Vertically Integrating for Massive Gains with Brian Green

Brian Green: [0:00] On that 20 unit I mentioned earlier, one of the ones we got off the mailer, we ended up spending a million dollars of renovations on a 20 unit, maybe 1.1, and we bought it for 1.25. So we spent almost the same thing, 90% on renovations. Wow.

Mike DeHaan: [0:15] That's crazy.

Brian Green: [0:16] Multiple times we've brought the buildings down to zero occupancy. Wow. So we've relocated all the tenants. We would pay them moving fees and buy them out of the leases early. Yep. Just so we can do the construction faster. Mhmm. And we can kind of get through the whole building in less than a year, ten months maybe, re lease it out, and then recapitalize the income instead of trying to do it, you know, in phases or slowly Pull the Band Aid off. We just rip the

Dan Austin: [0:38] Band Aid off

Brian Green: [0:38] and do the whole thing.

Speaker 4: [0:40] Welcome to the Collecting Keys Real Estate Investing Podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [1:03] What's going on, guys? On this episode of the collecting keys real estate investing podcast, we have Brian Green from Saratoga Springs, New York, and he is like the master at vertical integration in his real estate investing business. And this guy, he is like, just doing so well. He basically started owning cell phone companies back in like the 90s. Right? Cell phone stores or Verizon stores back

Brian Green: [1:30] in the 90s when people

Mike DeHaan: [1:31] were still trying to figure

Brian Green: [1:32] out cell

Mike DeHaan: [1:32] phones, learned baseball business through that, got it into investing in multifamily properties, and has taken the knowledge that he's gotten in those first couple investments to vertically integrate basically tap on all these different other businesses onto his investments, to basically build a property management company and short term rental portfolio. He's doing ground up developments. He's doing redevelopments of different, you know, distressed properties and neighborhoods. Here's what I like it. What I like about it.

Dan Austin: [1:59] It's like he's doing really good, but he's not. Like, you can't tell he's doing really good because he's pretty humble. And he's crushing like, if you listen to what he's saying, he is crushing every piece of that vertical integration system. His property management company, I know he's crushing it. He's speaking the right terminology when he's talking about how he learned literally project management, like his company. Right? They they came together. They said we're gonna build things, and we need to do million dollar construction jobs. And so they went through, and now they have project management where his brother's running that for them, and they're doing these giant giant construction projects. Right? Wasn't a skill he learned slinging cell phones. So yeah, he's a studious guy who's learning how to do things at a very high level.

Mike DeHaan: [2:34] Yes. Yeah. And it's funny. And because, like you said, he's pretty soft spoken. He's relatively coy on sort of what he's built out. But sort of as we get halfway through to the end of the episode, he really starts to dive into the systems and the processes of how he's built it all out. And the stuff that he says, like, it's super brilliant. It's not rocket science. It's something that can easily easily be implemented in everyone's real estate business. So now a lot to glean from here. Super, super great episode. And hope you guys enjoy it. So anyways, guys, if you want to learn how to start generating off market leads like Dan and I do, and like Brian does, spoiler alert, he also uses direct mail to find a lot of his deals just like Dan and

Dan Austin: [3:11] I do find 20 unit apartment complexes with it

Mike DeHaan: [3:13] high 20. Yeah, find like big deals, all just through direct mail, not crazy stuff. But if you wanna know how to get started with that, you can go to collectingkeyspodcast.com/free, and you can get your five step guide to start generating off market leads. And it's the list two weeks. Definitely go check that out. Aside from that, you guys, leave us a five star review regularly to your podcast, and enjoy this really awesome show with Brian Green. Hey, guys. We are here with Brian Green out of Saratoga, New York, who is a ground up developer of multifamily properties, and you're doing a lot of things I've seen on social media. So I guess for people who don't know who you are, don't know all the stuff that you have your hands in, what's that look like and and where you're from?

Brian Green: [3:58] Yeah. So like you said, I'm from Saratoga Springs, New York. We're about three hours north of New York City. We started buying real estate 2015. You know, it was kind of a transition time for me around that time. That was right after I was leaving my old business. I used to be in retail prior to that, if you can believe it or not. I used to own, Verizon Wireless stores. I did that for ten, twelve years right out of college, sold them all off in 2014, and then just began buying small multifamily properties. And from that point today, we've kind of turned it into me doing it myself and doing a little bit of everything to my brother and I now being partners. We have, just north of 100 total rental units. We're in ground up development, as you stated, redevelopment of existing multifamily properties, short term rentals. I'm a broker also. So we kind of kind of have our hands in a lot of different places, but everything we do is vertically integrated.

Mike DeHaan: [4:52] Okay. Sweet. That's smart. So first of I'll take a quick step back. So you had you're running Verizon stores, you owned them right out of college. Yeah. I didn't even know that people could do that,

Dan Austin: [5:00] like how does that work?

Brian Green: [5:01] I'd love to pull the thread on this one. Yeah. Let's hear this. So like half of the stores that you might see, it's probably more than that now, because Verizon, the national corporation has been divesting a lot of their stores, because, you know, the I mean, having a retail store at this point is kind of a loss leader for them, So a lot of the stores are privately owned, and when I was out of college, I started working for a guy that was a retired executive with Verizon, and he had a paging company back then. This was in the mid to late nineties. Nice. So he helped myself and my brother kind of start into the cellular industry. My brother actually went on to own and operate Sprint stores, and I went on to do Verizon Wireless stores. Oh. We kind of did that successfully for ten, fifteen years until, like I said, I sold my branch off. He continued to operate his Sprint stores and I got into real estate. So that's kind of the That is fascinating.

Mike DeHaan: [5:52] Why did you choose like the ultimate like rival? You're like, well you're Horizon versus Sprint. We didn't have a natural rivalry as brothers. At that point, it

Brian Green: [6:00] was kind of, you know, we weren't officially working together within the same business, but we definitely were helping each other. So we just figured, you know, those were the two most popular at the time. Actually, that time, Sprint was by far the most popular in the nineties. Sure, yep. And then it kind of transitioned while we were already owners, so we were actually, you know, we had the kind of the mindset where it didn't really matter which of our stores they came to, as long as they were going to one of us, right? Satisfied at one, they could go to the other, and we just were trying to corner the market in that way, and we just loosely kinda helped each other over time, and it just it just kinda worked out. But it did change at the end where Verizon was a valuable brand that we were able to sell off, and you know, turned into something else, and it kinda wound down over time.

