BiggerPockets Podcast 258: Six-Figure House Flipping with Gabe DaSilva

by | BiggerPockets.com

Massive goals encourage massive action—and a massive plan to get there. That’s the truth behind today’s episode of The BiggerPockets Podcast, where we sit down with Gabe DaSilva, a New Jersey real estate investor who specializes in a unique niche of house flipping: “add-a-level” or “pop tops.” You’ll hear how Gabe shoots for a six-figure payday on each flip and how you can incorporate this strategy in your own business. Be ready to take some notes—this is an action-packed show!

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Brandon: This is the BiggerPockets podcast Show 258.

“I have them to thank for helping me scale the way I did and that’s how I got from one to three to six to now twelve. We’ve been doubling year over year pretty much”.

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Brandon: What’s going on, everyone? This is Brandon Turner, your host of today’s BiggerPockets podcast, here with my guest co-host, Scott Trench. How are you doing, Scott?

Scott: I’m doing great. How are you doing, Brandon?

Brandon: Good. I’m actually really good. You know, the holiday season is upon us. We’re recording this here a few weeks before the Christmas holiday, but obviously, this comes out right before Christmas. And you know, I got the tree up. I went out to the tree farm, got lights on it. My house looks like something out of Country Living now. It’s fun.

Scott: Awesome. Well, I live in the bottom half of a duplex so I’m going to use that as an excuse not to decorate this year.

Brandon: You’re not going to get a tree?

Scott: No, I think it’s a negative to get a tree for decorations.

Brandon: I was going to say, I bet your girlfriend will bring over a tree if you don’t. I don’t know. Very cool. Well, get a tree and I’ll send you a present to put under it. Deal?

Scott: Yeah, awesome. I would love a present from you, Brandon.

Brandon: All right. I’m going to send you one.

Scott: I need some new socks.

Brandon: I was thinking something a little more educational, like a book or something. But you know, I’ll send you some socks. Have you ever heard of Darn Tuff socks? I think they’re called Darn Tuff. Have you heard of them?

Scott: No.

Brandon: A friend told me about them last Christmas. I ordered a pair and they were like the best socks I’ve ever had in my life. They’re like expensive, like 20 bucks a pair, but they were so comfortable. I’m actually wearing them right now at this moment. And I asked my wife, all I want for Christmas is like ten pairs of Darn Tuff socks, so check them out.

Scott: Well, I can already hear our listeners thinking, wow, this conversation sucks. So let’s move on and talk about our guest a little bit here.

Brandon: All right, so today’s show—

Scott: Our guest today is Gabe DaSilva. Gabe is a flipper or more accurately, he adds levels to properties like ranchers and stuff—some people call it “pop top”, and he has got a thriving business and was a really knowledgeable guy about a lot of different topics. It seems like he’s really taken the opportunities to expand his business and build it out in lots of different creative ways and it’s really just a good business systems thinker.

Brandon actually got dinner with Gabe a few months ago and completely forgot him. They had a really awkward moment in the middle of the show. He did remember like a giant cookie that he ate at the restaurant he was at with Gabe but he totally forgot him, so.

Brandon: Yeah, the back story is that, before the show, Mindy Jensen, who is our BiggerPockets Community Manager, was like prepping it. I get on the call with Gabe and he’s like, okay Brandon, this is Gabe, and I’m like, hey Gabe, nice to meet you. And Mindy’s like, have you guys ever met before and I was like, I don’t think so. I mean, you kind of look familiar. And he was like yeah, I met you real quick—and we just kind of moved on. And in the middle of the show all of a sudden, it just occurred to me. I know this guy. We had dinner for like four hours together. Yeah anyways, that was fun.

But we’ll get to that. You’ll hear that in the show. But before we get any further, let’s talk about today’s sponsor.

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All right, big thanks to our sponsor as always. Now with that—you know what we skipped today? We did not do our Quick Tip.

All right, today’s Quick Tip that we forgot. I may have done this Quick Tip in the past. I just could not remember when I was putting together this podcast but if I did, you’ll hear it again. We actually launched a brand new calculator on BiggerPockets. For the longest time, we’ve had the flipping, the rental, the BRRRR, and the wholesale calculator, but now we have one called the Rehab Estimation Calculator and it does exactly what the title says. It helps you to estimate the rehab costs going into any project, flip or rental. And it is really cool.

Basically, you can go through categories like all interior and you can go step by step like carpentry, painting, plumbing, electrical, and you can add fields. You can estimate by different ways like is it per unit or is it a flat fee or is it labor and material? Anyway, it adds it all up into a nice, easy to read PDF format at the end and this thing is going to be probably the tool I’m going to use more than anything else on BiggerPockets.

That’s a hard thing to estimate rehab costs because it just keeps it really organized and it saves it into your BiggerPockets account so you can go back and revisit it anytime. So check it out. BiggerPockets.com/Analysis and then just click the button at the top.

Scott: I have a question, Brandon.

Brandon: Yeah, please do.

Scott: What if I do not know exactly how much to estimate for specific rehab costs within that? How would I go about learning how to estimate those things?

Brandon: You actually can’t. You have to give up and go watch TV until you’re 60 and then retire on social security. No. All right, so a couple of cool options. First of all, we actually do have a book BiggerPockets launched called The Book on Estimating Rehab Costs. You can read that. That’s really good. It’s by Jay Scott. You can pick it up at BiggerPockets.com/store.

Or, if you go to that calculator—these little question marks—we’re actually adding these in over the next few weeks to the next month, so if it’s not there right now, you’ll see it soon. These little question marks, you hover over it and there’s going to be more information about every field including videos that we’re putting together for every single area that explains from a real estate investor how to do it. So that’s all happening as we speak. It’s being filmed, which is pretty cool. So, that was an awesome question.

Scott: So if I don’t know how to estimate the costs on a floor, for example, like what the flooring costs are going to be in my rehab, I can go and learn right there on the tool about how to make those estimates.

Brandon: You can. And just like all of our other calculators, they are free up to five uses and then they are for pros only. So if you’re not a pro member, what are you waiting for? BiggerPockets.com/pro. Sign up today.

With that, let’s get onto today’s show. So as Scott already brought in or talked about our guest, I’m not going to go on any longer. Let’s just bring him in.

All right, Gabe, welcome to the BiggerPockets podcast. How are you doing?

Gabe: Good, man. Just fighting a cold but excited to be on the show.

Brandon: Yeah, well, if you sneeze and stuff, it’ll just be awkward for everybody. All right, so we want to talk to you today about your flipping, primarily. You’ve been doing a lot of cool stuff out there. What are you in, New Jersey, right?

Gabe: Yep.

Brandon: New Jersey. Do you have an accent? Can you do a New Jersey accent?

Gabe: No, but it’ll probably come through.

Brandon: Maybe we’ll hear it. I want to know, while you’re listening to this, if you think he has a good accent, let us know over on like the Show Notes or something.

Scott: Please comment in your sickest New Jersey accent.

Brandon: Yes. So why don’t we start with your story? How did you get started in real estate? What did you do before that and how did you get into it? What was your first deal like?

Gabe: So I’ve been at it about a little over three years. I got started in the business after having a handful of finance jobs. I got laid off three times in 18 months working in financial services during the crisis, especially. And I realized then that I needed to be the master of my own destiny. So I went into business for myself. My first foray into entrepreneurship was food service. I was at a restaurant for a little over four years, did that. That ran its course. I actually sold out of that business and I got into this. And the first deal was a cosmetic rehab, did really well with it. I actually pulled money out of my 401K to do the first deal and just got the ball rolling and here we are three years later.

