Globetrotting Real Estate: Joseph's Expertise on Investing and Flipping Homes

Welcome back we are back after a small break in our programming.

🎙️ New Podcast Episode Alert! 🎙️

Expand your real estate investing knowledge with our latest episode featuring Joseph, an expert in international property investments and flipping historic buildings. From his start in Israel to his current projects in Arizona, Joseph shares invaluable insights into navigating the challenges that come with international real estate investments. 🌍🏠💼

Joseph generously shares his top tips for success in real estate, from flipping historic buildings to adjusting to changing market conditions and having a margin for taking precautions. Learn about capital partners, tactical strategies, and the art of vetting contractors across different areas. 💡🔑🏗️

We also discuss the importance of setting expectations and communication when flipping a single-family home and how planning directly impacts the success of any renovation project. From Joseph's experience in the multifamily market to involving a general contractor early in the planning process, this episode is a game changer for anyone interested in real estate investing! 🏘️📈🔧

Don't miss out on this opportunity to learn from Joseph's wisdom and experience. Tune in now! 🎧🌟 #realestateinvesting #internationalproperty #flippinghouses #historicbuildings #realestatewisdom #podcastepisode

https://www.linkedin.com/in/josef-lapko-83705413
https://hihello.me/p/72aa52b7-fa36-43c5-b80d-b3244b7a5f96?f=vcf
https://www.wildcat.group/team
yosef@wildcat.group
lapkoyo@gmail.com

Transcript

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0:00:06 - Speaker 1
Welcome to this week's episode MVP real estate podcast, season three, episode 11. We have Joseph from the warm, warm climate of Arizona sitting in the desert at like 80s, doubling our weather. But thanks for giving us the time, thanks for jumping on the show. 

My pleasure Happy to be here Now. You told us a little bit about where you're from, but we're excited to get into what do you do down in Arizona within real estate, kind of where did you will take it from the top. Where did you come from? And then, what led you into the wonderful world of real estate that you're living now? 

0:00:50 - Speaker 2
Sure. So I'll start from the end. You know, right now in Tucson and in the other markets, i'm mostly focusing on high value added, taking projects from class D or C minus and doing high value value, basic, high value renovation and redevelopment all the way to 300, 200 units And I'm overseeing the full cycle of the acquisition, from purchasing all the way to refinancing cell. I kind of start my journey in real estate about 11, 12 years ago actually in Israel, when I would have the privilege to finish the last stage of a very cool historical building was very large building with very Italian marble and glass work from Chihuly if you guys know the famous artist and etc. That was kind of my first engagement to the real estate. 

And as we moved to the state I started with single family and managing for others and managing for investors, you know, and grow up to a larger portfolio was kind of hard in the beginning. I would say. You know, converting from meters and centimeters yards and foot, which makes no sense because well, why not 10 white, 12 and who knows what yard it is and how's quarter of an acre? So one do not miss much easier in over. But it took me a while to convert myself into this process but I'm up with, you know, hundreds of single families or innovations and picks and flips and small, multi families and bigger, and 30s and 60s and 90s, and and I'm keep going, both investing with others, managing for others syndication funds with myself and my partners and hoping to get to do great. Everybody needs a roof under. 

0:02:54 - Speaker 1
Yeah, no, that's exciting. That is quite the journey. So you started real estate investing in a different country, basically. 

0:03:04 - Speaker 2
Oh yeah, i mean, my other story is like to transition. My previous career and I've been in many in my two years is actually owned a party planner company. I used to be, you know, top party planner and events producing and sound. You know it's always a responsibility of project management. 

0:03:26 - Speaker 1
Yeah. 

0:03:26 - Speaker 2
I found a very similar correlation. I just you know, you have budget, you have people. 

0:03:31 - Speaker 1
Yep, You got time. timelines. 

0:03:34 - Speaker 2
Yeah, and I just switched. 

0:03:36 - Speaker 1
in some point in life I switched flowers, music and chefs into plumbers, electricians and city inspectors which I mean that was all for better contractors and say you said city inspectors, they may not be the most pleasant but I know It's part of the game. 

0:03:59 - Speaker 2
I know, even if you like it or don't. 

0:04:01 - Speaker 1
Yeah, that is so true And definitely I can see some straight like parallels between the two organizing a project in terms of a house build or a party Like you. Like you said already, there are a lot of connections between the two, so I can see the symmetry there. What was big for me is how long did you operate overseas when you first started? Because I feel like you almost had to hit the complete reset button when you came over to the States. Like you said, currency is different, measurements different, your contractors all gonna be different. So how was that transition? starting on a historic building, which is one kudos to you, because that's already a difficult process, then coming overseas and basically have a hit reset? 