Mike DeHaan: [6:43] Right.

Brian Green: [6:43] So seeing kinda see how that transitions through the to the years that we own them. Yeah. Fascinating.

Mike DeHaan: [6:48] Yeah. I guess I guess, you know, in the nineties, you were like an early adopter with them at that point then as

Brian Green: [6:52] well. Yeah.

Mike DeHaan: [6:53] So, you know, I think it was probably a little different. Because I I imagine that a college kid today couldn't just go and open a, like, a Verizon store and be an owner.

Brian Green: [7:02] No. And and to be truthful, I wouldn't be able to either. So I never would never able to do it without our business mentor that had experience with him. He literally knew everyone that was with Verizon in our region. He had hired most of them, and he funded me to get started, and he helped me get my contract with Verizon.

Mike DeHaan: [7:19] So Oh, man. How did

Dan Austin: [7:20] you find him? Was it like you just applied for a job or what?

Brian Green: [7:23] No. No. No. So it's even stranger than that. So my brother and I both played college football, and she came into our team meeting and was looking for people to work seasonally over the summer to help him support his paging business. Yep. And we, I know, we had probably had 80 guys on the team, and the only one in the room that volunteered to work for him for the summer doing like, this is like fairs, like the county fair, and like, we'd have a table for like pagers, and only one that volunteered was my brother. He was the only one that volunteered to go work for this guy, and then so he got started, and then, like, the next year after, because he's a couple years older than I am, I went and started working with him in the stores, and that's kinda how it got started, but it was just a random he came and asked the team for help, and he's the only guy that wanted to work. As you add, rose

Dan Austin: [8:06] your hand. Wow. So wait, what position did you play?

Brian Green: [8:08] Outside linebacker. Oh, oh, so

Dan Austin: [8:10] you're you're bigger than you look on camera then. You're a big guy.

Mike DeHaan: [8:13] No. I'm smaller than you used.

Brian Green: [8:15] Oh, yeah.

Mike DeHaan: [8:16] He moved some weight, though. I've seen him throwing some some barbells around

Brian Green: [8:18] Yeah. On Yeah. I still have that part of it in me, but, yeah, no. I definitely

Mike DeHaan: [8:22] So why does he come to, like, a college? Is that, like, how, you know, they're like, oh, we have Scottie Pippin here to try and, like, sell cars? Was that we're gonna go to, like, Sarah where where'd you go to school? Saratoga? I was at Saratoga Community College, but be super insulting.

Brian Green: [8:34] I went to University of Albany. Yeah. University of Albany. Okay. He Okay. He came in, I think, because well, he was retired military. He had a great deal of success hiring veterans and athletes. Right? So

Dan Austin: [8:46] he I agree.

Brian Green: [8:46] Yeah. Speak to the football team because he he thought that that was a good source of talent for, you know, the salespeople he was looking for. You know, honest, responsible, disciplined, that, you know, that whole kind of mantra. So that's like Subservient. Subservient. Yeah. Yeah. That's right. Respect authority. Right? Yeah. Well,

Dan Austin: [9:04] it's some and some local fame probably too as a college athlete. I mean, nowadays, like, you know, Mike and I are hometown. If you're a Gonzaga basketball player, I mean, now they get paid to do these advertisements, but they're local heroes. Right? So there's probably some of that too.

Brian Green: [9:18] Yeah. Yeah. I'm from Syracuse originally, so same kind of thing there.

Dan Austin: [9:20] Yep. Oh, yeah. There you go. Yeah. Yeah. You get it.

Mike DeHaan: [9:23] Yeah. I bet I bet football, like, team sports especially makes sense. You're not gonna go hire, like, the number one, like, single men's tennis player for that job. Gonna be a prick to all the people that are trying to pager.

Dan Austin: [9:33] He's gonna

Brian Green: [9:33] be a t player. Yeah. I said, wants to have a freelancer. Right? He's gonna do his own thing.

Mike DeHaan: [9:37] Exactly. Yeah. Yeah. You invite Rafael Nadal, you know, to come and run your pager company. He's gonna have you out of a job pretty quickly when he takes over.

Dan Austin: [9:45] Cell phones made sure your pager company was obsolete too, so.

Brian Green: [9:48] Right. About pagers.

Dan Austin: [9:50] I haven't talked about pagers in a long time. Nice.

Mike DeHaan: [9:52] Yeah. That's that's cool though. So so you built that up and you're able to sell out. So that basically give you like a little bit of a nest egg to start getting into the real estate world. Because that's always the number one Mhmm. Thing I think that everyone struggles with who wants to get involved in real estate, especially with larger assets is the capital problem, you know. And like you either have to do, you know, kinda like what Dan and I did, where we ground out the capital issue, we flipped houses, you know, we do that sort of stuff to build it up, or you have to have, you know, a rich partner, which is basically willing to fund the money. Yeah. Or you have to have like some sort of lucky event in your life that gives you the capital to do that, or you have to have high paying job. Yeah. So it sounds like this is what that was for you, though.

Brian Green: [10:32] Completely agree with what you just said. And I did start off with a bit of an unfair advantage because I had my own capital. Mhmm. But I kind of see that as a double edged sword, right? Because when you have the money, it can be too easy, right, so you might make mistakes.

Dan Austin: [10:46] Mhmm. Totally.

Brian Green: [10:47] You know, just because you have the money doesn't mean you know what you're doing, and like, you know, the first couple, it did allow me to trial by error, like I bought my first place all cash, didn't know what I was doing, right? I felt like I definitely should have financed that, so then like three months later when I figured out I should have financed it, I went back and refinanced it and got my money back. Nice. You know, so you and then the first made the second or third one, I know I overpaid for a property that I still own today, and it kind of worked out with time like most real estate does, but I had the ammunition in the bank that would allow me to kinda make my own mistakes and figure it out. Yeah.

Mike DeHaan: [11:18] Yeah. Oh, sorry. Was say, you say you have an unfair advantage, but that's just part of playing the game. I mean, you did your time. Right. It's not like, you know, you had a bag of gold that like just showed up on your doorstep Yeah. One

Brian Green: [11:29] There's

Dan Austin: [11:30] some rubber cops dancing around it.