Brandon: Okay, I want to talk about that. First thing is, if you don’t mind me, Scott, kind of taking the lead here. I know you’re the official host today but I want to know about 401K stuff. That is an option for people. They can pull money out of it—what does that mean and how does that work? Can you talk about that?

Gabe: Yeah, what I actually did with it was I rolled it into a self-directed IRA. So I did the 401K rollout into a self-directed IRA and then used those funds to do my first flip. Because if you self-direct your IRA, obviously, you can invest in anything—bitcoin, gold bars, anything you choose. Obviously, in a 401K, you couldn’t do that. You’d have to take an early withdrawal penalty so we did it the other way, put it into an IRA custodian and those are the funds I put to work on that very first deal.

Scott: I’ve got a question here. So you’ve got a 401K and you liquidated it, or you moved it into a self-directed IRA to begin working on it with real estate funds but your goal, I believe, was to go ahead and then sustain your lifestyle, take control of your own destiny. What was your plan going into this, to take out that money and fund your lifestyle?

Gabe: Yes, it was tough at first. I actually started out of a 400 square foot garage. So that’s where I was living when I did this. So after I sold out of my first business, the little money I did get out of that is what I used to sustain my lifestyle. I had a very obviously minimalistic lifestyle, working out of a garage apartment. And slowly but surely built one deal into two, into ten, into 20 and fortunately, I was able to move out of that place. But yeah, that was the idea. I was willing to sacrifice at first to get there.

Brandon: That’s cool. And we’ve talked a lot about that. Scott talked about—Scott wrote a book called Set for Life and the whole book—I don’t know, I’m not going to paraphrase the whole book in one sentence but like the book is largely about what you can do now to set yourself up for a life of financial independence. Is that a good summary, Scott? You want to correct me?

Scott: Sure, I mean, I think it’s how to go from zero to financial freedom. But I mean, as far as your story here goes, you had this 401K—I guess my question more is, the funds were in there. So were you just planning, oh, I’m going to pay the tax or the penalty and then withdraw those funds after I’ve done a couple of these deals to then fund my lifestyle or were you trying to just simultaneously build that 401K, the wealth inside there, and the wealth outside of that with the flipping business?

Gabe: Yep, that’s exactly right. Build them both simultaneously. At first it was just, what am I going to do? How am I going to get started? And I was willing—it’s just like you said, a sacrifice the way few would now so you could live how most can’t later. That was the idea. So, I didn’t need much. Like I said, super minimalistic lifestyle. It didn’t cost me much money out of the 401K. That’s how I got started there and what little I did have from the sale of the restaurant business kept me going living expenses wise, and yeah, just like you said, I started building them in parallel and now the flipping business is doing well enough that it kicks off the cash I need to live on.

Brandon: So just to confirm, the 401K obviously, when you have a 401K—I’m assuming that came from your previous employer, right? So then when you left the employer, you keep your 401K. So the idea being, you put money in before tax, correct? Then that money is in there. Normally, if you were to take that money out, you would have to pay early withdrawal penalties. And then pay taxes as well. So you’re kind of double hit with penalties, saying hey, don’t do that, right?

So what you did was you rolled it into a self-directed IRA. Obviously you’re not like a CPA so we don’t need to go deep into this but like do you remember what that cost or like was that no penalties to do that, right?

Gabe: No, there’s no penalties to do that. The fees are minimal. I think at the time, I paid $500 to do it. I know that there is some custodians out there that are doing like $250 rollout promotions right now so you can roll those monies out, pay $250, somewhere between that and the $500 I paid, and then there’s a monthly maintenance fee based on account value. But yeah, no tax penalty with it. Like you said, we’re not CPAs obviously, so whoever wants to do this, it would make sense to go and consult your CPA before you go and do this because the tax implications can be pretty severe if you don’t do it right.

But the other thing I’ll say, too, is when you roll it out and you go into a self-directed IRA, this gets kind of in the weeds but if you want to self-direct your IRA, truly self-direct it, you want checkbook control so you would ultimately open an LLC within the IRA and that’s what I did.

Brandon: Interesting.

Gabe: Yeah, it can get a little complex which is why you want to work with a good custodian and make sure that your CPA is on board.

Scott: Awesome. I love it. I think that’s a creative way to take control of this money that a lot of people just kind of passively allow to not have an impact on our lives and get started in real estate with this.

Okay, so you have this money and the 401K. We understand that was a great summary of how you were able to then harness it. Can you walk us through that first deal and how you found it, what the numbers were, how that was able to launch your business that you’re currently well underway with?

Gabe: Yeah, so it’s been a couple of years but if memory serves me, we picked it up for $292K. I put in about $80K in repairs. It was mostly cosmetics. It needed a kitchen, two bathrooms, did siding repair, finished the basement, and we got out of it—we listed at $499K and we wound up getting $518K. If I remember the numbers right. It was a great first deal. I found it—actually a broker brought it to me and I bought it. I saw it, offered on it, and closed within a couple of weeks. Just saw it, first guy in there, stepped up right away, paid them exactly what they were asking.

Went in there, made a lot of mistakes, learned a ton. Managed to reign in a lot of expenses by doing most of the work myself which I feel is probably the way everybody should start. I know a lot of times people will suggest investing is about writing and cashing checks but I’m a firm believer in that you gotta kind of do everything once yourself so you could see how long it should take and how much it should cost before you start subbing it out.

And that’s exactly what I did on that one. I want to say we were there for maybe six months or so. It was a good deal. It was a quick deal. I more than doubled my money and that’s the one that got the ball rolling.

Brandon: That’s fantastic. I have a few questions in there. First of all, I love the idea of doing everything once yourself. There is a lot of debate in the real estate community over this. We’ve had people in the podcast saying there’s no way you should do things yourself. And then there are people like you—like I did a lot of my own work myself and now I know exactly what it takes to change a water heater or to replace a roof. I know what that is like.

In fact, I’m debating—I’m working with a contractor right now who wants to charge me way more than I think he should for a simple roof and I’m like, dude, this is going to take you two days because I’ve done roofs this size before on my own. So I think there’s value in that. I think that’s interesting you said that.

Gabe: Absolutely. And that lesson, in the food service business, you almost have to do that. And in any business, I guess you go in blind and you don’t know what you don’t know, so a guy might tell you it’s going to take him x numbers of days and this many man hours but until you’ve done it and you see what you can do and how long it takes you and how much it costs you, how are you in a position to give a guy a job like that?

Scott: And this is where I think a lot of people get mixed up because when you do things the first time yourself, it always takes way longer. I don’t know—the experience for me was, I would start a simple plumbing project and I would go to Home Depot, I would come back, not have some parts, I’d go back—and the whole thing would take me eight hours when it could take an experienced guy one or two hours.

But the fact that I can do that like Brandon just mentioned, I think enables me to avoid a lot of expenses in other scenarios, know when I’m getting ripped off, know when I’m getting a good deal, and just manage the whole process more effectively.

What would you say to that if you were investing back in your financial services day, passively on the side, however? Would you still have that mindset of hey, you should do it yourself or would you have a different perspective on that?

Gabe: Well, I think my investors appreciate the fact that I did do all that stuff myself and that at any given time, I have the ability to do it should I absolutely need to. At this point, it makes absolutely no sense for me to swing hammers. It just doesn’t—it’s not the highest and best use of my time. But I know that there’s a comfort level with my investors that if for whatever reason, someone walks off a job, they know I have the ability to step in. Now, we’d find another sub to step in but I think that puts the passive investor at ease knowing if something goes sideways, this guy is going to step in and get it done because he knows how to get it done.