0:04:50 - Speaker 2
So I'll tell you a deja vu story that just came to my mind. I came to the States, to Ohio, and the middle of the winter, raising snow outside, you know, probably four or five feet, and I joined my friend and future boss into kind of the first tour, touring, you know, across the neighborhood and starting to show me different houses and different projects and different stages, and I came with my summer shoes. 

0:05:19 - Speaker 1
They did not do well in four feet of snow. 

0:05:21 - Speaker 2
So my first step was like five feet into a snow. I'm like, oh oops, i think I'm going to be wet for the next few hours. So, like for a few hours I've been going around him looking at different houses. My feet I don't feel them anymore. You know the freezing cold. That's where I felt the big belt and the big difference between where I'm coming from to where I'm going. 

0:05:45 - Speaker 1
But oh yeah. 

0:05:46 - Speaker 2
Yeah, you have to adapt quick, you have to take opportunities and don't say no to any opportunities that comes and the rest is the rest will come. 

0:05:56 - Speaker 1
Yeah, that is, that is true. Leave yourself open. When you were over and you said that was in India, right Where you started with that historic building, israel, israel, i apologize. All right, so I have never worked on historic building one, because they scare me with the amount of red tape, because you can't just put traditional moldings in and building materials. If it's a historic building, at least here in the US or in our area, you have to rebuild it as if it was from that time period. Obviously, you can upgrade plumbing, upgrade electrical, but your finishes kind of have to be the old, like actual oak. You can't do any MDF or you're going to ruin the integrity of the historical building. Were you running about that overseas when you were doing that, or is how does that parallel to our inspectors or codes here in the US? Kind of the same word? 

0:06:54 - Speaker 2
So in Israel, my project, that was a new construction but it's built again. If you're walking in every area, especially in the old city of Jerusalem, like everywhere, it's funny Like here we're saying, oh, it's a historical building And then you see it's 100 years old. In Israel, when it's a history is 2500, 3000 years, it's a bit different. 

But that was ground up and was in many years involved And a lot of archaeology. That was being fun on the base And that was very delegated process. You cannot work with heavy machinery in that area and you have to work around police and only at nights. That was a heck of a project. As far as here, i'll say, with historical and, to your point, with historical project, i see it prongs and cons And each state and each regulation is different. 

Sometimes it could be just going into the details and understanding what's involved. Right, it could be. You only have to take the facade and the exterior to keep it originally, which means keep the windows in historical grip. That's easy. Right, you can go today and I'm giving some some secret of our industry. Right, you can go to a windows store manufacture and ask them to create this type of grid. So it's going to look the same, it's going to be a dual panel. We're going to be a fancy, nice, energy efficient windows, but at the same time you're going to still keep this greed in the middle and this, this look. But here you are. The tenants, or future tenants, have the modern look at the efficiency of good AC, of the efficiency of good energy standard. You got a credit for energy 45 l, etc. For the people who are into it, but at the same time you keep the historical project And some other cases it's. 

You need to know that if the piping is historical you have to take consideration that you have to replace it. You usually don't have ground in the electrical. You're facing much bigger problem But it's also challenging and also has his own charm right. Everybody most of the new builder companies they kind of you know used to call cookie cutters, but you see them all over the country. They look all the same, they're using the same material. That's kind of you walking to a unit that you know exactly where they took it from Home Depot, shell. Some people like it because it's it's looking nice and fresh. But some people look at this extra step and uniqueness of historical charming. That's where you can really add value taking the old, make it functional and new Mm hmm. 

0:09:36 - Speaker 1
Which is hard blending all the old building materials with the new, and that's just an X is a no tactical in the field, on top of the the red tape and the codes that you need to get up to snuff with all those old buildings. So it is quite a feat And I'm I'm I've got a million questions on that, but I want to cover the full scope of what you're doing. So you're going in and I'm assuming when you first went in into the States and you're getting four or five feet of snow, that wasn't Arizona, right? So that was Ohio, that was Ohio. So did you know your boss slash now partner when you were in Israel, or did you come over here and you met him, and how did that kind of expand into what you're doing? 

0:10:23 - Speaker 2
Um yeah. I mean I, i knew him from before and obviously we had the conversation and didn't go across the world with no certainty. That's a little bit dangerous. 

0:10:35 - Speaker 1
Yeah. 

