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$500 Per Door on Multifamily Properties (During COVID!) with Thomas Tsitouridis

Real Estate Rookie Podcast
41 min read
$500 Per Door on Multifamily Properties (During COVID!) with Thomas Tsitouridis

Thomas Tsitouridis is truly a jack of all trades. As a kid, he was used to helping on the project-management side of his parent’s 64-unit apartment building (taking out the trash, helping with tenants, and so on). He later realized that real estate investing would hold a special place in his future.

Thomas later worked for a construction manager, then chose to start his own construction business, property management business, and long term buy-and-hold business.

Using the experience and cash flow from his construction business, Thomas found that he could amplify his money by buying deals and using his own team to do the construction and rehab.

Now Thomas (and his partner) are buying multifamily deals, fixing them up, and getting sustainable cash flow, so they can retire early. Within his first year as a real estate investor, he has already learnt a lot. Thomas shares some great tips on tenant management, system automations, construction, and even financing so you can get better ROI earlier on!

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Listen to the Podcast Here

Read the Transcript Here

Ashley: This says real estate rookie show. Number 39.

Thomas: So always look at things long-term and so especially a buy and hold strategy. You’re not looking to sell this in a year, two years, three years, we’re looking 10 years, 20 years, 30 years down the line. We want to have cashflow.

Ashley: am Ashley care. And did you guys hear that? Did you already have comfortable? Walkie-talkie that I could 10 Niner in there.

Tony: I have no idea what’s happening right there.

Ashley: Wait, I think to do is you first, Tony, and then I’m here with my co-host Tony Robinson, who has no idea, the Tommy boy quote. And it was so heartbreaking.

So tonight he is going to watch. Tommy boy, and get to know all of the Tommy boy. All right.

Tony: Consider it done. This is my commitment to you as, as partners, Tommy boy. All right.

Ashley: Done. Does he repeat it 10 times until you can cook the whole movie with me? So what’s going on. What’s new with you? I think I saw an Instagram.

You might be selling some property.

Tony: Yeah. Yeah. So we’re me and my partners were actually liquidating almost all of our, uh, long-term rentals in Louisiana. Um, we’re, we’re pivoting to the short-term rental game, so we’ve listed three of our properties. Uh, two of them have already sold. Um, and then actually, yeah, we just found out that on the fourth property, the tenant, they had a two year lease.

Um, but they’re, they’re leaving early. So they’re terminating the lease early. Um, so they’re going to be leaving at the end of November. So now we’re listing that one as well. So we’re going to take all the profits from, from those long-term rentals and just dump it in into some more short-term rentals.

And we don’t really know where yet it might be Tennessee. It might be California, but we’re excited either way.

Ashley: Um, but what about you, Ashley?

Tony: What’s happening on in upstate or Buffalo or Western New York. So,

Ashley: yeah,

Tony: so just say no, like people in categories, Warren you’re like, so geographically challenged, like I know California.

I know Nevada only because Vegas is so close to us. I know Florida down here, everything in the middle is kind of like a blur in New York city. But like, if you go like anywhere over here in New York, I’m, I’m, I’m lost there and that’s everybody in California.

Ashley: Well, when I went to Europe once, like with my friends, family and stuff, and people would ask me.

The rear from he’s like, don’t say New York say Nagra falls because they’ll just automatically think you’re friendly here.

Thomas: I’m like, okay.

Ashley: The first time I learned, like, when you say New York people just automatically think New York city most of the time, but today is actually really exciting for me today.

It is the grand opening of my liquor store today. So we opened, thank you. We opened like three weeks ago just doing like a soft opening, no advertising, stuff like that. So today is our. Our grand opening. Yeah. So we’re going to, do we have a winery coming in to do a wine tasting?

Tony: I wasn’t going to say, are you like cheers in some, some strong liquor tonight or what’s what’s happening?

How do you guys celebrate? I don’t

Ashley: know about that. I know we’re doing a ribbon cutting. The chamber of commerce is coming and the mayor, so yeah. But today we have a really exciting show to Tony is going to take over introducing this host because

Thomas: I

Ashley: can’t even annunciate realtor correctly. Everyone always says, I says real utter.

So go ahead. Yeah. So today we have,

Tony: we have Tom  on the podcast and Tom is Greek. But that’s why the, the, the last name is, is what it is, but Tom was great. Um, I loved his energy. I think he had a really cool perspective about getting started in investing during the time when a lot of people were shying away, right during COVID.

Um, and he not, he didn’t buy one, not two but three properties during this year. And he talks a lot about how he made that transition happen.

Ashley: Yeah, there were so many great topics and just things he does that he covers. So he talks about partnerships, automating his businesses. He owns a construction company that’s just automated and he’s like, yeah, that’s taken care of.

So I have all this free time to manage rental properties. And now he’s automating Matt and just listening to the goals that him and his partner have. And his partner is actually going to move back to Greece and they have it all set up to make that happen. And how Thomas is going to just run his property management company.

So really great stuff. So let’s, uh, bring Tom son Thomas, welcome to the show. Thank you very much for being on the rookie podcast today. Can you start off and tell us a little bit about your background and how you got started in real estate.

Thomas: Perfect. Thank you for having me today. So my name is Thomas I’m from Queens New York.

I was actually born in Greece, came here when I was about three years old and quickly got into real estate and construction just through my parents. My parents became a super a 62 unit building when I was about six. So I’ve always helped manage, take out the garbage I’ve taken out more garbage than I can count.

Shovel all the snow and stuff like that. And then my, my father also had a plumbing business. So at 13, I started working for him on the weekends and summers when I wasn’t in school. And then I quickly learned the business and, and it was just fond of working with my hands. And then eventually high school came around and, uh, it was make a decision to wait, what are you going to do?

