Ryan Scialabba shares how he flipped 70+ houses for a gross profit of $1.9MM in 2019

Steve Trang: Hey, everybody. Thank you for joining us for today's episode of Real Estate Disruptors. Today, we have Ryan Shalaba with Urban Capital, and he flew in from Pittsburgh to show how he and his partner have flipped over 70 properties so far this year for close to $2,000,000 in gross profit. If this is your first time tuning in, I am Steve Trang, and I help entrepreneurs create businesses that support their family, lifestyle, and goals through mentorship. I'm on a mission to create 100 millionaires.

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Alright. You ready?

Ryan Scialabba: Yeah. Let's do it.

Steve: Alright. So first question is what got you into real estate?

Ryan: So I'm sure everybody opens up the same way, right, way back when. But, obviously, I'm a young guy, so I'm 26 years old. I actually got into real estate because of my dad, and he he worked for US Airways, for a number of years. And in about a span of eighteen months back in o four through o five, o six, their company filed bankruptcy twice. And so you have all these workers, and I watched my dad at a young age.

I was, like, you know, 10, 11 years old. I watched him lose his pension, lose

Steve: four

Ryan: zero one k, stock option, all of that, and get his pay cut in half. And I watched us go from, like, just really kinda non stress about about money as a family to, you know, kinda batten down the hatches and a big change in, like, just lifestyle and mindset really as he tried to kinda climb back out. And so from ten, eleven years on, years we started doing a lot of stuff together on the side. Mhmm. So we were flipping dirt bikes, flipping cars, tickets.

That was when, eBay, Craigslist was getting real big, you know. And, Like you ran tickets? Yeah. Oh, yeah. I was killing it on Craigslist back in the day.

Yeah. So we were doing a lot of that, just making money on the side, fixing stuff up. What was actually fun was, like, he would fix it up because he's a mechanic. I would I would find something on Craigslist, like a dirt bike or a lawn mower or something that was broken. I'd buy it.

He would fix it up, and then I would I would sell it. And Sounds like a business day. Exactly. So got into a lot of that. And then go off to college.

I went to a really, really good school for a little while. I got my I got my real estate license the first summer that I had come home because I was like, alright. I I got an interest in real estate. Let's go flip some bigger things, and I always wanted to do it. And all my dad's friends that made it through the US Airways crash actually had a lot of rentals or they were flipping properties.

So I go, and I'm working for them. And, so I get my real estate license, and I'm really just buying and selling houses for, like, beer money, you know, during during college. Mhmm. And, so going to sophomore year, and, he buys me buys me tickets to a seminar, you know, a three day seminar. Go go went through Fortune Builders as a and so I'm 19 years old, and I'm in college.

He buys me this for our birth for my birthday. He's like, come on down. Let's go check this out. We're not buying anything, though. We're just gonna learn more about real estate investing.

I'm like, okay. Cool. Go down. Sunday, maxed out credit card, home equity line of credit. We're in the real estate game now.

Steve: Oh, so you guys went there to not buy anything, and you guys still Bought. Right?

Ryan: And what was cool about that was that that was, like, just as much for him as it but it was, like, he did it he did it for me, did it for us so we could go work together. And, so now we're real estate investors. We don't really have any knowledge at all other than what some people had, you know, taught us and what his friends had told him and stuff. So getting into that world of fortune builders where they they, you know, they do teach you how to, like, build a business. Right?

So the mindset's different than just getting into, you know, going on YouTube videos and things like that and launching that way. So there was a lot of negativity, a lot of people, you know, in and out of the circle. Like, you guys are crazy. Why would you ever why would you ever do that? Why would you spend all that money to get an education?

People outside of, like, your friends and family. Friends, family. Gotcha. College roommates. Like, I was so then so I'm second semester sophomore year.

I'm studying more real estate than I am studying, you know, my books and stuff. And it was just crazy how everything kinda worked that first six months, that we were investing, if you will. We started off wholesaling. I didn't get a deal for the first six months. But a bet we had made was that if I could do a deal before I had to report back to football camp, then I could take the year off, and we could pursue this.

It was, like, two weeks before supposed to report back to school. We closed our first wholesale deal for $6.

Steve: Nice.

Ryan: And then, in the next forty five days, closed another six deals, paid back the investment plus some.

Steve: Wow.

Ryan: And we were we were running. And, so then so that's mid September. Some people know my story. Probably a lot of a lot of listeners that are new here. Mhmm.

October 2013, I lost my dad in a motorcycle accident. And so that was six months after we started our business. And so I'm like, well, what do I what do I do now? Mhmm. And, it took me, like, better part of a year to really kind of pick myself up, put myself back together.

I was going through a lot a lot of family things, because I you know, it's just money, you know, money money makes people greedy. And Yeah. And it was a really stressful and tough situation. I had younger sister and mom and stepmom all all in the all in the mix, you know, everyone. We're all just trying to figure out how to get through it.

So I'm bouncing around on my buddy's couches and everything. And then, like, mid two thousand fourteen now, so, about six months after that, seven months after that, my my, my best friend's dad was crashing on the couch. He was my dad's best friend. Comes downstairs, literally kicks me. He's like, are you gonna put yourself together yet?

Like, you're gonna put yourself to the other day. You're gonna go out and, like, get get some work done and do something with yourself? Like, dad wouldn't be real happy about, you know, what you're doing. And that that was literally the day, like because I was I was boozing heavy,

Steve: and we were we were

Ryan: yeah. When we were partying hard and

Steve: Not Pittsburgh. You know?

Ryan: Yeah. Right. And, I was just going down going down a bad path. Yeah. And, that was the day I I literally said to my best friend.

I walk upstairs, I was hungover, and I was like, excuse me, but this is the exact thing I said. I'm getting my shit together today.

Steve: Yeah.

Ryan: And, every everything kinda started changing. Momentum changed for me after that point. And, And, you know, now I'm sitting here.

Steve: So there's a lot of adversity in this in this business. Right? Not necessarily, you know, personal adversity, but there's lots of adversity

Ryan: Mhmm.

Steve: In this industry. Yeah. So besides the literal kick in the butt, what else helped you kinda get through that adversity?

Ryan: It's it's a lot of, you know, coming to the grips with, like, I the way that I got through losing him was basically feeling like my dad did everything that he could and got me to a point where he maybe would have been holding me back. Mhmm. And, you know, he he got taken away. But after that, it's to really spread the wings and and go build out beyond anything he could have ever imagined.

Steve: Yeah.

Ryan: And that's something that care like, I got lost, you know, and forgot about that. Mhmm. And when I got that kick again, I I really realized, you know, why did we start? And it was because he had everything taken away from him. He was a company man, you know, and he had it all taken away and had to restart.

And I watched him go through, like, realizing that he was gonna have to work for the rest of his life. Meanwhile, he thought he was, you know, fifteen years away from a really cushy retirement.

Steve: Mhmm. And so,

Ryan: like, that was why we started it. It was for freedom. You know? And and, and so that helped me, like, just get back in the room. Started.

Yeah. Yeah. And, too, like, I got a chip on my I mean, I don't know why. I still to this day, my partner talks about it all the time. He said, you got some kind of chip on your shoulder, and I don't know why.

I think it I think it's a it's that, you know, competitiveness and sports and things like that. I grew up racing motocross, which is a very singular competitive sport. And so I have that that nature in me that I wanna always get better. And so once I kinda put that back together, it was I was able to at least start putting the pieces back together and moving forward.

Steve: Gotcha. Now Fortune Builders does not have a great name in our community.

Ryan: Mhmm.

Steve: What would you say is different? How were you able to get out and and and work with it when most people go through it with nothing but credit card debt?

Ryan: Yeah. I think and this is I think it's for any education. I think that what they are what they are good at is putting together a foundation to get you from zero to 10 deals. I think they're excellent at that. They have they give you a really good foundational base of not only real estate, but business itself.

I think a lot of people fail because they just don't take action. I mean, like, when I say that and this was back in 2013 when they weren't anywhere near what they are now. Now there there could potentially be an overload of information. But back then, it was pretty simple to where it was, like, literally follow this checklist. Do the bandit signs.

Do the mailers. Like, it was back then, you know? Mhmm. We didn't have any really that much technology. Right?

Right. And, you know, do this, do that. And then calls come in. You go, you meet with sellers. Here's what you say.

Steve: Mhmm.

Ryan: Here's how you estimate repairs. Here's a purchase agreement. And, you know, and you put deals together. And so giving you that foundation and then understanding that, you know, systems and processes are really important and blah blah blah. I think, you know, if you understand that that's what you're trying to do Mhmm.