0:10:36 - Speaker 2
But I was knowing my position, coming from different career and taking slow and being observed and being learned a lot and being grateful for the learning process. And you know, many, many, many great people taught me a lot along the way And I'm, you know, big grateful for them, for all the, for all the teaching. You know, i became who I am only because you know great mentors and great friends and bosses who will be willing to share and willing to teach and willing to be patient with mistakes, and I think it's a good lesson for us to be to act the same for our employees and friends. 

0:11:17 - Speaker 1
Yeah, now, and there's that's a cool thing about the real state culture I'm sure you're finding a lot of people would be more than willing to help you or answer questions if, if you haven't come across the situation before, either jump around a podcast or a forum or something. There's always people out there that are willing to help, which is, i think, a very cool part of this industry. 

0:11:40 - Speaker 2
Agree, yeah, definitely. I mean until until you have to put a bit of yes. I'm against your friend, then is no friends right, it's yes. However, but I agree, it's a very you know my personal note that you need to give and not expect return. giving, giving, give. It's going to come back to you. 

0:12:03 - Speaker 1
Yeah, it eventually will. So you are. you're obviously doing the historic buildings and I'm assuming that you're flipping those, So those are straight resell. 

0:12:16 - Speaker 2
So every project is a little bit, you know, based on his own strategy. 

Yeah, it really depends on the market condition. I mean, as we all know, the condition of the market is changing and evolving every, every minute, every day. We're coming and what's going to hit us tomorrow. So I really want to make sure my projects and my investments have enough margin to take, you know, cushion and precautions, if you know cap rates, if you know change grammatically, obviously, the value of the annual. But I'm so I'm keeping keeping myself and that means not doing a lot of projects, sometimes be very specific and being very cautious and not running enough every other project. So I have the right amount amount of margin to cover any mistakes or big changes in the market. It's usually comes with much lower cash flow because to make a bigger jump you need to almost sometimes a negative cash flow, but the rewards on the end is much bigger. 

0:13:22 - Speaker 1
Yeah, And as long as you have enough reserves to cover the the negative cash flow, you'll see the rewards in a few years. 

0:13:31 - Speaker 2
Yeah, or or a capital partners. That's what you know. It's always. You need to have a capital. You know capital partners. You know your friends, your family, who trust in you, trusting your boots on the ground, trusting your process, trusting your track record. When you say you're going to do something, you will do it and you know you need to have enough network with GCs and property management and engineers and designers to support you And, obviously, finance financial aspect as well to support you in the process. It's, it's a business that you cannot do solo. 

0:14:05 - Speaker 1
Yeah, education and tactical. And obviously, with you coming from Israel, a lot of the people that listen to this show are either new or getting started. Some have like a hundred units, but you get the spectrum. So when you come in, you're first in Ohio, then you transition to Arizona, so you're picking up two different pods of subcontractors. How did you navigate one? vetting your contractors in the different areas? What was your deciding factor of like, yep, this is the person I'm going with, because for homeowners, some people only buy one house and only work with the one plumber that they called from the yellow pages. So, like, how did you go in and do a new territory, starting a business, starting vetting all those subs in the area to find out, yep, this one's going to work for my business. Or I mean, there's a few that you could say, yep, i like them, but they're not going to work for us. So what went through your brain as you were vetting all of those things? 

0:15:10 - Speaker 2
Sure, i mean working with GC. we probably can spend a few hours here. 

Yes And the whole, the whole world. But a few tips I can share differently. So number one is constantly have a backup plan. A lot of, a lot of flips, a lot of transactions are falling because you're relying on one person and sometimes he cannot finish or he's too busy or he's not enough profit that you know he's already into the process and he walks away and then you have to bring someone else to finish it. Then you're paying twice. So that's number one have a backup. Number two is you know, take two, three bids, take the right time to evaluate. Number three is have a very clear scope of work. The more precise scope of work after details you will have, the more precise price you will get from the plumber, from the plumber, from the electrician, from any sub right. 

If you come and say, hey, i need this and I kind of know what I'm doing, he need to right, just change position. If he's the GC listen this client not exactly know what he's doing I need to have a enough contingency plan 20%, 30% contingency, just in case. Well, guess what, he's not going to give you a change back. If he's not going to use this contingency, he's going to go to his pocket. So the way for you to eliminate and create minimal contingency, just in case, is to know exactly what's involved and ask the question right, hey, how much time it's going to take you? Oh, how many people is going to be involved? Oh, it's five people. They're making 200s a day. Okay, so five people times 200. And do the math. You need to make some living. Okay, that makes sense. But if the number of hours, the number of people, the number of skills involved, the materials versus labor, doesn't end up just shutting some rough numbers into the air, that's not gonna work. Wish as much as you can responsibility and liability on the GC or on the subcontractor and have him have a full control. So you're responsible for permits, you're responsible to deliver the materials. Have, even though if it's sometimes costs you a little bit more given the responsibility because this way he can own the process and being 100% responsible for it, have a very clear guidance of quality control and the expectation right, i'm gonna come, i will pay you X amount of dollars if this and this QC criteria will be met. Make it clear in front because, again, oh, it looks nice, nice, it's very subjective. Oh, it has inspection. Well, the city inspection. With older respect, they have a thousand inspection for this month. He's not gonna be your QC guide. 