Mike DeHaan: [11:31] Yeah. Or or you have like daddy's, you know, $100,000,000 trust fund that just go and

Brian Green: [11:35] lean Yeah. Taxes Yeah. We earned it from the business. Yeah. Know, it wasn't like an inheritance or something like that.

Mike DeHaan: [11:41] Yeah. So give give credit words to you there. Yep. Sure.

Dan Austin: [11:43] The question I have, Brian, is is what made you pivot to real estate? So you sold out, you had your pot of gold from your business, you could have done anything with it. Real estate, like Mike said, is, you know, capital intensive. It's not always easy either, like what in real estate made you say, that's where I'm going next?

Brian Green: [11:59] I so let's see, I sold my stores at the end of November, and by March, I was buying my first small multi property family. Mhmm. So I spent three or four months trying to figure out what I wanted to do, just reading, listening to podcasts, and real estate made sense to me. I'm also a guy that has never really worked for anybody else, not since high school, or very early on when I started working at the paging store. So I knew I was not gonna go get a corporate job. I mean, I I had gone back and got my MBA at night. I could have easily done that track, but there was no way I was gonna do that. It just doesn't fit my personality, doesn't fit my life goals, any of that stuff. So real estate I saw is a way that I could run the numbers, figure out each property, kind of build my own property management company and just kind of go from there. And that's exactly what we did. Nice.

Mike DeHaan: [12:46] Perfect. Yeah. So I guess as you got out of that found, you started buying properties. What what period of time was that? 2000 what years? '15. 2015. Oh, so pretty recent. Okay. Yep. So, I mean, back then, you were just going mostly through brokers, I guess, to find stuff. Like, many I guess, when you got started, what was that process like for people? That's also the second thing that people always ask, especially with how the market's been the past couple years, is how do you get started finding properties? Where were you finding your deals? Yep. And, you know, like, how did you sort of grow, especially if you parked all your cash in one, must have taken you a little while to

Brian Green: [13:21] Yeah.

Mike DeHaan: [13:22] Figure out the next steps after that.

Brian Green: [13:23] So at first, I, was working with an agent that was referred to by a a friend. And, you know, I didn't really know if he was an investor friendly agent or not, but he did take the time to go around and show me some properties. So he was able to just set me up on his automatic feed, and I was analyzing properties on my own, just through the education that I had acquired in my background, my degree is in finance, so I'm very comfortable with spreadsheets and all that kind of stuff, so my underwriting was fine. So a lot of the leads early on came from him, and then I think by the time it was two years in in '17, I got my own age I became an agent myself, and then in '19, I became a broker. So over time, I just kinda took that role over myself, But we also started doing direct mail to owners in I think I saw my first wave of letters in, like, end of sixteen or '17. And surprisingly enough, it's been pretty successful. I got a six, my first one was a six unit building, 70 year old woman owned it, she was moving to Florida, she was self managing it, so you know, I got, and then later on, I got a 20 unit here in town, and then just recently last year, we got another 20 units. So we still continue to do mallers is their hit or miss, but sometimes they come in good.

Mike DeHaan: [14:34] Can you say that a little bit louder? Because that because that's our MO to our main, our main businesses where we have a wholesale business on the residential side. And, you know, we have like a group coaching program that we do as well, instant investor programming. We always teach direct mail because Dan and I, we've done well over 100 deals over the last few years, just off of mailers. And everyone's always a skeptic. Always. But it does work, and when it does work, the people that come through, they're always motivated because they chose to reach out to you.

Brian Green: [15:01] Yep. Sure. That's a

Mike DeHaan: [15:02] much better yeah. It's a much better conversation than ruining family's dinners with phone calling and text messages all

Brian Green: [15:07] the time. Yeah. And I'm sure you guys find the same thing too. Right? You'll have people call you that might have had your letter four years ago and they saved it. Yes. Absolutely. I I got some letters about that. It wasn't ready to sell, but now I'm thinking about it. Are you still interested? It's like, of course. Yep. Yes. I think what you said, Mike, that was correct, and I think a lot of people overlook it or you know why? Because it's boring. Right? It's boring. It's impossible. It's slow paced, but that, in reality, is exactly what real estate is and what it's supposed

Mike DeHaan: [15:33] to be. It's a long game. Right? Like Right.

Brian Green: [15:35] You have to do those little tiny tedious tasks over time, and then eventually, if one pays off a year, it's worth all the letters you sent out.

Mike DeHaan: [15:43] Hell yeah. Exactly. And a lot of people too, they don't like it because they're like, I can't believe someone would call you off this letter. Like, would never do that. You know, what but like, I don't know. Does do you do you look at like the REI catalog that comes in? Yeah. It's like the same thing. Like that is meeting your interest and your need at the time. Right.

Brian Green: [16:00] That's right. Yeah. But Yeah. It's kind of I mean, plus for me, we're so targeted geographically that we only we only really buy in like our own area, so like when I really narrow down the list from PropStream or or wherever, the actual buildings I wanna buy, I mean, you were talking about like four or 500 buildings, like. Yeah.

Dan Austin: [16:19] So you could just mail them consistently. I don't

Brian Green: [16:20] if it's in now at 500 letters, and it's I just use an online resource to do it. It takes me three seconds. It costs like $200, and I can just do it every couple months and change the letter format. Like, it's not gonna be that difficult.

Dan Austin: [16:32] I love that. It's like you're automating it. Right? And, like, the next thing you know, you you get a 20 unit, and a lot of people I would mail I would personally mail somebody for a full year every single month if I could buy a 20 unit out of it. Yes. 100%. Absolutely awesome.

Brian Green: [16:45] Yeah. And and now from those mailers, let's see, the six unit is worth over 700,000. The 20 unit is worth 4,000,000, and the other 20 unit is gonna be worth 2,000,000. So like There you go. Those properties, I was able to fully burr out of them.

Dan Austin: [17:01] So I had no money into them. That was awesome.