I didn’t want to go to college. I wanted to pick up the plumbing business and I liked to draw. So I went into architecture. I got a degree in architecture after college. I, uh, I worked for a construction manager and I helped the guy build his business. I was there for five and a half, six years helped them grow.

It’s about $8 million. When I got laid off. So I, yeah, quickly was it like, okay, construction management, I like doing this, I’m going to continue to do this. I went to work for someone else for six or seven months. And I was like, Nope, I’m doing it for myself. So I opened up my own business and now three and a half years later, we have our construction business and we’re just realizing that we need some sort of passive income, something that comes a little bit easier.

So earlier this year we bought our first property just kind of going into it headfirst, not really knowing that much, doing a little research on bigger pockets and other areas just to see what we need to do. And right now we own three, two family homes in upstate New York.

Ashley: Awesome. So when you say we, is that you and your spouse or your partner, who, who is

Thomas: that?

My business partner and Tomek group. That’s our construction company. We own the construction company. We own a millwork company, and then we own the three properties together.

Ashley: Very cool. Very nice. And how, how did that partnership form? Because you said, you know, you’d worked for other people and then you wanted to start your own business.

And we all love hearing about partnerships and how to make them work and how to structure them. So did you dive into that a little bit for us?

Thomas: Yeah. So when I was working for, um, the first construction manager, my partner was actually my tile installer. So I gave him his first job in America. When he came here, it was his biggest job.

It was like a $30,000 job. And we grew a relationship together. And he was always pushing me like farming. We start something ourselves. So eventually over the years we stayed close and, uh, that’s how we kind of built and started with the construction. And when we started our construction company, we were getting small, odd end jobs, mainly tiled because that’s what he knew how to do.

Hands-on and I knew plumbing, but it wasn’t something we could really start from scratch. And he already had some connections on that. So we started, he was installing the tile. I was cutting the tile or doing the work ourselves. And we, we got our first construction project where we were doing the demo work.

I was like, wait, this is too much. And I need to fall back and focus on growing and scaling the company and doing the paperwork and stuff like that. He can focus on the hands-on stuff.

Ashley: That’s right. You want to work on the business and not in the business. Yeah,

Thomas: but I feel a lot of people, when they start a new business, they get into it and they just kind of go head first at it and they need to take that step back and realize that like, okay, I need to grow my business and focus on growing the business, not working in the business because then I’m again, becoming an employee.

Tony: Yeah. Now, now, Thomas, a lot of people might say that you’ve got a big advantage, right? Because you grew up in the tree, you said your mom was a super, like, you had a lot of, a lot of the background that people don’t. Right. But then you also said that you, you went through a lot of education for yourself, right.

So people might be, might be saying like, what are you educating yourself on? Like you already knew everything. So what, what did that process look like for you?

Thomas: I don’t think I, every day I try and learn something new. I think that, yes, I did have an advantage because I had so many different trades. I had the plumbing, I had the management of the properties.

I had the architecture background. I had the construction. And everything was learned along the way, but also it was the relationships that were built along the way. It was one, one thing led to another. So when I was in high school, I was working for a restaurant and I was there for six years and I met a mechanical engineer that mechanical engineer working for him.

I was introduced to the construction manager, the construction manager. One thing led to the other. And that’s how I ended up in the construction world because of the relationships that were built along the way. So a lot of people do have to educate themselves, but they still need to kind of go at it head first sometimes because I don’t know everything real estate was something that I got into.

Yeah. I had like the property management side of things, but I didn’t know the financing side. I didn’t know how to find properties. I didn’t know where to find properties. I didn’t know anything about real estate other than painting the walls, which was the construction side of things. So people know someone may be in the finance world and they may know that, but they don’t know the construction.

So you have to learn everything along the way. You got to be open to growing along the way and just kind of gathering a good team and good fundamentals around building a pretty much everything. You need to own a piece of property.

Ashley: Well, even if you have the tools, there are so many people that have them and don’t take action.

That would hate me up when people say, Oh, well he know he had this background or he got this growing up. Well, so many people have those and don’t take those as turn them into opportunities to build a real estate portfolio or to actually take action on those things. So that’s awesome that you did, and you use the skills and the tools you had to to start build your portfolio.

Do you want to tell us about your first deal and kind of get into that?

Thomas: My first deal again, our, our three properties are in upstate New York Dutchess County. We kind of. I Googled Duchess County or upstate New York real estate broker. First guy that pops up, I gave him a call and he, we set up a meeting.

He showed us six properties the first, the first time around and we made an offer on two of them. And the first property they got that we got was the, uh, one of the six that we saw that day. And it was asking price was two Oh five. We offered one 80, I believe. And then we actually got it closed at one 90.

So that’s a two family, three bedroom, one bathroom over three bedroom, one bathroom. And it’s upstate New York.

Tony: Yeah. Now, so you mentioned earlier that you didn’t have like the, the analysis side of real estate investing down. So when you’re, when you’re talking with this broker, when you’re looking at these properties, when you landed at, you know, what was it?

One 90, how did you know that that was a good price to pay? Like how did you know that the checked all the boxes.

Thomas: I mean the, again, I think it goes back to building relationships. It’s the broker for us has been the most important person in our real estate journey so far, because he has been the person that I lean on to ask him, Oh, how much do you think this can rent for?

How much is it renting now? Can we increase it? What’s a property this size. Selling for. So again, I like to use realtor.com. That’s just a, a basic tool. I use you go online, click on sale, sold prices of properties, three bedroom, one bathroom, and you see that they sold it for two 50, two 20, whatever the case is.

And you have the information from the broker and you have to kind of gather information from your team and do your own research and then make up, make a decision at the end of the day. So you have to lean on people, but you also have to have your own opinion on what to do. Yeah.