You wanna leave some space for future, right. You're gonna come to a place you're gonna start living and then you're gonna start to see all the problems. You wanna make sure the guy will come back and honor the warranty or whatever it is, and he's not gonna forget about you the day he's got the last check. And lastly, he's being always that's hard, that's always intense. You wanna try to keep as much funding into your place and being that is scheduled, right. So if the GC finished 50% of the work you still owe him. You don't pay him already 60, 70% You pay him less right. 

He wants to run after you for the money, not you begging him, please. You need come from the time. Do it for me. That's not sustainable because you already got the payment. He's already dreaming about the next job. He's already. His head is already at the next site. Now you have to do anything you want, if you capable to bring him back. That's really hard. 

0:19:08 - Speaker 1
Yeah, and that is I'm gonna put in a star in front of that one. Don't prepay for your work, just don't do it. It's a catch all statement, just don't. It never ends up well. 

0:19:20 - Speaker 2
And I have agreement have a lean wavers, have a partial lean wavers again. We can go hours and hours on that. And I will say, lastly, work with existing network and like, for example, if you have a good electrician, ask him listen, who's your buddy, who do you like? 

to work on the plumbing side right, be a void for yourself to being the middleman and trying to negotiate between two, three, four parties. You have a day job. You don't wanna negotiate between 10 people and then they starting to fight who's gonna paint the cocking on the baseboard? because the painter already left, the baseboard already left and now you have this situation when you don't all. Right, that's all this. Gaps, so-called between different subs and between different trades, are really critical to make sure. Okay, are you gonna come back and paint this or are you? is that your responsibility or is that yours? I think that's critical, and that goes to the scope of work and the detail orientation. I think. 

0:20:26 - Speaker 1
So defining responsibility or defining roles, yeah, for sure. 

0:20:30 - Speaker 2
Yeah, yeah For a start? 

0:20:34 - Speaker 1
Oh, absolutely. And that list may seem very daunting for like a Joe Schmoe homeowner who's gonna try to get something done, but the good thing is, if you find a good contractor, he will lead you to all of those things. He will let you know about the insurance that you need. He will let you know about the lean waivers and the permits needed. Also, they'll have a roll of decks of other contractors. So if you pull a GC in and you want to get a shower done or your bathroom redone, they should have a roll of decks of electricians that they can work with and plumbers. And that is so much nicer for you as a homeowner because you know the GC who's friends with the plumber and the plumber's friends with the electrician are all sitting talking about your project, getting things done while you're doing your day job, and they know how the plumber is gonna run his plumbing line. So the electrician will already have a head start of where he can run his electric And if the GC has worked with both of them, they know how to set those people up, which will lower your chances for the dooming change order. 

Like everybody hates the change orders, but like if you hire a whole team that is already practiced and played together. You're gonna have less change orders because they already know the next step. They know the system And I think a lot of homeowners fear like the connection because they feel like, all right, if these three people come in they could take advantage of me because it's three against one. But you lose sight of the positive of that thing, like they do work well together. So they're probably gonna get done more efficiently, the quality is gonna be better, you're gonna have less hiccups And that may cost you a little bit more, but your headache is gonna be so much less And that's what I've found. 

0:22:22 - Speaker 2
For sure. Yeah, I mean I've done some project that it was back to back. I mean the kitchen installer was installing the kitchen in the morning, The granite people was being scheduling for the afternoon, like back to back. So no, like the domino, and everybody needs to know their place in this space. And if one is, oh, I'm just gonna do it after lunch. No, you cannot, It's a big problem Everybody else around you. 

But planning that in the events. And that's it for the GC. Planning that in events, knowing exactly who can work at the same time. Right, the flooring guy can now work at the same time with the painters because he needs to step on the floor. 

But the kitchen installer can work at the same time when somebody else is working on the shower. It would be a dual process, parallel processes working. So, again, a good GC will know to schedule and to monitor this process very well, and also monitoring the expenses versus the time that needs to be spent. 

0:23:25 - Speaker 1
Yeah, yeah. Do you ever ask about communication, like how often they'll communicate back to you about status of the project, or do you look for GCs that have some sort of automation system that can upload pictures and track progress? Is that something that you look for Or have you found like that something? 