Brandon: That’s a good point.

Gabe: And me as a passive investor in other people’s stuff? That’s what I look for. If they’re first-time flippers and they’re getting into a deal, just because they’re willing to pay me four in fourteen, I don’t want to lend them the money if I think they’re going to fall on their face. Because I’m not looking to get the property. I’m looking to make money passively in that scenario.

Brandon: Makes sense. Makes sense. So let’s go back to the financing a little bit. You mentioned using the 401K for this. Did you have all the cash you needed, three hundred something thousand dollars or was there something else?

Gabe: No, so I had to go and get hard money which is where this gets a little more complicated with IRA taxing, with UBIT tax and I forgot the acronym for the other but so I had to borrow a portion of it from a hard money lender so there’s—like you said before, we’re not CPAs so you’ve got to go back and obviously consult with your guy about that but no, I didn’t have everything I needed but I modeled it, it was a solid deal, and if I remember it right, I borrowed it two in twelve.

Brandon: First of all, can you explain what a hard money lender is and then what two in twelve means for somebody who doesn’t know?

Gabe: Yeah, so hard money lenders are—I mean, that’s where I feel like everybody gets started. Friends and family money first, and then after that you go to a hard money lender who will take the property as collateral. They’ll take first lien position and they’ll lend to you at what are typically pretty aggressive or exorbitant, I should say, rates. I want to say I got my money at two points and 12% and they were financing 80% of the purchase price and 100% of the construction on that deal.

And since my terms have improved and my hard money guys, they’ll let you put less skin in the game as you develop a proven track record with them. So maybe down the line, you’ll do 10% down for the purchase and they’ll come in with 90% of the purchase, 100% of the construction, and they’ll do it at two points and 10%. With time, the rates get better.

But that’s how I feel like everybody needs to get started unless you have a rich uncle. I exhausted the friends and family money pretty fast at the beginning so now to scale to the level we’re at now, it’s a necessary evil, I guess.

Brandon: There’s a really important thing that I want to point out here is that a lot of people think of creative finance. Like, the people’s first thought is I don’t have enough money to flip a house. Or I don’t have enough money to rehab or to buy a rental. And they just stop at that point. And then other people think one step further and say, okay, well I have a private money lender who can fund the whole thing. And then they feel like now they’ve got a thing. But in reality is, most of what creative finance is, is exactly what you did. It’s joining different pieces of creative finance into one thing, right?

So you used the 401K for the down payment essentially, a hard money lender for the rest, right? So you’re kind of combining those two things together and that’s how almost every creative finance deal I’ve ever done has been that way. It has been a combination of things. I just think that’s a cool illustration that you shared there.

Gabe: I feel like a lot of people are frightened by that sort of stuff. It may be because I had the finance background, the creative finance people, I’m comfortable with. There’s a comfort level around it. But if someone’s in the position to do their first deal and the financing is what’s holding them up and they’ve got a killer deal under contract, they need to just find someone like me. There’s a lot of guys out there that have the wealth of knowledge, more so than I even do, that can help you put together the financing. You should never let a good deal go. Good deals are harder to come by than the money is. I’m a believer in that.

Scott: Yeah, and if you’re looking for hard money lenders to get started, by the way, always tap your network to ask for recommendations, but we also have a directory on BiggerPockets, a hard money lender directory at BiggerPockets.com/hardmoneylenders.

Brandon: Yeah, I actually think it’s the largest directory of all hard money lenders in the country.

Scott: Yeah, they’ve got hundreds, maybe almost a thousand of them.

Brandon: Yeah, it’s crazy.

Scott: So yeah.

Brandon: Hard money is expensive but I remember the realization that I had. So this is back when I was like 21, and I was getting into flipping houses and I didn’t have any money and I read this in a book about hard money lenders and they were talking about how they can be crazy expensive like 12, 13, 14% interest. And then these points. A point is like a fee that’s like 1% of the price, right? If I borrow $100,000, one point is $1000.

And I remember reading this and going, that’s insane. I could never afford to pay that. Those guys are ripping people off. But then right after, in that book it said, but don’t worry about it because if you just factor that expense into your numbers and then make your offer based on having to pay that, then it’s a part of the deal. It’s the cost of doing business. And then all of a sudden, it clicked—I still remember that day it clicked in my head and I was like, oh, well that makes 100% sense. Like, who cares?

So yeah, don’t think as much about it like that’s way more expensive than what a bank would be. That’s true but there are really nice benefits to hard money lenders if you can afford them. So very cool.

So I love that. I love the story of your first flip. But let’s—I like to start with people’s first deals and then jump to the very end. How many total deals have you done now and then we’ll work backwards from there.

Gabe: Probably about 20 at this point.

Brandon: Okay, so 20—are they all flips? Are there any rentals in there?

Gabe: No. All flips, primarily all add a levels.

Brandon: Add a level. What do you mean by that? Is it just like what it sounds like?

Gabe: Yeah, so our niche and where we operate out of primarily, Union County here in New Jersey, and what we find in the better half of this county, especially there’s a lot of dated keeps and ranches that make for good ‘add a level’ candidates where you go in, you pop the top off, and you essentially force appreciation by doubling the square footage and putting a box on top of a box, simplify it.

Obviously, the construction piece of that is a little more cumbersome but I love the model. It’s primarily what we do. I’d say we’ve done a couple of cosmetic rehabs. My first one and maybe two or three since, but most otherwise, all we do is add a level. And we’ve done a couple of new constructions.

Scott: Can you walk us through your analysis of these deals? How do you determine which properties are really good candidates for ‘add a level’ and then how do you kind of estimate your spread on these pop tops?

Gabe: The houses that haven’t been touched in the longest are the best candidates. We’re looking for something from the ‘50s and ‘60s that is unkept. That knows probably had one or two owners and still got the shag carpet, big capes and ranches, they make for the best ‘add a level’ because it’s easy to double the square footage on those houses and really force appreciation because here, a brand new colonial is probably the most sought after product for first-time home buyers. And with rates where they are, there’s just so much demand and so little supply. So we find the capes or the ranches, we salvage the foundation, and then everything from there up is essentially brand new. New mechanicals, new frame, everything. Everything’s new so you’re selling a new house.

You can’t technically call it new because it’s sitting on an old foundation, but as far as the buyers are concerned, they walk in, it’s a new home. The mechanicals are brand new. And they know they have nothing to worry about. We sell them with warranties on top of that so just an added level of comfort for the buyers.

Scott: Can you walk us through an example of a recent one of these that you’ve done, just start to finish how you found it, what you did, and what you sold it for? Kind of just like a bread and butter of your business.

Gabe: So that’s changed, too. What we realized was you can do them at here in my market, you can pick them up in the $150-$200K range or you can pick them up in the $450-500K range, depending on what town you’re in. So obviously, you don’t want to be putting more money to work to make the same spread unless you’re in a town where you can really force appreciation and doing an ‘add a level’ on a big ranch, for example, the biggest one we’ve done, we paid $455K for it.

We dropped $375K into it, I believe. Did a massive addition out the back and an ‘add a level’ so really, doubled the square footage plus the addition. And we got out of that one at $1.2K. It was a massive deal but you can do something smaller. For example, buy at $175K, do a small ‘add a level’, spend maybe $155-$160K, sell it in the $450Ks. So that spreads great, too and you’re not putting as much money in play.

So it’s just really depending on where the deal is and we’re trying to put out product at a bunch of different price points so for us, $500K, $750K or $1 million are typically price points that I develop spreadsheets for, so I build to those price points. The finishes, the quality of the craftsmanship is there no matter what price point we’re at but the level of finishes obviously changes. So it’s trying to find a sweet spot in each town, I guess is what I’d say drives our model.