Mike DeHaan: [17:05] That's great, right? And people too, is they always just look at the sunk cost of the marketing because they're skeptics to it, especially if they're new. And they're like, know, I I wanna spend, you know, 2,000, 3,000, $5,000 on these letters. Right? And, you know, especially because most people are going for, high volume stuff. They wanna wholesale. They wanna build a large portfolio, whatever. And they're like, well, you know, that money's going out, and they don't feel like it's coming back. But kinda like you said before, it's all about the boring repeat actions. Sure. You spend that $5,000 a month over a year, two years. Your $100,000 into your marketing all said and done. But you've been able to buy $10,000,000 worth of assets. Who really cares at that point? Such a small line item. Yep. And the upside that you have With zero money left. Yeah. Exactly. But the upside is so exponential, and it's just really important. So Yeah. You so that's great. So you worked with a broker. You started sending letters. You still send letters. Yep. And then, I guess, how long did you do that before you started getting into the the ground up development, the redevelopment?

Brian Green: [18:02] Our positioning from maybe after, like, the first couple of properties that I bought at since then in Ford, it's always been major renovations. That was the only way I could kind of make the numbers work because I started caring less about what the property is worth now versus how much it's gonna be worth when I'm done with it. Uh-huh. So then I was able to make offers based on that after repair value and make sure that it met my financial criteria. We started I doing mean, I bought a three unit, and, you know, we spent we we would spend literally as much on renovation as we did on the building. Wow. And then we on that 20 unit I mentioned earlier, one of the ones we got off the mailer, we we ended up spending a million dollars in renovations on a 20 unit, maybe 1.1, and we bought it for 1.25. So we spent almost the same thing, 90% on renovations. Wow, that's crazy. And we would, multiple times we've brought the buildings down to zero occupancy. So we've Wow. Relocated all the tenants, and we would pay them moving fees and buy them out of the leases early, just so we can do the construction faster. Mhmm. We can kind of get through the whole building in less than a year, ten months, maybe, re lease it out, and then recapitalize the income instead of trying to do it, you know, in phases or slowly. Right.

Brian Green: [19:16] Week, know, one time

Dan Austin: [19:16] Pull the band aid off.

Brian Green: [19:17] We just rip the band aid off and do the whole thing.

Dan Austin: [19:19] Wow. So how did you that's a big task. You know, you said you bought a couple properties, but then you got into this major rental stuff. Like, how did you make that leap to, now I'm basically running a construction company? Because when you're doing a 20 unit building, and your rental budget's a million bucks, that's a full on construction operation. Like, how did you gain that expertise, or where did you go? Like, what was the resources that got you to that point?

Brian Green: [19:41] To be honest, it was just we kinda just figured it out. Wow. I'm an avid reader, so I read all the time. None of it, though, has to do with projects, management, or construction. Right? It's all business books, real estate books, but we've run successful businesses, my brother and myself, so we know how to manage people. So on that on that specific deal, my brother had already come on now as a partner. He came on in the end of two thousand eighteen, I believe. So this was literally, like, his first property that we were doing together was this huge renovation, and he's in charge. He's technically our project manager. So he was in charge of managing all the contractors and all the subs and overseeing the budget on that. So it was kind of just trial by fire, but we Try by fire. We figured it out, and we we got through it. That also coincided with COVID. So we were doing renovations during COVID. Yeah. And then in New York State, they're a little crazy sometimes. So, like, we literally had we were only allowed to have one contractor in the building at a time. Oh my gosh. What

Dan Austin: [20:38] person in the building?

Brian Green: [20:40] What person? So, thankfully Wow. The the complex is five four unit buildings all in a row. We were

Mike DeHaan: [20:45] able to have

Brian Green: [20:45] one guy in each building at any given time in order to meet their COVID restrictions. Wow.

Mike DeHaan: [20:51] Yeah, that's fine. That's tough with multifamily. So we had similar rules out here in Washington. Yeah. But so so what you would see is if you're like doing like a flip, they would have like, you can only have one contractor there, you can't do any work. So you would have this group of like roofers, you know, and they would just be like, oh, yeah, we all own this house, we live in it together. You know, you can't prove us wrong. We're like, so we're allowed to be here.

Brian Green: [21:12] We're just working on roof. Just our own house. Jeez.

Mike DeHaan: [21:15] Me and

Brian Green: [21:16] mother all outside, right? So like zero rabbit. I know. Exactly.

Dan Austin: [21:20] Wow. So when you talk about that, that's you make it sound like it was you just kinda did it, but when you were making those offers too, because you hadn't maybe done a million dollar rehab and you're saying you're basing off ARV, did you use any tools or did you get any help to say, hey, I'm only gonna pay 1.1 for this property because of my budget's gonna be this big. Did you have any clue or were you just kind of, you know, checking the win and saying, I think it's a million bucks?

Brian Green: [21:45] No. The the number side of it, I'm always on point with. So I I knew based on our our former renovations and other properties, and I got basically soft bins from some of the contractors we were working with, so I I knew what it was gonna cost, and we already had

Dan Austin: [21:59] per door or per square

Brian Green: [22:01] foot type. We already had our vendors, so, you know, I was able to calculate out square footage and how much flooring we're gonna need, and we're replacing windows and siding and roofs and everything. So we and we got a lot of those quotes from contractors while we're under contracts, so we kinda knew going in. Nice. I do think, though, that our our original budget was supposed to be, like, $8.50, and we turned into, like, a million 50, but also simultaneously, which often happens because I'm very conservative on pro form a rents. I think I was expecting that we're gonna rent them out. These started off when we bought it at, like, $750 a unit. And keep in mind, the median in my market for two bedroom is closer to 2,000. So this is, like Gosh. C type buildings, but in like a b location is what it was. So I think we were underwriting to get the rents to like 1,050, 1,100 after renovation, and they actually ended up being like $12.50. Oh, right on. So it really didn't matter. It made up for the over expenditure on the budget. Yeah. But your NOI was so much higher. That's right. Yep. So I did know how much I wanted to offer. I had talked to this guy for a year through Mallers and just so we negotiated the price down, and and it worked out.

Brian Green: [23:06] But I always know the math. Or, again, the math is it's For

Dan Austin: [23:09] a year. Yeah. So how what was your follow-up for a year? Was it, like, every month you just checked in with him or you

Mike DeHaan: [23:14] sent him another letter, he

Dan Austin: [23:15] called you, he's you know, what would that follow? Because that's that is so huge right there. I think

Brian Green: [23:19] it turned into three or four different offers that he either turned down, or I wouldn't go up as high as he wanted me to, and then in the end, which is funny, and this has happened before, he actually ended up listing it with a broker to sell it. But since we he and I had been talking for a year, he and I made a gentleman's agreement that, okay, I'm gonna list it with the broker, but I'm gonna let you see it before it goes live. And if you can match the price, then it's yours. I said, alright, fine. So basically, he gave me first right of refusal when you didn't have to. Though the broker got it, and he was like, alright, you got forty eight hours, and this is the price. The price was literally $50,000 more than I had offered him. I'm like You're like,

Dan Austin: [23:56] alright, let's do this.

