BiggerPockets Podcast 089 with Engelo Rumora Transcript

Link to show: BP Podcast 089: From High School Dropout to 300+ Real Estate Deals with Engelo Rumora

Josh: This is the BiggerPockets podcast show 89.

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Josh: What’s going on everybody? This is Josh Dorkin, host of the BiggerPockets podcast, here with my cohost Mister Brandon Turner. What’s going on, Brandon?

Brandon: What’s going on, Josh? How are ya? Good to be back home.

Josh: It is good to be back home. It is, it is. Yeah. For those of you who don’t know, Brandon and I were just in New Orleans for a conference and got to spend a few days together in person which is always fun if you’re Brandon, and always scary if you’re me, but it was good.

Brandon: I had a good time. Yeah, we met with a lot of financial writers and stuff and had a really enjoyable time walking up Bourbon Street so that’s a crazy area.

Josh: That is, and I will tell you, really quickly, because I know I pissed a lot of people off when I was talking about San Francisco, I take it all back! I take it all back! I was ripping on San Francisco for how dirty it is and I was like, “oh my god, this is the most disgusting place,” and it wasn’t really true, but there’s a reason for that and that’s because New Orleans is officially the dirtiest place I’ve ever been in my life. Brandon Turner you were with me, do you concur?

Brandon: I do. It was very dirty, both physically and I don’t know… mentally. I don’t know. it was an interesting area. I think that was the word we always used to describe it, “interesting”.

Josh: Yes, so we just pissed off a whole other segment of our population, but yeah. There ya go.

Brandon: Go there sometime. It’s a good city to visit.

Josh: Yeah, go visit.

Brandon: So, today’s show. We have an awesome show today. It’s really good.

Josh: We do. Absolutely.

Brandon: So we’re going to talk to a guy who’s actually from the great continent of Australia and he’s got some really good—he’s actually investing in the US, but he’s from Australia so you guys get the treat of an accent today. Woohoo! Never had that before.

Josh: Fancy.

Brandon: Yeah, look at us. So, let’s get to it. First, I want to give a quick shout out to our sponsor today and that is: 99 Designs. You know, every business, no matter how big or small, needs a professional logo. It’s the visual keystone of your brand, but getting a logo that both communicates the personality of your business and is totally functional can be tricky. If you are looking for a unique and exciting logo that looks good everywhere from business cards, to flyers, to postings and billboards, launch a design contest at 99 Designs. Logos start at just $299 so visit 99Designs.com/BiggerPockets and get a $99 power pack of services for free today. So, yeah, check em out, but, yeah, let’s move on to today’s Quick Tip.

Quick Tip today is: jump on the forums. You’ll hear why later. We’re going to talk about it, but jump on the forums, get active, it builds your trust, and we’re going to talk a lot about that. A really interesting thing at the end of the show about that so pay attention.

Josh: Nice. Awesome. So, today’s guest is Engelo Rumora. I don’t say it quite as cool as he says it himself. I would attempt to actually pull the Aussie thing, but it’s just not going to work. So, Engelo has been real estate investing for not very—what has it been? The past four or five years?

Brandon: I think so, yeah.

Josh: Yeah, something like that. He’s done hundreds of transactions, a hundred of them including his own personal funds. He used to play professional soccer and left school at the age of 14 years old to get into that. I mean, the guy is a ball of energy. He’s fascinating to talk to and he’s building his team, he’s scaling his business up and it’s a lot of fun. Lots of great tips in this one so definitely pay attention, and with that why don’t we just jump on?

Brandon: Let’s do it, bring him in.

Josh: Alright, Engelo, what’s up, man? Welcome to the show!

Engelo: Hey, guys! Thanks for having me.

Brandon: Thank you, and as people can tell, you have an accent. Where are you from?

Engelo: I sure do, man, I’m from Australia.

Brandon: Australia, nice.

Engelo: God’s country, as they say.

Josh: That is one of my favorite places.

Brandon: I have not been yet, it’s on my list. Like, top ten.

Josh: You gotta go. I spent time in Sydney, Cans, Canberra, it’s awesome.

Brandon: Nice.

Josh: It’s awesome. Well, welcome to America!

Brandon: Yeah, you’re not in Australia now, right? You’re here.

Engelo: No, I’m here in Toledo, Ohio.

Josh: Let me just stop you right there. Of all the places on this planet to decide to come to from Australia, why Ohio? No offense to all the Ohio people who just tuned out. Why Ohio?

Engelo: Mate, actually I started off with Kansas City. So, I was living in Missouri.

Josh: Even better.

Engelo: I know, ey? Middle of nowhere, but I guess ever since I started investing in real estate, and the first few mentors that I had they kind of taught me to focus more on trust and relationships before actually looking at any stats and demographics of a particular area, and that’s how I established my first relationships in Kansas City which kind of progressed onto me moving to Toledo now.

Josh: Got it. So, you ended up in Toledo, started in KC. First off, what kind of got you into real estate? Tell us about your background before that. What’d you do before? I know you were a soccer player, right? Tell me the whole quick and dirty story.

Engelo: Sure. Well, pretty much I’ve been playing soccer since I was 5 years old. I started off playing in Croatia where my parents are from and eventually moved to Australia and then I got a professional gig at the age of 18 in Hong Kong and moved back to Australia and I guess I quickly realized that it wasn’t a sustainable way moving forward continuing to play the game. I didn’t believe that by the age of 30 I could make enough money and have a sufficient lifestyle moving forward so I guess I decided, unfortunately, to let soccer go and started focusing on business, or trying to find another way of achieving that financial freedom, you know, without having any formal education the first job I could find was a laborer. So I was pretty much sweeping floors on dirty construction sites. I was making good money, but I didn’t like what I was doing, and once again started doing a lot of research and I got given a book by one of my good friends Rich Dad, Poor Dad by Robert Kiyosaki. A lot of the folks on the forum mention that book as a book that opened their eyes up and got them started in real estate. I quickly got a job as a buyer’s agent for a realtor who was a very successful realtor in Sydney and I, over time, combined the two, you know, my construction skills and knowledge with real estate and working as an apprentice for this successful realtor and that kind of led me to flipping.

Josh: And you said no formal education. I mean, from what I understand you didn’t even finish school, right?

Engelo: Yeah, man, I’m pretty formally stupid.

Josh: I mean, tell us about that story. It sounds fascinating.

Engelo: Sure. Well, when you’re looking at playing a sport at an elite level there’s a lot of training that has to be put into it and I guess school and education gets put on the back burner, and I had the talent to really make it at a grand level, like in Europe, and that’s when I kind of decided that the best thing to do would be to quit school. So I quit school at the age of 14 and just completely focused on trying to make it big as a professional soccer player.

Josh: Yeah, wow. So at 14 you’re out, you go to soccer and then you turn around. That’s amazing, man. I mean, by the way, you say you’re formally stupid, but there’s a lot of people who go and spend their lives going to college and master’s degrees who aren’t as successful as you are so.

Engelo: Exactly. Yeah. Well, I always like to joke around and say that, well, actually there’s a saying that says formal education will earn you a living while personal development will give you a lifestyle, right? I think there was some guru out there that quoted that saying.

Josh: That’s cool.

Brandon: That’s awesome. Let me ask you this then: if you were to talk to somebody younger, maybe not 14, but just say a very young person about wanting to go to college or not, I mean, if somebody wants to get into real estate, but they’re 18-19 years old what’s your advice to them? Do you tell them to follow your path or go to college still and finish school?