Brandon: How do you know an area is good for this type of thing? When I think of my local area, I feel like that just wouldn’t work in my area because we’re a cheaper price. I mean like the max house is going to be $250K. But I could be wrong. There’s also massive houses all around. Is that true or can you correct me on that?

Gabe: What we’re looking for—in the county that we operate in, there’s 23 towns. We’re in the better half so there’s 13 towns in my county where I think this model makes sense. What I guess I look for at the beginning now that I’m comfortable in those towns—comfortable enough to know if it makes sense or not, but I guess what I was looking for at the beginning is what are the fully renovated colonials going for—the big ones? Or new construction? Because our product is going to be somewhere in between there.

So we’re going to take the old dated cape ranch, we’re going to blow it up. We’re going to have it fully renovated colonial at the end. So that’s what I was comping out to and I was looking at where those were trading and figuring out if working back from there, because I’m going to get that new buy premium. Sort of, because it’s not new construction but working back from there, is there room to buy this dated cape, pop the top off, do all the work, list it, sell it, pay hard money, pay everything back, and then ultimately is there a six-figure profit in it? That’s our model. We try and model in six figures on every deal.

Brandon: That’s a good goal to hit every time, aim for the six figures.

Scott: Are you still financing these deals in a relatively similar manner to your first deal or do you have partners or syndications now? How is that working?

Gabe: It’s all over the map now. We’ve got private money. We’ve got private money lenders that have come in and funded the entire project, purchase construction, everything. And we’re just doing the project and paying them debt. We’ve got JVs with equity partners who fund everything and we manage the construction. We’re still doing hard money on some of the bigger stuff, like the 1.2 house, obviously, we didn’t have the cash to lay out for that sized project.

We’ve also got some of our own cash-in projects now where we’ll buy the project outright and then go to a local community bank and refi out so they’ll give us back 65% of the purchase and 100% of construction at prime plus one. That’s a great scenario for us. We tie up $200-250K of our cash to buy the project but then the construction is funded at five, with no points, which is five and a quarter which is great.

It’s all over the map. It’s whatever makes sense for the deal at the time. Whatever we can get access to, and a lot of stuff, I’m not the only guy in my market doing this—there’s probably a handful of guys looking at the same stuff and we’re bumping into each other at these houses when we go in there to look. Sometimes, not buying as many of them in competition anymore but when you’re doing that, you don’t have time to sit around and figure out what’s the cost of the cheapest capital? You’ve got to get the capital that you need to get so you can get the deal bought.

Brandon: Yeah, that’s a good point.

Scott: What’s the average timeline on these projects? How long does it take you to add a level to a rancher in these areas?

Gabe: If it were strictly the construction piece of the project, I could tell you it’d be four months. I know that piece, I have down. What I don’t control a lot of times is the town and how many people put permits, put applications in with them on the front end. We’ve had towns hold us up for you know, as little as two weeks or as long as two months. So that’s kind of an unknown. Well, now that we’ve done stuff in all the towns we operate in, I have a better understanding of how long it’ll take to get these things approved. So on the front end, we have that to deal with.

Also, at this time of the year, for example, we just picked up seven projects in October so we’re looking to rip the roof off of six of those seven houses. And the weather here is about to start turning. It’s 39 degrees here today and we’re going to start seeing snow sometime in the near future so we could wind up getting pushed out a month, depending on what kind of winter we have. Here, we’ve been lucky the last two years. We’re super mild but if we have a bad winter, you’ve got snow in your house—I’ve literally had to shovel snow out of the inside of my houses. So that could push you out. You could get burned for a week or two or a month even, with the snow.

And then on the tail end, our product typically doesn’t sit. We’re presaling I’d say probably half our stuff, and the stuff we’re not, we’re listing and moving it in about 30 days. The longest we’ve sat on anything was 90 days and that was that big project I mentioned, that 1.2 house. So stuff over a million bucks typically does sit here for a good bit. But our stuff, I think we built a really great product and if people are out looking at stuff at similar price points, I think our stuff stands out.

Brandon: That’s fantastic. That’s just crazy. I love that. I’ve never even heard of the idea of adding a level or popping the top or whatever until like a year ago. I think it was Ansen Young, or maybe two years ago, I think, who was telling me about it. And I’m like, that’s such a cool idea. But like it just doesn’t make sense, I don’t think, in my market. I never thought about it but if you can add a ton of value by doing that—so what about foundation issue? I feel like if they built back 80 years ago or 60 years ago, a house, and it was planned on being a single-level and they built the foundation for a single-level, can you just add a level or do you have to go and reinforce foundation issues?

Gabe: No, they were actually built better than they are now. We find that the foundations are solid. That’s the one thing. We don’t buy flood. We don’t buy oil tanks. And we don’t buy bad foundations because our motto is, “add a level”. So we obviously don’t want to be dealing with water issues, intrusion issues, and the foundation piece, we just make sure it’s good. At this point, I’ve walked enough of them where I’m comfortable when I look at it, whether or not it’s going to sustain the load of the new second floor.

There’s still every fourth or fifth house, maybe I’ll have my mason come out with me and give it a look, and then the architect will work with the engineering partner to give us a letter. Because a lot of times, certain towns will want to see a letter saying that there’s somebody who’s comfortable, an engineer who is formerly trained in this sort of stuff, is comfortable that this existing foundation is going to support the load of the new second floor. But yeah, we always check the foundation and if it looks solid, we haven’t had an issue yet. We make sure before we go in that it’s good.

Scott: So you just mentioned a couple of guys that aren’t necessarily typically part of your casual investors’ team here. Your architect, your mason, your engineer. Can you walk us through all the folks that—it might be a long list, but can you walk us through the folks that are really important to your business in making sure that you avoid these kinds of risks and successfully complete these projects?

Gabe: Yeah, that’s why I’m especially fond of this niche because there’s some barriers to entry with this model. A lot of the guys that have the construction savvy and are willing to undertake a project like this can’t fundraise for it because it’s cash-intensive. The guys that are on the sidelines and have got the money don’t necessarily have that construction savvy, so a project like this might spook some guys, right? So what I like about it is there’s those barriers to entry and for us, I got comfortable with the construction piece up front and having the right partners in place is huge, so if I do need a second set of eyes on something and I don’t have much time, I can call the mason and he can meet me at the house and we can quickly figure out, okay, is this a concern or not? And if not, I can comfortably write an offer.

So I understand that a lot of times, the cosmetic rehabs, you wouldn’t have a need for a mason. Architecture’s a minimal in those kinds of scenarios. And the architects partnering with the engineer, that’s more on their end. I’ve got an engineer buddy of mine that I can call if I absolutely need something but I kind of lean on my architect to make sure that he puts that stuff in front of his engineering partner, because they’ve all got one, and making sure that those guys are comfortable with what we’re going to submit and ultimately build. But from there, I mean all the same trades step in.

We don’t hire GCs. We project manage our own stuff so we run the subs. So we bring in the framer to shore up everything, to put the second floor on, to re-roof, to sheet, and then trades come in and they do their thing and all along the line just like anybody else would. Unless you’re hiring a GC to run the entire project, you’re going to need to call in all these subs anyway.

Brandon: So are you personally—you, Gabe, doing the project management, then? Or do you have a project manager that works for you?

Gabe: No, I have a project manager in-house that runs the jobs. I did the first two years or so, I would say, I was running all of my own projects. At capacity, I think we were doing, I might have had eight running at once and I felt like that’s where my limit was, running that many projects with that many moving parts at any given time.