Brian Green: [23:57] And keep in mind, I'm a broker, so I'm getting back two and a half percent commission anyway, so I'm like, it's basically Oh the same

Dan Austin: [24:02] my goodness. Why did we do this? I love that though. Speaks to the Rapport Building, and how Mike and I always appreciate how important that is to have that relationship with the seller,

Mike DeHaan: [24:11] because he, like you said,

Dan Austin: [24:12] he gave you first rider feels when you didn't have to, and it sounds like it was a sweet deal for you that you landed where you wanted to anyways.

Brian Green: [24:18] Yeah. Or I mean, within a percent, and at some point on a 1% of a huge deal like that. So Absolutely. Ended the contract immediately, and then and then we were off off from there. Nice.

Mike DeHaan: [24:29] That's awesome. Going back to your your renos, one of thing I wanted to ask is, you know, you have all those moving parts, you get all the bids and all those sort stuff. How do you manage all of that? Like, do you have some sort of system that you use to sort of process? Do have like a, I don't know, a web platform that you use? So, like I

Brian Green: [24:46] said, now, my brother's in charge of that division of our company. So he's the project manager. We've recently brought on a project coordinator who works with him. And in the last six months or so, we've really started narrowing down our systems for construction, whereas before, we were very excellent at just property management, because we self But manage that's only because I've started, I was starting to do that in 2015. So we had like a five year runway. And now we have a property manager also that separate, but all those systems were in place that we didn't have in the construction side. So in the last six months, he and his project coordinator, they built out all kinds of construction timelines using Gantt charts, and now we're working through, like, budgeting models, and they're getting it down so they have scopes of work written out for each part of the apartment. Like, they'll have one scope of work that we use for kitchens and one for bathrooms, and this is exactly how we want it. So we're trying to make it extremely defined so that when we go out to get bids, they the contractors know exactly what they're bidding on, and we can kind of compare one quote against another apples to apples. Whereas before, we were kind of vague on the couple of work.

Brian Green: [25:50] We knew what we wanted, but the contractor doesn't know what we're thinking, right, so they're giving us bids, but one guy's thinking one thing, and one guy's thinking another thing, so there was an incongruency So we're we're in a constant evolution of systematizing our our construction. I love what you're saying there,

Dan Austin: [26:05] because one thing I do know about contractors, especially on the commercial side, they make most of their profit on the change orders. And so when you're talking about having a clear scope of work and everybody knows from the beginning what you actually want, there's less room for them to say, oh, no, no, no, that's a change order. That's a change order, bud. You didn't spell that out, even though what was unsaid didn't need to be said, you say it, so they can't come back and change order you.

Brian Green: [26:28] Yeah. Mean, a change order is really just an excuse for a contractor normally to increase their price. Right? Yep. Absolutely. They knew what they were supposed to do in the first place, but it's not written on the piece of paper, so now I'm gonna charge you them $3,000 Yep. Sell it, the better off you are at rating your contracts and your scope of work, you get rewarded in that you get the price that you want, right? Right. And I guess for the contractor, maybe he's making a little bit less. But if he knows exactly what he's doing, he can get through it faster. And he makes up for it for sure.

Mike DeHaan: [26:52] And I think that's a good lesson too for like residential people, because you can take that same principle and take it towards a residential house, you know, like, and and I think that's where a lot of people get bit. They have a contractor that shows up. The guy, you know, he's a, like, a high school dropout who's, like, super smooth talking, you know, like, do the whole things like, yeah, we're gonna do this. We're gonna do this. Yeah. And then the people don't even necessarily know that the person, you know, the customer isn't have their best interest in mind necessarily

Dan Austin: [27:19] Right.

Mike DeHaan: [27:20] Or isn't even listening to what they're saying. Because all he's thinking is how can I get in and out of this project for as quick as cheap as possible?

Brian Green: [27:26] We're gonna make as much profit.

Mike DeHaan: [27:28] Yeah. Exactly. Especially on the residential space. I think in the multifamily space, it might be a little bit different because, you know, higher price point, like, more room for the contractor to bring in experienced people. When you're doing like a kitchen, it's the difference between the guys off the streets or like a sophisticated company can be pretty extensive in cost, but not that different in like process. Sure. Right? And you say it's hard to tell them apart when they're next to each other potentially. Yeah. But if you have that scope of work that you've built out about exactly what you want the kitchen to look like, you know what countertops you want, you know what kind of cabinets you want, you know exactly what you want the, you know, the the demolition process to look like, you're gonna come out much better than if you're just like, trusting it to a contractor that like, promised you that they were gonna do a good job, and then asked for 75% up front, which for some reason you gave for them, then you never see them. You never see them again.

Brian Green: [28:21] Exactly. Yeah. Yeah. The other thing that helps with too, just to to build on to that is, I'm still the one that's doing underwriting, so the better we have our scope awards for the contracting side of things, I have better estimates on what it's gonna be for renovation, right? So my numbers can be more defined when I'm making offers, versus me saying, okay, that's, yeah, 20,000 a unit, that looks close enough, and let's just go with that and punch it into the spreadsheet. Now we're we're working to the point where we know exactly how much it's gonna cost. That's great. But within 5% margin of error, so it makes us allow it allows us to be more competitive on our offers. Yeah. It's a

Dan Austin: [28:53] lot less stressful on your part once you do get something under contract, because if you are experienced at 20% swing in all of your project costs, you're not gonna as of the underwriter, you're not gonna be super comfortable. Right. The whole time, you're gonna be like, oh god, are we gonna be under 20 or over 20?

Brian Green: [29:06] Where are we That's right, yeah.

Mike DeHaan: [29:08] So I guess to stay on the systems really quick, I think that's super good value for people. Absolutely. And this is a selfish question, what are your systems like for property management? Right,

Dan Austin: [29:16] we could use some help there.