And you take the action and you just kinda succumb to your own fears and do it, you will be successful at some point. You will at least make your money back. You might not be some empire building, you know, real estate investor, but you will at least get your money back. And I think that's that should be considered success. Mhmm.

Because now you've picked up a new skill.

Steve: Gotcha.

Ryan: But a lot of people go in with these crazy high expectations, and then they don't put in the work, and don't try to learn to understand that, like, this is a this is a three, five, seven, twenty year thing here. Yeah. You're going back to college, and then you're getting your feet on the ground. And and so people just kinda fall under that pressure a lot and, and don't really put the pieces together. That's my opinion.

Steve: Yeah. Well, it could be right because I have never checked out their curriculum. Right? I have no idea what exactly they do.

Ryan: And I wanna put and I like and I like to put it out there too that, like, I think, again, that's all education. Mhmm. Right? I mean, you can you know, somebody could come and pay you or I a heck of a lot of money, and we could literally show them everything in our business. And you might show a 100 people that, and two or three take every bit of it, make it their own, and then go and surpass you.

Steve: Yeah.

Ryan: You know, it's just kind of the world out there right now. Everybody not everybody, but a lot of people want the get rich quick, the easy scheme and

Steve: Well, I mean, it's nice if you don't have to work for it.

Ryan: Right. But

Steve: So so you get your life back together, and then you're building this, I mean, do you go back to wholesaling? Where this is when you started flipping? What was the you know, at which point where did you or which direction did you go? Wholesaling?

Ryan: So so I started wholesaling again, and then I bought a couple flips. I so I bought two flips at once, and this was before I had partnered up with with Arch. So this is 2014 into 2015. And, so I bought two flips. One house I bought for $50, and it was in a really, like, booming neighborhood, was right next to this neighborhood.

So this was kinda like the up and coming. I was the pioneer No. But, so I bought that. And then I bought, a big historical house, close to my hometown. Mhmm.

And, this house, it needed it needed a ton of renovation. And, so the first one, my lender made more money than me, but I still made money. So he made 12 and I made 5. You always joke because he took me to dinner. And then on the second one, I actually I lost my butt.

Mhmm. I lost, like, $12.12 grand on that second one. And at this point, I mean, I'm riding on I'm riding on dad's money. Mhmm. And so that that was that was that hurt.

And then I buy a third one in Lawrenceville again. And, that time, I made $50 on it. And so it was like, okay. Kinda got my got my bearings together and realized, like, I'm good at finding them. I'm pretty okay at raising money.

Mhmm. And I have a real estate license, but I suck at construction. Like, I'm really bad at this, and and I just don't I don't understand it. So I'm wholesaling. I'm just kinda getting it together.

And then February like, mid twenty fifteen, I happened to meet my partner, Arch. We're chasing the same deal on the street where he's building the house on this side of the street and we're chasing a deal on the other side of the street.

Steve: I

Ryan: find out that, like, he's working it. So I hit him up on Facebook and I'm like, hey, dude. I think we're working the same seller. Like, let's not cut each other at the knees. He's like, okay.

Cool. So we we kinda work against, work against them.

Steve: A little friendly collusion?

Ryan: Yeah. A little friendly collusion. I lock I lock the deal up. So I'm going down. I'm putting a bandit sign in in there, and he's actually across the street.

It's the first time we meet in person. He shows me his build. He shows me just takes me around, kinda shows me, like, all the projects that he's working on. And, so then we go and we drink a bunch of beer. And, over, like, the next, like, thirty to sixty days, we we actually started having real conversations about, like, let's buy some houses together.

Steve: Yeah.

Ryan: I'll find them. I'll raise the money. You do the construction. I'll sell them. There'll be perfect marriage.

Steve: So he's the flip guy. Yeah. He's the construction guy. You as the flipper. Right.

Really, you're lousy at flipping too. Yeah. He's the real guy. Yeah. He's the real brains.

Okay.

Ryan: Yep.

Steve: That's cool.

Ryan: Yeah.

Steve: So Pittsburgh, how big is how big is

Ryan: so it's like, there's like a I don't know. Like, 1.3, 1,400,000 people. Okay. So it's it's me it's a medium it's a medium sized market numbers wise, but we have, like it's really in it's a really, really interesting market to where, like, a lot of people try to come in and work in that market, and they fail. Because even though it's larger, it's very old school, blue collar, like, homeboy to homeboy type type place, older demographics.

So people are really, really skeptical. Like, you have to have a a long track record of doing business there to kinda be successful. And, you know, how, like, I always I always make this, like, analogy. Like, when you're flying in and out of cities, a lot of times you you look down and you see a checkerboard. Right?

And you're like, okay, that checkerboards were those houses are like 300 ks. Mhmm. This checkerboard, they're like 200 ks. If you fly in and out of Pittsburgh, it looks like just this crazy spider web of neighborhoods. Mhmm.

And it's so street by street that a lot of times people would just have a really hard time getting an understanding of the neighborhoods and the values. So you could be one street here, and it's a $400,000 house. And I kid you not, on the other side of the street is 300. And so, like, people come in, and they make really big mistakes.

Steve: Yeah.

Ryan: So it's a it's a I I love it

Steve: Mhmm.

Ryan: But hate it at the same time because the housing stock's really old. So rehabbing there and constructions, it's it's really hard. Like, my partner has definitely a hard hard job. Yeah. You know, we're dealing with just bad foundations, asbestos, you know, knob and tube wiring, like, all these things that you probably don't no offense.

Probably don't even know about out here because We'd know more. Because the housing stocks, a lot newer.

Steve: Yeah.

Ryan: We're dealing with 1,900 to nineteen fifty homes more often than not. So makes it it makes it really hard.

Steve: Were you Yeah. We call those historic homes. Yeah. And I stay away from those because Yeah. Like, a good one, you can make a lot of money.

But a bad one, you know, you better have that margin. It can lose a lot fast. Yeah. So, yeah, anything that's, like, nineteen fifty and older, we're like, just Right. We'll let a professional handle that one.

We'll wholesale it, but we're definitely not flipping it.

Ryan: So yeah. So the market so the market's like it's really interesting there. We've had, like, a net migration of, like, zero for, like, thirty years or, like, negative. Wow. So it's it's booming.

There's tech coming in there. Like, Google's there. Uber's there. All this stuff. But still, at the end of the day, like, just as many people leave as they do, you know, come in because it's a really heavy college town.

Mhmm. And more often than not, like, a lot of small small neighborhoods and stuff. Like, the kids, you know, we get out of college, and we're, like, get as far away from here as possible. Like, it rains too much. It snows.

Like, let's get out of here.

Steve: You're not selling Pittsburgh at all right now?

Ryan: No. But it is it's I mean, it is a it's it's a fantastic market. Mhmm. The the biggest thing I let I let everybody know is it's extremely challenging to get into it, and to get up and going because it's just so hard to value properties, And there's so many little things. I know it's any any market, but, like, when your housing stock is $18.50 to brand new, like, there's so many different values, like, valuations and things that can, you you know, change these houses that it's just hard.

Steve: Well, I remember, you know, we were talking about this, in our mastermind, that we're in that you sat back and analyzed all the flows that you've done and the ones that you had the most profit per time was, like, something that was, like, $19.50 to $19.80 in this neighborhood. What was the Mhmm.

Ryan: Yeah. So What

Steve: was your sweet spot?

Ryan: So now so now we do homes built after 1950, and that was a that was a scalability thing. Mhmm. Because 02/1617 into a little bit of '18, we were doing gut jobs in the city. We were doing the historic homes, but we can only do 10 to 12 of those a year. Don't get me wrong.

We were making $80,100,000 dollars on these houses, but it was a nine month cash cycle. So it's just like you think the highs and lows of the business are long now? Do it when you're doing $200,000 renovations.

Steve: Mhmm.

Ryan: I mean, you know, you make four or five hundred grand, and then you watch the account dwindle

Steve: to capital just gets

Ryan: sucked out. $30,000, and you're like, oh my god. We're going out of business. Yeah. And then it sells again.

And and so we said, okay. We gotta stabilize here If we're gonna build a team, and this is, again, this is this is, you know, this is both Arch and I sitting down and him saying, the only way that we're gonna be able to do this is if we buy the same type of house over and over and over again. So we gotta get, you know, four or five miles outside the city to where we're out out of those historical districts, and we gotta buy the same house over and over again. We gotta McDonaldize this thing. You know, we're not doing we're not doing prime rib and steak anymore like it's McDonald's.

And, so that was, like, tail end of 2017, we started realizing that. '18, we really made the shift, and and, that was when, like, the team tailing us '17 and '18 was when the team really started to come along because we started buying a lot more. Our price points went down, so we got into the median price point, that $1.50 to 200. And so we're just started turning and burning. Got our rehabs down to, like, $3,540,000 dollars and pretty much dollar per dollar on the rehab versus the profit.