The way I look at it, you can have nine subs you’re juggling. You’ve probably got three guys working on whatever—three tradesmen finishing up something, looking to get paid, looking to close out their part of it. You’ve probably got three coming in next, right? Or three on-site that are starting their part, so six subs at any given time across multiple projects. So that’s when it gets tough to juggle and that’s where I feel like scaling this model becomes a challenge. It’s not that it can’t be done. You’ve just got to put the right people in place to manage those roles.

Scott: That makes a lot of sense.

Brandon: So how do you find these contractors that you’re working with? Do you have any good tips or strategies for it? And not just finding them but also vetting them to make sure that they’re good.

Gabe: Mhmm. So where our office is located is fortunately where a lot of supply houses are. So a lot of people go to Home Depot and see who’s at Home Depot early and take down the names and numbers of all the vans. I’m a believer that the Home Depot contractor, that GC, is not the guy that’s going to do the level of work that we’re going to get done. So we’re looking for tradesmen that buy at supply houses. So we build relationships—we in-house some of our own supply so we formed a supply company and we’ve in-housed things like vanities and tubs and doorknobs and millwork and stuff like that.

So what we typically do is we call the sales reps at the supply houses and they’ll provide you with their list for vendors. So buy your paints directly from Benjamin Moore and call the Benjamin Moore sales rep and ask him who are his three preferred painting contractors in a specific area. And that’s how you build a solid team. I think the Home Depot model, it works for cosmetics and if you want to put a GC in there to just do a renovation, that’s one thing. But if you’re trying to frame a whole house, that’s a whole different scenario.

Scott: And that strategy, I think, makes a ton of sense for these high-end properties that you’re doing. You’re trying to add a ton of value in a short amount of time to create a beautiful home for sale, right? Maybe some rental property investors, maybe Brandon wouldn’t need that kind of level of contractor for his $30,000 single-family home. Is that correct or am I assuming too much there?

Gabe: No, that absolutely makes sense. I think a handful of cosmetic rehabs that I have done, looking back on them now, I don’t think it makes sense for us to us our resources and project manage those. I think in those scenarios it might have made more sense to find a GC who can wear four, five, or six hats and be on-site every day as opposed to waiting for my tradesmen who are framing a 2800 square foot house to finish up framing there so he can come put in an LVL so you can open up a kitchen. So in those scenarios, absolutely, it does not make sense.

Brandon: So you mentioned DaSilva Supply Company. You opened a supply—tell us about that because I haven’t heard of anybody doing that.

Gabe: So we realized that we were spending so much money on materials that if I’m working direct with some of those accounts, you’re not always going to get the open dealer accounts with a lot of manufacturers but when I was at IBS in Orlando, which is a killer conference, the International Builders Show in Orlando. It’s coming up.

Brandon: I’ve been told I need to go to that. Darren Sayer keeps bugging me to go to that every year.

Gabe: Awesome, yeah. He and I were talking. We’re both going this year. So when I was out there, I realized that if you build a rapport, build relationships with manufacturers, you can actually buy direct from them depending on volume. So we’re a dealer for a kitchen cabinet line. So I buy my kitchen cabinets at 50 cents on the dollar direct from the manufacturer but I have to do $50K a year with them. So there’s kind of a rub there but it makes sense for me to do that kind of volume. So the supply company buys direct for ourselves but we’ll also buy direct for some of our builder buddies locally just to hit our quota. So it’s kind of a workaround. It saves us a good bit of money.

The cabinets alone are probably I don’t even know—what they probably generate us in savings every year. But we’re doing it with tubs and doorknobs and a couple of other things. I’m looking to do it with some more things even. Obviously, this is a scaling thing. I’ve got an office manager in-house that’s responsible for managing these relationships, paying these invoices, getting terms with these guys. Stuff like that.

Brandon: That’s awesome. You were the one telling me the story about the bathtubs a while back weren’t you? I just realized just now that you and I went to dinner together and like I totally forgot we were at dinner together. I don’t know. You look totally different than I feel like you did then. I don’t know. You’ve got more hair or something.

Gabe: Or maybe less.

Brandon: Maybe less.

Gabe: Yeah, the tubs thing is a cool story because that came from IBS. Last year when I went to the IBS show, I asked around if any of my local builder buddies were going and everybody said no, and when everybody said no, I said I have to go. There’s got to be something there. If nobody else is doing it, I want to give it a shot. And I went and I formed a relationship with a Chinese tub manufacturer and a month or two later, we’re engaged and ordered the tubs—I ordered a container of bathtubs from China. And I paid probably a third of what they cost here for 60 bathtubs. We won’t use all 60 this year but I’ll use 10 or 12 myself and I sold off a bunch to a couple of builder buddies locally. It just makes sense at scale. It obviously doesn’t make sense for two or three flips a year but if you’re trying to build something and do a dozen or so a year and more and stuff like this, it absolutely makes sense.

Brandon: That’s fascinating.

Scott: I love it. It sounds to me like you have an operation—you have your bread and butter and what you’re comfortable with in terms of these pop-tops, add a levels, but you’re adding on opportunistically in every direction that you can to save money and build that business and if you have another great little stream, that’s awesome. You’ll take it and move along with it and just do good business.

One question I had though, that ultimately covered, related to your business overall though was, how are you finding these deals in general on the market? Are these MLS deals or do you have a wholesaler? How’s that working?

Gabe: So we started doing a lot of our own direct mail stuff. I’d say the first year, plus it was just bidding in comp with other guys on MLS stuff, maybe a couple that were brought to us directly. Once you start proving yourself as a legitimate buyer and if you’re a buyer for this specific product, you buy dated capes and ranches in the better half of Union County. Cash, if they’re a fit for your model and you say hey, you’re buying, and you say what you do, I find that a lot of people will come to you first. So we’re getting shown a lot of stuff that we’re not even bidding in competition. Wholesalers will get these contracts and they’ll come to us and we’ll take a look at it and make an offer. We’ve got some relationships with some brokers that do the same because you’ll give them the listing on the backend so there’s that synergy there.

So like I said, we’ve just started to really ramp up our direct mail stuff. I do a lot of stuff on social, so my presence on social media kind of helps, just kind of builds your social authority, your social currency. It kind of positions you as an authority in this space as a guy that’s actually out there doing stuff and taking action. And I find that a lot of people see that and they come to us with opportunities before they go elsewhere because people want easy. At the end of the day, they want easy. So if Gabe’s the guy, he says he buys stuff and he buys it, why would I go call anybody else? I just call him and be done with it.

Brandon: Yeah, that’s awesome.

Scott: All right, so the last couple of questions here before we wrap up. Going back to that first flip—so we know where we are today and how you’re doing on the set volume and scale, going back to that first flip, however, it sounds like you netted between $100-$150K in profit when it was all set and done. How did you parlay that into the next few deals?

Gabe: With that one, it wasn’t enough to do what I’m doing now so it was hard money. It was just proof to those guys that you’re a good operator and that they can trust you to finish out a project and then when you go back to them to raise capital for another deal, if you model the deal well and it’s a legitimate deal and they’re comfortable with the numbers, I didn’t have a problem borrowing from them. Because that’s the business they’re in.

That’s the thing about hard money. As much as the terms might suck, those guys, they have a comfort level around that. They’re risk-takers. That’s essentially what they do. It’s hard to get grandma and grandpa to wrap their heads around an “add a level” even if they’ve got $250K in the bank. And I found that, we’ve had weeks where we’ve had private money lenders fade on $500,000’s worth of commitments just ahead of a closing. That’s super stressful. That can break you.

