Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and your investing with The Accelerated Investor Podcast.
Josh: So, hey, welcome back. Welcome back. For all of our listeners who’ve been with us for awhile, or whether this is your very first Accelerated Investor podcast, thanks so much for joining us. I’m honored to be here with you, whether you’re in the gym, whether you’re on a walk, whether you’re getting ready for your day, or you’re in your car in your commute, and you’re listening to Accelerated Investor. I hope you’ve enjoyed all of the episodes. I’m so excited to be part of your routine, part of your life and helping you achieve your goals as a real estate entrepreneur and helping achieve your lifestyle goals and your cashflow goals. Just love bringing you, whether it’s a guest, whether it’s a solo cast, and bringing you some of the best of the best information to help you along your journey. My guest today is a good friend of mine.
Josh: We’ve actually known each other going on nearly 10 years. His name is Daniil Kleyman. He is a real estate entrepreneur and a software developer from Richmond, Virginia. He owns over a hundred units of properties, both single family duplexes, commercial buildings. He’s a developer, he’s a builder and he also has an amazing software company that helps real estate investors. We’ll talk a little bit more about that. And what I’m excited to talk to Daniil about is also our journey. Daniil and I first met years and years ago. He was single, we were relatively new to real estate. Now both of us are a little bit aged, a little bit more white hair, married, both of us with kids. And we’ll talk a little bit about our entrepreneurial journey and how family has actually maybe changed our perspectives, changed our priorities. So Daniil, thanks so much for being here to Accelerated Investor.
Daniil: Yeah, man. Great to talk with you again. I feel like it’s been a couple of years, but it probably hasn’t been that long, so.
Josh: Yeah, absolutely. Daniil I not only have shared ideas for raising money, but we’ve done some affiliate deals where we promoted some of his different products and services to our audience. And he’s done the same with his audience. And some of our customers are also customers of his. So we’ve had a lot of connections over the years. So Daniil, first of all, I love to talk to my guests first about their money making strategy in real estate. So just tell our audience a little bit about what you do to make money in real estate.
Daniil: Sure. So right now my business primarily revolves around development. I started out rehabbing single family houses, then I moved into rehabbing duplexes and quads. And over the last couple of years I largely transitioned to building ground up. And I can talk about that later if you want, but I like ground up a lot better than I like rehabbing for many, many reasons. But primarily my business right now revolves around building properties to then keep in my rental portfolio. And this includes duplexes, this includes quads, larger apartment buildings, a bunch of projects in developing now are mixed use. So corner commercial and the rests or apartments. And that’s really the type of development I like a lot right now is we’re doing, we do most of the infill in the downtown area and infill development where I can add a commercial tenant that becomes an amenity to the neighborhood.
Daniil: And that in turn attracts, makes the rest of my apartments in the building more attractive but those are really the type of projects I’m doing now. I’ve got three of them currently going on. So, and I build spec houses and I was just telling you before we started the call, we listed three houses today that we built ground up that we’re going to sell to on the occupants. But that’s not really the primary focus of my business, especially now because I think where the market is headed in the next couple of years, I’m going to be a lot safer just by building rentals versus developing houses to flip basically.
Josh: Yeah, yeah, yeah. I agree. You know, and we’ll talk a little bit more about the strategy for sure. But Daniil, tell me a little bit more about how your investing strategy of development and commercial projects, how does it help you achieve your entrepreneurial and your family and your relationship goals? Because that’s really what we’re doing here, right, is we’re investing in real estate ultimately to produce some sort of income or lifestyle for ourselves and our family. So tell me a little bit more about that and how does your real estate fill in and protect and provide for what you want to do from a lifestyle and family perspective.
Daniil: Sure. So I, you know, honestly from day one I was never that excited about flipping and I tell this to our subscribers and our clients all the time, so they know my story very well. All I want this monthly checks, all I want is the residual cashflow. I cannot, you know, you see people post $5,000 to $10,000 checks from their wholesale deals on Facebook and everybody gets excited. It’s never, that’s great, but it’s never exciting me, right. One time pay days don’t excite me. It’s like these guys still have a job. And if you’re wholesaling and you’re listening to this, that’s great and if you’re doing great, that’s wonderful. But it’s just, I felt it was never for me. I want to do with deal once and I want to keep getting paid. So most of my focus revolves around building assets that will then stay in my portfolio.
Daniil: We have a great in house management team and we build a great product. We design it, we pick out the finishes, it’s attractive, it’s easy to lease, it rents. I mean, I just finished a little six unit building where we had leases before the drywall went out, right. Tenants walk through a new construction project when we still barely have insulation hanging out the walls. And we had leases at top dollar, right? Because they, we can show them the rest of our portfolio. They know that we build a great product. And so that’s kind of what I’m passionate about. At the end of the day if you asked me about my goals and we all have to do things that the money is great, but we all have to do things that we feel are, to a degree, our calling in this world, right? That’s where you’re going to prosper.
Daniil: That’s where you’re going to perform at your absolute best. If you, you know, if you ask yourself like, if I had a billion, would I still wake up and do this, right? So, and they read this in the book somewhere, go up a couple months ago, but I asked myself that question, if I had $1 billion, all the money in the world that I needed, if I never had to work in day again in my life, if I had great family relationships, if I had great everything, would I still wake up and develop real estate? And the answer is yeah, I would. Because like, I truly enjoy it. So the money is great, but this is what I feel like I was really meant to be doing. And I’m slowly working my way to doing on a bigger scale, right? Certainly like, no Donald Trump at for now.