And, and so now yeah. I mean, that's that's pretty much it for us.

Steve: Yeah. I mean, I thought that was a pretty smart move because you guys and I'm not trying to disrespect. Right? Like, you know, 70 transit 70 transactions, it's a good amount. You know, we have guys here that do, like, more than that.

Mhmm. You know? But I I admire the fact that you're able to go and say, okay. Here are the ones that are easier, and we still make a lot of money in the time perspective.

Ryan: Mhmm. Yeah. Right?

Steve: Yeah. And so that was wise, you know, like, to to actually sit back and analyze that versus, like, just continuing to do what you were doing Right. And be content. Like, because you're making a lot of money. Are you making $80,100 k in a flip?

Mhmm. It could have been just as easy

Ryan: Yeah.

Steve: To just keep doing that. Right. So I admire that you went back and, became introspective.

Ryan: Yeah. Yeah. And we've all and, like, that's one thing we've always been really good at is, like, stepping back and kinda looking at the big picture because, like, like, my partner, he's you know, we're on the traction model, and he's heavy, heavy visionary, like, as high as it gets. And I could kinda float between visionary and integrator, but I'm more of an integrator profile. So we have that, like, unique partnership to where, like, I can work deep in the weeds for a really long period of time and not burn out.

Mhmm. And also look at the business macro wise. But, like, his strength is pulling me even further out and saying, this is gonna happen. Like, you know, x, y, and z is gonna happen. We need to change right now.

Steve: Yeah.

Ryan: You know? And then when he sets that vision out in front of me, I can work it backwards. So, like, that's where our partnership's really good. And so, yeah, when we recognize that, it was funny because it was like, okay. We're gonna go and we're gonna do 50 flips a year.

And when we talk about, like, 50 flips, we're always talking about solds. So, like, for us so this year, we bought well, in at the end of what's on the docket up until December is 65 purchases and 71 sold. Mhmm. So, like, we're doing, you know, we're doing a lot of transactions, but, like, we really focus on the solds. And we said, okay.

Let's get to that 40 to 50 mark. And we were like, how the heck are we gonna do this? And the only way we saw doing it was getting our rehab numbers down, like, close to, like, 30 k, building out an in house construction team, and then really turning them. And then we got the crazy idea, you know, last year around October, and we had some EOS consultants come in. Gary and Susan Harper are fantastic people.

I love them. They came in, and they actually pulled an even higher vision out of us was that, you know, we wanted to get to that 70 to 80 mark and see what it looked like and be able to step away from the business for periods of time. Mhmm. And so that was whenever we kinda made all of these shifts and stuff. Yeah.

And then this year, we were like, okay. This kinda sucks.

Steve: So let's talk about that. Right? So, like, you know, here's the vision. It's 50. It's like, no.

It's actually seven or 80. And I your dad's like, no. Actually, it's really more like

Ryan: 50. Mhmm.

Steve: So what what were the pains that you experienced that, like, man, selling all these houses, making all this money is great, but it's not as great as we thought it was gonna be. Yeah. What were some of those pains that came along with that?

Ryan: It's so it it was like, okay. You can lay out a vision plan. Right? And and where we failed, first of all, was we said, okay. Here's the goal we want.

And we thought we laid out a lot of a lot of the pieces. Mhmm. But we did not think about, like, what problems could potentially arise when we buy 10 houses at once or when we go to list and sell 10 houses at once? You know, what what are these new problems? We just said, here's what we wanna do, and we started running.

So when we started when we started, like, doubling over again, basically, and we were buying heavy, you know, I I was working really, really hard on the front. And then Arch was kinda, like, sitting back just waiting for the storm. And then we would get in, and all of a sudden, you know, we had 12 guys on the construction crew. We're trying to do 15 jobs at once. And he's playing this maestro and trying to reinvent the rehabbing process when you just you can't do that.

So then things get backed up. Also too, when you go to scale that much, I had to pull back from the acquisitions, and I thought I put enough processes in place to where I could just sign off on these deals. And what was happening was our acquisition guys were underestimating repairs by five to 10 k and overestimating ARV by five to 10 ks. Who who would have thought that would happen? And, so then we're and we're buying to buy.

But we didn't we didn't realize that at the time. So come around May, we have full stack of inventory, like 35 homes, homes. And we're looking at it and we're like, half of this is crap. Mhmm. And it's not crap from a perspective of it fit inside the model that everything was nice.

But there's a couple of market there's a couple of neighborhood shifts, couple of underestimated budgets. And when you're only trying to make 25 or 30 on a house and all of a sudden you're looking at it and you're trying to make 15, stuff starts to not make sense.

Steve: Mhmm.

Ryan: So q three, we go into just crazy heavy sell mode. And, we're like, sell everything, get it out. We gotta start wholesaling more. And then next thing you know, our wholesales so we're making more on our wholesales than we were on our rehabs that were going out the door. And we're like, okay.

Let's, let's let's scale let's scale down. You know? So we had to let some team members go. Mhmm. We had to, obviously, re you know, batten down the hatches, really, and just get out of the mess of inventory and get it get it on the market and sold.

And, so I'm happy to report that, December is huge December is huge for us. And, like, we're making all of our money in one month this year, which is not good.

Steve: What do you mean?

Ryan: Like so, like, our business throughout this whole year, because we did such a heavy inventory stack, it sucks all the cash.

Steve: Right.

Ryan: Well, it's all coming back this month in December. When meanwhile, before, when we were growing at a steady, consistent pace, you were able to, you know, flip, get a nice influx of cash, kind of put some aside, keep growing. We we grew so much that it just now we weren't upside down on deals, but here we are riding the break even line. And then November, boom, big pop of money. And then December, we're selling 17 homes in December.

Steve: Yeah.

Ryan: And there's big profit margins on them. So it's like we're making all of our money in one month. Do I ever wanna do that again? No.

Steve: Yeah. It's it's something that's funny. Right? Because, like, we've talked about this on a couple episodes. It was that a lot of guys is when they're trying to scale, like, yeah, you're profitable.

And your books, your p and l's, they look great.

Ryan: Mhmm.

Steve: But your balance sheet sucks. Mhmm. And what aft what happens is you run out of capital. Even though you're profitable, it's hard for, I think, you know, guys that are newer to understand this concept that you can go out of business because you're too successful.

Ryan: Right. You grow too fast.

Steve: Yeah. Yeah. So yeah. It's it's, another thing that I I have friends. Right?

They're trying to scale. They're trying to get really big. And what I've told them and this is true on the traditional side. This is true on the wholesale side. It's like, name one person that you know personally that has more than six salespeople and is loving life.

Ryan: Right.

Steve: Like, this becomes a people business as you scale, and managing more than six salespeople, it's not a lot of fun.

Ryan: Right. Yeah. Yeah. Yeah. And and I've never gotten to that point.

Yeah. But on on the sales side but it was just, like and and what's funny is I I wanna make sure I don't I wanna make sure that I'm I'm being real with everybody here, and that's that's my shtick is that, like yeah. Yeah, we're an extremely profitable business. But the way that we hit the gas, I won't do that again. Mhmm.

The fact that we were able to come out of the other side of that profitable was because we still bought mostly right. We didn't over leverage ourselves. We had we had a very, very strong knowledge of how to how to do the construction and make sure that we were selling properly. And, you know, a lot of things that were still foundational to us worked. It was, you know, just you hit the gas too hard.

Mhmm. And the only reason why we didn't feel it as much was because we had huge cash reserves last year.

Steve: Yeah.

Ryan: And then it was like, oh my gosh. Where'd it go?

Steve: Story of every every

Ryan: day. But, like, it's still it's still crazy, though. Like, on on the other side of things, like, Arch and I spent thirty days in Breckenridge last February while all of this was going on to test and break try to break our business. Mhmm. So, like, we I I can say, like, we we broke it, but, like, we were trying.

Yeah. And I know that's crazy to to hear, and some people probably won't believe us. But, like, if you go back on my timelines and maybe we've been in masterminds together, like, we've been talking about this for a year.

Steve: Like Yeah.

Ryan: We're are gonna walk away from our business for thirty days and and see what happens.

Steve: You weren't answering the calls on on mums? No.

Ryan: No? No. It was we now we had a structure in place.

Steve: Mhmm. You

Ryan: know, we had our meeting structures to where we were doing morning check ins and afternoon check ins, and we had our weekly meeting structure. But other than that, we were hands off.

Steve: Yeah.

Ryan: And we bought and sold 17 houses in that month of February while we were gone. That was the one of the biggest life changing, like, business experiences for us was, like, we don't need to be in every, you know, every little transaction.

Steve: Yeah.