0:23:46 - Speaker 2
Yeah, it really depends on the project and the size. If on my major projects, i'm using all the top software that's out there, i have weekly reports, i have daily reports. For the people who don't know, it's really fun apps. You're getting pictures of every aspect. Everything's been categorized. You know if it's sunny, if it's rainy, how many people on the job sides, who's doing what, et cetera. And then you always it's not even if you don't need it now, but God forbid if something happened months from now. You can always go back to your log and see oh no, that's your plumber. Scoot over because, based on the pictures, that was not there, right. 

So you can always I want to say blame, but you can put the right people in charge for what the action safety hazard insurance claim, you name it. 

0:24:44 - Speaker 1
Yeah. 

0:24:45 - Speaker 2
So that's on the larger project. On the smaller projects, i think if you're doing a flip on the single family, just set up the right expectation for you, like I want to come and see a finish. If you say it's a finish, i'm going to come for two hours and I'm going to do my inspection and I'm gone. I'm not going to come every day, i'm not going to come every hour, right? I want you to respect my time. No one respects you. So when I'm going to come, i'm going to come once and that's it. 

0:25:15 - Speaker 1
So everyone has its own comfort. 

0:25:17 - Speaker 2
I mean, are you out of state investor? Are you are next door? Are you emotionally attached to the property and you want to visit the property every morning and drink coffee with the workers or not? That's, I think it's a personal preference for each. Yeah. 

0:25:32 - Speaker 1
Yeah, and I think a lot of that goes into the planning too, like if it's better planned and you have clear communication before it all starts. I feel like the communication is just going to be better from the start because everybody is starting at the same level. And I'll go back to that bathroom analogy If you have a bathroom that you're redoing and you have plans so the plumber knows exactly how tall to put the shut off or where to put the drain, where to put the toilet, if you're moving it, like those type of things, or where the switches are going, all of those plans are going to help the communication trickle down. Because it's a trickle down effect, it starts at the homeowner. 

So if you're saying I want to get a tile bathroom, and the first question the general contractor asks you is like all right, what tile are you going to put in there? And they're like well, i don't know, that's hard for us to give you a number of time and price if we don't know what tile you're putting in, like, those are the plans that you can, if they can go to you right away. And it's like hey, joseph, this is what I'm doing, this is the tile I'm using, this is the size. Everything is right here on this piece of paper. Very easy for you to take that and then communicate back their mission, rather than you trying to create it as you go. 

0:26:54 - Speaker 2
Right On that note, i think is it two different philosophy and processes that are famous today to work. Design is build, build is design is really. I can go to my friends as a designer. I can go to my architect, spend the right amount. He's going to scope whatever he's learning in art school And that could be a great and look amazing And it's going to be from state of the art, from a catalog. 

But practically, i mean I want to take all the architects into bed, but not everybody knows exactly the processes and procedure and what's involved on the practical level, site. So the architect can design something which not going to be 100% to the best of the interest of the owner. Or, on the practical, he can design a subway tile and mosaic that will be a nightmare to install. So instead of $3 a foot, for example, for labor, i'm going to charge him, the GC will charge you $11. So if the GC was part of the original process, original, let's meet on site with the designer With your GC we already have trustable And let's work around and decide what's feasible or not. 

0:28:18 - Speaker 1
Oh. 

0:28:18 - Speaker 2
I want my sink there. Wait a minute. Are you aware that you need to cut the flooring and the drain? Are you looking at another $5,000 of just because you want your faucets there and not there? Is that worth it? If yes, yes. If it's not so, having this information in the very early stage of the process and putting people at the design stage going to save you much more headache later on. That's my sense on it. 

0:28:48 - Speaker 1
Yeah, and I think the GCs that get early on, because I've found that there are some subs and some GCs that when you're that early on in the staging they pass you off. We'll get back to when you have plans And you're going to get the attitude all the way through the project. I feel like If you get a GC that's willing to go through the planning stage with you and sit with you as you're trying to plan out your space that you're trying to renovate, for me as a homeowner I would say OK, this person at least has my interest in mind. Where he's coming during the planning stage, i feel like he cares a little bit more about this project. I'm probably going to get more service out of this person than the person that wants to wait for the plans. At least that is what I've found in some of mine. 

0:29:37 - Speaker 2
Yeah, i agree, it's kind of a chicken and egg. You have to show. I mean, definitely I'm not going to waste my time running and sitting in meetings with GC, with potential people, and help them to do all the work, and then they're going to take all my advice and knowledge and we'll do some exact thing with someone else. So you need to always check the balances, sometimes depending on your position. Right, if you're just starting your business, you have to much more give and give and share to earn business. As soon as you're busy, people are going to chase you. 