Daniil: But you know, I’m getting there organically, right? I’m mostly self-funding or deals, so I’m not really bringing in outside investors. And so, you know, if I can afford to do, like this week we broke ground on the 14 unit mixed use building. I’m talking to contractors right now by 25 unit building. So like I can afford to do those projects on my own and every day I’m learning, right. Then that’s the other thing, right? So again, you asked me about my goals and how I want to sort of live my life and I believe in doing something where I have to learn every single day. So I wake up and I learn something new about commercial development every single day. And I’ve been doing that for years. And it’s one of those things where there is no end in sight to what you can learn.
Josh: That’s fantastic.
Daniil: And it’s fascinating, right?
Josh: So to that point, what I find is learning often comes with some risk, right? Where you know, it could be a small risk of I’m going to go to a bootcamp, I’m going to take the small risk of taking a day or two or three off of work and spend maybe a thousand dollars on travel and a ticket and a hotel. That’s one form of risk. Your form of risk is actually in the field. Like you’re actually in the dirt building something new. You’re learning along the way. So you have to kind of put yourself out there, take some risk in some way in order to learn something new. How do you manage that in your own mind? How are you comfortable with the risk in order to learn something new and balancing where you’re not trying to learn too much and take too much risk?
Daniil: Well, you know, we have a great team. So in any project that I undertake, I have a great team of architects. We have civil engineers, soil engineers, structural engineers, MEP, mechanical electrical plumbing engineers who I always have great people I can consult and I partner with good contractors and they ask good questions. And yeah, it’s a little bit scary because I’m learning really with my own money, but I almost feel better doing that then if I was, if I had investor money in the deals, if I was learning using their money. So I, you know, I look at money with sort of a pragmatic point of view. Like I’ve been broke before, but then I made some money when I had my corporate job and I was broke again and then made some money. You could go out and you could make money, right? It’s not, I don’t mind risking money. I don’t mind if it buys me learning experience and if it has potential to get me to the next level. I don’t mind putting some money at risk and putting my money where my mouth is that being the case.
Josh: Got it. So let’s talk about your deals for a minute. Look a bit a little bit around risk. You know, a lot of people are taught to be all in on a rehab deal at roughly 70% of what it’s going to be worth. Tell me a little bit about your development, your commercial building process. Is your philosophy the same? Are you trying to build a building maybe and be all in for $2 million and have it be worth roughly $3 million when you’re done? Or help us just understand a little bit more about your evaluation process. Because that goes right back to that risk and learning. And also like we talked about building this portfolio lifestyle. If you get into the dirt a little bit more about when you look at 25 unit or a 14 unit, how do you want to be all in on that versus what is it going to be worth and then refinancing into permanent financing.
Daniil: So that’s a great question. 70% is tough to achieve in new construction. Construction costs have gone up so much that our initial margins, so I look at it based on sweat equity, right? So the way I look at it as if I can build and have my all in cost basis, including my land, including all my soft costs and all my hard costs, including my cost of financing. If I can be into the deal for 80% even to 85% of the current appraisal, I’m okay, right. I’m looking for a minimum of 15% preferably 20% sweat equity. 30% I’ve been able to achieve 30% in the residential projects right now. So if I build a duplex, I can get the 30% equity because residential is cheaper to build. One you building multifamily, you now have sprinkler systems, you have backflow preventers, you have additional fire rating things to happen.
Daniil: You have all of these additional things that costs you a lot of money. So in like commercial projects, if I can get the 15% 20% equity, I’m a happy camper. Also, assuming that I am generating a sufficient cash aon cash return year one on the money that I’ve left tied up in a deal. So if I went through the deal for 80% to 85% of its value, it’s going to be very hard for me to refi out and get all my money out, right.
Josh: Permanent finance lender might be at 70% 75% of the stabilized value. So you maybe have 5% 10% 15% of your money left in the deal. So that’s what you’re talking about. That cash on cash, like year one net operating income and net free cash flow compared to what you have left in the deal, right?
Daniil: That’s exactly right. So if I’m leaving my money in the deal, I want that money to be working for me for day one. Now I don’t need an exorbitant return these days on commercial stuff, I’m targeting 10% so if I’ve left $100,000 in a deal, I want to have my net cashflow clean. So people also look, I look at cashflow differently. Even if it’s a new construction project, we chop off 10% of gross rents away for reserves. Brand new property, no maintenance for the first couple of years, I’m still chopping 10% off and I’m putting it into capital reserves.
Daniil: So my cashflow clean after my mortgage, after all my operating expenses, after reserves, after our management, we have an in house management company, but we charge an 8% management fee. So after my management fee, if I left $100,000 in a deal and if I’m generating $10,000 a year in cashflow, that’s a 10% cash on cash return, I’m happy because that’s going to grow from there, right. It will likely grow. And then if you add appreciation, depreciation and amortization on top of that 10% cash and cash return, my actual return is far higher than that.
Josh: Love it. Love it. So Daniil, let’s talk a little bit about team building then. So if you’ve got your money a little bit money left in the deal, you know, last time we talked and on a deeper level, you didn’t have a whole lot of like full time employees. And I’m sure that’s probably still the case right?
Daniil: In my real estate business, I have one full time employee, it’s my full time property manager unless our unit count surpasses probably 150 next year I’ll hire a second one and that it. So I mean we have a part time bookkeeper and then everybody else is outsourced. I’ve been thinking about bringing in an in house project manager, but then I would have to get filing my GC license, which I’ve been avoiding doing. So we just, we outsource the general contractors for now.
