Josh Cantwell:   Welcome to the Accelerated Investor Podcast with Josh Cantwell. If you’re looking to retire early with forever passive income, you’re in the right place. This podcast is the go to destination for real estate investors, both active and passive, and multifamily apartment investors, both new intermediate and advanced. Now sit back, listen, learn, and accelerate your business, your life, and your investing with the Accelerated Investor podcast.

[INTERVIEW]

Josh: Okay, so let’s talk about number 1, Real Estate brokers.

Josh: Okay?

Josh: Now, in the training that we talked about last week with Keith Washington and we talked about it with all of you guys, there’s a lot of different ways to find deals. There’s a lot of different ways to analyze markets. Once you analyze those markets and know what markets you want to go into, now, you need to network with real estate and commercial real estate brokers. Again, in that training I’m going to do in two weeks, we’ll talk about ways to find brokers.

Josh: Okay?

Josh: But commercial brokers are. They’re working all day, every day to call on sellers and do transactions. They’re creating what’s called a bov, a broker’s opinion of value. Bov. Write that down.

Josh: Okay.

Josh: They’re calling on sellers and trying to procure sellers who want to sell. They’re talking with their best buyers, finding out what properties do they want to buy. How is the buyers getting their equity? Is it coming from a 1031 exchange?

Josh: Okay.

Josh: I work with about four or five different major brokerages in the Cleveland area. In the Columbus area, it includes guys from Marcus and Milachap. It includes guys from Newmark. It includes guys from bellwether, includes guys from colliers.

Josh: Okay?

Josh: Those four groups, primarily, they all know each other. They all know each other. Think about the residential space, right? You work with the residential agent. Those agents, they know a bazillion other agents, they might know agents in their office, but then they go to networking functions. So the EXP agents, they know the Keller Williams agents, they know the Howard Hannah agents, they know each other.

Josh: Same thing in the commercial space. The real estate brokers all know each other. And you know what? In the commercial world, because there’s a lot less deals and the deals are so much bigger. The real estate brokers all know each. Okay, in the Cleveland area, I’ll give you guys an example. There’s one guy. His name is Gary Cooper. Some of you guys may know Gary. Gary got a long history of being a successful commercial broker in the Cleveland area.

Josh: Gary looks and smells the part. Like, everything about Gary reeks of being a commercial broker. He doesn’t wear any socks. He drives an Audi. He wears a three piece suit. He’s got these perfect glasses. His hair is slick back. He’s got a tan.

Josh: Right?

Josh: He wears loafers everywhere.

Josh: All right?

Josh: He’s a great, really, really successful. And I respect Gary a lot. Well, Gary’s been around for a long time. So there’s this new crop of real estate brokers who are all in their thirty s and forty s. Gary’s probably in his late 50s, I’m guessing in their thirty s and forty s, who basically they were all kind of apprentices under Gary Cooper at one time. Well, now they’re all successful in their own right and they’ve all splintered off.

Josh: One guy’s with colliers, one guy’s with bellwether, another guy’s a couple with Marcus and milachap. And now they’re all competing against each other for listings and for deals.

Josh: Okay.

Josh: And so those real estate brokers, I want to network with as many as I can. I want to network and I want to tell them, where am I getting my equity? Where are you getting your EQUITY? Who’s going to be your property manager? What other THINGS have you bought? What are the deals have you done? Even if it’s just residential and you bought 50 residential properties, you own 25 residential rentals or 150 residential rentals, you have to be able to give them your credibility kit.

Josh: Your credibility kit is inside your membership site. Okay, so let me ask you guys a question. I want you guys all to go in the chat box and tell me how many commercial real estate brokers are you currently communicating with on a regular basis? Just networking with, talking with. How many do you have conversations with on a monthly basis? Do you have two? Do you have three? Do you have ten commercial brokers focused on multifamily that you’re talking to on a regular basis?

Josh: Okay. All right.

Josh: So Keith says two, Sean says three, Chris Bell says three, Steve says two, Byron says three, Robert says three to four, Neil says four, Chris says two, Rick Allen says five, Becca says four or five, Scott says three, David says three, Gillingham says three or four. Okay, so what I’m going to challenge all of you guys to do is to double that number, get that number to about eight.

Josh: Okay?

Josh: Especially because all of you are kind of in that newer to intermediate.

Josh: Okay.