Ryan: Now ninety days later, all of those mistakes and things that were going on while we were gone took ninety days for that stuff to flush out. Mhmm. Which is what happened in May and June when we were all hanging out in, Huntington Beach, and we were like, I got I got hammered on that, on that hot seat.

Steve: Well, mostly by Scott. Right. I mean, I think Thanks, Scott. I think everyone else is pretty nice. Scott Oates, he's gonna he's gonna tell you exactly what's on his mind.

Ryan: But it's but, I mean, that was, like, that was I mean, at that point, to have those conversations with those guys Mhmm. Like, that was huge. And then Gary and Susan flew back in, and it was all within a two week span. And it was like, guys, I don't know if you realize this because you're pretty deep in the weeds right now, but you are, like, three months away from having to borrow some old crap money. So you better hit the gas on sales, and you better start wholesaling off this inventory and get cash.

And that was when we transitioned. Like, all of a sudden we started having forty, fifty, sixty ks months on wholesaling that survived us for that three month span to now we're pretty fifty fifty wholesale and rehab to get to this point where all that inventory is gone. And this like, this year will be the lowest amount of houses we carry into next year, which is like seven. Seven or eight versus 25 to 30 for the last couple of years.

Steve: Haim says that you should push some of those out to January to help with taxes.

Ryan: Well, we've been we've been trying.

Steve: So I think, one of the things I wanna talk about, and Edgar is actually asking about this as well, is that your marketing is different than most other people's marketing. Mhmm. So let's talk about what is your marketing.

Ryan: So I'm I'm I've fallen into being the traditional media guy. TV, radio, you know, paper, the old school stuff, billboards. And in a lot of markets, that's really counterintuitive. But, like, the reason why we became successful with it was because of the demographic of our market. We're we're the second oldest county in the country.

Really? Yeah. It was

Steve: all there.

Ryan: Allegheny County. Allegheny County is our county. It's like date date My date? Yeah. In Florida or whatever.

Whatever. Kings County in Florida or something like

Steve: that. Article about voters being dumb. So okay.

Ryan: But but so it's like your you know, our market demographic is is older people. How do they wanna be talked to? They still buy on infomercials. They they still listen to the radio. Like, that holds huge weight

Steve: Mhmm.

Ryan: Versus a a mail piece. So about two years ago, I started we started heavily investing into into that and expanding on those channels. And, I mean, it's game changer because it was I mean, it's how we blew up. We switched from Urban Capital Group to Homebuyers of Pittsburgh Mhmm. And had that full blown, you know, in eighteen months to where, like, people people know, the name.

Yeah. And we did it through through traditional media.

Steve: And, you were talking about these numbers offline. Like, right now, how many dials are are you how many call ins are you getting between between your TV and your radio?

Ryan: So so, like, so our all of our marketing is a 175 to 200 calls a month Mhmm. In. That's not it's not a lot. It's not a high volume. But our leads, it's, like, 70% lead ratio.

Steve: That's high quality.

Ryan: Oh, gosh. And and that was that was the big difference, you know, was when we were mailing and we were, you know, doing everything else. We weren't really doing that much else other than other than mailing and, like, bandit signs and stuff. It was just like it was like 40%,

Steve: you know?

Ryan: And I was like, okay. So can we reduce our volume, tell people exactly what we wanna buy, which was really

Steve: interesting

Ryan: because we picked our niche. Mhmm. And then we told people what we wanted to buy through this traditional media. Mhmm. And all of a sudden, I mean, it just it went up.

Steve: So what was that message? When you say you told them what you want to buy?

Ryan: Oh, I mean, it's like, hey. We're not we're not buying junkers in bad neighborhoods. Like, we're buying, you know, grandma specials in great school districts. And, you know, homes that are structurally sound and they just need some cosmetic updates are really good schools where you wanna put your kids. And and we started saying things like that.

Steve: That's what resonates.

Ryan: Yeah. Yeah. And and the for for us, it's like two, it's, we say we're the number one professional home buyer. Mhmm. Okay.

And now it's cool. We have some awards to to actually back that up. Yeah. We're not just the guy saying it. There was a there was a difference too of the people that we started talking to by talking on radio, talking to you.

We started talking to more affluent people that valued time over money. So automatically, the price point of homes you're gonna buy is higher. And that was where we wanted to be. We didn't wanna be buying $20.30000 junkers. It was we're paying 70 to $100,000 for these homes, which in our market is like, these are nice homes.

Steve: It's really hard to fathom.

Ryan: Yeah. So but they're but they're outdated. You know, they need that $35.40 in work and we're selling 150 to 200. So it so so we started talking to people that just, yeah, value time over money. And so then I even started saying that in in my in all my advertising.

Like, you know, do you do you have something that you have a house that's stressing you out? Maybe you're valuing, like, your time and stress that you're putting into it over getting a couple extra bucks on the market, give us a call. You know? And started saying little things like that. And next thing you know, you're getting calls from the retired, you know, the retired guys that's wealthy.

He's got a second home. He downsized out of it, and, he just wants to let it go in three weeks, you know, four weeks. Wow. So interesting stuff like that. I mean, it was like, who are you talking to?

Mhmm. All the things that we do normally. But what I love about traditional is, like, I can I can literally like on radio, one of my favorite things is saying, okay, if I'm gonna go on a country station, I'm talking to women and I'm typically talking to women 34 to 60? That's the emotional side of the brain. Right.

So I'm gonna speak in a commercial emotionally stress, you know, worry, things like that. And I'm gonna talk directly to them. Have you inherited a house recently that's really stressing you out? Or are you worried about helping your, your your your parents transition into assisted living? Like, we can help make that easy.

Mhmm. I'm talking to that emotional side, and then, boom, we're just crushing it with that. And same thing if we go on, you know, we go on, like a news talk radio station and I'm going to talk logically time over money. Mhmm. So we just started learning those things.

Steve: That's fascinating. How did you was there someone to help you along the way or

Ryan: Just Benjamin Franklin. Just spend the money and test it. I mean, just like anything, you know, we didn't know. The people at the stations were great. It it was really cool to be able to go in and talk with them and say, hey.

Look. I'm an ROI based guy. I want this to be successful.

Steve: Mhmm.

Ryan: I'm willing to buy on contract for long periods of time. And, and we're gonna test three to four different, you know, ads at once, and we're gonna look at the metrics. And then we're gonna dump stuff, and we're gonna record new.

Steve: Like So if you're doing three or four different ads at a time, are your phone numbers different for each ad?

Ryan: No. Not right now. And the reason why is because their analytics are way stronger. So, like, I can do one phone number for radio, but but the analytics reports that I get tells me everything that I need to know about what commercial is actually converting. So it's so that's nice.

Steve: So, like, the time that it came in?

Ryan: Yep. Everything. Gotcha. They they they know when the ad played, when it converted, if the people went to your site first before they called, like, their their analytics are heavy. Fascinating.

So you're able to look at your conversions for actual rate basically commercial to action is is a conversion point. So you wanna be, like, over point three as frequency. So you wanna be over, like, point three. If it's under that, then the ad is failing. But if it's point five, you better dump a heck of a lot of money into that

Steve: in the

Ryan: next month because it's converting the messages right.

Steve: So then is that phone number tied to the station then? So that's how they can track it. Gotcha. Very

Ryan: interesting. And then they they do like, they'll do Google Tag Managers too for for everything that you put into your website. And so if you convert that way, you can do that. It's crazy. Pretty fun stuff.

Steve: Butler Buys Houses wants to know, are billboards working in your market?

Ryan: They so it's interesting. We, I've actually been using the, the blip. I don't know if it like, the blip ones. And we bought, like we haven't

Steve: the library what blip is.

Ryan: Oh, so it's like, it's dig it's digital billboards that are, like, seven and a half or or, fifteen second, you know, blips, basically. And, I started running those because it was so cheap. And you can set your budget per day. And I was like, I wanna kinda I just wanna test it and see what happens. And I don't wanna commit to $4 a month.

So I did, like, a $2,200 campaign over, like, like, two months, and we bought three houses. And I was like, this is crazy.

Steve: Yeah.

Ryan: But then it it died off. So so I just, like, no.

Steve: You got all the other people that were gonna sell through billboards.

Ryan: Right.

Steve: Right.

Ryan: And then and then it and then yeah. So don't get don't get your hopes up. But it's still it's it's brand awareness at the end of the day. Right? Having a consistent message across multiple channels and, like, all of my stuff is the same.

Like, my postcards, my billboards, like, everything is the same. Now some people might disagree with that. I sometimes disagree with it and try new things. And when I come back to it, I'm like, it just work it it as a blended whole, it works. It's a brand awareness.