Josh: Yeah, it’s awesome to hear you say we have a hundred, you know, a hundred doors and we have another hundred or more you like in process and for you to have one full time employee. I love it. But you still have to build a team, right? You mentioned different types of engineers, you mentioned different types of architects. You’ve got to have leasing agents, you’ve got to have, you know, those types of things. You’re essentially the general contractor and ultimately the asset manager. I guess you could describe yourself as you’ve had to surround yourself with other great people even though they might not be full-time. So just talk a little bit more about that. How are you sourcing those people? How are you putting yourself out there to network with the people? Because really your projects and your profits can only be as good as your team, even if that team is an outsource team. So talk a little bit more about that.
Daniil: Absolutely. executing development projects, even sort of the smaller scale stuff that we’re doing is challenging just because it’s hard to get people’s attention, right. Everybody’s so busy. And so, I mean when you’re talking about the team again, we’ve got three or four different architects that we work with. Different surveyors. I have a land use attorney that he’s great and he helps me with every rezoning that we have to do, every zoning variances, special use permit. We have structural engineers, sole engineers, but to answer your question, trial and error, right? You, the best source of these people in your market is going to be referrals from other investors and then test slow, right? Engage with somebody on the small project. If it’s a new architect, you know, get referrals, look at their past work. there is a smaller project that you can work with them on at first, that’s better than jumping into a big project.
Daniil: It’s trial and error and seeing who you have chemistry with and who you can get along with and who does what they say they’re going to do when they say they’re going to do it. To me, that’s really, if I can find people that consistently do what they say when they say they’re going to do it and how they said they were going to do it, that’s like gold to me, you know? And those people are few and far in between the few. And when you find those people hang onto them for dear life because as you said, Josh, your team will make all the difference in the world.
Daniil: Whether it’s an outsource team or an in house team, it will determine everything, it’ll determine your success. So finding those good people is crucial and it’s just like finding good contractors. It’s referrals and then trial and error.. You’re going to kiss a lot of frogs before you find your prince charming. But then when you find your prince charming, just treat them well. Pay them fast, don’t be a dick.
Josh: Right? People like to get paid fast, right. And they’d like, like, yeah, everyone likes, you know, needs to be firm without B. Like I said, being a jerk, right? That’s part of the process. People that win are people that are, that do what they say pay on time from but not a jerk. Like all those things are, I think basic like things you learn in like second, third grade. But I think sometimes as adults, we forget that we learned that when we were kids. It’s amazing that it just translates into business still, you know, 20 years later.
Daniil: I know it’s, but we are stubborn, slow creatures. We don’t always learn and you know, set your expectations. I have found with people, treat them fairly, you know, I’m prone to, to flying off the handle once here and there, but I also have a great reputation in my town from the point of view that like I’ve never ever, ever screwed anybody over. You will never find anybody that has done any work for me that will tell you I shorted them a single penny. A lot of investors have that recommendation. A guy finishes a job and you show up and you’re like, ah, but you cost me an extra three days and I have to pay interest to my lenders. So I’m going to shortchange you or you know, oh, I had to change the order, but I’m not going to pay you for it.
Daniil: I mean, people have a bad reputation. So it’s important to, it’s important to maintain your reputation, be known as somebody that can be trusted, right. I pay, I pay quickly, I pay on time, and I, and I’ve always paid everyone and, and that goes through degree. That goes a long with contractors because you know, the really good contractors right now, they have their pick of who to work with.
Josh: Yeah. There’s an abundance of projects, right? There’s a lot of money floating around and people have a lot of private money, but there’s a shortage of operators and contractors and builders. We’ve definitely experienced the same thing.
Daniil: Yeah. Yeah. There’s no shortage of work for them. So you know, be the guy that that treats people fair and is known for that. Yeah,
Josh: I wanted to ask you about this theme of trial and error, risk learning. Like I think when, when we’re a new entrepreneur, whether it’s real estate or something else, you feel like, Oh my God, I’m doing this brand new thing. It’s so exciting. There’s risk involved, but I’m learning. We know that there’s going to be a lot of trial and error. You know that when you get started, but there’s this false belief that you’re going to get to some time in the future. Let’s say it’s five years from now, 10 years from now, 20 years from now, and all of a sudden your business is going to be perfect and you’re no longer going to have to take risks. You’re no longer going to have to learn. You’re never going to have to have trial and error. But here you and I are 5, 10, 20 years into our careers talking about, we’re still learning.
Josh: It’s still trial and error. So when did you realize, was there a time or a moment or an experience maybe years ago, that you realized that this whole learning trial and error thing is really never going to end? And I’ve got to be comfortable not knowing that if I’m going to expand, if I’m going to do more things, I’m going to constantly be learning and that’s uncomfortable. And you have to realize that I’m never going to probably be totally comfortable. Did you ever have a moment like that that sticks out for you or when did you kind of realize that was just going to be part of being an entrepreneur?
Daniil: Well, you know, I don’t know if I had a specific moment. I also think it’s kind of the path that I chose, right? Like I even called, it’s cheesy, but I called my development company is called Evolve Development, right. Because I from day one saw our business as something that’s going to wait for it evolve, constantly. And they see other investors in my market and we have a lot of investor score clients and subscribers and you know, I meet these guys who are 60 years old and they’re still doing single family houses deals the same exact deal that they’ve been doing for 30 years.