Engelo: Not really. I mean, if you can go to college finish the school. I mean, it’s very important to have that education behind you, but it doesn’t mean you’re going to be successful if you go to school and you finish that college. I know many people that are school smart, but life dumb as they say, you know, and everything that I know today and everything that I’ve learned today, yes, the odds weren’t in my favor. Most people said that I was gonna end up sleeping under a bridge, right? But, you know, I really, really focused on achieving success and asking questions of people who are where I wanted to be, you know, I attended various personal development seminars, networked with very high-end and wealthy people and that’s how I learned everything I learned today. So, you know, read a lot of books, went to seminars, conventions, expos, all of that stuff and just asked a lot of questions of people who are where I wanted to be. I mean, school doesn’t teach you that stuff, you know what I mean?

Josh: Yeah.

Engelo: And actually going in there and doing it yourself and losing 2 or 3 hundred grand like I did when I first started, I mean, I like to say that was my education, right? That was my college paid for: in mistakes learned.

Josh: Wow.

Brandon: Yup. So you mentioned networking with high-worth individuals and getting out there asking questions so let’s talk about that. A lot of people wanting to get started in real estate are scared to talk to people, right? They’re scared to go and ask for advice and help. That’s one of the things that makes the BiggerPockets forum such a success is that people do that, but how do you do that in the real world? How do you just go find somebody to talk to? Where do you find them at? How do you do that?

Engelo: Yeah, well, as I preach on the forums: just get active. I mean, pick up the phone and freakin’ call someone. Well, not call someone, but I’m sure if you do a quick Google search or jump on the forum, I mean, everyone’s number is on the forum. You can give them a call and if they don’t answer, well, call the other person. If they don’t answer call someone else. You know, I like to preach on the forum a lot too that a lot of it’s got to do with the numbers. Sit your butt in a chair, pick up the phone and just call people. Email people. Network on Facebook, BiggerPockets, comment and eventually when you commit to the numbers the doors start to open. It’s just absolutely amazing if you really commit to those numbers, you send out the emails, you make the phone calls and I mean just call anyone and everyone that’s related to whatever you’re looking at achieving. If you’re looking at finding a good attorney in Ohio, well, do a Google search, “good attorney in Ohio,” and call the first ten that pop up on Google, you know what I mean? And eventually, as I said, doors start to open and the magic happens.

Josh: Nice.

Brandon: That’s awesome. I love that. So how many deals have you done now? I just want to know what level are you at today?

Engelo: Yeah, mate, I’ve done 100 deals with my own personal funds and I’ve probably been involved in over 300 deals over the last 4 and a bit years since I started in real estate.

Brandon: Dang. Wow.

Josh: So what did those other deals, I mean, that’s 300 deals that are not your funds, right? So what does that mean?

Engelo: Well, sometimes I would be a joint venture partner where I wouldn’t be using my own funds, but I would have other investors coming to the table with their personal funds and I would just advise them and guide them throughout the process. You know, I also did that whole bird-dogging stuff, did a few wholesale deals, worked as a buyer’s agent in Australia where I was sourcing a lot of properties for investors all around New South Whales so that’s what I would kind of categorize as doing over 300 deals.

Brandon: What kind of deals are those? Are we talking about flips, or rentals? What are we doing?

Engelo: Yeah, well the hundred deals that I was involved in with my personal funds they were mostly flips. So I would be buying very run down properties even in Australia same as a I am here, fixing them up to a great standard, getting them tenanted, selling them to investors, or just selling to homeowners.

Josh: Really quick question, and we’ll get back to what you’ve got Brandon, is it any different in Australia, or is it the same thing? Just get a cheap property, fix it and sell it? I mean, I’m just curious.

Engelo: Yeah. Well, I guess the principal behind the whole operation is pretty much the same, but it’s a complete different world here to Australia. I mean, you’re looking at a median house price in Sydney of $850,000 today and I mean, you know, for instance here in Ohio we can pick up homes for $10,000-$15,000-$20,000 depending on the class of area. I mean, in Sydney you’re buying a fire damaged home for $350,000, you know, so I guess that would be the biggest difference, but some of the names and way people word certain things; like here it’s “rehab”, in Australia it’s “renovation”, those are a few little different things too. The materials used in the construction side of things are also a little bit different, but to be honest with you it probably took about 6-9 months to actually adapt to the lingo used here in the US and the materials used and the difference in prices.

Brandon: Interesting. Well, so what brought you to the US, then? I mean, you kind of talking about it earlier, but what was it? Was it, “I want to do real estate. It’s cheaper in America, let’s go there”?

Engelo: Well, yeah, mate. I built quite a large portfolio in Australia, you know, it was worth over a million dollars in a very short space of time and a lot of media outlets picked up on it there and got a bit of a ride up there, but once again, same as I did with soccer, I was quick to realize that it wasn’t a sustainable investment moving forward buying high hoping to sell even higher. I mean, my portfolio was mutually geared, but it still wasn’t spitting out the cash flow that— every investor really wants to invest in real estate is to supplement the current job they’re working in, right? And I wasn’t getting that in Australia. Yes, I was building my portfolio at a rapid pace, but it was mutually geared if any issues arose I’d be losing money cause I had to put my own hand in my own pocket to cover the losses. You know, once again, if you keep active via seminars, expos, forums, you know, you start to expand your mindset and US property came up as a topic and I started digging into it more. That was around the same time when prices were pretty rock-bottom here and once again, started establishing relationships here. I was on Skype calls and phone calls at early hours of the morning back home in Aus and one thing led to another and I saw how attractive the prices were here, especially in the Midwest – Kansas City, for instance. Now Ohio, I mean, you’re buying properties for 10-20 cents on the dollar. It’s a once in a lifetime opportunity. I know it might sound corny, but in my opinion it frickin’ really is.

Josh: Whoa, whoa, whoa. Frickin’ A, hey now. Passion, passion.

Engelo: Hold your horses, mate! I’ll be banging my hand on the table, that’s alright, right?

Josh: Nice. Alright, so you’re excited, clearly. Clearly you’re enthusiastic about this stuff so why don’t we jump to your first deal? What did that look like?

Engelo: Wow. Put me on the spot there, ey?

Josh: You didn’t expect it? I mean, if you listened to our show… ahem. You might have known that was coming, but, you know, it’s okay.

Engelo: Believe it or not, mate, the first deal almost got me killed!

Josh: Well, that’s an Australian thing, man, we don’t—

Engelo: Yeah, and it wasn’t by a frickin’ poisonous spider—

Brandon: That’s what I was wondering, yeah.

Josh: Yeah, like the wallaby came in and sliced your neck as he jumped in the apartment.

Engelo: Started boxing me standing up on his tail, ey, and hitting me with fists. Nah, man, it was in a regional town in Melbourne called Mildura. It was the only affordable area, believe it or not, that I could find in the whole of Australia. Around a 12-hour drive. I believe I picked up the property for around $155,000 dollars, 3-bedroom brick home. Put around $15,000 into it and revalued it at $210,000, pulled out around $40,000 in equity and off I went to the other one.

Josh: So did you actually sell it, or did you just re-fi it?

Engelo: No, I re-fied it, pulled out the equity and then I used that as a deposit and renovation for property number two.

Brandon: So how did that almost kill you?

Josh: Yeah, I was going to say that was the most boring exciting story I’ve ever heard.

Engelo: Yeah, well being a little bit of a psycho and passionate guy, as you mentioned—

Josh: I didn’t call you psycho, by the way. So don’t come and kill me.

Engelo: My wording. I would get in the car at midnight, drive 12-hours, get to Mildura at noon, I’d work all day, sleep for 3 or 4 hours, then I’d do that for five days straight then I would get in the car and drive back. On the way back 6 hours into the drive I just lost control and I flipped the car at 80 miles an hour five times.

Brandon: Oh, wow.

Josh: Oh my god.

Engelo: Yeah. So very, very lucky to be here. It shook me up for a good six months. I was having all of the vertigo, nausea, vomiting and all that stuff, but yeah. Lucky to be here, that’s for sure.