Tony: And I would encourage everyone that’s listening.

Right? Like there’s so many tools out there to run analysis. Like BiggerPockets has, like, I love the BiggerPockets calculator. Right? They’ve now got the BP insights. There’s, there’s a lot of different ways to kind of pull in information and start running them through the calculator. And then, like you said, Thomas, if you have a network of folks that you can lean on, you can say, Hey, here, here’s what I thought about this property.

What do you think about it? And kind of use other folks to, to sanity check

Ashley: and especially. If you’re giving them all the information too, you’re not like, Hey, I’m looking at this property. Does this make sense? Where if you’re running it through the calculator, you’re giving them maybe the listing you’re giving them the report.

You’re doing all the work, just having that second set of eyes to look over it. You know, it might take an experienced investor, five minutes to do. But it it’s so worth asking for it. You know, I wouldn’t ask them to do all the actual work for you, but handing them, everything, all set for sure.

Thomas: Yeah. And along the way, it’s you start on a piece of paper cause you don’t really know what you’re doing.

It’s like, okay, what are my taxes? Oh, wait, I have to pay taxes upfront or I can not roll them into escrow. Like you’re learning these things and. And when I say, uh, you have to go into things sometimes head first is because after you complete that first deal, you understand taxes, insurances, the finances, you understand how to find properties.

Just that one deal, you gain so much knowledge than reading a book or looking online. If you don’t actually take action, like you said before, you’re never going to buy the second property. The third property, the 10th property.

Ashley: Yeah, you’re right on that.

Tony: Yeah. Was this, I’m assuming with your background, that you, you went after something that needed a little bit of work?

Like, was this a fixer-upper, was it a Burr? Was it a turnkey, like tell us about the property.

Thomas: So our goal is buy and hold. So we’re looking for bird properties, but we’re not looking for something that it’s, it’s in really, really bad condition, just because the properties are an hour and 40 minutes away from where we live and where we operate our construction business.

So we are buying properties that do need some work, but we’re focusing on properties that, that the rents are much lower than what the fair share market is. So our first property that the, the rents for the three bedrooms were $1,200 each and $1,200. We saw an opportunity that that market was able to get for a three bedroom, $1,500, and it needed some very minor repairs.

So we are focusing on buying properties, not really concerned on the purchase price, but more on what the value is in the increase in the rent. So we’re seeing that the three properties we have after we fixed the properties, after we get some new tenants in there, we can raise the rents to fair market, which is 30%

Ashley: plus.

So what’s the, for this first property you did, what were the rents when you purchased it? And then what are the rents now?

Thomas: So they’re a $1,200 a piece and we purchased this in, in January and then obviously COVID happened. So we didn’t want to remove the tenants because we’re all human. I’m not looking to put someone out of the house.

Right away and, uh, during COVID. So we, we there the $1,200, we can increase these after we fixed them up to $1,500 each. So that’s huge because our numbers are just, uh, should be around 16% return on our investment for this property. And along with all three of our portfolio pieces,

Ashley: When you purchase this and you’re ready to raise the rents.

And I know COVID kind of threw this for you, but what process do you take to do that? Because a lot of people are, you know, they don’t want to raise the rent, especially by that much to these people. Do you, you know, give them the option of moving out or raising the rent. Do you send them a letter? Do you talk to them in person?

How do you go about approaching that?

Thomas: We try and take it on a human level. Like we understand that COVID is going on. We understand that we’re not looking to put people out on the street. We tell them that we are, we bought this property. We’re looking to raise the rent. We give them the required 30 days, 60 days, 90 days notice like, Hey, you can stay, but you have to pay the increased rents and we’re not going to do it without fixing your apartment because.

Obviously when we’re trying to bring it up to fair market value in terms of the rental, but we’re also bringing up the conditions of the space to be a fair market.

Ashley: And just so everyone knows in New York state, when he mentions the 30, 60, or 90 days, he’s not saying that did that. It depends on the tenant.

You know, if he’s going to give them 30, 60, or 90, it actually depends on how long they’ve lived in the property. How much notice you have to give them. So the longer they’ve lived there, you might have to give them 90 days notice on the rent increase. Right.

Thomas: And some, we actually got lucky on our second property that we bought, which.

Right now is our best property because we bought it vacant. So that was a four bedroom, two bath over two bedroom, one bath. And that was vacant. We actually sent our crew up there, construction crew for a month. They lived up there and it cost us $15,000 to renovate the entire property.

Tony: Well, so I want to dig into that a little bit more, right?

Let’s talk about the rehab on that first property. Now I’m assuming because of your background, like you managed everything, you managed all the subs, or did you have a general contractor? Did

Thomas: no. We, I managed my partner.

Tony: Think something Thomas had a lot of new investors struggle with is how to decide how much rehab to do.

Right. Because like you said, you saw that the rents were undervalued there at 12, you know, you can push them up to 15, but what happens if you over rehab and, you know, you spent more than, than the value that you return that you get back. So how did you manage that? How did you, how did you decide how much rehab to do

Thomas: so?

I think the best thing to do is to look at other rental properties that are renting for that $1,500 Mark. So if these are renting at $1,200, now you look at the $1,500 properties and you see that they’re not putting in a Viking stove. Right. So you’re going to go in to something that’s close to. What is renting now and the fair market value.

And you see that I need to minimize this as much as possible to give me the biggest return. And I think a lot of people face the issue where yes, I do have the benefit of having a construction company and I can send my guys up there. And a lot of people try and do things themselves instead of sending it out to a contractor or a handyman or whatever the case is.