So I like the hard money guys for the simple fact that they’re comfortable with the level of risk that they’re taking on and if you’re a good operator and you perform, they’re there for you. And they were for me and I built a great relationship with my guys and we’ve been working together for a couple of years and I have them to thank for helping me to scale the way I did. And that’s how I got from one to three to six to now twelve. We’ve been doubling year over year pretty much.

Brandon: That might be the best explanation of why to use a hard money lender I’ve heard.

Scott: There’s a big saying on BiggerPockets. I’m going to butcher it here but it’s like, if you think it’s expensive to hire a professional, try hiring an amateur. It seems like you’re applying that kind of concept to this. If you think that hard money is expensive, wait until you try to raise money from a private individual who might back out on you.

Gabe: Yeah, when they fade on you at the eleventh hour and you’ve got a closing in two days and you’re counting on these commitments and these guys—I never asked my wife and she doesn’t want to do it or I’ve decided I’m not going to take the money out or I don’t want to get a home equity line, whatever it was. There’s always some excuse but, that saying definitely applies in that scenario.

Brandon: Wow, that’s awesome. So what does your day-to-day look like right now. What do you do when you get to the office? When do you show up there? How long do you work and what do you do all day?

Gabe: I’m a morning person so I typically try to be up by 5:30am. My goal in the morning, after I do my routine, get myself ready to rock and roll, is to get on e-mail early. I try and touch e-mails three times a day, so first thing in the morning, I try and blast e-mails ahead of everybody else, getting to the office, so that way the ball’s in their court when they log in. I’m at the office probably mid-morning straight through to lunch. I spend that time planning out, doing our marketing campaigns, talking to my office manager, reviewing financials, figuring out where we’re at with funding for the projects that we’re acquiring.

Midday, I’ll hit e-mails again, see what’s come back that needs a response. And then I head out to the field and my afternoons are spent in the field checking on projects, my project manager, if he needs anything. If anything’s gone sideways on a deal. With this many deals, there’s always something. So I’ll spend my afternoons doing that and then I’ll hit up e-mail one last time and call it a day. That’s an ideal day. I mean, they don’t always look like that.

There’s a lot of times where whatever you’ve got working in the office in the morning consumes you, trying to figure out how to launch a new marketing campaign. It shouldn’t be a two or three hour ordeal but sometimes, it is. And same thing in the field. A mason is doing work and finds something or uncovers something that you weren’t anticipating and now you’ve got to make two or three phone calls, figure out how we’re going to adjust on the fly to keep things moving. So I feel like you can never really have a set routine. I try to, just because for mental sanity, it’s good but the days are all different, I guess.

Brandon: Makes sense, makes sense. Cool.

Scott: Last question here before we move onto the Fire Round. What’s your goal moving forward as you move along with your business here?

Gabe: So my goal is to scale this thing into a $50 million dollar company. So I want to be a fully integrated real estate investment company. We already find, fund, fix, and flip deals. We are doing our first wholesale, probably another one in the pipeline, solo supply company, it’s small, it’s just something I use for our business and kind of side hustling with some of my builder buddies. We are building out an online brand, too, positioning ourselves as an authority, trying to build social currency so I can start helping other guys do what we’re doing here in their markets.

I think there’s opportunities, not everywhere, but in certain places and I think if you show people that it can be systematized, it can be scalable, I think there’s opportunity out there so we’re doing a lot of different things, wearing a lot of different hats. It’s just my personality type. I don’t suggest that for everybody but that’s what works and that’s the fastest path to the dollar, I think, is building that six-legged stool and having those different revenues coming in. Don’t just be a one-trick pony. Have your bread and butter. Do those “add a levels” but wholesale, do some new construction, do a custom build, sell bathtubs.

Scott: So is that going to $50 million in revenue on an annual basis? Is that your goal?

Gabe: Yeah. Well, shooting for the stars, landing on the moon kind of thing. I mean, we tried to do $10 million this year, it’s our third year out and we won’t do it but it was a good target and we’ll come close enough that I’ll feel good with what we did.

Brandon: I heard this great quote recently about that. It was like, the purpose of the goal is not to hit the goal. The purpose of the goal is to become the person you become while trying to hit the goal. And I probably butchered that. But by setting big goals, it’s not about the number. It’s about who you are and who you’ve become.

Gabe: Yeah, absolutely. I love it.

Brandon: Cool, hey, let’s shift gears here real quick and head over to the world of the famous Fire Round.

It’s Time for the Fire Round.

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All right, let’s get to the Fire Round. Number one—these questions come direct out of the BiggerPockets forums, of course, and we’re firing them at you to see how you’d respond. Number one, would you contribute still to a 401K or not now that you’re in real estate? And you can take this both from you personally and somebody who has a job, should they continue if they’re already in real estate, keep putting money in there?

Gabe: No. I’m a firm believer in the value of a self-directed IRA. For us as real estate investors, if nothing else, you can lend out of your self-directed IRA back and forth to other investors, so if I’ve got $100K and you’ve got $100K and we’re both struggling to find money, you lend to me on my projects, I lend to yours, and that money grows, pays us a consistent 10-12, whatever we agreed to. 401Ks are limited. I want the ability to invest in what I want to invest in.

Brandon: Cool. Scott, you’re a big finance guy. Do you want to answer that as well? What do you think?

Scott: I think it makes a ton of sense. I think one consideration also is if you’re working a job, you could contribute to the 401K while you’re working and then once you leave, you could then roll that over into a self-directed IRA just like Gabe did here.

Brandon: Especially if it’s like a matching program. You get free money. You might as well—always take the free money. There you go. Cool, number two.

Scott: I’m going to go with, what did you do wrong on your first flip? Now, you mentioned that you made some mistakes, but can you kind of go into a little bit of depth on maybe what some of those mistakes were that you did on that first one?

Gabe: I’d say the mistakes you make are, it’s not knowing what you don’t know. At the time, I don’t know why I didn’t think to YouTube. Like if you’re going to be doing your own stuff, YouTube, you can figure out how to do open heart surgery on YouTube. There’s literally everything there. So I think I was trying to figure out how to do things without necessarily knowing what the proper process was.

And for me to do that, how long does it take, how much does it cost model and do it myself and learn—that wasn’t the most efficient way. We weren’t there terribly long but I know I should have been there—I shouldn’t have been there six months. So I’d say what I probably did was I wasted too much time doing things that could have been done faster. Not to say that I shouldn’t have been the one doing them. I just should have done some more research to figure out exactly what I needed to get done before I sat there and spun my wheels.

Brandon: That makes sense. By the way, I just went and searched YouTube and sure enough, you can figure out how to do open heart surgery. I wouldn’t recommend it, but you know.

All right, next question. I’m closing my first flip house in the Houston area on Thursday. It’s a 3/2 in a pretty nice area, standard mid-range community, built in the late ‘70s. ARV 175. It’s a little bit lower end than what you’re working on earlier, it’s a lower price point. I work for a flooring company and I can get the material and labor myself, but I’m not sure if I should use a mid-range vinyl plank for around $1 per square foot or waterproof click product with like a foam backing that’s three times as much. What would you do?

Gabe: Uh, at that price point, I would go with the cheaper product. I just don’t think—in this market, I know the 175 buyer wouldn’t notice the difference so I wouldn’t spend three times on the material for something like that.

Brandon: All right.