Josh: Wow. Crazy. Okay, so it wasn’t somebody that attacked you, it was just the fact that you didn’t want to pony up for a hotel and stay instead of schlepping back and forth rushing for 12 hours at 80 miles per hour.

Engelo: Pretty much.

Josh: Yeah, that’s crazy.

Engelo: Pretty much. Well, I’ll tell you what: I definitely won’t be doing that again that’s for sure.

Josh: Yeah, Bananas, man. Well, we’re glad you’re here. So the majority of your deals have been fix and flip properties, correct?

Engelo: Yeah, that’s correct.

Josh: Alright, so what do you like about that? Why did you for that for starters? I mean, why that strategy? Why does that work for you?

Engelo: Sure. Well, mate, cause that was the only thing I was allowed to do as an alien resident here in the US, right?

Josh: Oh, really?

Engelo: Yeah.

Brandon: I guess that makes sense.

Engelo: I mean, when I moved to the US I started off with a Visa waiver and then I progressed to the B1B2 Visa and pretty much what the Visa states is that you’re only allowed to sign documents to purchase the house and sign documents to sell it. So, when I moved here my goal was to build a portfolio where it would be producing enough passive income for myself, my family and my friends to enjoy in the lifestyle we desire, right? And sorry, I lost my train of thought there.

Josh: That’s okay, I was just going to make another smart aleck remark about you, you know, you should have just flown to Mexico and walked over the border and you wouldn’t have to deal with the paperwork. You would’ve been fine.

Engelo: Yeah.

Josh: Don’t worry about it. So, fix and flips. There was a reason behind it at that’s fine. So as you’ve gone along you’ve transitioned from using your own money to working with other people, right?

Engelo: Sure. Well, not so much. At the moment I’m still using my own personal funds and you just actually reminded me what I wanted to say. The main reason behind the fix and flips was when you fix and flip a property, right, you make a lump sum profit which after doing three or four properties you can actually, you know, use some of that profit to buy and hold a property for your own portfolio and, going back to the previous question, that was the main goal of why I actually moved to the US; it’s to build a portfolio to a level where everyone can enjoy in the lifestyle they desire, my loved ones including myself, but in order to be able to hold that property I had to buy, rehab, flip, make the lump sum profit and then maybe fourth or fifth property I could hold for my own portfolio and build it to 15-20 properties, right?

Josh: That’s a great strategy. So you used the job of being a flipper to create the passive income of a buy and hold.

Engelo: That’s correct. In order to be able to buy and hold investment properties for my own portfolio. That was the main reason behind the whole flipping strategy.

Josh: Gotcha.

Brandon: So when you were building your portfolio, and not just rental but flips too, what kind of mistakes did you make in that process? Can you kind of go over some of what did you screw up on in your career?

Engelo: Trusting the wrong people.

Brandon: Really?

Engelo: Trusting the wrong people.

Brandon: How so?

Engelo: How so, mate, it’s, you know, when you put your trust in other people’s hands, especially when you’re from afar, right, I see that topic come up on BiggerPockets quite often, you know, there’s a lot of things that happen which are out of your control. You know, I always like to tell everyone to really, really, really focus on those trusted relationships. You know, without going into too much detail how it happened, but you know when you’re looking at building a portfolio in real estate or investing out of state or out of country you really need to make sure that the people you’re working with, even if you’re investing with people that are based locally, you know, that you kind of have a mutual benefit and you both have each other’s interests at heart. So, I guess over the years the biggest mistakes and the most money that I ever lost was unfortunately falling trap to other partners that really did not have my heart and interest and they weren’t loyal, they weren’t honest and they were greedy. That’s now with the business that I’ve currently got those are the three things I look for in everyone is; number one: loyalty, number two: honesty, and don’t be greedy so, yeah.

Brandon: That’s great. That’s really, really good advice. I know I’ve heard that time and time again from people on the show’s biggest mistakes a lot and it always, like, the biggest mistake people have or the biggest thing that causes a downfall is usually trusting the wrong people and it’s so important.

Engelo: Yeah. I always like to say, for instance, sorry to interject mate, but same as on the forum I always like to say it’s not the stats and demographics that are going to cost you the money, right? It’s trusting a property manager that’s incompetent or ignorant that’s going to cause you to lose money, right?

Josh: Yup.

Engelo: And all the other stuff. A rehabber, an attorney, etcetera, etcetera. So a lot of investors, what I’ve found, is they get caught up in these online calculations of figures and this formula and the 2% and like, Jesus, man, I have no clue what these rules are, you know, sorry, no offense to anyone who made them up, but you can literally buy a house in the heart of Detroit, right, which everyone always talks badly of.

Josh: Trust me.

Engelo: Yeah, but if you have the right people on the ground—yes, they might have to wear bullet proof vests and collect the rent with shotguns, but if you can trust them they’re going to do the job and you’ll collect the rents, you know what I mean? Vice Versa you can buy the best house, on the best street, in best capital growth area, right? But if you have the wrong people around you collecting your rents or looking after investments even if you’re there on the ground you’ll still lose money.

Josh: So how do you vet people? What’s your process? Because, as somebody who’s been burned, you’ve probably changed your criteria on, you know, how do I know somebody’s not greedy? How do you know that somebody’s not going to screw you? I mean, what do you do?

Engelo: I’ve got one elimination question, right? I found that everyone here in the US is very transactional. They just want to do business very quickly and if you don’t want to do business with them they’ll just leave and go work with someone else. The question that I ask everyone, actually, I don’t ask—well, I do ask them a question. I say, “look, it’s great connecting. Trust is built overtime, not over one phone call, meeting or email, right? Would you be willing to be spend 6-9 months, or even longer, building that trust and relationship with me answering any question that I have and assisting me without conducting any business?” right? That’s the way that I eliminate 99% of shady operators, be it attorneys, property managers, contractors, whatever it may be.

Josh: Walk me through that again. So give me an example of what that looks like because I think that’s really interesting and I want to hear more.

Engelo: Okay. So, for example, let’s say you’re a property manager in, let’s say, Saint Louis, and I connect with you via phone, we exchange a few emails, etc, etc, right? So pretty much I would pop the question where I would say, “look, I’m not currently looking at conducting any business in Saint Louis for at least 6-9-12 months, okay? I’m going to have a lot of questions and I’m probably going to take up a lot of your time, but there is potential to do a lot of business together in the future. Would you be interested in working with me over those 6-9 months educating me on the market and what it takes to succeed in that particular area, answering any questions that I might have and just going out of your way to assist me? To open up my eyes to what it takes to succeed in that market?” so that would kind of be the basis behind that question.

Josh: That’s an amazing question, by the way.

Engelo: Thank you, and what you’ll find is that 99% of the operators you won’t hear from them anymore after you send them another email, or they’ll start being very slow with returning your phone calls. Why? Because it’s instant gratification. They just want to make money there and there. They’re not willing to wait 6-9-12 months or they’re not interested in building a long term relationship, right? This is something that you don’t want because one or two houses are not going to give you financial freedom. One or two houses are not going to supplement the current job you’re working in. You need to buy 10-15-20 properties, right? And in order for someone to be able to run your portfolio successfully they will want to be doing business with you for 5, 10, 15 years. Not many people can buy 15 properties in one hit and be financially free so it’s very, very important so you don’t jump in, you don’t bite the bullet and make a stupid decision. Spend the time doing due diligence on the people more than on the area and the demographics and that’s one key question that got me to where I am today and, as I said, 99% of the operators you will eliminate them with that question.

Josh: Oh, yeah, I was gonna say, I mean, I can’t imagine very many people would do it. Now, so that takes us to the 1%. What do those 1% look like and how does somebody find them because clearly you’re going to dissuade a huge number of people and, frankly, you know, for those people listening that might be a major turn off. Oh man, I don’t want to keep going through people, I keep getting rejection after rejection, ignored after ignored, how do you do that?