Daniil: And that’s great, right? They’re really good at it. It works for them. It makes money. They’re comfortable by a number envisioned myself being one of those guys, right? I like being out, I like being out of my comfort zone and so I’m used, at this point to waking up everyday and feeling like, I don’t know half the shit that I’m supposed to be doing today, right?
Daniil: Like everyday, especially again, like as I’m getting into more and more into really interesting commercial development, I feel like a fish out of the water every single day. But what works for me is kind of being humble about it and just being upfront with people. Like, yeah, it’s funny, right? Because like you and I, we have big email lists and we’re known in this industry and you know, I doubt I’m very well known but there is a good chunk of people that know me that get my emails and they look at us like we’re somebody to look up to. But I’m telling you, man, like every other day I wake up and I talk to contractors and I’m like, listen, I’m sorry if I sound like a moron, I’ve never had to do, you know, helical piers before in order to put in the foundations.
Daniil: I don’t even know half of this terminology. Can you talk to me like I’m a five-year-old, but I think that’s important, right? Being humble and not pretending to know what you don’t know, right. And just being upfront with people. And so I, it’s better than puffing up your chest and saying, you know, I’m this big time person. People will see right through that. So I’m very upfront. If I’m in a situation where I don’t know what the hell I’m talking about, I’m upfront about it and I use that as a learning opportunity and then it becomes interesting everyday I’m learning something incredible.
Josh: That’s great. That’s great. So I want to pivot into, you’re also running an amazing software development and doing that for real estate investors as well. But before I go there, a couple of quick questions. A couple of quick hitters about real estate. So how old were you when you did your first deal?
Daniil: I bought my first property when I was 26 I was still working full time, but I like, that was my first deal.
Josh: Got it. what were you doing? Do you remember the moment when you decided you were going to go into real estate full time?
Daniil: Yeah, I got fired from my job, it was 2008 and I got fired from my job and the, this doesn’t have to be long story, but I worked for an investment bank in Midtown Manhattan and it was August 14th I remember like it was yesterday and I got laid off and it was during the recession, so a lot of people were getting laid off. But I decided to walk that day from Midtown to my $3,000 a month, upper East Side apartment that I could no longer as of that moment afford. And I walked like 40 bucks. And during that walk of those 40 blocks, I made the decision not to send out any resumes and I was done. And I had no idea exactly what I was going to do, but I knew I wanted to do real estate and I knew I wanted to do something on my own.
Daniil: And it was an interesting conversation I had with myself at that point. It was advice that was given to me by a mentor a couple of years back. And the advice basically was that if you need to make a hard decision, it’s good to think in really extreme examples. So I had the decision to make at that point was I going to find another job, right. Because I knew I needed the money. I didn’t, you know, I worked in New York, I wasn’t really saving anything. And so I asked myself a question, I said, is there any job that I could land tomorrow? Any job where I would wake up and be excited next week to go to it.
Daniil: If somebody came up to me in the middle of the street and said, Daniel, you know, you silly 28 year old that doesn’t know what the hell is going on. You’re now the CEO of MGM studios, you know you’re going to get paid 5 million a year and file on the private jet. Would I be excited about waking up and going to do that job? And the answer was no, no. And so that made things really easy for me, right? There was no question at that moment. I just said, I’m done and I’m going to go full time into something that has to do with real estate.
Josh: Love it, love it. So I have another question around that. Another question around that. So you use extreme examples, I love that sort of discussion around extreme example. What would be the one thing I would do? What did you have that same thought in your head? Like extreme example of the opposite direction. Like I just got fired. I have an apartment and expenses that I can’t afford. Did you do that same thing in your head to think like, okay, what’s the worst case scenario, extreme example?
Josh: Because I find it very refreshing when I’m in a pinch, when I’m in a challenge, when I’ve got something in my business or in my life that’s not going well, I actually use that very similar tactic to say, okay, let’s sit down. Let’s think before we freak out, what’s the worst thing that could possibly happen? Let’s resolve ourselves to the fact of this is worst case scenario. And you know what, this is really not that bad. So what were your thoughts around that going through that experience?
Daniil: Yeah, I mean I asked myself and I did ask myself that, right? What’s the worst that can possibly happen? So here’s the worst that would possibly happen. I would spend the next two years living with my parents back home and trying to build a business, which I ended up doing. I moved in, I got rid of my apartment and cut all my expenses to zero and then moved in with mom and dad. And it was a humbling experience at 28 but it was the best thing I ever could have done for myself. But I asked myself, what’s the worst that could happen? I would spend two years or three years fumbling around living with mom and dad trying to build the business. Then I would give up and fail and go and look for a job and I would sit there at that job interview and the guy would say, there’s a gap in your resume of three years. What were you doing?
Daniil: And I would say, well I built the company and it didn’t work out. Here’s the things that I learned. One, two, three, four, five, six, seven, eight, nine and who wouldn’t hire me at that point? Even if I failed and building a business, the things that I would have learned just by trying to build that business. We’ll be a resume builder like no other. And that’s the worst that could happen. I would in two, three years or whenever I chose to give up. I would go and I would find another decent job in maybe a better job than the one I got fired from because of all the things that I had to learn by being entrepreneur. That’s the worse. How bad is that?
Daniil: So, and yeah, you know, we all look back during the moment. We tend to freak out about whatever’s going on right back on with two weeks later and you barely remember it, right. The things that in the moment we feel are a big deal and that we need to really freak out about three months later, you’re on to something else. You don’t even remember about that moment.
Josh: Absolutely. Two more rapid fire questions. I want to talk software. What was the most money you’ve ever made on a deal and then what was the least money you’ve ever made on a deal?