What’s more important than money is the time. Right? So the only reason it worked for me is because I do have the crew because I am in construction. I’m sending, spending my time and putting my guys on there where someone else who doesn’t have that ability to, to send their guys or have their own construction company, I would definitely suggest they give it to a liable contractor because you’re your time should be focused on growing your portfolio on, on growing your business, as opposed to working in your business.

Tony: Again. I love that. So when you talk about growing your business, right? Like, and you mentioned this earlier that you, you, you stopped cutting the tile because you know that, that wasn’t the best use of your time. How do you and your partner determine who’s going to focus more so on, on like which piece where they felt like that’s something that a lot of people get, get stuck on is how to divide those responsibilities.

Thomas: So, um, I’ve always been good on the paperwork side of things, the sales side, the, the client facing, uh, side of our business. So in terms of our construction company, I am the person that is in front. I’m the person who does the estimate. And I do the sales. Uh, in terms of our real estate business, I am also the person that finds the property, figures out the financing, the taxes, the insurance is everything to get it basically ready to purchase once it’s purchased and ready to be renovated.

I hand it off to my partner and tell them, okay, here are the pink colors. Here’s this is it. Go do it. So you have to have a balance. Like if you’re working with a partner, one person needs to compliment each other because. If one person does the same thing, the other person does, you’re going to slow yourself down.

You’re you’re going to cross each other on, on the one thing that the other person can handle. So you need to figure out what works for each person and each person focuses on their tasks so they can kind of move forward with the project.

Ashley: Do you guys have any kind of alignment meeting, quarterly meeting?

What do you guys do to kind of stay together as it just like a group texting going on

Thomas: without even speaking with my partner, we were pretty much on the same page, but he knows that his, his main goal is to push the project. Whether it’s our construction business, whether it’s our real estate business, the faster, the fee that we finished, the faster we can make more money on our projects, the faster we get a tenant in there, the faster we make rentals.

So his goal is strictly to push the projects. And then if I see that he’s slowing down a little bit, like I got to give them a little nudge. That’s what I have to come in. But we, we compliment each other in that sense where that’s, what you kind of have to separate divide and conquer in it in a sense.

Tony: Got it. Now I want to talk a little bit about the rehab portion, right? How did you finance that part of the deal? Was this part of your loan? Was this your savings that you have walk us through that piece?

Thomas: Yeah, so we are in the construction business in New York city. So we took our profits that we’ve collected over the last three, three and a half years.

And we’ve. Decided to put some of it into our properties. So every single property that we own, which is the three we’ve put 25% down, 25% down to start. And we do a, um, usually a, uh, adjustable, an arm loan. So our first one was a ten one arm. Our second one was a six one. Our third one was a five one arm.

Ashley: Can you explain what an arm is for everyone?

Thomas: Please say it it’s an adjustable rate mortgage, right? So you get it at a 10 year arm. Let’s say it gets adjusted at 10 years. So you can, um, pay we’re paying 3%, I think on our first one. So 3% up to 10 years after that it can go up. It probably will never go down.

Um, but in our sense, we’re seeing that. We’re looking for bird properties. So we are going to refine it. So we don’t care that it’s a ten one on five, one are we’re looking for increased cashflow. So the lowest mortgage payment on a monthly basis. So that when we do go into the refinance process of the Burr, we are looking to increase.

If the mortgage has increased, we don’t, that’s not what we were concerned about. We’re concerned about a lower cash flow to get us to where we need to be, to refinance

Ashley: and with the, with the arm. So it’s you start out with your fixed and then it switches to variable interest rate. What is your timeline to refinance these properties?

So you said you have, you know, a 10 year arm on one. When do you actually. Want to go and refinance them.

Thomas: So our second property is actually in the refinance stage. Now we should be closing maybe in a week or two. We bought it in April. So we bought her in April. We’ve fixed it in a month, month and a half.

And now we’re, we’ve already rented it out. It’s profitable. It’s making money. There’s tenants in there and we’re refinancing now. So usually around six months is what we’re aiming for on our first property was bought in January because of COVID. And because that one was already occupied, we weren’t able to meet that six month Mark, but we’re now starting to give the tenants a little nudge, like, Hey, we want to fix the property.

You got to either stay.

Ashley: What does the, this refinance look on property? Number two. So

Thomas: all of our properties are commercial so that they all have the own LLCs. We’re not buying anything under our personal names, but we are backing them personally. So our first one, our second property that we’re refinancing was a six one arm, 15 year with a 30 year amortization at 3%.

So that we’re refinancing now at four and a quarter, I think, but that’s because it’s a commercial loan. So commercial loans tend to be a little bit higher than the interest rate. And what we’re losing I believe is around $200, $150 on our net operating income on this property. But when you look at it, the amount of money that you’re losing in cashflow on this property, it would take us nine and a half years.

To get that back from the property. So we’re getting around $40,000 back on this refinance and it would take us nine and a half years to get that $40,000. If we didn’t be financed.

Tony: But so, but even with the refinance, w w what made you decide to go with the commercial loan as opposed to the residential?

Is, is it because the size of the property or just, you guys felt more comfortable?

Thomas: It was just a liability thing. We have, we structure our businesses in a sense they’re all owned by a holding company. So we have different ways of structuring each and every entity, so that it’s its own LLC. Everything is separate.

We’re not really concerned about the. A higher interest rate, although yeah, we could probably get a point, point and a half shaved off. If we did it on their personal names, we just wanted to keep everything separate, everything it’s own business, everything completely separate because we do have other businesses.

I have my own businesses on the side, out of the construction as well. So we want to just keep everything separate.

Ashley: I have found one bank that will actually do an LLC on the residential side, but the interest rate. So this was, I think, three years ago where maybe like a normal interest rate was around 4%, 5%.