0:30:09 - Speaker 1
Yeah, that is true. It is true, and you are also. I heard something early on in the show that you're also in multifamily. So you have some held properties, or are those ones that you manage for other owners? 

0:30:27 - Speaker 2
I'm usually, mostly, I would say in multifamily. I've had both of myself and both for others, mostly consulting others for all the way from land development to you know new ground up to redevelopment, uh, existing multifamily process That's. I think that's my you know, special expertise in the track record of the die in the past seven, eight years I was a full-time family? 

0:30:56 - Speaker 1
Yeah, and are you seeing uh like major differences in operation from the commercial side to the residential? 

0:31:07 - Speaker 2
Yeah, it's a whole new, different world. Multifamily versus single family, obviously. Um, that's pros and cons. I mean, i'm a big fan of multifamily. You have a lot of different benefits that you don't have on the single family, from tax aggregation, from credit and benefits working with municipalities. But the process, the bigger you go, the process would be much more complicated. Right, you need to work with planning departments and bigger architects and bigger lawyers and bigger, everything is bigger. All the checks that you're cutting are bigger, but also the rewards are much bigger. 

Um, i don't, you know, it's personal preference, right, i prefer more doors under one roof. Right, the bigger project, the better. For me, it's a one transaction, right? So to me, if it's 60 units or 90 units, the more is better. But it's not always, uh, per your desire. You get what you get. If the number makes sense and the property makes sense, then you do the project. But, yeah, i mean, i think everyone has his own strategies and when you know some people doing grant and Airbnb, some people doing in, you know, in warehouses and storages and mobile houses. 

I think it's a personal knowledge and expertise, where you come from and know who you know like. I know what I know and I know what I don't. So I'm not, i'm not trying to be expert of all And going back to, i think that just hit me. If you're trying to test the GC, start slow, right, tell them, okay, do a small project. I know you, you are expert of the world, but let's do a sync and see how the process works. If he shows his expertise and his communication skills and he's saying what he's saying in the best way, give him another project, another project, another project until you're comfortable to give him your nature, your dream house or your project. 

So, don't give, don't go all in at the beginning. 

0:33:14 - Speaker 1
Yeah, you just got to think of those little projects around the house you want him to start with. 

0:33:21 - Speaker 2
Yeah, something complicated that he's. you know a lot of people saying, yeah, i can do it all. When somebody's saying I can do it all, to me personally, it's a red flag. I don't like, you know, when you go to a doctor and say, listen, i'm going to be your heart surgery, brain surgery and I also going to fix your broken toe, no, no, no, no, no, thank you right. The more general you are, the more it's a red flag for me. I want to go to a doctor that is specialized only on the left toes, because that's what he's practicing for the past decade. Kind of the same analogy. 

0:33:58 - Speaker 1
on on on this, yeah, and it's true, and you have those correlations within even the residential market. You have some plumbers that they are built, their company is built for new builds, so they have a bunch of crew and they're good at going into a new house running all of the wastewater and all the lines, but it comes to service and they're terrible. And then vice versa, some companies are good at service but terrible at new builds. Like those are the questions that the typical homeowner won't know to ask Hey, do you do typical new builds or do you do a lot of service? And most contractors will say both. I know you do both, but which one primarily do you focus on? Because they are two different things. 

Masonry, like do you do foundation walls or do you do flat work Two different masonry fields within one industry. So, like what you're alluding to, like you have to drill down and find out what they are good at and let them do what they're good at, rather than trying to do your landscaping and your framing. It's just going to. It's not going to end well And it's not going to end well for your timeline too. Like you need to get this done And if he only has a crew member to do one thing at a time like you're going to be. You're going to be flipping this house for three years and you won't make your margins. 

0:35:20 - Speaker 2
All right, that goes back to you know, while we spoke about scope and really questioning the right question how many people you have, how much time is going to take you? Who is going to be on site? Who's going to oversee that? The more you know, the more you know. Sometimes it's sound like you really interrogate them Like well, who cares? You know, i'm paying the money, i'll do the job. You know, get out of my veins. But at the same time you want to evaluate and hope the right bears And if he's not comfortable to give you the right answer, then he's not the right guy. 

0:35:52 - Speaker 1
Yeah, and you have to be okay with it not being the right guy like that or gal. Just some contractors just don't align with what you're going for And it's nothing personal It's just not going to work 100%. 