Daniil: Most money I made on a deal, realized money or non realized money. I had a piece of land on their contract one time that before we even closed on it, I had an offer for close to $600,000 higher. I chose not to accept the offer. I bought the land. Realized profit, there was a new house that we sold. I think we made like $170,000 on it, on, on a new construction house. So that’s probably the biggest. Again, like I don’t…
Josh: And unrealized profits, sorry.
Daniil: Well that was the land examples and then realized profit because I never sold it. I still own the land up with a build 130 units on it. But I could have flipped that contract and made close to $600,000 grand on that land without ever developing it.
Josh: Yeah. And the unrealized profits is honestly where the bigger profits are at. Like all of your whole portfolio for frankly is unrealized profits sell equity. And that’s the balance sheet builder that all of a sudden now you can qualify for larger loans. You can sponsor more deals. That’s what banks care about is cashflow and equity, not necessarily income. And frankly, the cashflow on the equity is the way you reduce your taxes and pay the least amount to the government. And least amount of money that you’ve ever made on a deal or maybe lost money on a deal?
Daniil: The very first a rehab and flip that I tried doing, I probably made every possible mistake you, I mean, every single mistake you could’ve made. From buying on the wrong street to hiring the wrong contractor and having to fire him halfway through and starting over to a rehabbing just on a shitty block where on a Friday afternoon somebody pulled up with two trucks and when we had the house already finished and staged and literally in the middle of the day while the neighbor was sitting on the front porch drinking coffee, or actually sorry on his back deck, he was sitting in drinking coffee, two vans pulled up into the backyard to keep pumps, all appliances, ripped out, air handler out. They ripped out the dishwasher and it flooded the basement. they took everything that we staged with furniture, napkins, silverware. Everything broad daylight they cleaned us out.
Daniil: My insurance ended up covering it, but I had like this ridiculous deductible that then I identified my insurance guy. I mean it was just a disaster. But what saved me was I bought really cheap and that goes back to the old Adigun. In the real estate and investing, which is you, you make your money when you buy. And so luckily I bought really cheap and I ended up losing probably like $5,000 net when we sold the house I lost a couple of grand.
Josh: Got it. Got it. Yeah.
Daniil: Given how many mistakes I made, I call that a win.
Josh: Absolutely. Absolutely. So Daniil, tell us a little bit more about you’ve taken now all this experience as a developer builder raising private capital funding deals on your own, building a massive portfolio, doing new construction and you’ve kind of boiled all that down into your software Rehab Valuator which we’re very familiar with. A lot of my audience is familiar with it because we’ve promoted it in the past. But I know it’s evolved over the years. You’ve added to it over the years. It does amazing things. So I definitely want to kind of plug that, tell my audience that they should be using it and where they can go get it. So just describe it real quick about what it does and then just throw out your website where our folks can go get a free trial.
Daniil: Sure. And you know, and I appreciate you, you know, you’ve spread the word about the software in the past and I really appreciate that. It’s basically the softer, the original version of the software came out almost when they started my real estate business and it was originally developed as a spreadsheet just for myself to use in doing deals. And since then it’s evolved into a pretty sophisticated cloud based platform and there is a free version and there is a premium version and then you can get the free version if you go to RehabValuator.com, rehab.
Josh: Yeah, we’ll put that in the, we’ll put that in the show notes as well. RehabValuator.com
Daniil: Yeah, but it’s so it really does three things. It’s an analysis. It’s a deal analysis, deal marketing and project management software. So in terms of deal analysis, you can use it to pull comparable sales, determine your after repair value, determine the offer that you should make on your property. Look at different financing scenarios and see what your financing will cost you, determine your projected profit if you’re going to flip the house. Or if you’re going to rent it, you can use it for rehabs, you can use it for new construction. We use it in our development business because I can literally model, this is what I’m buying land for, this is what my construction will cost me. This is what my short term financing costs me when it’s done. This is my projected income, projected expenses and now I’m going to refi into permanent financing and it spits out, you know what my debt coverage ratio on the new loan will be, what my net cashflow will be, how much equity I have on the deal.
Daniil: So I use a daily for my development projects. So that’s one, that’s analysis marketing. If you’re a wholesaler creates marketing presentations that you can use to sell your wholesale deals and you can, there’s social media syndication functionality there that you can use to build your cash buyers list. And then marketing also in terms of if you’re buying a deal yourself, you need to raise money. So a lot of our users use the software to put together private lender presentations for their projects as well as bank financing packages for their projects. And I do the same. So I’ve used, I’ve raised over $10 million in funding, probably using just the simple presentations that the software puts together. And then lastly, there’s a project management component. So you can build out detailed rehab budgets. You can create costs templates so that when you’re looking at your next deal, instead of recreating your budget, you can pull up a cost template and then create a rehab or new construction estimate for your project in a couple of minutes.
Daniil: It’s got ability to put together a scope support for your contractors. You can track all your bids, store your documents. There is that accounting system that basically lets you track your project as you’re paying people, contractors and then it tells you in real time what’s my budget versus what’s my actual, where does my project stand category by category. And then creates really detailed, easy to understand reporting around it that you can use internally with your team or you can share with your partners, with your lenders. And we’re getting ready to release scheduling functionality for your rehabs and a couple of other things. But I really just, you know, it’s always been, I’ve built the base in my own business like I’m my own client and it just so happens that we’ve also been able to help thousands of other investors, which is pretty cool.