This one was that 7.375%. Like it was it. We did it because there was a, a 25 year amortization, but. Um, now the commercial side, you can find commercial loans that are amortized 20, 25 years. That it just doesn’t. It didn’t make sense with us to use that bank anymore to try to get an LLC on the residential side.

Uh, so what, what are the terms of the commercial loan? You said the interest rate, but is it, what’s it amortized over

Thomas: it’s amortized over 25 years on the refinance and that one? I think we also did a five one arm. Um, and again, we’re just looking for the lower, uh, mortgage and, and, uh, principal interest payments so that we can have a positive cashflow on these properties.

And we, we do see that after we build a certain size portfolio, maybe four or six, we’re going to start paying these down. So this is our first refinance, all of the cashflow that we’re seeing on all of our properties, we’re going to pay down on this one so that we can kind of get out of this rat race, right?

So everyone’s in this rat race and we want to start paying these properties down and kind of start building again after we pay these off. Cause it’s, it’s good up until a certain point. You don’t want to over leverage yourself as well.

Tony: I want to change gears just a little bit, Thomas, and talk about like the tenant management side.

So you had, you’d been in the construction space, but you’d never been a landlord before. What was that process like? Inheriting those tenants.

Thomas: Ah, it was tough the first week that we, uh, we bought that first property. Two days later, I get a call at 11 o’clock at night, the tendons, like it’s leaking through the roof, the, the, the bathroom.

I was like, Oh my God, I’m selling the property. I’m done. I’m getting out of real estate. And it was like minor issue. The wax on the toilet was loose and like the tenant flush the toilet and like water is coming down, but it’s like 10 it’s just overreact. And you just kind of need to kind of take a step back and realize, okay, I’m going to send a plumber there tomorrow.

He’s going to fix it. We’ll fix it damages. It’s not that big of a deal. So you got to have. Kind of control your emotions in real estate.

Ashley: That took me a long time to adjust to, because I would feel the stress. I would get overwhelmed, like, Oh my God. And it was like, okay, calm down. You know what to do? Like take care of it.

Don’t let this affect you. And we had someone on the podcast a couple weeks ago, maybe even a month ago that said he, when he first got his first tenant calls, like his first property, he’d had it for like six months. And he was like, so overwhelmed, like, Oh my God. And then he realized, wait, I’ve made thousands of dollars over the past several months, this five minute phone call.

I can take care of it. You know, it’s 20 minutes of my life for thousands of dollars. Like I’m doing pretty good. I’m like, why don’t you tell that to me years ago,

Thomas: you gotta look at the upside of things. Like we don’t really self-manage because how it works now is, is my partner. Uh, has only been in the country for four years.

So we’ve built this business together. We’re starting this re real estate portfolio together. His end goal is to build a set of portfolio that he can live back in Greece. So in four years, five years down the line, keep plans on taking the properties, keeping them here, receiving that cashflow and living in Greece.

A great life from these real estate properties that we were building together. So we had that understanding at the very start and how we went into it is that I would manage the properties. So in order to do that, I built another business. So now I own blue collar Realty, which is our property management company that manages these businesses.

Ashley: And then does the, the properties pay a management fee to send me up and then you’ll get paid out of that? Yeah, I think that’s such a great idea. And. A lot of people ask about, Oh, you know, what, if the job duties, like, what if someone’s doing more, when you write up your partnership agreement, structure, something like that, or put it into the agreement, like whoever does this task is getting paid this and that way you can stay 50 50 with the equity, but then if you’re doing extra tasks or extra things, you are paid.

Thomas: Yeah, exactly. And I think it works really good for us because he, he understands that I’m, I know more of the real estate side, just because of the property management for that 62 unit building that I’ve helped my parents manage through very start. And he sees that he just wants to retire. He’s 10 years older than me.

He wants to retire in five years in Greece. And he doesn’t want to worry about it because I’m going to be stateside. I’m going to manage this and I’m just going to be sending him a check at the end of the month.

Ashley: And like how lucky for him that he could, he trusts you out. Yeah, yeah.

Thomas: Yeah. We’re really good.

We work really good together. So it works out well for both of us.

Tony: And, and, and if the goal is to retire, at least for your partner in five years, like what’s the roadmap to get there? Like how many properties do you need to acquire? What, what cashflow per door?

Thomas: Yeah. So right now, uh, our best property is, is, um, netting just under 1100.

So it’s about $500 per door. So that’s the goal we’re seeing in, in the area that we’re focusing on, that we should be getting at $500 a door. And now with the price is just skyrocketing. Some things just don’t make sense. You’re getting $200 a door, $150 a door. And right now in our worst property, we are making 150 per door.

But when we renovate, we will be up to that $500. We’re seeing, we bought it in seeing the upside. So at $500 a door, we are looking to get 25, 26 properties. And then we can kind of say, we don’t need to work in construction anymore. He can go retire. I can go stay in New York. We could go to Florida, California, wherever I want to.

And we’re, we’re fine because we’ll, we’ll have that positive cash flow.

Ashley: For when you do the refinance, are you pulling all of your money back out of the deal because you put the 25% down. Are you taking that back when you refinance, are you leaving some money in,

Thomas: so on this second property, which we’re refinancing, we’re leaving $5,000.

So we’ve invested the down payment, 25%. I was like $45,000. So 40,000 at the end of the day, closing costs were really getting like 35, but 35,000. It was like seven years to build.

Tony: Now you, you bought your first property, you said in January of this year, right Thomas. And you’re up to three properties. No.

Thomas: Yeah. So our goal pre COVID was 10 this year.

Tony: Yeah. But that’s important to call out, right. Is that there were a lot of people this year, Thomas, who had the same goal of getting their first property, but when COVID hit, a lot of people kind of pulled back.