And I know that that's a big fear of people Like if I'm a homeowner, i bring in a contractor, i feel bad saying no to them. But protect your asset Like this is something that you want done in your house. It's a high ticket item, take care of it. So if that's a fear that we can try to like articulate to the audience, of not fearing saying no if it's not a good fit, it's going to save you time, just like the planning. 

0:36:35 - Speaker 2
Always say listen, I can refer you to the right person, but I don't see myself doing that, Whatever reason it is, and you can be a front. Listen, your budget is not going to do it, Your timeframe is not going to go to me. Your your uncertainty and not knowing what exactly you want is not comfortable with me, You know go fish, go go to plans, like you mentioned. Go go to the home or come back to me. I'll help you in any process, but I'm not feel comfortable to do it at this point. 

Yeah, I'm going to help you for a certain fee or you know. Each one has his own way of how he wants to approach and his stage of his career. 

0:37:15 - Speaker 1
Yeah, and those conversations usually lead to a stronger connection or bond with that subcontractor. The first time I had to say no to a sub was HVAC, and it was just because it was out of his area. It was a job he could take on. But I called them, i walked them through the scope of what we were doing And I was like, hey, i know where you live, i know this drive is about a 40 minute drive for you. Is this even something you want to touch? Like you have to run your numbers of how much is it going to cost you to get there and what's your schedule like And are you even going to profit on it? 

And he was like you know what? I probably am going to skip this one. And I said that's fine, but can you give me a recommendation of somebody that's in that area? And right off the top of his head he said, yep, you're calling this guy, he'll do it. And it was because they had worked together at a previous company but he operates in this other area now. So it's like I'm working with the same guy, but it's his friend. 

0:38:11 - Speaker 2
So it's an okay situation. 

0:38:17 - Speaker 1
What were you going to say? I'm sorry I interrupted. 

0:38:18 - Speaker 2
Yeah, i have a personal refer is amazing And you know he feel obligated, feels gratitude to his friend for the referral. 

0:38:27 - Speaker 1
Yeah, I want to let them down. 

0:38:30 - Speaker 2
Yeah, definitely That's. that's another way to do it. 

0:38:34 - Speaker 1
Absolutely, and I know we're running short on time, but I want to get into future plans for you because you are where I want to be, like you're in multiple states doing multifamily and flips, and so what do you see happening here with, like, where our, our financial structure is, with the housing market, how it is? have you switched gears at all of what properties you're looking for or looking to do Like what's, what's the rest of 2023 bringing for you and your company? 

0:39:08 - Speaker 2
Well, definitely, the situation is not easy. It's challenging. A lot of flashbacks from 2008 for the older folks that been there, you know 9, 11, etc. I personally believe that don't rely on one source. Don't be scared, because some groups of people scared Sometimes. That's even bigger opportunities. Right. No, now is the time when the smart people, the patient people will rise, and not all the superstar that playing to be a superstar. So know where your value is, focus there. You know, master that and you will succeed. With that being said, on the practical level, i think, with crazy interest rates and inflation and uncertainty, the larger portfolio guys not going to make a huge move. 

0:40:05 - Speaker 1
Right, if you own 10,000 units. 

0:40:08 - Speaker 2
That's not the time we want to make a move. On the other hand, on the multifamily size, this is the time when a doctor, a dentist, an older person who's just retired or etc. He's freaking out, he doesn't know what to do with his property, he's seeing the inflation goes to the roof, he's seeing the interest rates going, he knows that he cannot refinance in the next two years And he wants to pull out. So we're going to see the smaller opportunities right The 10, the 20, the 30 units small opportunities coming much more faster And having your structure in place and that's what I'm talking about myself having the structure in place, have the people in place, have the capital partners in place going to allow you to go and do a shopping in the candy store very soon. 

0:41:04 - Speaker 1
Yes, in the next one I'm waiting for that store to open. 

0:41:07 - Speaker 2
Oh yeah. 

0:41:07 - Speaker 1
Oh yeah. 

0:41:08 - Speaker 2
So just be ready. Be ready, Don't be afraid, Master. Take a risk on yourself. Know what you're knowing. It's that's the time to do it, But be very cautious at the same time. Right Evaluate everything. Take additional risks. Don't always trust the numbers. You know it's all good on paper. Revaluate it. Think about what's going to happen in the worst case scenario. Do I have enough liquidity to cover a worst case scenario? What's going to happen if I'll need additional capital to inject in? Just take this extra step. 

0:41:43 - Speaker 1
But at the same time, guys, we all. 