And what's really interesting about it is that so, like, mail specifically for me does not convert super high. But when I slow down mailing, everything else kinda falls off. It's like when it all works Mhmm. Together.

Steve: Yeah.

Ryan: But They all

Steve: lift each other.

Ryan: When one kinda goes off. So that was that's been really interesting. Something I haven't been able to, like, understand why or figure out. I'm just like, don't don't break it.

Steve: Yeah. It's omnipresence. Right? It's that, you know, they see you, like, man, this guy is everywhere. And, legit, you are everywhere.

You're on TV, radio, mail, newspaper.

Ryan: Newspapers. You are on Facebook.

Steve: Everywhere. So, yeah, I mean, that's something that, we talked about the mastermind. Right? It's that if your your TV is gonna work because your radio is working Mhmm. Or because you're on a radio Mhmm.

Because you're in both places. If you're just radio or you're just TV, it doesn't quite work as well.

Ryan: Right. Yeah. So And the messages are congruent. Yeah. The like, it's just yeah.

Steve: So how much are you spending a month on radio right now?

Ryan: Everything is pretty like, I'm spending 20 to 22,000 a month total. So I think, like, my radio contract's, like, 5,400 a month. My TV's right around there. My paper's right around 5, and then I spend, like, 5 on mail.

Steve: Gotcha.

Ryan: And so, like, radio, I run, like, 700 commercials for that. Mhmm. And then I get two hours a month long form. Or now well, this is pretty cool. It actually doesn't convert well, but, again, it's just presence.

I do do two hours a month on the radio where I'm, like, kinda like the local, like, real estate guy now. You know? People are calling in, like, well, I got this situation.

Steve: And you're coaching them through it?

Ryan: Yeah. Yeah. That's awesome. So it's cool. Like like, just, you know, if anybody's gonna go that route, like, understand, like, just a couple of things.

Like, you wanna go on long contracts if you can knowing that you can always get out of them because you'll negotiate the best prices. And then just look at perks. Like, ask them questions like, okay. What's a hard cost to you versus something you can throw in? You know, what am I actually paying for versus can we you know, if I up my budget, can I get a bunch of extra perks over here?

Steve: What are some perks that you you would get?

Ryan: Like like, for instance, they'll run, they'll run, like, your like, your Google SEO, pay per click, and Facebook. So, like, let's say, like, you spend, like yeah. So let's say let's say, for instance, like, you have, like, a $4,000 contract. Right? And let's say for newspaper.

If you have, like, a $4,000 contract and you run, you're gonna run, like, two Sundays and a couple follow-up Wednesdays, that's actual hard hard you know, that might not be hard cost to them, but that's where they make their margin. So what they'll do is then you you opt in for, like, a thousand dollars in pay per click and $500 in Facebook ads, but your cost of your package stays the same. So and I've now tested this. I was like, okay. Strip me down to just print and see what happens.

It starts failing. Mhmm. When everything is clicking together, it just it works. So it's kinda like I drop my stuff down to $15, and it just does not work as well as spending the full 20.

Steve: You lose any sleep over that?

Ryan: I don't really lose sleep over anything. Okay. I I I I don't.

Steve: Because it's either, like, you're either all in Yeah. Or you're not.

Ryan: Yeah. I am so desensitized to to the to the money that, like, I've I've learned enough now that if the day you take off your foot off the gas on your marketing, it's another six months before you get fully through. So, like, I just I my experience has been from the day one. If I send mail out tomorrow, I'm not getting an ROI for ninety days.

Steve: Yeah.

Ryan: And that's most and then you go traditional, it's six months. Mhmm. So, like, you have to be willing to commit. So I was 20,000 a month for six months before we really saw that return. And then tack then tack rehabbing and reselling

Steve: Mhmm.

Ryan: You're talking a nine to twelve month cash cycle, which is what I said 2,018. That's why it just now came out now.

Steve: Right.

Ryan: Because it it it tests you. It's a full year, when you go all in. So

Steve: You're a very patient person. So, so we got your radio ads, your TV ads, everything. It's it's all out there. Someone calls in. Where does that lead go?

Ryan: For us through CallRail and then into Podio, we still use InvestorFuse. Sorry, Don. Don Ross. But we're we're we've had multiple conversations about, like, switching over, but, like

Steve: I'll talk to him, Don.

Ryan: Yeah. The just the CRMs are just like the vein of my my existence. It's like one project at a time kinda new. So yeah. So we're use we're still just using the original Investorfuse, by the way.

And then we have a lead manager in house. We we have, like, a closer setter model where he's good cop. I'm bad cop. Basically, he's he's building all the rapport. He's fact finding, getting all the information, setting the appointment for now me because I again, we we strip we kinda stripped down some of the teams who are rebuilding.

And, so running that, like, closer setter model to where he's taking the calls. He's doing the follow ups.

Steve: So he's take he's answering the call live. Mhmm. And he's getting the information. Mhmm. And then getting and booking a time.

Yep. And then you go to

Ryan: the house. On my calendar, and then I'm going. So, really, right now, I'm like I try to be five appointments to 10 appointments a week. Mhmm. Close to.

That's my that's my gig.

Steve: Very cool. So what does the rest of your operation look like?

Ryan: A lot of construction and sales. So our so our company is myself and Arch, my partner. Mhmm. The smart one. Yeah, right.

I just I'm just the face, but it's Arch and my partner. Then we have on the front end, we have Ryan, Ryan and myself. So two Ryans, which if you can get somebody in that front seat that matches your name Yeah. It it's pretty cool. Actually, it kinda works.

So then it's, myself and him on on acquisition side. Joel is our operations guy. He he kinda runs everything in the background, all the books, all the TC, APAR, all that stuff. We have two project managers. So Arch's brother, Bob, and Bill, he's our he's our old head in the office.

He's our he's our old steady gray that keeps everybody at a nice even pace. And then we have 12 guys out in the field on the construction side of our company. And then I have one dispo slash retail guy

Steve: Yeah.

Ryan: In office too.

Steve: So something you said to me, and I don't know if this is still true, but at your presentation so you had two crews and a two person punchless crew.

Ryan: Yeah. So so now it's so the way we've always been successful is three man crews. Mhmm. So I'm gonna throw some numbers really fast at people. But three man crews, $75 an hour per crew.

It's about $3,000 a week in labor. That's pretty much what a flipper can afford. Mhmm. Way we've always set it up. So you have your lead carpenter.

Printer. You have a light electrical, light plumber guy. And then, you have your, you know, paint or plaster general labor. Okay. And that team's gotta be $75 an hour is where we like to be.

So you can either have three highly skilled guys that you're paying $25 an hour, and you're getting you're getting a less managed crew

Steve: Mhmm.

Ryan: Or you're gonna have a four man crew, right, where you're kinda training and and and working up, and someone's gonna step out and become another crew leader. So for us right now, three crews, and then we have two the big problem for us when we when we scaled up was, like, reply to inspections. And for most wholesalers out there, they're like, what the heck is reply to inspections? Yeah. But but it's when you go and you sell a house retail and the buyer gets their inspection report, they're sending you a laundry list of stuff they either want fixed or they want credits for.

You're selling ten, twelve houses at once. That's a whole nother construction process.

Steve: Yeah.

Ryan: Because your crews have left and now you got to go back in. So we have two guys that that they, a lot of times, will start the job. So they'll do they'll go in. They'll do some demo. They'll do rough plumbing, rough electrical.

Our crews come in, do everything else, and then they get a they do a final punch list. And then those two guys will come back in again at the very end and do, like, a final final punch out.

Steve: Can you pay these guys more?

Ryan: Yeah. Because even though, no. I guess it it it no. Because they, they're they're $10.99. Mhmm.

So, yes, they get paid more, but it's the same cost to us. Right. You you know what I mean? Mhmm. So, yeah, they get paid more.

I think those guys are, like, 35 to 40, but they're on their own. So, like, most like, our average in our company is, like, 22 to 25.

Steve: So and each guy, they work for you and you alone. They don't work for anyone else. There's no other side jobs, no side hustle. Hustle.

Ryan: Yeah. Because everybody so everybody except for those two is w two for us Yeah. Except for those two guys. Now if there's times when we've been able to keep them busy, but we keep it very legitimate as far as $10.09 9. They get the scopes.

They do the thing. Like, it's very legitimate on that side. There has been maybe three instances where it's like, hey. If you have a you got that client you've been talking about, you wanna go knock out their bathroom, we're gonna have a week of down downtime for you. Go knock out their bathroom.

Mhmm. So it's happened, like, two or three times.

Steve: Gotcha. Now that's the rehab part. Who's managing the rehabbers, or is it all self managed?