Right. Was it like, how did you kind of coach yourself through that to kind of not get scared off of, of continuing to grow your portfolio?

Thomas: We, I, I like to always look at things long-term right. So especially a buy and hold strategy. You’re not looking to sell this in a year, two years, three years, we’re looking 10 years, 20 years, 30 years down the line.

We want to have cashflow. I will likely never sell these properties and sell something comes along. And then I want bigger pockets again. It’s like, I sold my properties, but we’re, we’re looking long-term down the line. And we’re just seeing that the upside of, of the properties, we just have to keep going.

Yes, COVID happened. And the reason we’re not able to hit our 10 properties this year, Mark is because our nine to five. Right? So we, we, we focused on the construction. We lost a lot of projects because of COVID and the profits that we were expecting were down. So we’ve focused on growing the real estate.

As far as I can. Our properties we’re expected to be at 10 this year, we should be at four. So because of this refinance, so I have four more properties than I had last year. So at the end of the day, maybe I didn’t hit my 10 year Mark, but I hit a four property Mark. So that’s fine.

Tony: Yeah. And the reason why I dig into that Thomas is because for me, I feel like real estate is such, it’s such a mindset play, right?

Like, like you can only read so many books. You can only go to so many conferences. You can only be in so many Facebook groups. At some point, you’ve got to actually take the action and close that first deal. And the thing that I always try and say is, is no one gets the first deal perfectly, right. Right.

And I’ve met zero investors that have such a great first deal that they’re able to retire off of that one deal, right? Like there’s always more deals to come. And the purpose of that first deal is to teach you is to educate you it’s to give you that confidence, because some of them, I’m almost certain that Thomas today has so much more experience and confidence in Thomas in January of this year, but it wouldn’t have happened.

Had you not taken that first deal?

Thomas: Just that first property alone. I. And, and why I always try and encourage people that I know some other people that are looking to get into real estate. And what I tell them is just ask the stupid question, just ask it like the only stupid question is the one that you did ask.

So ask about the financing, ask about the taxes, ask about an insurances. You need to educate yourself on all of these things. To understand what your actual cashflow is. And me personally, I grew up in the business side of things. So helping my father grow his plumbing business, and I was always working with businesses and, and taxes and insurances and stuff like that.

So I always look at these properties as a business. I look at it as real estate, but it’s a, it’s a business, right? So you, you open a business to make money. If the property isn’t cash flowing, it’s not a good business. It’s not sustainable. So you need to focus on it as a business don’t tie emotions to the real estate because.

It’s not a property you’re living in. It’s an investment property.

Ashley: Can’t agree with that more and just building the, your finances on the personal side too, to make sure you have that strong foundation to build your business up. And now for your finances, are you doing everything for the property management for your construction company and now for the real estate, do you outsource anything?

And do you have any plans to do any outsourcing. As far as like the admin side, I guess

Thomas: I have an admin. So our construction company is right now. We have an admin myself, my partner, I have two property managers, project managers for our construction side of things that handle managing the construction side of things, the real estate side of things, or the property management side of things.

I manage myself because. I have that free time because I have property manager, project managers and office admin for my construction business. So I definitely think that you should outsource as much as possible and wherever you feel comfortable in, in terms of your time management and me personally, I’ve always been pretty big on managing my own personal finances.

I have a spreadsheet like everyone, and I track dollar for dollar, what I make every single month where I need to invest my profits. And I try and. Push as much as I can back into the real estate for the buy and hold strategy, because I think longterm, this is what will allow you to retire at 40 years old, which is all my plan is so that I got eight years ago.

Tony: Yeah. So I want to switch gears just a little bit, right. And talk about the properties a bit more. So with, with how you’re managing these properties yourself. Right. And you said that’s, the long-term goal is for you to kind of scale this property management company. Are you just using like, you know, notepads and Excel sheets, or do you have property management software?

How are you managing these rentals? And what’s the long-term plan for you?

Thomas: It’s all Excel. I I’ve looked into, uh, all these, uh, these property magnet softwares. I think that some of these property management softwares, along with project management softwares in the construction industry, they just kind of slow down what you’re supposed to be doing.

Excel is so basic. It’s just so simple. And as long as you keep tweaking your formulas and all the charts that you make on Excel, I think you’re fine using Excel. You don’t need anything else. And, and just try and automate everything. So I automate everything. I use chase from all of our accounts.

Everything’s automatically paid to every company. Everything is automatic.

Ashley: Thomas. I am wearing the perfect t-shirt today for this conversation. I mentioned this one time in a podcast. I mentioned I’m a lady in the streets of freak in the spreadsheets, and I’ve had three t-shirts sent to me that say this

Perfect. T-shirt for this Excel spreadsheet.

Tony: Thomas Mark. My shirt does not say anything.

So, but Thomas, that that’s super interesting, man. Right? Because I, I have a property management company in place for my long-term rentals and, you know, I know that they’ve got, I think we’re using app folio. Like that’s how I communicate with them and see like all of my spreadsheets and whatnot, but like it, like, I dunno, it just feels like it might get cumbersome.

I don’t actually, how are you using, what, what property management software are you using for your properties?

Ashley: Well right now, I’m just managing one and I’m using Buildium. And when I was managing all of mine before, that’s what I used for me. It worked best just like them being able to pay online through their, the maintenance requests, but I’ve hit, there’s like so many more popping up when I started actually researching software.

I think the first time I started it was maybe five years ago, four years ago. And like, since then, like there’s so many of like free companies that are offering the basic software now. And. It’s it’s really like a growing product now. It seems like. Yeah.

Tony: So Thomas, so, so for the guests that maybe want to follow in your footsteps and not use some of the software and kind of do it themselves, I guess, just walk us through how you set up all these different parts.