Josh: You need to be focused on talking with a lot of okay. For me, the guys in my area, Cleveland, the Marcus and Milichap Group, dominates the market. They do the most transactions by a mile. In the Columbus market, there’s a Newmark broker. His name is George Scaff. And in the Cincinnati market, there’s another Newmark broker named Matt Newcomer. They are the leading brokers. They dominate in those markets.

Josh: And I talk to all three of them all the time. So I’ve aligned myself with the top guy in Cincinnati, the top guy in Columbus, and the top guys in Cleveland. That’s where you want to get to. Okay, so real estate brokers, eight should be your goal. Write that down because you’re going to have a lot of smaller.

Josh: Okay.

Josh: That may just get a few listings a year, and you may not want their deals. The deals that they get might not fit your market. Makes sense. Reach out to them cold. Call them. Look them up on LoopNet. Look them up on apartments.com. Talk to property management companies. Find out who the property management companies know who are the best brokers in town. Go to all the websites. Marcus and Millichap, Colliers, CbRE, Newmark, Cushman and Wakefield Bellwether.

Josh: Go to all of those and opt in on their website. Become part of their buyer’s list.

Josh: All right, next is your CPA and accountants. CPAs and accountants. Again, this is about building out your network. There are certain CPAs and certain accountants that focus on real estate accounting.

Josh: Okay?

Josh: And number twelve, cost segregation experts. Your CPA may also do your cost segregation for you.

Josh: Okay?

Josh: But my CFO, Roberto, communicates with the CFOs at the property management companies. The property management companies, they’re authorized to collect rent and collect income.

Josh: And then.

Josh: They’Re also authorized to pay the bills. So the property management company keeps the P L inside of yardy or inside of that folio or inside of Entrada. Then the CFO at the property management company communicates with Roberto. If you guys don’t have a Roberto, then the CFO or the area manager at the property management company should be communicating with you. Then near the end of the year, you should be taking those P Ls.

Josh: That shows your profit loss, whatever, and giving that to your CPA. So your CPA can consult with you and find out, are you going to have a lot of taxes that you owe? Are you going to have a lot of write offs and maybe not have a lot of taxes? Do you have a loss carry forward from previous years?

Josh: Okay.

Josh: So in my world, I’ve got Roberto, my CFO, the property management company, has their set of books, which comes from their property managers or their CFO. And then we have the CPA that actually does the tax returns. Okay, so number two, this, you need to align yourself with the CPA who’s going to do your final tax return, that understands real estate, especially depreciation. And the accountants and the.

Josh: Okay, that would be Roberto. That would be Steven. Steven’s the CFO at.

Josh: Okay.

Josh: Gary is the owner of REM. He does a lot of the accounting for Rem. So we want to align ourselves with these guys. Now, I had a CPA. I’ve only had two CPAs in my whole life. The first guy, he was a good CPA, but he didn’t really know anything about real estate accounting. He was a good accountant, but he was very much a generalist.

Josh: Okay.

Josh: And eventually I basically fired him. I don’t want to say that because he was a good accountant, but I let him go and moved to my current CPA because the current group, the current CPA, really understands real estate accounting. He understands cost segregation, understands depreciation, cash flow, acquisition fees, and how things should be, basically what category they should go in. He also, my current CPA does a lot of tax planning.

Josh: Your CPA should do tax planning. So as you get into Q four right now, it’s September. So when you get into October, your CPA better be calling you and suggesting that you have a year end tax planning meeting. Tara, just put in the chat box. If anybody needs help, let me know. My current CPA is Hank Gingrich with Corrigan Krauss. Tony, Corrigan Krause is located at Crocker park in Westlake, and they’re right next to the American Greetings headquarters.

Josh: Robert Lindsley says, I use provision for my bookkeepers. Tony, if you want some help from Hank, I’ll be happy to introduce Hank.

Josh: To, you.

Josh: Know, he could definitely help you, I’m sure.

Josh: Okay.

Josh: Rebecca’s looking for a CPA as well. Rebecca, I don’t know anybody in Colorado. But again, that’s why this is again all about expanding your network. Rebecca, talk to Marcos and Paul, talk with Keith Washington. There’s apartment association meetings and apartment association groups that you should be a part of, and you’ll be able to find CPAs and accountants there.

Josh: Okay?

Josh: Like every state has an apartment association, like the Greater Columbus Apartment association, the Greater Cleveland Apartment Owners association. I’m sure there’s one for Colorado.