Engelo: Yeah, I getcha. Look, it’s worth it. It’s worth spending that time to get the right people because if you don’t you’re going to be losing big money like I did.

Josh: I mean, I agree, and I lost money for the same purposes so I’m with you.

Engelo: Yeah, it’s worth spending that time. I mean, I always like to say until you are comfortable with making the next step, and until you feel confident in the structure that you’ve established on the ground do not let anyone influence your decision and that’s the key. Just spend the time. I guess, what was your question? You said, “how do you find that right person?” once again, pick up the phone and call, email, get active on the phone and get active in your emails. You know, contribute to the forum. Eventually doors will open. It took me 18 months to open up this door that I’ve got in Ohio, now. I met a great guy, my business partner right now, and we first connected in late 2012, and it took us a good 2 years to establish the relationship that we have and we decided to open up and start up around 7 months ago so, but once again all good things take time. Trust is built over time and as long as it takes just keep building that trust and relationship.

Brandon: You know, it really stands out to me there you talk about how trust is built over time and here’s something interesting, right? So people who come on BiggerPockets on the forums they go into the marketplace and they post a thread and it says, “I’m looking for someone to finance my property,” or, “I’m looking for someone to buy my property,” they’ve got four total posts, they haven’t been on the site in 9 months and that’s how they think they’re going to get financing. Then you’ve got other people that are engaging every day, that are active, that are asking questions, answering questions and when they’ve put up a post like, “hey, I’m looking to buy or sell or funding or whatever,” and they get responses and that is exactly why. I mean, there’s 30,000-50,000 people listening to this show right now, you know, that are listening to you talk.

Engelo: Now you’ve got me nervous!

Brandon: Yeah, now I’ve got you nervous, right? As you should be. There’s like, what, 1,500 forum posts every day in the forums? I mean, that’s a lot of forums! One of the most active forums online, but 1,500 compared to 30,000-50,000 I mean, this is just my encouragement, I guess, to people listening to the show right now is get active, get out there, ask questions, answer questions. Start building now so that 6-9-12 months later, just like you said, when you need something you have the credibility and the trust to ask for it.

Engelo: 100% agree and one of my early mentors he’s got a 50-million-dollar business now and he built that entire business on one Australian real estate forum and just through YouTube videos, also, of just the properties he was buying and doing all kinds of stuff.

Brandon: Wow.

Engelo: And, to be honest with you mate, a lot of the things that I know today about real estate is through the forums and you guys, BiggerPockets, have been a big help. Especially when I moved to the US so thank you.

Brandon: Well, thank you. That’s awesome to hear.

Josh: Nice. Yeah. That’s awesome. It is, it is.

Brandon: Well, cool. So, alright. So we know your story, we know kind of how you got started, how you got to the US and all that so let’s actually kind of shift focuses a little bit and talk about your business today on how you’re actually doing what you’re doing. So maybe we just start very basic; how are you finding properties?

Engelo: I mean, is there one under a rock here? No, I mean, anyway we know how to. We’re starting to implement a lot of, what do they call it? Yellow mouth? Yellow letters, right?

Brandon: Yup.

Engelo: We’re actually waiting to receive a package now of around 500 postcards which we’re going to be sending out. We’re doing a lot of bandit signs. We’re posting on Craigslist daily. I’ve established a lot of relationships with wholesalers in town, birddogs, I mean, these guys supply us with a lot of inventory. Once people see that you’ve got the cash to make a deal happen you’ll start getting inundated with emails on potential deals. Another thing that we’ve also recently done is we’ve just rented out a new office space; a thousand square foot little building so we’re painting the entire building blue and yellow, which are our company colors, and it’s a very high-traffic area so we’re going to put, “We really do buy houses,” on the side cause we actually do buy it, right? We don’t wholesale them, no offense to any whoelsalers out there, so yeah, mate. Once, again if you keep very active, I always keep referring back to those phone calls and emails, and I guess keeping your finger on the pulse checking Craigslist 2 or 3 times a day. You know, some of the best deals that I ever purchased were off Craigslist believe it or not.

Josh: That’s cool.

Engelo: So that’s pretty much how we find the majority of our deals. We’ve also got ties with financial institutions that like to buy in bulk and once they hit their figures they like to send out 200-300 deals that they have left that they’re willing to get off their books for cheap. We’ve got around 50 contacts there that we can just give a cold call to and see if they’ve got anything that fits what we’re looking for so, yeah, the deals are out there mate. For sure.

Brandon: That’s awesome. Well, what are you looking for exactly? I mean, what style house? What size? What price range are you buying in?

Engelo: Everything, mate. Just depends, you know? We’re doing a lot of A-class stuff. We’re looking at doing a lot of A-class stuff in the very near future. Anything that’s run-down, distressed, needs a lot of work, you know, we’re happy to buy it, put the work in and get it tenanted, sell it to an investor or owner-occupier, alrighty?

Brandon: Okay, cool. So, I’m going to try to walk through your whole business here; so that’s how you find them.

Engelo: Sure.

Brandon: We talked earlier, a little bit, about how you fund them, but maybe we can explore that a little bit more. So, you said you do some of them with your own money, other times you do JV, are you raising private money at all? Do you do bank loans? Stuff like that—

Engelo: No, we don’t do any JVs. I’m not sure if you’re referring to hard money as a JV.

Brandon: Yeah, you could look at it like that. People call it either way, but yeah.

Engelo: Yeah, most of the deals we finance with our own cash. That’s one of the main reasons why I sold out of my portfolio that I had in Kansas City and a few other states just to be able to focus on buying numerous properties here with my own cash. We’ve also got hard money on board that we can tap into at any given moment for any deals that we—if we’ve got our own personal funds tied up in 15-20 properties we can use the hard money to take down a good deal. So, yeah. That’s pretty much how we finance.

Brandon: How many do you typically run at one time? I mean, how many deals are you typically either buying—after purchasing and before closing how many deals do you have going at one time?

Engelo: Sure. Well, mate, we started a higher cash flow around 8 months ago and we’ve done 35 deals thus far.

Brandon: Okay.

Engelo: 35 flips. So, you know, it depends. Right now at the moment we’ve got 4 in the works, okay? So I guess we’re probably looking at around 3 to 5 a month?

Brandon: Okay. How do you do that? I mean, cause I struggle, when I’m flipping a house I struggle doing one. I’ve done two at a time and that was driving me insane. How do you do it?

Josh: Infrastructure, right?

Engelo: Yeah, that’s right. Every extra penny that I get I look at bringing someone else on board, okay? Once again, formally stupid, but I’m smart enough, as Henry Ford said it, I’m smart enough to have smarter people around me doing the things that I can’t do, right? So as soon as revenue allows it I look at getting someone else on board to bump other people out of the current jobs that they’re in into a higher role, okay? So, mate, that’s the key. We’ve got two full-time guys on board right now and looking at getting another two full-time people that believe in the same vision that we do, that are loyal, honest and are not greedy, right? And that’s how you can start to increase the volume of your business and what you’re doing is by getting good people that believe in the same vision that want to achieve the same success that you do.

Josh: So, who are the two guys that you have right now? Like, who was the first hire? What did he do when you hired him? Who was the second hire? Did the first guy’s job shift when you made the second hire? And what was the second guy’s job?

Engelo: That’s correct. Well, we first started off we’ve got Dominique in our office, she’s my girlfriend and she’s also pretty much working as a PA for me cause I freakin’ type like that, right? With two fingers.

Josh: PA like personal assistant, right?

Engelo: Personal assistant, right, yeah. So I dictate to her and she does all of my typing, thank god for that, right?

Josh: Nice. So we’re going to have to talk about working with your girlfriend as part of this story too. We’ll get back to that.