Mike DeHaan: [29:18] Yeah, so we have 48 units that we own across. It's pretty geographically dispersed around the area, so it's kind of a pain in the ass to deal with. Yep. And we have by the time this episode comes out, we'll probably have fired our current property manager. Sorry if you're listening to this, but that's

Brian Green: [29:33] the reality. Yep. It's just been

Mike DeHaan: [29:35] a constant problem. You know, we've been doing this for years. We've tried to bring people in house. We've tried to, you know, outsource it, and it just always sucks. Exactly. So what's your secret?

Brian Green: [29:44] So I I used to do it myself, and now, like I said, we have a property manager that works for us. She actually started off doing just doing showings for us. But I always tell her whenever we got to get into a spot now where things are going sideways or we have a problem, it's almost almost always because we did we made an exception. So, like, I always tell exceptions are the death of property management. We cannot make exceptions. So we have strict tenancy standards. Right? So, like, if they don't check all the boxes as a applicant, they don't get approved. There is no, like, the story sounds good. I think they're honest. Like, the numbers are either there and the background is there and the landlord reference is there or it's not. And we kind of tweak those standards over time. So a lot of the work is on the front end with bringing in the right tenants. I've been doing this for seven years, and I've never evicted a single tenant that I chose. My love that. That's awesome. Okay. So the only people that we've had to evict are or threatened eviction are holdover tenants from properties we bought from other landlords who did not have a system and had terrible amends. So that's one thing. So on the front end, lots and lots of time on screening of the applicants.

Brian Green: [30:50] And then when they're in the building, we have they're basically already well versed on what is required of them, how the systems work. Like, if they submitted a maintenance request and it's not done through AppFolio, we tell them to go into AppFolio and submit the request, so it's like, you know, you gotta teach them what to do at first, and then we kind of have our system and everyone buys in, and and that's how we go forward. But, know, same thing with, you know, late fees. We in New York, we can't charge a late fee until the fifth of the month. There's like an automatic five day grace period. So but we always charge no matter what. Like, doesn't matter what the story is, doesn't matter what circumstances are, boom, here's your late fee. We're delivering the papers just like, you know, in person service like we're supposed to, and like, this is the process, and everyone knows it. So I think that's the biggest thing. It's like, don't make exceptions, don't cut corners, just follow the process.

Mike DeHaan: [31:37] Yeah. I think that's huge. So what's your portfolio size right now?

Brian Green: [31:40] We have just over a 100 Over a 100 units. Spreads across 13 different buildings, and we have everything from the original buildings I bought, we're like three and four units, the largest we have is we have two twenty unit buildings, and we have an 18 unit building, And then where we're our ground up development that we're in process right now is gonna be 36 units, as well as somewhere between six to eight condos.

Mike DeHaan: [32:04] Wow. Okay. So and then your property manager that works for you, do you pay them like a salary, or is it like a percentage of gross rents, like a typical property manager?

Brian Green: [32:12] So currently, she's on a salary, we kind of established She actually just became our first official employee this year, so we got through having an employee. Oh, W two. She was an independent contractor prior to that, but now it's just to the point where she's full time and she's part of our management team, so she needed to be an employee. So we pay her a flat salary, but she does make profit sharing the management of our short term rentals that she manages. Oh,

Mike DeHaan: [32:38] be that's

Brian Green: [32:38] great. Looking at percent of the total sales on our short term.

Dan Austin: [32:42] Gotcha. That's pretty cool that she's able to do all of that because we, I guess, technically, just in our business have three property different property managers. One specifically to our short term rentals. Mhmm. Because they are harder to manage, and typical property managers can't manage them. Their systems aren't set up, and I feel for them because their long term systems are totally different than short term systems. There is crossover, but the speed at which you have to operate on short term rentals is so much different.

Brian Green: [33:10] Yeah. We just kinda basically built all that out this year. We didn't have a short term rental until June was our first one, and now we have four with the fifth one coming online in the next sixty days. Wow. What we're doing is short term rentals inside of our multifamily buildings, so we the might goal is to have at least the properties we have that are in the town of Saratoga because it's a very it's a big forest y town. We have the oldest horse racing track in the country, so, in the in the summer, all the thoroughbreds come here from Kentucky and all over the country to race. Oh. So we have, you know, a huge influx of tourism. So our Airbnb business in the summer is is great. So we just started building that out over the summer season and now into the fall where we're doing midterm rentals, but we've we're in that constant process now. We're trying to figure it out as we go. Right. And actually, we're confident enough at this point in the short term that we're gonna start taking on new clients the first time we're managing for other people starting next In the short term business? Only short term, not long Just because, well, as you know, I mean, the revenue and the profit you can generate from energy short terms is far greater than than long term.

Dan Austin: [34:11] Oh, Yeah. Usually, we're getting hit with 20% for a lot of people is what they want.

Mike DeHaan: [34:16] And also, too, the short term market is inundated with people who don't know what the hell they're doing, but they just wanna be able to, like, travel to Europe after they bought three short term rental properties.

Brian Green: [34:24] Yeah. That's

Dan Austin: [34:24] right. But I yeah. I would imagine there's some opportunity for you to mark up your other services. So say you're just doing a flat 20% plus, then you might be able to mark up your cleaning. You might be able to mark up your maintenance a

Brian Green: [34:34] little bit. I don't know

Dan Austin: [34:34] how you're doing. I'm just assuming some of these companies that do it gain quite a few different markup areas because you're constantly turning and fixing and cleaning units too. So, It's fascinating. Yep.

Mike DeHaan: [34:45] Absolutely. Cool. Awesome. Well, we're coming up on time, but before we go to our final questions, I do wanna hear a little bit more about your development stuff that you're doing. So you're doing ground up development now as well.

Brian Green: [34:54] That's right. Yep. Just to throw one more

Mike DeHaan: [34:56] thing into the fire of all the stuff that you have going on.

Brian Green: [34:59] You always have to keep it interesting, right? Yeah. Absolutely. And challenge yourself, right? So this is this is very exciting for us. So we're buying a property that's just over two acres right in town, so it's walking distance to downtown. It has two old buildings on it right now, a house and a carriage house, which part of the story is we're finding out that New York State finds them to be historically significant all of a sudden. Oh, interesting.

Mike DeHaan: [35:21] Never in comparison.