Ryan: So it's so, yeah, so it's all it's all us because we build out a construction company. So you have Bill and Bob and Arch. So the way that we had to break it out was we project manager, you're typically you're you're handling schedule, right, budget, timeline or whatever timeline budget and the people. So we broke it out to where now Bob, he is a materials manager. Bill is site control and Arch drives the schedules.

So Arch is laying out the schedule. He's laying out the, you know, execution plan for the job. And then it's Bob's job to make sure the guys have all the materials they need and Bill's job for site control. And then he gets us site reports for Fridays for our inventory meetings. So we just keep that that

Steve: flow. And then one thing you mentioned earlier, you know, while you guys are out having a good time in the mountains was you guys have your regular meetings.

Ryan: Mhmm.

Steve: What are those meetings?

Ryan: So it's cool. It used to just be Tuesday and Friday. So Tuesday was our standard level 10, and Friday was our inventory meeting. So we called it on the business and the business. Inventory meeting, we went through every single house, You know, labeled all the issues, made sure anything got buttoned up.

Tuesday was our standard level 10. Now our meeting structure is and I love it. So it's we're first quarter testing it. But now on Tuesdays, we do a level 10, then we do sales, then we do a construction pulse meeting. On Fridays, we do finance.

We do the sales. We do construction pulse, and then we do an inventory meeting. So it's, like, from nine to one. And the inventory meeting now is just crossovers. Reply to inspection and then the TC on the front.

So getting the project started, getting it finished. That's all that is. So we broke everything out departmentally, which has been so much more effective. And then we got the team on Voxer and we broke our chats out by department. Mhmm.

And it's like I tell I mean, it's a new world. And then Arch and I are same page on Wednesdays. Gotcha. And Every week. Every week.

Cool. No matter what.

Steve: So

Ryan: So I I gotta call him after this.

Steve: That's fine. So, we should have him call him live. One question that, you know, I so I posted, you know, the, you know, 70 plus houses, 1.9 mil in gross profit. And I intentionally put gross profit in there. Right?

Yeah. Because not everyone knows what all these terms mean. So had someone actually messaged me, he's like, hey. Why are you pushing gross profit out there? Right.

And to which I responded because most people have no idea the difference.

Ryan: Mhmm.

Steve: And the ones that don't know the difference, we can educate them. Right. And the ones that do know the difference, they don't need to listen to the show. Right. Yeah.

That's totally fine. Like, it's a win win for everybody.

Ryan: Yep.

Steve: So, can you you elaborate, you know, the 1.9? That's gross profit from all the flips. Mhmm. What is the net profit after everything's said and done?

Ryan: So this is and and I think one of the one of the reasons too that I like, most people I know wouldn't be aren't even willing to talk about this stuff.

Steve: Right.

Ryan: It should be 750, $760,000.

Steve: Mhmm.

Ryan: Okay. Based on that 1.9, right around that 40 to 45% range. If you're running a fully stabilized operation, net profit based off your gross. For us this year, I told you we overscaled. We got we got we became inefficient.

And so it's going to be around 400 this year.

Steve: Yeah.

Ryan: So we left $300 on the table, about 50% of our, you know, profit. So as far as the gross, yeah, 1,900,000.0, it should break down to that $7.60 mark, $7.50 mark. But this should be off,

Steve: like, last year's metrics? Yeah. Based off, like, percentages

Ryan: of the

Steve: based off

Ryan: standards, you know, just based off, like, general standards. Right? So, like As a flipper, this is what you should make. Yeah. So for us, the goal is to run on 20% net profit based off of sales.

Mhmm. K. So if you're or to gross. Sorry. So if you're a if you're a $10,000,000 sale company, you do $22,000,000 gross, and you do around 7 to $800,000 net pretax.

That's pretty much the standard, to be safe. And you can become inefficient. Mhmm. Right? And then you'll be at 12 to 13% like us.

Steve: Right.

Ryan: So just based on the standards, that's that's what we set. We said, you know what? Let's be an awesome $10,000,000 company. We'll do 10,000,000 sales, do 2,000,000 gross, and we goal is to clear a million, to be really, really efficient. But, realistically, we knew where where our profit should be.

So so, yeah, that's what happened this year. And but next year, it's just like you're already looking at the board, and you and you everything that you learned that we learned and were taken through, like, you already look at everything and you're like, okay. We're back to normal, baby. Like like, it's okay. This is what I remember being like in 2017 and 2016, except for now, you got a full team under you.

Alright. So you have to go through that growth period, right, to get stabilized and then cut the fat, get your processes tight, and then you go back to profitability.

Steve: Yeah.

Ryan: But I don't think a lot of people push themselves to get to the other side.

Steve: Yeah. And that's kind of the conversation I was trying to have with him is that you can't net a million until you gross a million. Right. Right? Like, this is growth.

Right? So, I mean, these are metrics that we're tracking. But once once we gross a million, hey. Now we know the path to netting a million. Yeah.

But you can't net a million. You never grossed a million.

Ryan: Well, it's like you talk about, like, you know, getting from zero to a $100,000 a year net is really challenging. Going from 100,000 to a million is not that much harder. You take all of those foundations, you just turn the heat up and then you get there. But then there should say the gross, but then to get to a million net, it's a different ballgame, you know. So like for us, it was going from, you know, dollars 500,000 in sales or whatever to $3,000,000 to $5,000,000 to $10,000,000 But this year, we're actually like $13,700,000 So it was like getting all the way up there is totally different animal.

But now you've seen the other side of it. So you can say, what's the sweet spot? If you remove the ego of having to do all of this transactions and all of this stuff and you say, what do I need? What what what makes sense for this business from a risk standpoint, from a going gray standpoint? And for us now, we we know what that is.

It's around 40 to 50 flips, around 30 to 40 wholesales. And then we have the retail arm of our business, and we have the rental arm of our business. And now all that cash is out, then we can lend back to our business. So you're creating five profit centers off of one well oiled machine.

Steve: Right.

Ryan: That's the goal. But you have to go to the other side to understand that.

Steve: So you mentioned something there, the the retail side. What is so, like, you guys flip the house. Retail side. What is so, like, you guys flipped the house. Who's listing it?

Ryan: We are in house. So we

Steve: Ryan's name's on that list as listed.

Ryan: So, Aaron so I actually wanted off of it. So 201718, yes. It was me. Now it's Aaron in our office, but we're under the same brokerage, and we're at a 100% commission brokerage. So we pay him a salary, and then we have obviously a negotiated commission rate that he, gets paid through the brokerage.

So we save a lot of money there, but it all goes under him. So, like, he's a top 150 agent in the market now. Mhmm. You know? But it's mostly our sales.

Steve: So what are you paying him per flip? Because this is something I've encouraged other people that go down this road. Mhmm. Like, there's no reason to pay an agent 1% on every single flip. Like, it's Blasphemous is a broker.

I know it's terrible to say.

Ryan: Oh, yeah. But But

Steve: as an

Ryan: investor Yeah.

Steve: There's no reason to pay a person 1% on every single flip. Right. So what are you paying them?

Ryan: Half a percent. So so so he has a $50,000 base

Steve: Mhmm.

Ryan: Because he's handling his transaction he's handling his transaction coordination too. And then he gets paid a half a percent. Yeah. So it's gonna make that's good a bit of money. You know?

You make a lot of money. And and we want all of our guys to make, you know, to make great money

Steve: Yeah.

Ryan: And for it to make sense.

Steve: You know?

Ryan: But, yeah, half a percent. And if you look at it at the end of the day, like, that saves us, like, $200 a year.

Steve: Yeah.

Ryan: $250 a year.

Steve: So then you mentioned the the retail piece. You have a retail arm? I had no idea.

Ryan: Yeah. So but it's just him and I. Mhmm. So our goal was to do 15,000,000 in in retail between him and I, and we're gonna surpass that this year. I don't I don't really pay attention.

Yeah. I don't really pay attention to it that much, because he that's him. I want him to have that brand for himself. I want him to be successful there.

Steve: Yeah. And So he's getting like, he's talking to sellers Mhmm. To list their houses. He's going to listing appointments. Mhmm.

Ryan: Yep. Yeah. And we do a lot of referral too. So right now, because we got so stacked up with inventory, Aaron got totally bogged down. Mhmm.

So then we started referring out to a kid named Dave who's killing it too. So we're like, okay. How can we get everybody kinda under one and then really go attack attack the retail side of it? But it's just been like putting those pieces back together because we've built a brand as far as ourselves go Mhmm. On the retail side that we have great metrics when we sell.

But, it's been it's been interesting. We do a lot better, believe it or not. Well, maybe not. Believe it or not. We do a lot better when lead manager when Ryan's on the phone and these people want retail, he's, you know, connecting them over to Dave who's actually outside of our brokerage.

Steve: Mhmm.