0:41:45 - Speaker 2
We have so much more houses to build in the United States. That means desperately. We have so many homelessness people that will need, you know, affordable living. We have the and people needs roofs like that's the first expense, so it's maybe it's not going to be a luxury mentions in you know, with dozens of million dollars But both multi-family and single-family affordable so-called houses are here to stay. Everybody needs a roof. 

0:42:15 - Speaker 1
Yeah, i'm wondering because what I'm, what I'm seeing here, the affordable housing is being built But I don't even think and maybe I'm off, but I don't even think the affordable housing is affordable housing. Is affordable housing at this point? Like we're having affordable housing being built? The last city planning meeting I went and it was probably like it was pre-COVID, but they said they were building affordable housing and each unit was going to be $1,400 to rent. And I'm sitting in this meeting like where is this affordable housing? This is seems weird And just seeing the developer in the city council going back and forth on this, i was just saying silent but that just seems mind blowing to me. So I'm wondering, with all of those affordable housing buildings being built, will you ever see those prices drop back because the building price is so high? Like that's my fear. I know it's needed, but how do we get there? And that's my worry in 23-24. 

0:43:23 - Speaker 2
And also replacement costs and insurance coverage are also skype. The insurances are underwriting replacement costs not at $80 a foot. 

0:43:34 - Speaker 1
The underwriting at $200. 

0:43:37 - Speaker 2
So when you're buying it below $200, you're basically buying below replacement costs. So I agree, i mean it's not a numbers of three, four, five years ago. It's a different numbers, it's different costs. I think some part of it is people taking advantage of it. I mean you've both some well, covid who is not here, guys, i mean, you don't have sick people anymore who cannot perform the work, so why my appliances are not showing up on time? It's just a kind of a lot of people unfortunately taking advantage of this excuse and oh, it's COVID or something in that nature And just use it as extra pressure or extra price increase. 

So I agree, that the numbers are crazy, yeah, and I'm waiting for those numbers to come back down, like you said like the lumber. 

0:44:30 - Speaker 1
prices went up when people weren't working and when we had shortages, but they've trickled down, but I'm still waiting for them to get back down to where they were. Yeah, but it's also pushed, finally in the United. 

0:44:42 - Speaker 2
States tremendously building with metal studs. Right, That's been slow, slow and slow. And guys, most of the world are not doing wood studs. Come on, it's just look around, look what's Europe's going on, look what's, in some way and again, our construction standards and I'm participating in international shows and knowing how other things we are Shaker style cabinets. This is our previous century product. We need to and we're seeing that. We're seeing much more going into new innovation, new ways to build, but it's still slow. Covid, give us a lot of push and starting to think outside of the box or outside of our perimeters. Yeah, that's, you know, you can build a house without the wood studs. 

There's other ways to do it, yeah, and I've been seeing more and more renovations at least Not yet. 

0:45:39 - Speaker 1
It hasn't taken on with like new builds. They're still doing the wood. But if someone has a house built and they want like a half wall built or a dividing wall or an island or peninsula, they'll build it out of aluminum studs. Now, and in the commercial side you see aluminum all the time, but residential not so much, which I like the trend. So I've we actually had somebody from overseas I can't remember where they were from, but they built everything And concrete And he talked about how they put an elevator and how they had to support the floor so that they could bore out the hole to put the elevator shaft through. 

It was super cool. All those X's and O's things are amazing to watch And hopefully they start converting over into the States. But we'll see, yeah. But I know you got to go and I appreciate your time. Keep working over there. I like the theory, like when you open up and you're bringing a D-class a D-class, a D-class, a D-class home to a C or a C to a B and you keep upgrading. I love that philosophy. I feel like that's where that margin is going to be, where we can have some affordable housing. So keep on working. I'm excited to hear more And hopefully 2023 brings you some good luck. 

0:46:54 - Speaker 2
Sounds good. And, guys, if I can bring value and give and share with anybody, i'm still free. I mean, my calendar always full of people who needs advice And I'm doing the same, asking for advice for bigger and greater mentors. So, as we mentioned earlier, that's a shared space. when people can help each other. That's awesome. 

0:47:15 - Speaker 1
And if we have listeners that want to reach out, what's the best way for them to reach out to you? 

0:47:19 - Speaker 2
I think LinkedIn will be the best. Just Joseph, JOSEF LAPKO. That's the easiest way to reach out. 

0:47:31 - Speaker 1
I'll find it and put it in the notes on YouTube, youtube and the podcast notes, so we'll get them to the right place. 

0:47:42 - Speaker 2
Thank you for the time. Thank you, guys, pleasure. 

0:47:45 - Speaker 1
Yeah, we'll talk soon. Enjoy your Thursday. 

Transcribed by https://podium.page