Engelo: Well, mate, she’s the one that freakin’ types out all my blogs, mate, cause if I hate to do it I wouldn’t be able to submit one a week. It would probably be one every two years, alright? So, I’ve got Dominique looking after all that admin stuff, you know, the leases, the contracts. Tim and myself, I mean, we were the attorneys, the accountants, the property managers, the hard money lenders, we were the whole lot, right? Eventually as we started increasing revenue we managed to hire Josh who’s now, not Josh Dorkin another guy, right?

Josh: I secretly work for Engelo.

Engelo: That’s it. So he’s pretty much our Director of Operations and he’s looking after all of the property management and day to day stuff. He also project manages the jobs. We’ve got Matt on board now who’s going to take over the whole role that Josh is doing in regards to the property management so we’re just going to bump up Josh into more of a Director of Operations role to overlook what Matt’s doing and Matt is going to be in charge of all of our property management; collecting the rents, updating the property management system which we have yet to buy, and all of that stuff.

Then, what I’ve found is eventually I’m going to have to get one or two people to also assist Matt with managing the properties because it can be quite time intensive when you’re starting to do a lot of sales and a lot of volume, you know, you’re going to have to have extra people on board just to assist with all of the management. Property management is key.

Josh: Do you do—prior to that were you using outsourced property management or were you doing it all yourself?

Engelo: We were. We were outsourcing property management which is great, once again, as long as you find a trustworthy property manager, but what I’ve found is I would rather just knock on the door and pop my head in the other room to see how things are progressing with a certain property, right? In order to have a successful turn-key business you have to have a big emphasis on property management. I think if you have in-house property management, of course then you abide by all of your state’s law and regulations, it will complement your turn-key business at a significant level.

Josh: And that’s what your business is? I mean, you have a turn-key business, correct?

Engelo: That’s correct.

Josh: That’s kind of what you do. I mean, you do your own deals, but you’re also selling deals to people as turn-key, correct?

Engelo: Sure. That’s correct.

Josh: Okay, gotcha, and we’ll probably get back to that. So how do you find the guys to work for you? What do you do to get those guys?

Engelo: They find me.

Josh: What do you mean they find you?

Engelo: Once they see how crazy and passionate I’m am they’re like, “what’s this guy doing? I want to do the same thing,” you know the saying, mate, “if you stand for nothing, you fall for everything,” most people these days do not have a purpose in life. They live their day for whatever reason. I mean, they might as well not be living it, and then they see Engelo, right, who’s this freakin’ crazy weird accent dude, right? And he’s just talking about real estate and going a hundred miles an hour and they’re like, I guess they literally jump on board and they believe in the same vision that I do and they see what my purpose is and my purpose is everyone around me. I don’t do what I do for myself, right? Because if you do what you do for yourself or the money it won’t last. It won’t push you out of bed every morning at 6 AM to get you in the office, and you know, I guess, once again, Josh was working at a bank. He was a branch manager and he took a significant pay cut in order to join our company just because he loved what we were doing. We give him absolute freedom to do what he wants, whenever he wants, and he believes in the same vision that we do. He gave us a good story about it with the Wright brothers, right? There was some guy that supposedly got funded by the government to invent the flying vehicle, but he never did that, right? And the Wright brothers made that flying vehicle themselves with no budget at all, and then this guy that was funded by the government, I can’t remember his name, he actually went to inspect this flying object that they invented, right, and instead of joining them, right? He was jealous because they were the first ones to invent the vehicle he just kind of gave up and went his own way. Josh gave us an example, he said, “well, I didn’t start at a higher cash flow, but I want to be a part of it,” so yeah.

Josh: So, find people who agree with the passion. Be passionate, for starters, and then find people who have similar passions, or they’ll find you, and that is kind of how Brandon came on board with BiggerPockets.

Brandon: Yeah, I was gonna say that, right? Like, Josh was passionate about BP and his passion, like, I became passionate about BP because Josh was passionate about BP and I jumped on board there and that’s kind of how I got my employees in my real estate stuff too. They saw how passionate I was about real estate and they wanted to. So passion definitely inspires passion and a great leader has to have that.

Engelo: It rubs off, mate. As I said, a lot of people stand for nothing, they fall for everything, they don’t have a purpose. They don’t know why they wake up every morning, you know? I definitely know why I wake up every morning and then when others around you see that they want to be a part of it. They want to jump on board and they want to do great things and call it luck, I don’t really believe in luck, I just think it’s, I don’t know what it is. Once again, if you do the small things right the bigger things just seem to fall into place.

Josh: Yeah, you need a little less passion, man. Just a little bit.

Engelo: Why? You know what? Everyone says I’m too intense.

Josh: Just did an hour show in a half hour.

Engelo: Really?

Josh: No, I’m just kidding.

Brandon: Yeah, I love it.

Engelo: Everyone’s been saying here in Toledo that I’m too intense and I keep telling everyone, “you’re freakin’ too old,” seriously. Come on!

Josh: Nice. I love it. How old are you by the way?

Engelo: 26.

Brandon: Wow.

Josh: So you’re a young pup, man. That’s awesome.

Brandon: Yeah, that is awesome.

Josh: You’ll kick my butt, but yeah.

Brandon: At least in a soccer game.

Josh: Well, yeah.

Brandon: So how are you managing contractors? Actually, I want to talk about two different things, one because you just mentioned you’re young, but first of all I’m going to ask about contractors: how do you find them?

Engelo: Well, how do we find contractors? Good question, mate. We did have quite a few dramas with contractors over the years. I mean, that’s one of the things that, you know, if you find a good one eventually something turns sour over 3-6 months. They get greedy, they want more money, or they just start doing stupid stuff and then you’ve gotta look for a new one. How do we find contractors? Word of mouth, I guess. You know what I mean? We speak to, I guess, our contacts and see if anybody’s got a trustworthy contractor that they can refer us to and then when we find a good one we just like to stick with them for as long as possible. You know, we had a few issues with a few contractors a couple of months ago. Right now we’ve got a few good guys that are trustworthy, their prices are good, they do decent work and they’re hungry for more work.

So, I guess, to be completely honest with you that’s one thing that is—you really, really never know because it could be good for 6 months and then all of a sudden something turns sour and they either get busy with other work and you can’t keep them on board. Once again, looking at bringing that in-house very soon. So hopefully we can maybe get 1 or 2 maintenance guys that we can save a few call-out maintenance costs on cause every single time you get one of your main contractors to go out of sight you’re looking at, you know, $100-$150 and if you’ve got someone on board full-time over the long term it will really assist us with that bottom line and they’ll be trustworthy and loyal and honest and not greedy and I think that would be another good way to go about things moving forward.

Brandon: That’s cool. I’ve been debating the same thing for many years. I mean, should I take on a maintenance guy on staff, even if it’s part-time, you know, I flirted with the idea back with resident managers. I’ve had resident managers in and out of my apartment complex and it’s been okay. I know for me it comes down to the reason I still haven’t yet, and I’ve said this on previous shows recently, is I’m just not that good at managing people and so the idea of having the in-house guys—I don’t think that would solve my problem. My problem is I’m just not good at managing people so once I get over that issue then I think I’ll be better.

Engelo: Well, mate, you don’t have to be good at managing people. You can find someone that is good at managing people.

Brandon: That is a good point.

Engelo: Once you build your portfolio to a level where it actually allows you to hire someone full-time to manage the people that’s what we’ve done with Josh.

Brandon: Yeah.

Engelo: With Tim and myself we’ve bumped ourselves out of that role and Josh is looking after all the contractors and we want to get these people to work under him so he pretty much just answers to us. Now, Tim and I have the experiences of success and failures and we’re willing to share all of our experiences with Josh and it’s up to him to take over that role of managing the contractors and property managers so we can do other things.