Ryan: And getting the appointment, we have a lot higher closing ratio when he's outside of us than under our umbrella.

Steve: Interesting. Mhmm.

Ryan: It's real interesting.

Steve: So then the 1.9, that we talked about in the beginning of the show, that's outside of wholesaling.

Ryan: No. It's because, like, this year yeah. Mhmm. Yeah. We'll be around two one, two two after all is said and done.

Steve: In the wholesaling on top of the one? Yeah. Yeah. Okay.

Ryan: But, like, we weren't doing wholesaling before. It was one every couple of well, last year. So last year we did just we did 197,000 in wholesales by literally like it was like 10 or 11 deals calling and being like, Hey, I can't take this. Do you want it? Cool.

Go. And and so in June, when we transitioned to actually start pushing more, we have a couple really successful wholesalers in our market. And this was a big problem we ran into is that we built the brand as the guys that take everything down. And when you go and you start wholesaling, everybody's asking questions. Well, it must be crap.

There must be something wrong with it. They're not disclosing something. Blah blah blah. Mhmm. So we actually hid behind the successful wholesalers and negotiated 75, 25 splits in our favor that they would do our dispo.

We started killing it. These people were willing to pay $1,015,000 dollars over asking price for them because they're doing the dispo versus paying us under asking, you know, if we were doing it. So so for the last few months, we've got our feet under us and said, hey. Remember all these deals that you bought? Those are actually ours.

Right. And so now we've been pushing more stuff out. But, like, we did so, like, today, I actually told you today, we're closing our our biggest, assignment. It's $47,000,

Steve: which is,

Ryan: like, crazy. That's I think it was it's, like, more money on a wholesale and probably made on a flip this year. But we like, wholesaling in the last six months carried us through that real cash tight portion. I think we did, like I got obviously, I would look, but I know it's around $200,000 since June Yeah. That that we've done just wholesaling on the side.

And that carry that built the cash to to carry through until all that inventory closed out.

Steve: So knowing that you can make around the same wholesaling versus flipping, how do you stay excited about flipping?

Ryan: Well so this is perfect for my partner because I know he's like, go ahead. Answer answer this. It's because, you know, the construction side of the business for me is I I buy it. It pops out. Aaron sells it.

Mhmm. Like, I I

Steve: It's just this black box that you just kinda put this thing in and something comes out.

Ryan: It's a number on a spreadsheet. Right? And so flipping, obviously, is is exciting for me. The wholesale side is a lot of work for me because we don't have the dispo processes, and we don't, you know, we don't have we're we're we're babies in figuring this out. We know how to buy super deep and buy right, and automatically, you can sell deals easier that way.

Mhmm. But, building out those processes and re ramp up the marketing and opening up the buying criteria, it's like this whole new wave of things

Steve: Mhmm.

Ryan: That now I'm trying to learn on top. So why is wholesaling exciting? Well, to my partner, it's like, dude, you know, like I said, pull me out of the weeds and be like, dude, are we crazy? Like, what are we doing? Let's let's do, you know, 40 to 50 flips.

He's like, I don't even I will. They will be numbers and boxes for me at 40 to 50. Mhmm. Bob and Bill can handle that. I don't have to think about it.

But when we go above that, he's heavy in the weeds. And he's like, if I'm out, then I can help you on the wholesaling side, of of the business, and we can get this thing really fit So

Steve: he's the flipper, and he's more excited about the flipping or wholesaling.

Ryan: Yeah. And I'm like, let's flip it all. But I mean, it's hard to it's hard to turn down, you know, that that money.

Steve: Right. I mean, that's I see it, like, you know, a lot is that when you when wholesaling is working, like, why subject yourself to dealing with appraisers, dealing with inspections, dealing with a buyer's agent?

Ryan: Yeah. Yeah. It's all that. But two, it was a lot of so it's it's market preparation too. Okay?

Our goal from 2015 to 2019 was to put a couple million bucks in the bank, hope that the market shifted out, and we would have an exit machine that we could do whatever we want because everything that we're buying, we would keep. Mhmm. So when we can buy deeper again, then we'll buy it all. We'll keep it all. We'll have the cash to be able to still do the refis, and we'll have the money partnerships and all of these things, that we're not a one we're not a one trick pony that, like, if we were just wholesaling, well, that's all we got.

And we just spent the last four years figuring out how to build the best thing, thing, you know, little construction operation that we know how to build, to be able to do anything that we want. If we wanna go into if if everything craps the bed and we wanna go into commercial construction and fit outs, we could do that, and we can make a lot of money. You know, if we wanna wholesale or if we wanna buy around like like, we have options because we've stayed lean, and we have a really specific skill set.

Steve: Yeah. Bernard Mac wants to know how are you deciding which properties you're gonna rehab, which one you're gonna wholesale, and which ones are you keeping as a rental?

Ryan: So now it's, it was always very simple for us. If the house is built after 1950 and the numbers makes and the numbers make sense, like, we're buying it and we're rehabbing it. The obviously, obviously, you can tell we don't really think about it that much. Yeah. Because I gotta think about it.

Like, on the rental side, like, if I'm if we're $70.80 grand into a house and I can run it for 12 or $1,300 a month, we're gonna keep it. Like, if we can make the refi make sense or we can pull 15 out, still be leveraged well, have good $400 a month cash flow, we're keeping it. We don't do that very often, by the way, because we've been so heavily focused on the flip. Now, if it doesn't fit inside of our rehab box or if it fits inside of the criteria of the 1950, but the rehab is 50 or 60 or 70 and we have it really deep, we're gonna wholesale it. Mhmm.

Because what where we have transitioned is to more wholesaling, more just cleaning and Lighter rehab. Yeah. Like spot renovating. So our rehab numbers, like, I guess, in this case, but, like, our average is, like, 35, but now it's, like, 15 to 20. So we cut it in half.

So now it's like we just got we force ourselves to get really lazy. And and, like, force you have to force yourself to, like, try these new, like, tricks and sectors. You know?

Steve: I love it. That was, one of the biggest lessons I learned, in the coaching program, when I was back in Craig Proctor. It was that you need to spend as much time as possible trying to figure out how to be more lazy. I love it, and that's something that always stuck with me. And, you know, those of you that know me well know that I try to not do anything, so it works great.

Yeah. So then what is your biggest struggle today?

Ryan: The wholesaling. Like, learning how to be a wholesaler because

Steve: You were just in a room full of wholesalers.

Ryan: I know. And that that was awesome. I do appreciate that. And I'm and that's why I was saying, like, I I wanna spend the next two days that I'm here, like, being inside of these operations because I wanna learn, because we are the type of people that if you show me what you're doing and how to do it, I'm going home and I'm implementing. Mhmm.

So I do I I I wanna I wanna see that. But, yeah, it's it's definitely just I'm trying to think how to how to put this, like, what I consider a good deal. I'm extremely conservative. It's hard now looking at leads and saying someone will buy that. Mhmm.

It's a different it's the it's the opposite mindset of, yeah, put her under contract and see what happens. Mhmm. Because we put 66 houses under contract. We bought 65. And so it's a different mindset with that attrition rate.

And how how do you pitch that? And And, you know, do we put it under a different brand?

Steve: We close it. We don't we don't cancel.

Ryan: Right. So so that's so that's the thing where now we're we have such a specific niche of what we buy that pretty much everything that we wholesale is outside of that. Mhmm. And we don't wanna close on

Steve: it. Right.

Ryan: So we're like, okay. Let's set up a sister company. And then when people are calling us, now we're saying, you know what? This doesn't fit inside of this box, but we can help you move this property or we can you know, we have partners over here. Yeah.

We set up a sister company for this exact reason, and so we're we're working through that.

Steve: But they're not gonna call that sister company.

Ryan: No. They call they still call us. Mhmm. And now we're just shifting it and resetting expectations and and just framing properly because I believe in full disclosure and tell people what we're doing. You know?

Steve: 100% agree with that. What is your superpower?

Ryan: I I think, like, I I really think the integration and under deep understanding of how a flipping operation, like, works. Even though I I partially consider what we did a failure because it didn't come out as planned. There's a sick part of me. Right? But, I think I'm I think I'm really good at understanding how the way business should work Mhmm.

The way that it it it should look and being able to kinda build that out. I think I've grown into a a half decent leader. And just being, like I think integrity and honesty when when I get down to it is really, like, my superpower of just being, like, blatantly honest and being, like, this is what I wanna do. This is where I wanna go. This is how I wanted to look, and I would like you to come on board and and, just telling people, you know, kinda like, telling everybody how it is and also having that two way Street

Steve: Yeah.