Brian Green: [35:23] Now, as of now, when we wanna build something there, now they're significant. Of course. So the current iteration of our plan, we're building a 36 unit apartment complex, but now we're gonna keep the house and the carriage house, and we're gonna remove them on the property. Like last week, we're out there with, I don't know if you've ever seen it on TV, they pick up the buildings and they move them. We had a guy come out last week, gave us a quote on moving the buildings to one of the corners of the lot, and now we're gonna do it as a subdivision, and we're gonna separate out the house and the carriage house, which we're gonna remodel to historical standards, and potentially get 40% back in tax credits on the renovation. Oh, that's great. And then we're gonna turn those to the condos to sell off, to recapitalize the project, and then the 36 units will be built on the larger portion of the lot right next door. And so and this will also be the first time we're gonna syndicate a deal because this will be a much higher dollar value. The total project cost is gonna be more like $12,000,000. Right. So it's above and beyond what my brother and I can self fund. So this would be, the first time we're gonna bring in outside investors with equity, which is also exciting and kind of challenging for us at the same time. But anyways, our plan is to build it, build the 36 units, refinance it at completion where we should, we should be able to get a good stabilized value, and then, keep that forever long term with us managing it, our property management company. And then the condos, we may have to keep it for five years, we will rent those out for the first five. There's a five year requirement in order to get the tax credits in order to before you can sell it off.

Brian Green: [36:53] Sure. So we're kinda still working through that model, whether we want to keep it for the five or not, but that'll be a liquidity event for our investors at that point, right, because they're gonna get proper So condo I think it's gonna be a really interesting and unique project, and we're kind of getting everything out of the way on our first development.

Dan Austin: [37:11] Yeah.

Brian Green: [37:12] We're moving buildings, historic renovation, we're building ground up, I mean, it's kind of everything at once.

Dan Austin: [37:17] That's fascinating, honestly. So I I have a question here for you. So how does how did this work for you? Know a lot of people, including myself, it's like, okay, I wanna develop a big project. Yeah. So you found the two acre piece of property. Did you just buy that and you're like, okay, we're gonna figure this out, and then you happen to be able to get it all the way through entitlement, you're like, yep, we can do this, or did you do an LOI where you're like, hey, let me just pay you more money on the back end, assuming we can get through entitlement and we can make these things happen? Because it does sound like you ran into some headwinds there.

Brian Green: [37:46] Yeah, we still are, we're not even, we're not approved yet, so we're still working, we submitted everything to the city, but our city takes, what's this say, takes some time to get approvals?

Mike DeHaan: [37:55] Yeah, of course.

Brian Green: [37:56] Yeah, of course. Yeah, so, no, our contract, we are under contravand property, we have instituted, but

Dan Austin: [38:01] it's all contingent upon us getting our entitlements. Perfect. That's Yeah, that's a huge point for people to understand is you don't necessarily have to go out and buy this piece of property, pay cash for it and sit on it for two years while you go through entitlements and before you even break ground. That's that's a really good strategy that Mike and I have heard a couple times now.

Brian Green: [38:17] Yep. Also, very important too, as a side note, is to make sure you have extensions built into that contract.

Dan Austin: [38:22] Yeah.

Brian Green: [38:23] So we have four ninety day extensions built in, we can basically buy ourselves an extra three hundred almost a year by contributing more and more deposit as the process goes along if we need to, because, you know, as you know, probably I'm assuming in your market too, these things sometimes the city can drive their feet for a year or two, and you need to have that time so you don't stop with

Dan Austin: [38:42] the contract. And so then how did you get to the point of understanding you were gonna be able to build 36 units? What was that? Is that some designation within the local area per square foot of the lot? Like, how did you get to that?

Brian Green: [38:53] Yep. So before we even went to contract, we had an engineer take a look at the psych survey and interpret the zoning laws in our market, and the way it's there's just a math calculation, right? Yep. Yep. You have a certain amount of acreage, and these are the setbacks that are allowed, so they basically turn your giant box of a lot into this tiny little box that you're allowed to build on, and then you figure out how many units you can fit into there, and then the maximum based on the math was 36. But since now we're keeping these historic buildings, it's gonna give us, hopefully, if they approve the plan, an increased density, cause we're still wanting to build the 36 and we're gonna have the 68 condos.

Mike DeHaan: [39:27] Yep. Yep. Nice. I love it. Good stuff, man. Yeah. You're all perfectly vertically integrated from where you started.

Dan Austin: [39:33] It says freaking ass, man. I love it. Yeah. Awesome.

Mike DeHaan: [39:36] Cool. So gonna dive into our end of show questions here. Okay. First off is the crowd favorite. What is your craziest real estate investing story? It's gonna be a tenant story, a big win on a transaction, time that you lost a bunch of money, whatever your craziest story is. Okay.

Brian Green: [39:55] So let's see. One of the projects we're working on right now, about a month after we bought it, we got phone calls from the joining tenants that they hadn't seen one of the tenants in quite some time. So long story short, we had to call the police to check on them. We went in there, and the tenant had passed away. From what we can tell, I don't know, a month ago?

Dan Austin: [40:18] Yeah.

Brian Green: [40:19] So if you I did not personally walk in and see it, but we got descriptions from the police officer who went in. Uh-huh. So I'm imagining it was something out of the movie seven where he walks in and sees the Like the guy that's all like The guy on the bed that's Oh my goodness. One time with the air fresheners

Mike DeHaan: [40:35] So from the

Brian Green: [40:37] that was a pretty bad scene. So like I said, my brother's in charge of project management, so he had to hire a company to come in and remove the the furniture that this guy had decomposed into, and it's like, cut out holes in the floor from where everything is soaked in, and it's like a whole whole thing.

Dan Austin: [40:56] I met a guy that that's what his company is. There's companies out there, like, if somebody gets murdered, or somebody dies, that's what they do. Their job is to clean up blood and guts.

Brian Green: [41:05] The guy was there for, I don't know, three hours. It was $2,000. It's a great business.

Mike DeHaan: [41:11] Oh, man. I mean,

Brian Green: [41:12] I don't wanna personally do it, but I'd rather pay him the 2,000. Yeah. Absolutely. Yeah. Yeah.

Mike DeHaan: [41:17] Yeah. That seems to be the most common reoccurring case story is dead tenants or occupants or things like that.

Brian Green: [41:23] It's I'll add on to that slightly more. Same property, same time period. We had one of our holdover tenants. Our contractor noticed that they were out in the parking lot doing illegal activities with a client of theirs. Oh. She can connect the dots. Right. In the middle of the afternoon, right, on the side of a van. Nice. Right there in

Dan Austin: [41:43] the parking lot. Wow.