Josh: Okay?

Josh: I’m sure there’s one for Colorado Springs.

Josh: Okay?

Josh: Ask other property managers again. Property managers are the epicenter of a lot. So property managers know brokers, they know CPAs, they know contractors, they know attorneys, because property management companies are the epicenter of what we do on a daily basis. So as you network with property management companies, ask them, who do they recommend for cost segregation? Who do they recommend for PPMs and securities work?

Josh: Who do they use for evictions? Who do they recommend for CPA? Who do they recommend as a. Okay, number three, property management companies. Again, this is another area where you’re going to want to have more than one. You’re going to want to kind of have them compete for your business. And property management companies come in all shapes and sizes.

Josh: Okay.

Josh: Some property management companies focus on a class downtown, and they’re more used to dealing with a class residents and dealing with really high end amenities. Other property management companies work in the suburbs. They do a lot of B class. Other property management companies maybe focus on section eight and maybe HUD properties.

Josh: Okay.

Josh: You do not want a, a class property management company managing a B minus or a C plus value add. You DefiniTeLy don’t want a C class or a d class. Section eight HUD property manager to manage your B class value add.

Josh: Okay.
Josh: The biggest question here for me when I interview property management companies guys write this down is what is their lease up strategY? Write that down because you’re going to have a lot of turnover. You’re going to have a lot of evictions. You’re going to have people that you kick out push out so you could turn the unit and raise the rent. You’Re going to execute your value add plan. And so are they used to that?

Josh: Are they comfortable with a lot of turnover renewals, move outs and then new lease ups. What staff do they recommend? Property management property manager, assistant property manager, leasing agent. How many maintenance techs.

Josh: Okay.

Josh: What software do they use? Yardy, entrada, appfolio. There’s a lot of different ones. Bildium, do they use rent cafe for websites? Do they use know there’s a lot of different softwares.

Josh: Okay.

Josh: How long have they used that? Bell good. Good question. Chris Bell put a contact in the chat box. Brandonhall@therealestatescpa.com okay, number four, contractors. We’ve got a stable of contractors, roofing contractors, window contractors, interior paint, exterior paint, carpet, guys, guys that do ceiling, stripes of driveways, HVAC boilers, unit turns, carpenters, guys that manufacture signs for us.

Josh: Okay?

Josh: Now, your property management company is probably going to suggest that they can also be your contractor. Never allow that to happen.

Josh: Okay.

Josh: The property management company also is your contractor. There’s a couple of things that are going to happen. Can you guys guess what do you guys think is going to happen? Or what do you think is a common thing that happens when your property manager is also your contractor? They might overbill. Yes. They might charge an upcharge or an overcharge. Yes. Price goes up. Sean? Yes. One of the biggest problems is that the property manager will put your capex expenses into your p l.

Josh: Capex goes on the balance sheet as an improvement to inventory. Right, Tara? Capex is an improvement to your building. It’s an improvement to your asset. It’s an improvement to inventory. So it sits on the balance sheet. It does not get written off. If you put it in your p l. Then you’re writing it off against your cash flow. Tara says, improvement to asset.

Josh: Yes. Okay.

Josh: The other thing is that they’ll say, hey, my maintenance guys can do the unit turns. No, they can’t. Maintenance guys can handle maintenance tickets. I’ve never yet met a maintenance guy that can do any kind of significant unit term. If it’s a make ready, let’s put it this way. If it’s a make ready, meaning the unit needs painted, maybe there’s some small plumbing fixes, maybe some electrical that needs swapped out. Minor, okay.

Josh: Maybe the shampoo, carpets need to be shampooed. Maybe there’s some handles like towel bar handle, toilet paper handle, small leak. Those are all make ready. That’s all maintenance tickets.

Josh: Yeah.

Josh: Your property manager, the maintenance tech, should be able to handle that. But if you’re going to turn the whole bathroom, rip out the vanity, rip out the toilet, swap out the mirror, swap out the LED lights, you’re going to add new hardware to the bathroom, maybe you’re going to glaze the tile, you’re going to put down new flooring, paint the unit, maybe you’re going to put it in a new in wall AC unit. Maybe you’re turning the entire kitchen.