Ryan: As a leader of, like, hold me accountable. Like, the only way I'm gonna hold you accountable is if you hold me accountable. And Yeah. So I think I've grown I think I've grown significantly, like, on that side of things, and that's what really excites me the most is, like, having people that that wanna follow you because you're good, you know, you're a good person. Yeah.

And, and that's just something that's helped us be really, you know, successful.

Steve: I wanna add one thing into the integrator. So, Ryan and I, we met for the first time in a mastermind, and you were the first presenter. And you gave, like, a lights up presentation. And you're like, I don't know if this is any good. I don't know what I'm supposed to do.

I guess, like, I I you know, hopefully, this is is a good enough presentation. Like and like I said, this is one of the best presentations I've ever seen. And I'm just sitting there thinking, I have to go after this guy. This is gonna

Ryan: suck. No.

Steve: So but, like, the the detail you had in your presentation, it it it was crazy to me.

Ryan: Yeah. And, like, and that's something that, like, I I I've been on I've been on the circuits. I've been on stages. Like, I I love speaking, and it's something that I really wanna, like, do more of. I wanna get on the events because, like, it's it's hard to feel like you know?

And this is why we're sitting at the table together. Like, being one of the few guys out there that's willing to lay it all out, good, bad wins, losses, and actually, like, help people. Like, I'll tell you where where we failed and how we came out of it and have the understanding enough of being able to explain those things. And, like, that's where I wanna I wanna go. I wanna get get back out on, you know, on stages and and be a part of these groups and, like, help people.

Steve: Yeah. It's appreciated. What's the greatest lesson you've learned?

Ryan: I told you not to ask me this question. I'm just kidding. Man, I a solider. No. No.

No. I'm just kidding. But, I it's just doing the work. Like, that I think that I learned very, very early on a couple of things that that were taught was that, like, you're not in the business of flipping houses. You're in the business of turning money.

So understanding that, this is a very, very long term game. Like, so many shortsighted people out there that, like, I'm in this because I'm in my mid twenties. I wanna be doing this game when I'm 70. So, like, every every decision that we make, whether it costs us money, whether it makes us whatever whatever it is. Like, I'm thinking about doing the right thing.

What is that? And so for me, it's do the right thing, have really good solid core values, like, think long term and, you know, just just understand that, like, this is a business. If you if you want it to be a business, so you have to think about it that way and, do the work. And there's no shortcuts. There's no game changers.

There's there's none of that. So Yeah. I'm sure we could go. I could spatter on, but those are those are a few.

Steve: And then is there a favorite best or most interesting failure?

Ryan: I mean, you know, we've lost we've lost money on quite a few houses, but,

Steve: That's gonna happen.

Ryan: Yeah. Yeah. Of course. If you're not if you haven't lost money on a house, you haven't done enough. But I I don't know, man.

I there's there's so many things that, like, we fail on on day to day basis that, like, you kinda become desensitized to it. Mhmm. But some of my some of my favorite ones were the multiple times that, like, when I was building out my own list. And I would go to copy and paste over, and the Excel sheet would jump a line. And, it would

Steve: be We've had this pain.

Ryan: And it's like, you know, you send it out, and you're, like, expecting all these phone calls, and all you get is the mailman showing up on your doorstep with a bin of 10,000 postcards. And you're like, oh my god. That was, like, $4, $3. That's happened more times than I typically care

Steve: to

Ryan: admit. So I try not to touch my list anymore. I mean, man, there's just there's so there's so many things that that, at the end of the day, we've probably done wrong. Yeah. But, like, those that's some of, like, my my favorite, like, funny ones.

You know?

Steve: Funny now.

Ryan: Yeah. Yeah.

Steve: Shane Hunt wants to know how has speaking and running a mastermind helped your business?

Ryan: I think I think putting yourself out there. Shane's my homie. He's actually he's coming into town, this week. We should, we should make sure we grab some dinner with him. I love this dude.

Good dude. So in 2000 I've always been putting our put myself out there on social media, but in, like, 2016, we really kinda started putting out there a lot and just showing the building of our business. I think from a credibility standpoint of laying it all out there the the whole entire time, like, people people know that, like, you're no like, they know I'm a no BS guy. I'm gonna tell you what I did wrong or what I did great. And, so having that credibility has raised me a buttload of private money.

Steve: Yeah.

Ryan: And just being out there with the connections. Like, I'm sitting here, and we were at lunch with, you know, five, six stud wholesalers that, like, I know I can give them value. They can help help me. It's gotten me into multiple mastermind circuits of guys that have, like we are so open to just being, like, tell me what I'm doing wrong Mhmm. And, so we can fix it faster.

Steve: Right.

Ryan: That it's put me in it's put me in a lot of the right rooms that have got me, you know, sitting here and being around all these just amazing people. So relationships, credibility, all of those things. And Yeah.

Steve: And I'll add to that. Right? Like, you know, before the podcast, like, who who who is Steve? You know, who is Steve Trang? Mhmm.

And I actually tried, and now a lot of people know about this. Like, I tried launching a coaching program actually a few years back. And I was killing it with PPC. Right? And I was trying to tell everyone, like, this is the way I'm doing it.

And, like, no one cared because, like, who is this Steve guy? But having this podcast has given me opportunities that I never would have even imagined. Right. So Yeah.

Ryan: Yeah. You just you have to put your you have to put yourself out there and let people know what you're doing.

Steve: Right.

Ryan: You know? And and it's it's we we're we're lucky because flipping houses is very interesting, right, to the general public.

Steve: Yeah.

Ryan: So, like, you you show a simple before and after of a of a flip and people, like, lose their minds, you know? And it was like I just started putting videos together and breaking things down. Like, this is what we're tracking. This is what we're doing. And it just kind of started you know, building from there and, just being willing to share.

You know, it's definitely like the the the relationships is awesome.

Steve: Is there a book that you've gifted more than any other?

Ryan: So many. But this year, The Dichotomy of Leadership by Jocko Wilk and Leif Babin, same thing with Extreme Ownership. The Dichotomy of Leadership, I've read that three times. Really? I I love everything about that book.

And just I think that I think growing as a leader and understanding, like, understanding how to do that, I think, is, like, it's now becoming to me one of the most important things, if not like like, not only, you know, we always say, like, mindset Mhmm. But, like, mindset and being a great leader, you can do whatever you want if you have the proper mindset and you're a good leader. But if if one of those things are missing, you know, then then you might, it might not work out.

Steve: Awesome. So I'm gonna let you think about, a last thought I'm gonna leave the listeners with, and I'm gonna make a couple of quick announcements. So guys, it's gonna be on this Friday. I'm gonna be in New Orleans with, Chris Rood for Skillathon, and I'm gonna be speaking there. So if you guys don't wanna check it out, go to bit.ly,bit.ly/2019skill.

And Max and I are still getting blown up about our workshop. We're still accepting applications. So if you wanna make twenty twenty a year, go to disruptors.com to see if the workshop will make sense for you. And next Wednesday, we got RJ Bates flying in from Dallas, Texas. So RJ went with Titanium Investments.

Big, big dog.

Ryan: The big dog.

Steve: Flipping in multiple Yeah. Multiple cities. So that's gonna be next Wednesday. I had to fly to Houston to get him to commit to come here.

Ryan: Why?

Steve: That's so difficult.

Ryan: He made you work. I came I came here.

Steve: I know. We just messaged on Instagram. Like, that guy, I had to chase him down in Houston.

Ryan: Oh, man.

Steve: Yeah. Alright. So, actually, before your last thoughts, Gary Harper says that you and, and your partner are some of the finest young men that he knows. So

Ryan: Likewise, Gary. I love you, brother.

Steve: That's big words coming from a guy like Gary. So last thoughts.

Ryan: I wanted to start the podcast off this way, but I'll end it this way. I get to sit here. I get to talk. But at the end of the day, there's 17 guys back home that Mhmm. Have made me be able to sit here.

Arch and I, yeah, we put the thing together, but they do the work every day, and and we love working alongside of those guys. One of my favorite things about this business is being able to and being a business owner is choosing who you get to work with.

Steve: A 100%.

Ryan: And, I've I freaking love our team. And it's cool, man. We have, like, a locker room back home. So first and foremost, I appreciate these guys more than they know. Secondly, if anybody's, you know, listened all the way through this, I appreciate that too.

And, yeah, I'm just I'm so I'm just so thankful to, like, be here every day, you know, from where I started, you know, six, seven years ago, what I've gone through and all of the amazing people that I've met that, like, if you just put yourself again, if you put yourself out there, if you have good intentions and goodwill, like, people will take care of you, and there's a lot of great people out here. Mhmm. And I've experienced so much of that, and so I'm just, you know, thankful.

Steve: Awesome. Thank you very much.

Ryan: Yeah, man.

Steve: Thank you guys for watching.