Brandon: Yeah, very cool. So how do you get people to take you seriously at a young age? I mean, you’re a young guy. I know, I have that too. You have facial hair like I do, right? So it helps a little bit, but—

Engelo: Well, I’ve got bald patches so I keep asking my dad, mate, when did you get a freakin’ beard cause mine’s bald at the moment!

Brandon: So how do you do that?? I mean, in your line of work how do you get people to give you money, to buy a house from you, like all of that stuff? What are your tips on that?

Engelo: It’s not easy, mate. It does take time. I guess here on the ground is when they see you writing the checks they start taking you seriously, okay?

Brandon: That’s a good point.

Engelo: Yeah, cause they see that you’re the guy paying them and they’re like, “wait a minute? What’s going on here? Why’s he paying me?” and then they’re like, “okay, he must be the main guy,” right?

Brandon: Yup.

Engelo: I can’t really give you an answer there for the other contacts that we’ve had. I mean, time is bliss. I mean, if you spend that time I guess and you start doing good things and people, you know, I guess they give you a chance. You do one deal and you do well and then they give you another chance and once that trust is built I mean, it’s not really a big issue. I haven’t really, to be honest with you I kind of had it in the past. What I’ve done there is if I believe that someone is not taking me seriously because of my age, or because of my weird accent, or because of my good looks—sorry, I had to throw that one in there.

Josh: There you go.

Engelo: I’ll just get Tim my business partner to go chat to them and I’ll tell him to give them a few slaps in my name too, that’s a joke. No, he’s a little bit older than me. He’s around 44 so he’s kind of that more mature figure where he’s just got that Aura of authority. I’m more of a young, groovy, fun, passionate guy and if I see that someone is not taking me seriously I’ll just get Tim to go chat to them and sort them out.

Josh: So is that him basically acting as the boss? Or is that him basically saying, “hey, if you’ve got an issue with Engelo get the F out of here, we’re not going to work with you. He’s in charge and get on the bus, or you know”.

Engelo: It depends, mate, it just depends on the situation, you know? We have had a few hiccups here where certain wholesalers, for instance, did not really want to chat with me for whatever reason. I guess because of my intensity so they just talked to Tim and vice versa. There’s a lot of people where just personalities, you know, clash, you don’t get along. Well, that’s fair enough. Let’s just try and stay as mutual and diplomatic as possible and if you want to work with Tim work with Tim, if you want to work with me work with me. And, as Josh asked the question, it’s not so much he tells them to get the F out of here, but if I kind of see that I’m not taken seriously Tim and I discuss it in the back end and I say, “Tim, look, I think these people are looking down at me. They think I’m a young kid, they think I don’t know what I’m doing so I think you should step in and just continue the relationship with them”.

Josh: And I think that’s great. I mean, we have—it’s a different thing, but we’ll have situations where people who know me know that I’m a pretty nice guy but I can be a New Yorker at times. We actually just got back from a conference and it’s really funny the dynamic with Brandon and I where people think that I’m kind of jerky at times and I’m just intense, I’m just a New Yorker, I am who I am, right? And I’m like this guy, let me send Brandon in to kind of soften him up a little bit.

Engelo: Mate, we would call that a wanker. You’re a wanker at times in Australia, right?

Josh: You know, don’t associate wanker with me, son. Be cool, dude, be cool. Come on, now.

Engelo: If you wanted someone to take the edge off your intensity you shouldn’t have chosen Brandon, mate, he’s not much of a pretty face.

Josh: He’s not pretty, but he’s nice. He’s like a cat.

Brandon: I’m like a cat? Oh, but cats are pretty though, come on. They are very pretty.

Engelo: If I’m really feeling it that day and I’m on edge I’m like, “Dominique you’ve got to come to this meeting with me because you’re a pretty face, you can take the edge off my intensity”.

Josh: Yup, yup. Hysterical, man. That’s really funny.

Brandon: Alright, I’m putting us back on track here. Not much of a pretty face…

Josh: He called me a frickin’ wanker. What the hell is going on? Did you really—

Engelo: Am I allowed to say that on the show?

Brandon: You are.

Josh: Hold on, let me, alright, he’s cut off! He’s gone!

Brandon: You got rid of him?

Josh: Don’t call me a wanker and be on my show! Alright, he’s back. I’m not gonna get rid of him. We like Engelo. Alright, let’s get back on pace.

Brandon: Alright, so we talked about how you find properties, how you are financing them, how you’re fixing them up. How about selling them? When you go to sell them are you guys, I mean, I’m assuming—are you a real estate agent now? Licensed or no? And do you use an agent then?

Engelo: No, I’m not.

Brandon: Okay. So you’re not.

Engelo: I am not. The team and myself aren’t licensed realtors. The reason for that is if we were it would limit us to the certain things that we can and cannot do. We do have Josh in the process right now of getting his realtor’s license.

Brandon: Okay.

Engelo: We’re also looking at literally bringing an in-house broker too. Pretty much, mate, with a turn-key business you can buy properties in your own name and sell them. You don’t need any license to do that. So with the selling, you know, once again I like going back to leave no stone unturned. You know, we’re very active on all Social Media platforms. It took us over 12 months to establish 2 sales channels that we currently have. One of them is in California, the other one is overseas and these guys pretty much sell all of our inventory at the moment. So whatever we supply and whenever it’s ready the property’s pretty much sold before we can even get it finished to be honest with you.

With that being said, we’re looking at connecting with an SEO tech expert to do a little bit of—I guess building our brand and assist with certain marketing strategies. I really want to create these pages and see if we can tap into the east coast and west coast, maybe see if we can work with a few Canadian investors. You know, the east coast is quite expensive, the west coast is quite expensive, real estate in Canada is expensive very, very similar to Australia. So, you know, there’s a lot of investors looking for that cash flow so we’re looking at tapping into those channels, those areas there and see if we can get any investors on board that would want to buy our turn-key properties.

Brandon: Okay, so let’s talk about turn-key a little bit.

Josh: Here we go. Drama.

Engelo: Here we go.

Brandon: There’s a lot of debate on turn-key, right?

Josh: There is a lot of debate on turn-key.

Engelo: This is a forbidden topic, man. I don’t even want to get involved in this.

Josh: No, listen, I mean, we gotta cover the verboten topic here so—

Brandon: So, what I want to know when you say turn-key, first of all, cause a lot of people have different definitions, what does that mean to you? Like, do you do the rehab, I mean, assuming you do, do you property manage? What does turn-key look like for your company?

Engelo: Turn-key means that you just collect the checks in your account every month when the rent is paid.

Josh: You being me, somebody who gives money to you?

Engelo: The investor. That’s correct. So the investor has to buy a complete turn-key property that needs no work whatsoever, the property’s tenanted, it’s got a lease in place with a good tenant that’s willing to stay for at least a year to two years and all they have to do is give me a call, or anyone here in the office a call, and ask them, “how’s everything going? Is everything fine?” that’s pretty much it. Hands off. Completely hands off.

Josh: So, you put a tenant in, the property presumably is in great shape, you’re doing all of the capital improvements before you put a tenant in there? Is that correct?

Engelo: That’s correct. Everything is done. There is no work that needs to be carried out on the property, the tenant is in place.

Josh: Are you doing new roofs every time? I mean, are you doing new HVAC?

Engelo: Depends. Depends on what condition the property is in. For instance, here in Toledo cause we are only focusing on B-class areas you’ll find that some of the houses have great roofs on them so you don’t really need to replace them, but whatever it takes to make that property a sustainable investment for the investor. So we look at things that we predict might occur and cost the investor money in the long run.

Josh: Gotcha.

Engelo: So that’s pretty much what we will fix. As I said, just depends on what condition the property is in. I mean, I’ve bought properties where you literally need to do nothing to them except a bit of plumbing. We just missed out on a great deal that was completely rehabbed, believe it or not, and foreclosed on. It just needed new plumbing in the basement. It needed absolutely nothing else other than that. So, yeah, just depends on what condition the property is in.