Josh: Yeah guys, check it out. RehabValuator.com we’ll put it in the show notes. I’m highly recommend it. I mean Daniil builds that software. I mean again, it’s amazing you built your real estate business with very few full time employees. I know you’ve built your software business very similar with very few full time employees, a lot of outsource developers and things like that, so congratulations on that. Fantastic. I wanted to wrap up Daniil by talking a little bit more about entrepreneurial routines and talk a little bit about how those routines may have changed over the last couple of years. Recently you got married a couple of years ago, had a few kids. And so, you know, when you’re 30 years old or 35 and you’re building your real estate business, you’re single, you know, you have certain entrepreneurial routines, you got a lot more time in the day.
Josh: You know, I know what that looks like 10, 12 years ago before we had Julianna and now those routines are changed. So help me understand if there’s maybe two or three or four routines or things you do on a daily basis to push your business forward. So that’s question number one is what do you do every day to push your businesses forward? Do you find yourself doing the same couple things to push your businesses forward? And then I’m going to ask you a second question, which is what entrepreneurial routines have you tried to embed into your relationships in your personal life that allow you to still build your businesses and have balance? So let’s talk first about business. What are you doing every day when you get up and get started with your workday to push your business forward?
Daniil: And that’s a great question because you know, as we had children, well as I get married and we had children, I mean yes, it’s a completely different world. You know, I used to be workaholic, I would work seven days a week if I wasn’t traveling, I would work nonstop. I’d work in the morning, in the evening long into the night and, and I would just crush it and just get so much done. And then you get married the night I got lucky because my wife, before we even had kids, she was great. She would let me do my own thing and she kind of knew what she was getting into. So there wasn’t any of that nagging of I wasn’t spending enough time with her. She kind of let me do my own thing without like neglecting her. And you know, I mean, but then we had kids and, and the changes because now I wake up at 5:00 o’clock in the morning, but not because my alarm goes off, but because my two year old daughter is screaming from another room, daddy, daddy, daddy.
Daniil: So that’s my morning. I get her ready for her daycare and then I’m usually in the office by like 7:00 AM. So I’ve been, it forces you to be more productive, right? As you as I’m sure you know, you want to spend time with your kids, you want to be a good father, but you don’t want to neglect your business. So it forces you to get the same amount of things. I used to get done having seven days a week, you know, 16 hours a day. I’m basically now having to figure out how do I get that same amount of work. And now as my businesses are growing in their more demanding, I have to do even more than what I used to do. So I’ve been kind of on the big productivity. I’ve changed up my diet a lot.
Daniil: You’d like, you’ve probably heard of Bulletproof, but all I do in the morning is I make a big pot of coffee. I put it in the Vitamix, I blend it with butter and some MCT oil. And they pour myself a thermos. Actually have it.
Josh: Nice. There you go.
Daniil: I pour myself a thermos of Bulletproof coffee and that’s all that I consume until about, I tried to go until about 1:30 or 2:00 o’clock sometimes I get hangry and you know, I have a protein bar or something, but you know, some, something that’s simple has made a huge impact on my ability to focus, right. Because I didn’t realize this in my twenties but what we eat, that directly impacts how well we’re able to focus on thinking how much energy we have in that. It’s, it’s crazy to me to look back on my twenties when I would wake up and have this huge breakfast and then wonder why I was sluggish at 10:00 o’clock in the morning and chugging like my fifth cup of coffee. And it’s so obvious. So I don’t, so I do intermittent fasting now and that’s now from like 7:00 AM until 1:00 PM I just, I kill it. Like my focus is insane. So that’s been the big thing that’s allowed me to be really productive. Just intermittent fasting, not eating food until a very late lunch.
Josh: I love that Daniil. Because like even for me, like I lost my stomach and my surgery right in 2011 so if I really eat anything at anytime of the day, my body has to work overtime just the process that food. So the later in the day that I eat, the more energy I have. And I definitely can tell as soon as I put something in my mouth, my energy level and my productivity, it’s going to slow down. It’s partly with age, partly because I don’t have a stomach. So it’s amazing to hear that routine can change everything and the focus level to just stay up and you’re not getting up looking for the next snack. You’re like getting up, looking for the next pot of coffee. You’re not getting up thinking, what am I going to eat? You just eliminate that from the conversation in your head so that you can just stay down focused on whatever you’re working on. I love it.
Daniil: It’s well it’s, so yes. So you’re onto something because there’s a secondary benefit to that. It’s that I don’t wake up in the morning and spend anytime making like decision of what to have for breakfast. And the more you can eliminate those tiny, you know, if you add up all the tiny choices you have to make throughout your day. If you use up your willpower and your ability to make those choices early in the day, then you’re not going to have enough left for the important choices. So figuring out what to wear in the morning, figuring out what they have for breakfast, all of that, they seem like minor choices. But look at how much time you’re spending in the morning, figuring that stuff out and it eats away at your ability to focus. It eats away at your time. So, most of the time when I am out and about when I’m in the office I have the same shirt on, right?
Daniil: I have like 20 of identical tee shirts. They either have my software logo on them or they’re just a basic blue tee shirt. And I wake up in the morning, I put on a pair of jeans and I put on one of those tee shirts and I don’t think about it. And it might seem like a minor thing, but it makes a big difference. I wake up, I don’t think about what to wear. I don’t think about what they have for breakfast. I just go.
Josh: Yeah. Love it. Love it.