Scott: All right. Question number four. Hey, I was wondering what people’s thoughts were on flipping houses under one LLC. I know that most rentals, many people set up a separate LLC for each property to minimize liability. But for flipping houses, since it’s so short-term, would it be okay to use one LLC. What’s the entity structure that’s appropriate?

Brandon: And obviously, you’re not a CPA. We know that.

Gabe: Well, the way we do it is, DaSilva Group is an S-Corp that owns individual projects, specific LLCs. We do that for liability reasons and for financing purposes because of different partnership structures and different financing structures, so I can’t have all my projects under the same LLC because I have different JV partnerships on some of them and lenders want lien position on a specific house in a specific LLC so I can’t necessarily blend them. But I don’t think you’d want to anyways, from a liability standpoint. Every project is its own LLC, insured accordingly, structured that way, and then dissolved once the project is complete. So I think it limits liability and here in New Jersey, especially, that’s a big issue. I think people are sue-happy here so we don’t take that chance.

Brandon: All right, very cool. That makes a lot of sense. All right, well, let’s shift gears one last time and head over to the world famous Famous Four.

All right, these are the same four questions we ask every guest every week. And we want to hear what you’ve got to say. So number one, Gabe, what is your favorite real estate related book?

Gabe: This is going to be—this is a super generic book but Rich Dad, Poor Dad.

Brandon: All right. When did you read it? Do you feel like it’s the book that got you into it or did you read that later on?

Gabe: I read it early on and it was mindset. So that’s what it did for me. I think moreso than anything else, it didn’t matter what the product was, I’ve always been kind of a business guy regardless. I think this was always in my blood. It was just figuring out where to focus those energies and efforts and when I saw that, when I read that and learned, listen, you’re the master of your own destiny. Real estate is the way to go. So I’d say that, yeah, is probably my favorite real estate book.

Brandon: That’s cool. You know what I always say about Rich Dad, Poor Dad, is like, that book put words to what my soul was like groaning for. I knew there was something I wanted, and like, I didn’t know what it was but like there, and then I read it and I was like, that’s it. I don’t know what to say. I just give people the book and say, this is what’s on my mind. That’s what it did for me. It put that into words what I knew was true. So anyways. Cool. Scott?

Scott: Since Rich Dad, Poor Dad is kind of like a business book as well, I’m going to give you a choice on the second question here. You can either tell us what your favorite business book is or you can give us a resource that you regularly read up on that helps you with your business.

Gabe: I’ll go the book route because I think there’s two books that are critical that every entrepreneur needs to have read and it’s probably been said a dozen times on the podcast but, The E-Myth, for sure, and Think and Grow Rich. How did I almost forget that one?

Scott: Napoleon Hill.

Gabe: So those two books are critical. I think Think and Grow Rich is just big on the millionaire mindset and just getting your head right. And The E-Myth is more tactical. The systems piece of it, I geek out on systems and it’s the only reason in three years, we’ve gone from doing one cosmetic rehab to doing 12 this year. That doesn’t happen by chance. That happens because you take a systematic approach to everything you do. Like, do everything once and you know how much it costs and how long it should take. Well, the other step behind that is document it. So everything we do, we document. We have processes for everything and I got that from The E-Myth. That mindset. How to look at things. Just don’t be a technician. Be an owner, not an operator and have that at the back of your mind as you’re doing everything. Do it, but understand that you can’t be doing that forever. If you are, you’ll never scale.

Brandon: Fantastic. Number three, Scott?

Scott: What do you do for fun? What are your hobbies?

Gabe: I’m guilty of working entirely too much. I don’t get out as much as I would like. I think the one thing I do love is food. I like to cook to get my mind off what’s going on with work. I like to travel and when I do travel, it’s always food-focused. I could probably afford to have more entertaining, athletics style hobbies. So maybe that’ll be my goal in 2018 is to find more balance and take up yoga or something.

Brandon: Do you remember the name of the restaurant you and I went to in Summit?

Gabe: The Office.

Brandon: Okay, The Office. So if anybody is ever in Summit, New Jersey, go to The Office and get their—they’ve got three chocolate chip cookies with ice cream baked in the little thing—did you eat that, by the way, Gabe? When you were there?

Gabe: No.

Brandon: Oh, you missed out. It was the best thing I’ve ever eaten in my life. It was so good. And I think I had it after you left, but man, it was so good. I actually had it four times that week. We went like four different occasions to The Office and I had it every time.

Scott: That’s what Brandon remembers from your date.

Brandon: I know. I don’t remember anything else. I remember the cookies and ice cream. It was so good. Anyways. All right. The Office. That’s my little plug for them. It was fantastic.

All right, last question from me. Gabe, what do you think sets apart successful real estate investors from all those who give up, fail, or never get started?

Gabe: I think it’s the same thing that sets successful entrepreneurs apart from the unsuccessful ones. I think it’s grit. So in this business and any business, you’re getting kicked in the teeth every day. It’s just the nature of being entrepreneurs and the nature of real estate investing. I think you need to be mentally prepared for that and just know that after you—whatever prongs are being thrown at you, you figure out how to work through them and move onto the next thing. That’s what entrepreneurship is. That’s what real estate investing is. So I think it’s just great, just being able to buckle down and get it done at all costs.

Brandon: I like that. Perfect.

Scott: Where can people find out more about you?

Gabe: I’m on social. I’m pretty active on social so I’m on all the platforms—Facebook, Instagram, what I think I can do to add the most value to listeners is over on my YouTube channel, we started a docuseries and I’ve got a videographer with me every day and we’re capturing the realities of the real estate investment business. We’ve created a show called The Build and that’s what we do. We show people what’s going on, what it actually takes. None of that foofoo guru stuff. It’s what are we doing? We have tradesmen walking off the jobs. We have financing falling through. We’re capturing all of that stuff so people can see what it really takes to do this and if you’re cut out for it or not. So I’m hoping to help a lot of aspiring entrepreneurs and real estate investors with that and that’s where I’d say people can go and find out more about what we’re up to.

Brandon: What’s your name on all the social stuff and YouTube?

Gabe: It’s my name, Gabe DaSilva. If you just google Gabe DaSilva, all that should come up.

Brandon: I’m going to check that out because I love all those videos, like they’re following you around so you can see the real thing. Very cool. Very, very cool. Well, Gabe, this was awesome. Thank you so much for being a part of our podcast today. I learned a ton. This is another one of those shows where I’m like, after I get off the call, I’m going to be like, I’m going to go do that. I’m going to go tell my wife. We’re taking the roof off a house and we’re going to build something cool. Anyways, thank you so much.

Gabe: Thanks, guys.

Brandon: All right, I’ll see you around.

Gabe: Take care. Ciao.

Brandon: All right, big thanks to our guest today, Gabe. That was awesome. Like I said on the show, I’m totally pumped up. I want to go add a level or pop a top or whatever you want to call it. That’s cool. How about you, Scott?

Scott: Every time I think I’m getting a little better at this whole business thing that we’re trying to do here and I talk to a guy like Gabe and I have so much to learn. I need to go back, get back to work and start thinking like what systems thinking—go back to basics and just take as many opportunities as I can. What an impressive story.

Brandon: Yeah, very much so. I was just thinking like, I want to reread The E-Myth now. It’s been a while since I read The E-Myth. Gabe kind of respurred that in me so I’ve actually got it sitting here on my floor. I’m sorting through all of my real estate books the other day. I have like a hundred books. It’s crazy. They’re all over my floor. I’m working on that. So anyways, well, should we get out of here?

Scott: I don’t know.

Brandon: You want to talk about anything fun? You want to talk about your favorite movies, books, how you’re feeling right now? Need a pep talk?