Brandon: So here’s the complaint that people have, those people that don’t know the debate with turn-key, I mean there are a few things, but the argument is that turn-key providers charge a lot more—I mean, obviously you’re paying a lot more. You’re paying retail essentially for the deal. You’re not going out and finding those $5,000 properties or $20,000 properties and doing the work yourself like I do, right? I do my own work; I find my own properties. Why should I choose, or why should somebody maybe choose turn-key over just going out and doing it themselves to pay a little bit more for that, or is it more?

Engelo: Well, I guess for the privilege of not having to put in the work themselves. I never try and sell my model at all, you know what I mean? There’s plenty of buyers out there all around the world that, you know, can buy my product. I never sell anything on BiggerPockets, and you can look through all of my thousand posts, you know? But if someone wants to do it themselves I encourage them, mate. Go out there, do it yourselves! Spend two years building the relationships and trust and then you might be able to do it yourself. I guess the only thing that you get with turn-key, and the big forbidden zone there, is a lot of the turn-key operators the figures promised on paper aren’t actually the true genuine numbers, you know what I mean? Those numbers aren’t genuine. A lot of the numbers don’t include, for instance, 20%-30% deduction on maintenance and vacancy. You commented on one of my blogs there regarding that, Brandon, in regards to how much you take off from your bottom line.

Josh: That wasn’t really your blog, that was more your girlfriend’s blog from what you’ve told me, but, you know, okay.

Engelo: Okay, well she typed it up and I got Josh to help me with the dictation, alright?

Josh: Yeah, alright. Likely story.

Engelo: Whatever. Here we go. He got me back on the wanker bit right now.

Josh: Who’s the wanker now, buddy?

Engelo: Yeah, I am, should I take my headphones off? Okay, where were we?

Brandon: Turn-key, yeah.

Engelo: He rudely interrupted me.

Josh: That’s part of the show, man. It just comes with the territory.

Brandon: Yeah, you were talking about how a lot of turn-key providers the numbers don’t match what the actuals are, and I see that all the time, right? I mean, I actually feel bad. I listed a property a while ago on the marketplace and I put all the real numbers, right? And then I felt bad cause I think nobody expected that to be real so everybody was deducting other things and I’m like, “no, I already included that. That includes that,” because they expect that. People expect to try to be ripped off.

Engelo: Exactly. Sorry, mate. That’s kind of—I guess, on BiggerPockets, you know, it’s a very forbidden topic and I’ve even taken turn-key off my keyword search to be honest with you. I mean, I didn’t even want it to pop up anymore. No, but look, what I’ve found false numbers on paper, or not genuine numbers, and those end sale prices are much more than what the actual property value is, but then again I really can’t give you an honest opinion on what the value would be in a C and D class property because it’s a rollercoaster. The prices are all over the shop. You really don’t know so that goes back to property management. I guess even if someone does sell you a property for a little bit more than what it’s worth, but if they can hit those numbers with property management and get you all your money back in 4 or 5 years well happy days, mate. You know what I mean? You got what you invested back, right? Over the 5 years. You’ve still got an investment property which is hopefully well-kept and you can sell it to another investor if it’s a C or D class property, if it’s a B class property, well, then you can even potentially sell it to an owner-occupier.

Josh: How does somebody know that the numbers are legit versus not being legit? I mean, there’s a new investor, they hear about your company and twenty other companies out there; how do they go about figuring out if you are giving them all the details, all the numbers? Is it just, “hey, listen, here are all the numbers. We include vacancy, we include capex, you know, 10% for that, we include this. Go ahead, shop everybody else, make sure they’re including that. Here’s our prices. We’re going to take care of all that stuff.”

Engelo: Mate, it’s a great question and you thought you were probably going to stump me on that question, but you didn’t, okay? So I’ll give you an answer.

Josh: I didn’t think anything, man. Just cause you’re a wanker doesn’t mean I don’t expect more of you.

Engelo: Alright Mister Wanker, so pretty much that goes back to that trusted relationship and that key question that I said, “are you willing to build that trusted relationship with me for 6-9-12 months before I feel comfortable investing with you, or through you or whoever it may be?” I mean, you’re really never going to know if those numbers are true unless you actually bite the bullet and invest and buy the property, right? But over time, over 6 to 9 to 12 months and if you can, for instance get a few other people to speak to who have already bought through that turn-key operator, you can get testimonials from them, they can maybe give you insight into how their investment properties are performing. You know, real estate is not smooth sailing. Issues arise, tenants leave, people lose their jobs so it’s a bit of a murky water area. It’s very hard to know what the exact figures are. I can tell you right now that C and D class properties, whoever’s promoting 20% or higher those numbers are going to be very, very difficult to achieve and hit. Very difficult just because you need full-time property management. I always kind of like to do this estimate: if you’re doing C and D class properties you would want your property management company to have one full-time employee looking after 50 units, okay? There’s no ifs, ands, or buts. So in order to be able to have a chance of hitting those numbers, and the lower class the area is the higher the volatility and year you might get 25% and the next year you might get 0% so yeah.

Brandon: Yep. That’s a really good point. C and D properties do require, I mean, I have a lot of C class properties and they require a whole lot more work than my B class properties do, they definitely do. So very good point there, and I like that concept you’re talking a lot about. I mean, we kinda came full circle. We talked about this early on about, you know, the people you trust and if you can find the right people they can deliver you numbers just as good if not better than the crappier properties that you might think because they’re the ones helping you hit the numbers, not the property itself. I like that.

Engelo: That’s correct, awesome.

Brandon: Well, before we go and move on I want to ask you one more question: where do you see yourself going forward? Like, where is your company headed in the future?

Engelo: Sure. Well, mate, the purpose of this company is bigger than myself and I’m going to repeat what I said before: I don’t do it for myself, I don’t do it for the money. I would like to add as many new employees to this business as possible and as soon as revenue allows it I’m looking to add someone else. There’s no better feeling than giving, you know what I mean? I love writing out bonuses, I love helping people out, and I love to work with people that believe in the same vision so I want to grow the business to as far as it can get. We’re already looking at doing Michigan cash flow. We’re looking at starting up Cincinnati, Columbus, having separate offices there. I mean, sky’s the limit. Sky really is the limit and yeah, I guess I see a higher cash flow. We’ve got a little bit of a goal there. I’ve got actually here above my head in the office, I would love to get on that Inc 5,000 list as the fastest growing company, well top 5,000 fastest growing companies.

Brandon: Nice.

Engelo: I guess that’s a good goal for us to have. I’d love to get on that list, and we are looking at getting more guys on board. You know, helping them achieve what they want to achieve, helping their families and that’s what I want to do. Add as many people on board as possible, open up as many markets, and help as many investors out as we possibly can to also achieve their goals. You know, win-win-win for everyone.

Josh: That’s great.

Brandon: Great. I love it. Well, why don’t we move on to my favorite segment of the show called—

It’s time for the Fire Round

Engelo: Ooh, this is scary. No one told me about this.

Brandon: Alright, we’re going to fire some questions at you. You do hang out on the forums so you probably already know a lot of these questions already. These are questions that real people have asked in the forums, which people listening can get to at BiggerPockets.com/forums, and we’re just going to fire them at you and see what you’ve got to say.

So, number one: what is the biggest red flag that alerts you to a disaster fix and flip property?

Engelo: Foundation issues.

Brandon: Good, good. I would say the exact same thing.

Josh: So if you’re going to buy a fix and flip and there’s foundation then it means they didn’t do their job, is that what you’re saying? Or are you saying if there’s a property that has foundation issues before you fix and flip it it’s going to be a disaster?

Engelo: I’m saying before you fix and flip it I don’t even touch it.