Like, how are you taking payments from your, your, your tenants? How are you accepting maintenance requests? All of, all of those.

Thomas: So once we purchased, so I’ve created, I’m just construction management background, right? So everything is paperwork heavy. So I’ve created templates for every little process. So I have a, a template of a spreadsheet that tells me what I need to do in order to get me to the closing table.

So I need to have all the insurance and everything ready to go. After the closing table, I have another spreadsheet and it just says five, six, seven things on there of what I need to do to set up the tenant. If there is one in place. So we give an introductory letter to our tenants that are in place and tell them, Hey, we’re the new owners of the property we are looking to to keep the maintenance up and, and manage the property for you.

If you have any questions, here’s our email address. Here is our phone number payments. Moving forward are only done electronically. Here’s our bank account number. This is where you’re depositing it. You don’t give me cash. You don’t give me a check. Because if I get a check, I have to go an hour and 40 minutes to go get that check once a month.

If I get cash, I don’t like cash. It’s just at the end of the day, automate this as much as possible. So I can minimize the amount of time because for me, time is what’s most important. So I’m trying to manage the time.

Ashley: Well, it seems like just with your construction company, you’ve been able to do that. If you’re able to say I own a construction company and I have lots of free time, so that’s awesome.

Yeah. Let’s move on to our next segment here. So this is where we want to ask you about. Someone who has been very valuable to you, your most valuable player on your team and has really helped you grow and scale your real estate,

who is that MVP?

Thomas: Hands down, big awards, go out to our real estate broker in upstate New York. He has been by far the best asset for us in our real estate journey. He’s helped us find insurance people he’s helped us find attorneys. He’s helped us find inspectors for the properties, handyman, any questions that we have in the area, because he’s in the area.

He has always been helpful finding appliances, anything we ask, we ask him first and then we’ll do our research.

Tony: I want to ask Thomas. So if I’m a new investor and I’m reaching out to this broker for the first time, what does that, what does that dialogue look like? Like how did you get this broker to take you seriously and, and show you around town and take you out to the different properties?

What do I say?

Thomas: I told him that we’re a general contractor in New York city were interested in buying some properties in the area. We have no idea what we’re doing, and we’re looking for someone to join our team and kind of guide us through the process. And he was. If you’re a good real estate broker or you’re good in the position of what you do.

I think that you should be open to educating whoever you’re working with. So he was very open in showing us his properties and telling us, Hey, this is selling for 200,000. You can fix it up for X amount of dollars and make another $50,000 in equity or whatever the case is. You have to be mindful of who you’re dealing with.

So someone like me, if I see a beam falling down on a hundred properties, it’s okay. It’s another construction project for me. You know what I mean? But someone who doesn’t have that construction experience, maybe walk away from that deal, which is totally fine. You don’t, you may need a turnkey property in your case, but you have to go within your, your comfort level.

Ashley: So when a lot of people have told us that when they researched, you know, a team out of state or long distance, they call, you know, 10 to 20 people. Do you think you just got lucky that, you know, the first person you put Google, what are some things that drew you into him? They, you know, you said he educated you, but what would have been some things that turned you off where you would have went down to call the next person on the list?

Thomas: We, we, we call the first person on less. We had a phone conversation, just a quick casual phone conversation and he was just. Very welcoming. He was a type of person that was easy to talk to. We felt that we could have a conversation with him. We felt that he gave us just on that first conversation, enough information that he would be an asset down the line.

So you have to. To have that first conversation, because again, it’s, it’s, it’s about managing your time. So if you see that someone’s not really, they don’t send you any properties or they don’t really care to have a conversation with you, or they’re not interesting in educating you, then that’s not the right person for you.

You need to find someone else. And it may take 10, 20, 30 brokers down the line, but I’m telling you, someone is out there for you to, to help you guide you in that journey.

Tony: Yeah, I think the only thing I’d add on to that, Thomas and you kind of mentioned it is that don’t be afraid to fire people that aren’t working for you the right way.

Right? Like, as I was, as I was building my out of state investing team, I went through like four or five different realtors. Right. I mean, it took me a while to find that one that works. So for those of you that are new investors, I know sometimes you can feel almost indebted to that first person that helps you.

But, you know, it’s a business for both of you and you’ve got to find someone that works. So, Thomas, I want to, I want to take us to the next segment here. The server could request the line, uh, with your construction background. A lot of folks kind of want to dig into your side and understand how to make that work.

So our question,

Thomas: good morning guys. Thanks for the opportunity. My name is Richard Kelly. I’m actually one of the Louisiana and my question is what is best to be doing? What do you recommend in regards to construction? Is it better to go with a general contractor or is it. Better to use subcontractors for the entire project.

Thanks so much. Hopefully that’s an answer for me. It depends on your time. If you have a nine to five and you can’t manage the subcontractors, then I say, give it to a general contractor, but it’s, it’s again, building those relationships and finding the right general contractor. You’re not going to find. I mean, you may find it on a first shot, the best general contractor for you because every person is different.

But if you have the time to manage the subcontractors, I do this every day in construction, then that’s definitely a good option for you manage the subcontractors. You’ll save money, but you need to understand that your time has to be invested. For it to work properly. If you don’t have the time, then I suggest you definitely give it out to the general contractor and you don’t have to manage them as much because that’s what you’re paying them.

Tony: And for me, right, again, I built my first long-term rentals. I purchased them out of state. So I knew for me when I have, I have a W2 job and I’m buying stuff, that’s several States away. Right? I knew it was going to be very difficult for me to effectively manage a bunch of subcontractors. So I knew going in that I was going to have to pay a premium, to have a general contractor kind of manage that whole process.