Brian Green: [41:45] Yeah, it's just a transaction amongst adults.

Mike DeHaan: [41:50] God. Consenting

Brian Green: [41:51] adults. So you can see why in a lot of cases, you know, there's a need to bring occupancy down to 0% so we can get through it and turn

Dan Austin: [41:58] it Totally.

Brian Green: [42:00] Yeah, that's funny.

Mike DeHaan: [42:02] Yeah, I mean, inherited tenants, that is always tough deal. But honestly, if you're, you're a buy and hold investor, it's one of the easiest ways to get a discounted property.

Brian Green: [42:11] Yeah,

Mike DeHaan: [42:12] almost all of our rentals that we've bought insurance sucks, you got to deal with them, you got to like have them, they're paying, like not paying rent for six months or whatever. But you're taking the headache away from the previous owner, you're solving their problem. And if you're in for the long game, the six months, eight months, a year, one my had one recently, I just got the lady out, she was there for two full years Wow. Before I was finally able to get her out because of the politics that we have in COVID. Yep. And but you know, now it's worth it. Right? Like Absolutely. We suck for that period of time, and now I have this nice secure asset and pick my own tenants. Should be great. Sure. Absolutely. Awesome. That's cool you're willing to do that. Because it's always a big thing to a lot of other investors trying to shy away from. But, I mean, someone's gotta do

Brian Green: [42:53] it. Yep.

Mike DeHaan: [42:54] Perfect. Alright. Next question. What is the number one tip you would give to either a new investor looking to get started or to a small investor looking to take their business to the next level?

Brian Green: [43:04] Like I mentioned before, I'm a huge reader. So my number one bit of advice would be to educate, educate, educate yourself on as much as you possibly can. You know, there's in real estate, there's no shortage of books or gurus that are gonna tell you how to do this, but I just I read and listen to everything and anything, and I have for the past seven plus years to kind of get to where I am, And that also leads into my next top my next bit of advice, which would be decide early on if you're gonna be a business owner or you're gonna be an investor. And what I mean by that is most people that are in real estate should just be investors. They should find properties, underwrite them, hire a property manager, or do it as an LP on somebody else's syndication deal. I feel like way too many people think they're gonna just go buy a house and figure it out and self manage, and that turns into disaster.

Mike DeHaan: [43:51] Right.

Brian Green: [43:52] So you gotta decide. If you're gonna do that, you gotta be prepared to create a company. Right? You need a company to support your properties. If you don't wanna create a company, then you should just invest and you should find somebody else that knows how to manage the properties.

Mike DeHaan: [44:04] Yep. Yeah. I think that I think that's great advice. So book wise, what are your recommendations for people?

Brian Green: [44:11] Man, I don't know. I yes. And then question that I've read I read so much, but I get them all mixed up. I think I've read every single bigger pockets book there ever was.

Mike DeHaan: [44:19] Let's say this is situation. We you have a young college graduate that's coming and says, Brian, I wanna be just like you. What should I read?

Brian Green: [44:27] I don't know if you wanna do that, but So yeah. Right. I don't know. I like well, for me, I was one of the ones that decided he was gonna build a company. Right? So I like what's it? Michael Gerber's book. The E Myth. Yeah. I'm gonna look Right? It up

Mike DeHaan: [44:45] The E Myth. That's a good one.

Brian Green: [44:46] The E Myth. Right? Because it's not specifically real estate focused, but it does tell you how to create an organization that eventually you can sell off, or that you don't have to be in day to day. Yeah. Because the other problem is when you start a company, most people create themselves a job, instead of creating a company.

Dan Austin: [45:03] So true.

Brian Green: [45:04] And to some extent, I'm still in that spot, right? I haven't I am required in my own company, but over time, the goal is for me not to be. So that would be one book, because most people think they're like, oh, I'm just gonna start a property management company, and then like, great, just gave yourself an eighty hour a week job. Congratulations. If you read that book and kind of build it from that, like back from the start, the way he explains, and then there's other guys that have written books that are similar, but it's, you know, systematized, hire out, who not how, it's all kind of the same reality. Absolutely. That's great.

Mike DeHaan: [45:34] Cool. Great suggestion. Alright. So last question, where can people find you, follow you, and reach out to you if you'd like them to do so?

Brian Green: [45:42] Sure. So on our website works pretty well, greenspringscapitalgroup.com, or I'm on we're on Instagram at greenspringscapital. On either of those, they can reach out to me. My email address even is briangreenspringscapitalgroup dot com. They're welcome to send me an email directly if they'd like to learn more about my story or about our development deal that's upcoming or or any of the things we talked about today. Happy to help. Cool. Awesome. Thanks, Brian.

Mike DeHaan: [46:06] Perfect. I love it. Well, thanks so much for coming on, Brian. And listeners, if you want to know how to build an awesome vertically integrated real estate investing business, reach out to Brian. He is a wealth of knowledge, man. And, you know, go go find him on social media too. He throws around some decent weight in his his second garage gym as well. So, you know, all sorts of good stuff coming out. Anyways, guys, thanks so much for listening. If you enjoyed the show, please go and leave us a five star review, read this in your podcast. Also, if you wanna start learning how to generate off market leads, just like in and I do, and how to do it, you know, pretty simply. It's not rocket science. Brian does a very similar process that we do. Go to collectingkeyspodcast.com/free, and you can get your five step guide to start generating off market leads in as little as two weeks. So thanks so much for listening, everybody, and talk to you guys next week. See you. Thanks for listening, everybody. Please make sure you subscribe and leave us a five star review wherever you listen to your podcast. Also, please make sure you go and you share this with other people within your network. We are really trying to grow this thing, the best way for us to do so is by you telling other people to come check us out.

Mike DeHaan: [47:12] You can also follow us on Instagram. I am at Mike underscore invest. Dan is at investor man. Dan, you can follow the podcast at collecting keys podcast. And if you wanna learn how to make real money as a real estate investor or you want to grow your already existing real estate investing business, please go and check out instantinvestorprogram.com and book a call with either Dan or myself, and we will see if you'll be a good fit. Thanks for listening everybody, and talk to you next week.

Speaker 4: [47:39] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts. And check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.