came across a problem what do i do you'll come across so many diverse amount of problems and then you know at that time you dress them i usually will either ask somebody that's already flipped the house or whatever it is or investing right in that time hey have you ever invested in this area how's it been as far as like specific things is really becomes really hyper local you know right when it comes to real estate investing you got to know your area [Music] what is your favorite part of real estate investing and what is the least favorite part yeah i think my favorite part is taking a project or taking something that's ugly and then really taking it to completion and seeing the final product nice that's the coolest part that feeling of accomplishment and before and after and at least and then my least favorite part is probably managing the actual subcontractors i don't know if you've ever managed subcontractors before but if you have it's not that fun what are some tips on managing subcontractors that you can share from experience yeah biggest things probably have relationships have a system and then really use like that contract your form when i was talking about really make sure that you keep track of everything have good contracts in place maybe have an attorney look over them but really no relationships or no handshake deals i mean just to be on the safe side no no no i mean in the beginning i did some handshake deals with contractors and you pay for what you get and also handshake deals are great for like if you have a home that you're living in and you want like the curb work done or something like that right like hey but not like a big project no i would not do that you have a lot to risk yeah don't do it what will you tell our audience who just love real estate maybe want to get into real estate or specifically as we've been talking overall about investing in real estate any last words piece of advice to all the entrepreneurs watching you right now yeah i mean if you're out there and you're looking for want to be a real estate investor my thing is look at the b burr method b rr google that that's a a great method to look at another method is look at your leverage think about how am i going to get this money and then start off small be patient find the good deals it's not about how much you can sell it for it's about you make your money on the buying side where am i going to get my best deal so make your money with the good buys leverage them and be smart there you go well this has been a pleasure thank you so much paul it's been awesome thank you well that's a wrap of this incredible episode with santino the owner of these multiple businesses you guys have heard their incredible numbers his growth of more than 500 percent i trust you guys took away at least a couple things that you will execute in your business in your industry we appreciate you watching we appreciate your support so take a second like subscribe and hit that bell so that you don't miss any of our episodes thank you so much
2022-03-19 19:12