Daniil: And it makes a difference. So that diet is one. Obviously I’ve had to be better at building a team like we talked about in the beginning and surrounding myself with really good people and outsourcing more of the things I don’t want to be doing. And that’s a constant, you know, it’s a constant challenge and struggle. And I’m still way too much of a control freak and I don’t outsource enough and I’m still doing too many things myself that I should have probably had like a personal assistant do a long time ago.
Daniil: So, you know, I’m getting better at that. And they have to, right? Because my amount of time is compressed, compressed, how many hours a day are compressed. So some try to make a better effort to do that and surround myself with more good people. And there’s other small things, right? Like exercising that’s become more and more important because you know, you get into your late thirties, your metabolism slows down and things I could get away with in my twenties I can’t anymore, right.
Josh: We got away with a lot in our twenties a lot. You realize when you’re about 40 you’re like, wow.
Daniil: It’s crazy.
Josh: You didn’t even think about all the bad things I was doing to myself and my body and all this crazy stuff. And it didn’t even matter. It just as much energy. And now it’s like, holy cow, what did I drink on Friday that I’m still sluggish on Tuesday?
Daniil: I literally in my twenties cause my first six years were spent on Wall Street. I would go out during the week with my buddies. We would party all night and then walk onto the trading floor all day. Just saying that out loud right now it gives me anxiety. I have two bourbons and I’m done for the next day. It’s night and day. So we have to take better care about ourselves. I, you know, I drink a lot less. I’m also like really into cold showers in the morning. Freezing. Like I finish every shower with 60 to 90 seconds of the coldest setting possible and it has also really positive impact on my energy levels throughout the day.
Daniil: There is, you can read up on it. I’m not going to go into a whole spiel on it, but it’s habit stacking, right? It’s not a term I invented, I don’t know who invented it, but it doesn’t really matter what you know, it doesn’t even matter what you learned in this podcast, right? It doesn’t even matter what you, it doesn’t matter what you know, what matters is what you actually do consistently. I think that’s a quote I read by Tony Robbins recently. It was like, oh my God, it’s so freaking brilliant, right? The only thing that matters is what daily habits can you build in that become habits, right? Because that’s what has a big impact over the long-term on whatever it is you’re looking to make an impact on your health, your productivity, your, your bank account, right.
Daniil: The only thing that matters is habits. So I’ve made a big effort over the last 12 to 18 months to just stack new habits on top of each other and make them almost things I don’t think about. So I wake up in the morning before I get out of bed, I chug 32 ounces of water to rehydrate myself. I take a cold shower and make some Bulletproof coffee and I’m off to the races and I’m really productive for most of my day. And it’s, you know, it’s made a big difference.
Josh: Yeah. Wow, that’s fantastic. And what I love is the comparison or the kind of two things like habit stacking. And then I wrote down the word property stacking like those two things, right? And then, you know, for your software business, it’s really about like this is a raw way of saying it, but it’s customer, customer stacking, right? Bringing in enough customers that like the software that use it on a free basis, upgrade to the premium version and they have a great software that they can use long-term and they stay for a long time. It creates consistent cashflow. And if you think about those three things, they permeate through your personal life in your habits, your properties and your software is creating long-term habits, long-term cashflow, long-term assets. So last and final question is relative to that is you’ve made a lot of long-term decisions and things that are not necessarily paying off today, but you knew they would pay off in the long-term.
Josh: Many people I think want to get into real estate or want to create habits or want to create a business that will pay them for the long-term, but they constantly have the short term a temptation to either maybe flip a property, because I can make more money now or to drink too much alcohol because it makes me feel good now. Or to sell a product that’s transactional where I can get more money now.
Josh: And so how do you think in your own mind, how did you come to the realization that you’re going to sacrifice some short term, immediate gratification for all these long-term things? The habit stacking, the property stacking, the customer stacking, because that is a tough decision that eventually everybody has to make. We want to get into real estate for long-term equity, long-term cashflow. So we’ve got to give up some of the short term, like you did the $600,000 windfall on the land to develop a hundred units. So talk to me about that for a second.
Daniil: I think the first question you should be asking yourself is like what are your values and what do you truly want, right. I mean if you, if you want to go pop bottles at the club next weekends, you know, and buy that $20,000 Rolex, if that’s what you truly want, then live your life. Who am I to tell you differently? Like do makes you happy. At the end of the day, we’re all going to die. Just live, you know, live your life the way you want to. The way that makes you happy, as long as you’re not hurting other people, live according to your values. I’ve never really been into materials stuff myself. I’ve never really, you know, I grew up, we were immigrants, we came here with nothing. For most of my middle school and high school, I had nothing. I’m fine with going back to nothing like, it’s okay.
Daniil: Like I, you know what some foreign to me is freedom. I suck at having a job. I suck at having bosses. I cannot stand the thought of ever, ever again in my life calling another man in my boss. I can’t stand the thought of ever being somewhere where I feel like the world is passing me by and I’m not really contributing anything. You’re making my mark, you know, I used to, I used to freak out about that when they had a full time job that I was meant to be doing something else and I wasn’t making any kind of difference where I was. So what’s important to me is having that freedom, right. Having, I’ve been publishing a lot of contents for our subscribers and they call it the F-you Wall, right? Every, every unit I add, every property I add to my portfolio puts another brick into my F-you Wall.
Daniil: And it started as a pretty vulgar F-you and, but you can also call it like financially untouchable or financially unstoppable wall. And so I’m building this portfolio and it builds freedom for myself, right? It builds freedom for myself against ever having to work a job. It builds freedom for myself against having to start a go fund me campaign because my dog died, right? And we need a funeral or because my car broke down. So I am not in it for the money right now. I just want that freedom and flexibility to be able to sleep at night and know that if I want to stop working tomorrow, I can, I have a portfolio that supports me, that will continue working for me. And, you know, we’re making lifestyle plans, you know, we want to live in other countries when the kids are a little bit older and we want to travel the world for extended periods of time.