Brandon: Okay, so you don’t do foundation stuff.

Engelo: No. If there’s foundation issues I wouldn’t even touch it I’d just pass. You know the saying: it doesn’t matter how bad the property is the price can’t fix, right? Well, if it’s got foundation issues it doesn’t matter how cheap the price is, it still won’t fix the foundation issues. So, in my opinion I just wouldn’t touch it, alrighty?

Josh: Fair enough. Would you rent to somebody who’s committed a felony in the past?

Engelo: Potentially.

Josh: Under what circumstance?

Engelo: Not sure. I would have to evaluate the circumstances. For instance, right now we’ve got someone that’s got a felony, but they were happy to let us speak to their current employer that they’ve been working for for the last two years, and their parole officer too. So we’re actually considering that at the moment, renting a property to them so we’ll see how it goes. We’ve got to do another podcast next week and I’ll tell you.

Josh: There you go, there you go. Nice.

Brandon: I’m curious. Alright, what tricks have you learned to harden, or bulletproof, or they call it tenant-proof, your properties? Like, is there anything that you do, knowing that it’s going to be a rental, that’s going to help it last longer?

Engelo: Yes. Insulate the roof and walls. Lowers the tenant’s monthly heating bill which gets them to pay the rent instead of the gas and then you’ll have a happy tenant that’s willing to stay longer.

Brandon: I like that. That’s a great tip.

Josh: That is an interesting tip.

Engelo: There you go. Aussie knows a thing or two about US property.

Josh: There you go, man, there you go. Maybe you’re not such a wanker, alright. What do you hate and what do you love about managing properties?

Engelo: Hate about managing properties would be when someone gives me a call and they want their lightbulb fixed or something as miscellaneous as that. What I love about it is collecting the rent on the first of the month, isn’t that frickin’ obvious?

Brandon: I love it.

Josh: That’s something to love for sure.

Engelo: Yeah.

Brandon: Alright, last question of the Fire Round, I think we’re going to ask you this: would you, and we might have asked this last week so forgive me if we did, I know I’ve been watching this forum thread on the forums quite a bit so I can’t remember if I asked it, but: would you partner with someone who is cheating on their spouse?

Engelo: Ooh. That’s a bit of a seedy question, what do you mean by that?

Brandon: No, not like partner like date, I mean, like if they wanted a joint venture to go together on a deal or they wanted to be your business partner, but you knew they were cheating on their spouse would you still become a business partner with them?

Engelo: Probably not because that goes back to my trusted relationship stuff, you know what I mean? If they can do something like that to someone that they should be loving unconditionally well, then they’ll have no problems of going behind my back later down the track and stuffing me up on a deal or whatever.

Josh: Nice.

Brandon: Cool.

Josh: Fair enough. Good answer.

Brandon: Good answer. Alright, final section of the show we lovingly call our—

Famous Four

Brandon: Alright, these questions we ask every single guest and we’re going to see what you’ve got to say.

Engelo: Okay.

Brandon: So number one: what is your favorite real estate book?

Engelo: Favorite real estate book. Wow, does it have to be real estate?

Brandon: We’re going to ask you business next, but this one’s real estate or real estate related I guess you could say.

Engelo: Hmm. I can’t remember the last real estate book I read. It would probably have to be that Rich Dad, Poor Dad by Robert Kiyosaki cause that’s the one that opened up my eyes to real estate investing, and really I believe it got me to where I am today. Then again I did find out certain things later on that I’m kind of not 100% about with that so yeah.

Brandon: Okay.

Josh: Right on. Okay, cool. What about business book?

Engelo: Two of them: Think and Grow Rich by Napoleon Hill and How To Win Friends and Influence People.

Brandon: Yup. Cool, those are both good books.

Josh: Both good books.

Engelo: By Dale Carnegie.

Brandon: Yeah, good stuff.

Josh: Now, what about hobbies, man? What do you do for fun? Do you still play soccer at all or nah?

Engelo: Nah, man, unfortunately. I’m in the office 100+ hours a week. This is my hobby, my love. I live, breathe, eat real estate. Man, I love it. Can’t get enough.

Josh: So that’s your hobby? You don’t do anything outside of work?

Engelo: Nothing, mate. No word of lie. I’m looking at maybe pulling back a little bit, but I’ve got another 30 people I need to feed and then when they’re fed I might pull back a bit.

Josh: Do you have a TV show that you like or something? Anything? Do you like anything besides yourself and your business?

Engelo: Joshy, my wanker friend, TV is a waste of time. Eating is a waste of time. Just pump the job and do the numbers.

Josh: Nice.

Engelo: Real estate, real estate, all the way guys. Real estate.

Josh: All or nothing guy. All or nothing.

Brandon: Alright, good deal. Alright, final question from me: what do you believe sets apart someone who succeeds at real estate versus someone who gives up, or they fail, or never even get started in the first place?

Engelo: Good question, mate. You have to be willing to keep going when you think you can’t go anymore no matter how hard it gets, and I like what Barbara Corcoran says in a video that I recently watched where no matter how many times you get hit you’ve just gotta pick yourself up and keep going, you know? And I think that’s what it takes to succeed is just keep going. It doesn’t matter what other people think of you. It doesn’t matter other people say. It doesn’t matter how unintelligent you are. I honestly believe if you push hard enough you will push that [inaudible][1:03:35] distinct world views, alrighty?

Brandon: Awesome.

Josh: Great. Awesome. Hey, where can people find out more about you? Obviously you mentioned BiggerPockets a couple times, do you have a website for your company?

Engelo: Yeah, well if they Google my name, “Engelo Rumora,” I’ll pretty much pop up on the first page of Google. That’s Engelo with an “E” and same thing with, “Ohio Cash-Flow,” if they Google, “Ohio Cash-Flow,” we’ll pop up on the first page of Google and they can find out more about myself and my company there.

Josh: What’s the URL for it?

Engelo: URL?

Josh: Yeah, the link.

Engelo: www.OhioCashFlow.com

Josh: There you go, nice and easy. Well, listen man, it’s absolutely been fun.

Brandon: Yeah, it’s been fun.

Engelo: Thanks, guys.

Josh: It’s been fun and we really, really appreciate it having you and we’ll look forward, of course, to seeing you back on the forums and if anyone has any questions for Engelo you can hit him up on the forums or on the show notes at BiggerPockets.com/show89. Engelo, thanks so much, man! See you around!

Engelo: Thanks so much guys. I appreciate it. Thanks for the time.

Brandon: Thank you.

Josh: Alright, everybody that was Engelo Rumora of the BiggerPockets podcast show 89. We really want to thank him for being our guest on the show. Lots of fantastic information, lots of great tips and we really, really do appreciate him giving us some time so thanks so much. Otherwise, as Engelo said, guys jump in the forums! We’ve got a whole lot of listeners here and building your credibility, building your brand, starting to network and meet people can’t be easier. You literally jump on the forums and start talking to people. Set aside a couple of minutes a day, a couple of minutes a week, whatever it is, to do it and make it happen because that is going to help you grow your network and possibly your business. Very likely your business so we definitely recommend that.

Otherwise, that’s it! Follow us on the various networks: Facebook, LinkedIn, G+, Twitter and so on. We’re sharing cool stuff there and it’s another place to interact with us, and that’s it! Get out there, make things happen. I’ve got nothing else to say. Get out there and make moves guys! I mean, you can work and work and work and study and study, but at some point you’ve got to pull the trigger and whether that’s just getting out and looking at deals or calling people like Engelo suggests you’ve got to make it happen. So don’t just be an academic, get out there and do it.

So, that’s all I’ve got for you. Want to add anything, Brandon?

Brandon: Nah, go out there and be passionate. That’s all I’ve got.

Josh: Passion! I love it. Alright, guys, this is Josh Dorkin from the BiggerPockets podcast, signing off.

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