Scott: No, I’m feeling pretty good. I watched How to Train Your Dragon the other night which was pretty good, surprisingly.

Brandon: I have not seen that. But you know what I watched for the first time?

Scott: It was kind of like Shrek.

Brandon: Is it? I’ve seen Shrek. Of course, I’ve seen Shrek. I actually love Shrek. But I saw Moana. I never watch kids movies anymore but Moana, the Disney movie—I don’t know how new it is but anyways, my little daughter Rosie is obsessed with the song in there. What’s it called? Heather, what’s the song in there? How Far I’ll Go? My wife’s here. Yeah, my daughter will listen to it on repeat. She’s 18 months old and she’ll listen to it on our Amazon Alexa like a hundred times in a row and get angry every time we turn it off. Like when the song ends and the final music is fading out, she’ll go uh uh uh until we turn it back on again and then she gets happy. Anyway.

I mentioned Alexa and now my Alexa is talking to me. All right. What’d you ask?

Scott: Well, let’s go ahead and get out of here. Hope everybody enjoyed that. I thought it was really informational. I learned a tremendous amount from Gabe and yeah, I’m probably going to go check out his YouTube Channel at some point.

Brandon: Do it. Check it out. All right, guys, thanks so much for being a part of our podcast, listening to it again, and stay tuned for the Random Six right after the music. For BiggerPockets.com, my name is Brandon and this…

Scott: Scott Trench.

Brandon: Signing off.

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It’s time for The Random Six.

Brandon: All right, there’s one more segment of the show here that we like to throw on the end. This is our Random Six. Six random questions to get to know you a little bit better, Gabe. Number one, if you could take a year off, what would you do for the whole year? If you had to take a year off.

Gabe: I already know. I’d go eat my way through Europe.

Brandon: Oh, nice.

Gabe: I’d go from city to city and just eat my way around the entire continent.

Brandon: And come home 120 pounds heavier?

Gabe: Yep.

Brandon: It’d be totally worth it. All right.

Scott: Number two, do you know any magic tricks?

Gabe: No. Someone tried to teach me one on Thanksgiving, some funky card trick but no. They got me.

Brandon: Ya’ll want to learn one right now? I can show you one right now. This is my favorite magic trick in the world. Only people on YouTube are going to be able to see this, but—check out my thumb. You ready? You ready? Oops, lost my thumb. Isn’t that great?

Scott: That was great. Wow.

Gabe: I guess I do know that one.

Brandon: Yeah, well, that one’s the best. Actually, I’ve got one more to show you and again, people listening to this are not going to get the fun out of this but—pen? This is actually one of my all-time favorites. Pen? You know, you actually have like seven layers of skin on your hand? You can actually shove a sharp pen through the outer layer, and you go down like this and then it hangs right there for forever. And no matter what I do, the pen just hangs right there. You want to see the magic trick? Count the fingers. Isn’t that good? You guys are all going to try that with somebody today, aren’t you? It’s the best trick.

Scott: You don’t have to give it away, man. I’ve been using that trick for years.

Brandon: There’s only like nine people still watching us at this point. If you’re listening to this and you want to watch it, go over to BiggerPockets.com/Show258 and there will be a YouTube thing there at the end of each video. You should find it.

All right, moving on. Number three, what historical figure do you want to see in present day?

Gabe: Ben Franklin.

Scott: He would be a cool guy.

Gabe: Yeah, I hear everybody rave about him. I haven’t read any of the biographies, autobiographies, but Tim Ferriss, I listen to his podcast a lot and he seems to rave about him. So I wonder if it wouldn’t be cool to have lunch with that guy, pick his brain.

Brandon: That’s awesome. I like it.

Scott: I read his autobiography. I can’t remember who wrote it, though. But it was pretty good. A lot of interesting stuff in there.

Brandon: Nice. All right, number four.

Scott: Who would you fire, a poor performer and a great person, or a great performer but a disliked person?

Gabe: Poor performer…good person…I have to pick one or can I fire them both? I’d fire them both.

Scott: All right. Good answer.

Gabe: Because you want a good person who’s a great performer.

Brandon: Smart. All right. What would you name your yacht?

Gabe: Not a big boat guy, but—

Brandon: Well billionaires have to have a yacht, and when you become a billionaire, you have to have one. So—

Gabe: I would name it Productivity.

Brandon: I like it.

Scott: So you’re the kind of guy who I think would have given this question a lot of thought already, which is, what is your spirit animal?

Gabe: Spirit animal—can we curse on this podcast?

Brandon: It’s the Random Six. You can do whatever you want.

Gabe: One that would rip sh*t apart. I don’t know, a lion? Just something that would rip sh*t apart. That’s my spirit animal.

Brandon: All right, very cool. All right, Gabe. Thank you so much. We’ll see you around.

Gabe: All right. Thanks.

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In This Episode We Cover:

  • How Gabe got into the real estate business
  • Tips for using your 401k as capital
  • How he landed his first deal
  • A discussion on doing things yourself
  • How to finance your deals using hard money
  • Gabe’s unique definition of hard money lenders
  • The deals he’s made to this point
  • Which properties are good candidates for rehabbing
  • How to tell if it’s the right market to invest in
  • What to check for in a good house foundation
  • The “bathtubs story
  • How to find deals through direct mail
  • What his day looks like
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Fire Round Questions

Tweetable Topics:

  • “Sacrifice the life you have now so that you can live the life most can’t live later.” (Tweet This!)

Connect with Gabe

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners — without the non-stop pitch prevalent around the industry.

With over 180,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!

8 Comments

  1. Lucas LeBlanc

    Love this episode. Interesting and informative to learn about your add a level strategy.

    How did you get around the legal issues of investing in your own projects/company with your self directed IRA? Maybe I’m missing something, but every IRA custodian I’ve spoken to has said that is a prohibited transaction.

  2. Scott Schultz

    Have stated he used a self directed IRA to get started, and he did all the work himself, from what my CPA and others on podcasts have explained, this would be a direct violation of IRS rules and would subject all the monies to tax and penalty as if with drawn, pleas enlighten me on this.

  3. Sonny Ruckstuhl

    I have the same comment as the other two above. There weren’t enough details given as to how the self-directed money was used on a project that Gaba (or his company) worked on and stayed legal with the IRS.

    Brandon Turner or Amanda Han, any insights available?

  4. Dmitriy Fomichenko

    I didn’t have the time to listen for the entire interview but found the section where Gabe discusses using his self-directed IRA to do his first flip. When you have a self-directed IRA you can invest in pretty much any alternative asset, including real estate. So I’m assuming that he did not do flip personally, his IRA did, and he as the IRA account holder controlled it.

    Here is what he said regarding being personally involved in the deal:

    “Managed to reign in a lot of expenses by doing most of the work myself which I feel is probably the way everybody should start.”

    If my understanding is correct and his IRA owned the property, and he personally worked on it – that is prohibited transaction. An account holder is considered to be a “Disqualified Person” to his IRA (see more on that here: https://www.biggerpockets.com/blogs/2810/47960-disqualified-person-in-a-self-directed-ira-or-401k) and the IRS rules clearly prohibit any personal involvement in IRA transactions. Here is a link to the IRS website:

    https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-prohibited-transactions

    Perhaps Gabe can jump in and clarify the transaction.

  5. Bob Koby

    Lots of great advice and very inspirational, starting from nothing and finding a unique niche. I really liked how you showed that every step you took evolved and got better/bigger/ more efficient along the way.

    Scott – Dont know who wrote the autobiography? 😉 Ben Franklin’s was as good as they say. The guy was life hacking centuries before it was a thing.

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