Daniil: And that’s what my version of my real estate business will allow me to do. And, you know, that’s according to my values. It shouldn’t be everybody’s values. And, you know, I never try to impose what I do on other people, but for me, what I care about is optionality, right? Be able to wake up tomorrow, have the option to work or not work. And I always choose work because I love what I do, but I want to have the option to, you know, if something unexpected to happens I want to have optionality. I want to have ability to pay, to take care of those things, right? So like as an example, two weeks ago it was my wife’s birthday and we had a flight to Miami and it was for three nights. And we had dinner reservations that Friday night.And the American airlines just completely shit the bed and canceled our flight, right.
Josh: Love that.
Daniil: And they didn’t just cancel our flight, the only flight they could rebook us to was a flight that would make us stay overnight in on another side of the country. And then maybe eventually the next day get us to Miami. So like it was a completely ruined weekend and if it sucked but because I don’t live like a super rich person, but I’ve built up a portfolio that pays me really well. We called up a private jet and within two hours we were on the jet to Miami. Nice. That’s the F-you Wall, right? Like that’s having that F-you ability and that’s what I work for. I work for that optionality to be able to not deal with shit, right that life throws at you. I don’t know if that makes sense. That’s what I’m just a crazy immigrant.
Josh: I love it, man. I don’t know whether it makes sense to other people or not. Like, I don’t do this podcast and interview my friends and guests. I primarily do it for my own. And I tell my subscribers, all my listeners, if you haven’t heard this before, I do this podcast for myself and I just hope you like it. I’m going to do these interviews regardless because of the value I get out of interviewing guys like Daniil and my other friends and other amazing entrepreneurs. And when I do solo casts, you know the same thing. Like I just kind of throw up in the microphone because it makes me feel good and I hope I provide value to people if they listen to it. And you know what? If they didn’t listen to it, I would probably do it anyway because it makes me feel like I’m getting out my thoughts, my ideas, and you know, you do it for yourself man.
Josh: So the fact that you’re doing what you want for the optionality, for the freedom and ultimately there’s the financial independence, the financial unstoppability and the F-you wall for whatever reason. Sometimes it’s to put it in their face and sometimes it’s just for you guys. It’s phenomenal. So Daniil, listen, this has just been, I’ve had an absolute blast doing this interview. It’s great to catch up with you. Happy birthday. You know, amazing, amazing stuff. Congratulations on your success.
Josh: And for all of my subscribers who are listening, if you’ve enjoyed this, make sure you go visit Daniil’s website RehabValuator.com he’s giving away free membership, a free trial membership into his software and have the opportunity to upgrade into the premium version if you’d like. But the free version is dynamite. Trust me, I’ve used it, I’ve checked it out, I’ve promoted it. You should absolutely should, should check it out. Also to know any other places online, whether it’s website, Facebook that our audience should connect with you on or check you out on.
Daniil: Yeah, I’m not a lot of social media. I’m on Facebook so you can find me on Facebook pretty easily by just searching my name. I’m not really on Twitter or Instagram or I’m still figuring those things out and I’m not sure I even want to because I already do too much work, but you know, I’m on Facebook and we have a dedicated Facebook group for our rehab value to users and kind of a community of real estate investors there. And that’s something you can, if you just search for Rehab Value Users, you can find that group on Facebook as well and you can connect with me that way. So.
Josh: Perfect. Well Daniil listen, thanks so much for being on accelerated investor. I had an absolute blast with you today.
Daniil: Thank you man. I appreciate you having me on. It’s always, it’s always awesome talking to you and you know, I mean you’re, you’re asking great questions so it’s always, you know, it’s intellectually stimulated to actually do this.
Josh: So yeah, you bet my friend, I appreciate you being on. We’ll talk to you soon.
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Daniil Kleyman knows a thing or two about being a thriving entrepreneur. After all, he’s been investing in real estate and operating his own companies for nearly 20 years. But don’t let his level of success fool you… he admits that, just like the rest of us, he had to work hard – and make some mistakes along the way – to get where he is today.
At the start of his REI career, Daniil focused on rehabbing single-family homes, then moved on to duplexes and quads. Over the past few years, he’s transitioned primarily to new construction – including duplexes, quads, larger apartment buildings, and mixed-use buildings.
Daniil is also a software developer who created Rehab Valuator, a real estate analysis, marketing, and project management system for investors.
Josh chats with Daniil to learn more about his entrepreneurial journey, the challenges he faced along the way, and the advice he would give to other real estate investors who are trying to find the best investing strategy for their business goals. He also explains how each property you add to your portfolio is like putting another brick in the “Financially Unstoppable” (F-U) Wall, and is another way to earn freedom from a traditional job that restricts your life.
- Why Daniil prefers long-term cashflow over one-time paydays
- How Daniil built a team of trustworthy property managers, engineers, plumbers, contractors, etc.
- Daniil’s money-making strategy for his commercial construction business
- How Daniil is able to accept the discomfort and uncertainty that comes with being an entrepreneur
- How Daniil made the switch from a traditional job to full-time real estate investing
- The most money Daniil ever made on a deal and the most money he ever lost on a deal
- How investors can use Daniil’s software, Rehab Valuator
- How Daniil balances work and his personal life