So to your point, it’s really about what your situation is and what works best for you.

Thomas: Yeah, every person is different. And for us, we just saw that obviously we have the construction business, we already managed people. We remain manage subcontractors. It just made more sense for us to do that, but we’ve also considered even being a general contractor because it is almost two hours away getting a general contractor out there, but the prices were just.

It w it’s what I would charge as a general contractor. They just didn’t make sense.

Tony: Yeah, no, I love it, man. So I want to ask you a few more questions, Thomas, to get to know you just a little bit better and for our guests to get to know you. I know what I, what I’ve got, but actually you put me on the spot last time.

So I’ll let you go first.

Thomas: This week.

Ashley: First thing is, is that a fire alarm going

Tony: concern for you, Thomas? I

Thomas: don’t even hear it, honestly.

Ashley: here. I am in my, you know, my closet, this landing, you don’t nobody around me. Don’t eat

Thomas: nothing.

Ashley: So Thomas, what is your morning routine? Do you have anything special you do every day? Um, even, maybe even an evening routine. Is there something you do daily that you think has really helped you Excel in your businesses?

Thomas: Yeah, I mean, I wake up at five 30 pretty much every morning. I’m a morning person. I like to wake up. I used to go to the gym, but I have two kids. I have a three-year old, I have a four month old. So I don’t really go to the gym anymore, but I still wake up at five 30. I read very like made for an hour, hour, half an hour or so.

And then I like to get into my emails right away. I’d like to work out if I do have some time, but now with my son in school, kind of got a ring to school in the morning. So it’s a little tricky,

Ashley: just a followup to that question. What kind of books do you read? Are you reading business development real estate, or are you reading romance novels

Thomas: right now?

I’m leading the four hour work week. I’ve already read traction, rich dad, poor dad, how to win friends, influence people think and grow rich, make your bed. And don’t laugh at this one, but so, uh, the art of tidying up or something. Oh yeah.

Ashley: Awesome. Awesome books. I’ve read. Most of those actually.

Tony: Yeah. It’s so funny.

Like the art of tidying up, I think that’s Marie condom, right? Yeah. Yeah. I saw the Netflix show and like all of, like, if you open my drawer for all of my t-shirts, they’re all folded in that like little crazy when she folds everything, my fiance thinks I’m a psychopath. She was like, no one folds their shirts that way.

So, Thomas, my question for you brother, is, you know, your, your father built this business. Right, but you decided to go a different route and kind of build your own business. What was the thought process behind that? Like walk us through, like, why not inherit the family business? What, what made you kind of take your own path there?

Thomas: So I, at first, again, I didn’t want to go to college. I just felt it wasn’t for me. I liked business. I liked growing a business. I like working with my hands and my mother was always the type of person to be like, Learn a trade that you work with your hands and you always have that to fall back on it. And my father was always the type of person where he would push me and be like, no, you need an office job.

You need somewhere where you’re, you’re safe, you’re indoors. You’re, you’re making more money. You, you don’t want to do this.

Ashley: So I said the opposite of each other.

Thomas: So it’s like, I’m so confused. I went to school for architecture because like I saw that as a better opportunity. So towards what my father was saying, But I didn’t really want to be locked in an office and work on a computer all day.

I wanted to, I enjoy the construction process. I enjoy the real estate process. It’s just, I like being hands-on and I wear, I wear a hoodie and a t-shirt to work. I’m not the type of contractor that goes with a button down and dress shoes on because I like to get my hands dirty. I like to work. I like to be the person that is running a job and pushes a job.

And I’m not. The, the type of person to wear a suit. It’s just not who I am.

Tony: Yeah. Well, you got to know yourself, right? And, and you’ve got to find the path that works best for you, man. It’s all right. So, Thomas man, it’s been like an absolute pleasure. I feel like you’ve dropped so much knowledge for the guests for myself.

If people want to get in touch with you, where’s the best place for them to go.

Thomas: Instagram, Tom, T O M R I D I S I did everyone a favor and put some security this because no one can say, so follow me on Instagram, ask me any questions I want to help. Like, I’m not. I only have three properties, but anything I can do to help anyone.

Um, I’m there just slide into my DIA.

Ashley: Thank you so much. We really appreciated having you on this has been really great. And just that, you know, talking about your partnership, how you’re automating systems, your property management and your rentals. That’s so awesome. So thank you very much for joining us.

Thomas: Thank you. I appreciate it. You guys have been fun.

Ashley: Yeah. Well, that’s our show for today. I am Ashley Carey at wealth from rentals and he’s Tony Robinson at Tony, Jay Robinson. So make sure you guys join our Facebook group, uh, search real estate rookie on Facebook. And then you can find out some more about Thomas and some of the things he [email protected] forward slash rookie 39.

Thank you so much, Thomas.

Thomas: Thanks

Tony: guys.

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In This Episode We Cover:

  • What to look for when partnering up with other investors
  • The importance of having a great broker on your team
  • Why you need to take action and lock down your first deal 
  • How to facilitate a rent increase while having empathy for tenants
  • How to split responsibility between you and your partner
  • Why ARM loans are a great choice for the BRRRR strategy
  • Managing tenants while controlling your own emotions
  • Why you need to ask the stupid questions to be smarter later on
  • How to start automating everything in your real estate business
  • And SO much more!

Links from the Show

Thomas’s MVP

Rookie Deal

  • Location: A 2-family house in Upstate NY
  • Asking Price: $205k
  • Purchased Price: $190k
  • Funding: 25% down on a 10/1 ARM 30 year loan 30 year amortization
  • Rental Income: $1,200 per unit and can be increased to $1,500 each

Books Mentioned in this Show:

Connect with Thomas:

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.