Josh: If you have your maintenance tech also turn your unit, guess what happens? All your trouble tickets they all fall behind. Look at Chris Bell. He’s saying, yeah, that’s for right. They all fall behind because turning a unit, especially if it’s a half turn or a full turn, that’s a two week project, maybe a three week project, depending on the size, full time for two or three weeks. So if your property manager says, yeah, we can also handle your unit terms, well, they’re going to get set back by two, three weeks.

Josh: And I guarantee you the quality of the work is not as good if you have a contractor that’s used to actually the carpentry. Also you can separate then your maintenance tickets as a p L item versus your capex, which is a balance sheet item.

Josh: Okay?

Josh: Now, again, when you’re new at this, you’re new to intermediate, it falls on you to network and find all the.

Josh: Okay.

Josh: Once you’re at scale and you buy a couple big buildings, now you can bring on someone like Dave, VP of construction. And Dave has relationships with all the contractors.

Josh: Okay?

Josh: But at the beginning, yes, you’re going to have to be more in the dirt instead of the clouds. Because now you have to find the CPA, you have to find the property management company, you have to find the contractors. One of the best things we ever did was really focus on raising money so that we could buy enough units. Again, when I say enough units, the number is again, guys, the domino effect. 310 units. That’s the goal.

Josh: At 310, you have enough scale.

Josh: That.

Josh: You don’t have to operate in the dirt.

Josh: Okay?

Josh: That’s why 310 is so important. Because now you have enough scale that you can bring on really good property management, a really good CPA, really good VP of construction that can oversee and manage the contractors. Everybody becomes a little bit more niche in their swim, right? Versus at the beginning when it’s just you guess what? You got one massive swim lane and you’re freaking swimming in it. You do it. All right?

Josh: Scale. Focus on raising capital. Buy a bunch of buildings. Now you have got enough cash flow and enough work to niche. Everybody down. Okay, number five, your mortgage broker. You guys all met and talked to Chris Litzler. He’s been on a lot of our webinars, podcasts, live events. Mortgage broker, commercial mortgage broker is going to go source banks, credit unions, permanent financing. Fannie, Freddie Hud, they’re going to source bridge, they’re going to source life insurance companies.

Josh: They’re going to source it all.
Josh: Okay?

Josh: So Joe Greaves, who’s been in this program for a long time, was trying to find his own bankers for residential assisted living. I said, hey, Chris, one of the guys I know here in Ohio, he is basically the vice president for residential assisted living financing. He’s a manager of a whole massive territory. And this territory, he manages all these mortgage brokers. And all they do is focus on senior living.

Josh: I said, Joe Grieves, stop calling the banks. He kept telling me, oh, the banks don’t understand. The banks don’t understand. I said, yeah, Joe, the banks don’t understand. But you know who does understand? The mortgage broker that has relationships with all the banks. Let the mortgage broker sell your loan to the banker. That’s what Chris Litzer does. He sells our product, our deal, our loan. He puts that in front of a bunch of different.

Josh: Okay, puts that in front of Zavista Bank, Erie Bank, First Financial Bank, Huntington bank. He puts in front of them all, kish bank. And then they duke it out. Whoever’s got the best rate, the best term, wins the deal. And then Chris recommends who we should pick. So again, I’m in the clouds. Chris is not really in the dirt. Chris has six people that work for him, okay? Joe Greaves was in the dirt. He was talking directly to the banks. I said, joe, stop doing that.

Josh: Talk to the mortgage broker. So I introduced him to a guy named Jason Dopoulos. Jason Dopoulos is a mortgage broker for senior living, residential assisted living, traditional assisted living, memory care, Alzheimer’s, all of that. And Jason Doppel is like, yeah, I’ve got three dozen banks, three dozen products that I can help Joe Greaves with. And all these banks, they already get it. They get it.

[CLOSING]

Josh Cantwell: Well, guys, there you have it. I really enjoyed that episode with Liz. Man, being responsible to others is such a motivator. Giving to others, I feel so good about myself, right? Such and such a good place when I give to others. Number three, making a new decision. I remember when I was diagnosed with cancer and came out of my hospital bed and had an opportunity to restart my life, I had to relearn how to eat, I was not going to go back and redo my life the way I had been doing it, so making that decision. And then finally, as Caleb and I mentioned, don’t quit.

Guys, listen, everybody can do this business. Everybody can be successful. Everybody can be a multimillionaire with real estate. Keep getting your education, keep listening to podcasts like this. But most of all, go execute, raise capital, make offers. Don’t quit. We’ll see you next time on Accelerated Investor.