Masterful Insights within STR market in Florida with Alon Orbach

Unlock the secrets to successful real estate investing with Alon Orbach as he shares his incredible journey from a professional volleyball career in Israel to becoming a powerhouse in Southern Florida's luxury short-term rental market. You'll gain practical insights into long-distance investing, navigating the complexities of Florida's vacation rental scene, and the crucial role of weather-related insurance. Alon offers his expert advice on ensuring thorough property inspections to avoid unexpected setbacks, especially after a recent storm caused significant flooding in Tampa.

Explore the innovative strategies that have propelled a Florida-based company's vacation rental investments to an impressive $150 million portfolio. Learn how Airbnb drives 70% of their bookings and discover the unique amenities, such as basketball and volleyball courts, that set their properties apart in non-traditional vacation spots. Alon shares the company's shift from single-family homes to luxury properties, emphasizing how they continue to thrive amidst rising real estate prices by creating immersive guest experiences that attract visitors to less-touristy areas.

Dive into the nuts and bolts of property acquisition, from the art of negotiation to managing inspection challenges like pool leaks and outdated plumbing. Alon also sheds light on expanding investment horizons with ventures into multifamily properties and hotels, leveraging proprietary software to guide decisions. Whether investing locally or abroad, the importance of a reliable on-ground team can't be overstated. This episode is packed with indispensable knowledge and hands-on advice for anyone eager to navigate the ever-evolving world of real estate investing.

All the ways to get ahold of Alon Orbach:
www.designedvr.com 
IG: OrbachRealty 
IG: DesignedVR_Realty_Invest 
FB: DesignedVR Realty & Investment

Chapter Timestamps:

(00:05) - Luxury Short-Term Rentals in Florida

(09:17) - Luxury Vacation Rental Investments in Florida

(22:00) - Unique Amenities in Luxury Rentals

(33:00) - Navigating Property Acquisition Challenges in Florida

(46:16) - Expanding Investment Horizons With Unique Ventures

(54:36) - Investing Abroad

(01:02:09) - Real Estate Investment and Flipping

(01:11:15) - Navigating Challenges in Real Estate

(01:23:38) - Real Estate Investment Opportunities in Texas

Real Estate Investing, Florida, Vacation Rentals, Luxury Properties, Airbnb, Property Acquisition, Multifamily Properties, Hotels, International Investments, Property Management, House Flipping, Market Trends, Texas, Long-Distance Investing, Insurance, Inspection, Unique Amenities, Niche Market, Diversification, Property Managers

Transcript

Marcus: 0:05

Welcome back to this week's episode of the MVP Real Estate Podcast. We have Alon Orbach here from Southern Florida. Originally from Israel, moved to the state 17 years ago, started as a volleyball career, found himself in real estate. A very cool niche market of real estate which is luxury short-term rentals, primarily southeastern part of the US, hubbed right now in Florida. But talks about in the show where they're moving into different markets, they're looking at Texas a couple other places into different markets or looking at Texas a couple other places. Very fascinating niche. I mean it's super cool and I talk about in the show where my nerves are and my stressors of investing long distance to him, cool as a cucumber, like it's another day in the office. So it's super cool to see where my fears are at and where his are at and I mean both are doing well within real estate. So it's super cool to see different philosophies kind of come together here. So I'll let him tell the story, so let's bring him on. So thanks for being here, alan. Uh, thanks for giving us the time here on a friday of course.

Alon: 1:27

Thank you for having me and excited about this conversation and the fact that it's friday yes, that is always a benefit.

Marcus: 1:35

Um, I'm excited to learn a little bit more about the the vacation rental market in florida. See me and Dan are here in Wisconsin. Our temperatures are dropping. I think the past week we've been in maybe the 60s. We're falling to like below 50s at night.

Alon: 1:51

Oh, wow.

Marcus: 1:52

And I'm imagining you're in a completely different climate at this point.

Alon: 1:55

So I don't know if you guys are aware, there was a storm alert in the last couple of days. Schools were canceled and that's kind of like Florida life, like they cancel school and usually nothing happened. We actually have properties in Tampa area and Tampa did get a lot of heavy rain and some floods. So in Tampa we do have right now at least one house that I know that got flooded, that we're taking care of it. I don't know yet all the properties, but the weather is great where I'm at, but that's florida.

Marcus: 2:32

You can drive like four hours and it's a storm yeah, no, I heard about that whole thing and it's me and dan actually worked at a previous company and we had some reps in florida and I don't remember what hurricane it was, what year it was, but yeah, all the reps had to stay inside and everybody was boarded up because it was going right through florida. Four or five years ago maybe yeah, yeah, okay.

Alon: 2:55

So four or five years ago there was a storm that you know every time they talk about a storm. So you go to like grocery stores all the water is, you know the flashlights, everybody buy everything they can about a storm. So you go to like grocery stores all the water is, you know the flashlights, everybody buy everything they can get a hold of. Yeah, and then usually nothing happened. And then you're like a little bit oh man, I was like waiting for it. Every, every time it happens, I'm saying like, oh, there's probably gonna be a real estate opportunity now.

Dan: 3:23

Quick question, that's a good way to look at it when you have, when you have a property like that, like you said, in Tampa, do you? I know some some insured insurers will not cover houses there anymore, so do you have homeowners insurance that will cover flooding like that?

Alon: 3:39

So so the quick answer is yes, but it's actually a good question, because the insurance in the last year and a half drastically increased to a point that it's insane. So if people buy cash, sometimes they don't insure the wind. You can still insure the flooding. Flood insurance is relatively cheap. Okay, but it did change. Flooding Flood insurance is relatively cheap, but it did change. It's harder to find companies and it's harder to get insured, but I can tell you in Florida you have to when you're in a flood zone. It's a lifesaver. I mean, it's definitely a must to do and we have it in every property.

Marcus: 4:23

Wow, I would have thought flood insurance would be way more expensive down there, seeing as it's probably one of the bigger items that insurance companies deals with.

Alon: 4:32

So surprisingly, it's the wind. The wind in some of our properties can be$20,000, $30,000 a year, just wind, and the flood can be like $1,500.

Dan: 4:48

So you can imagine how like cheaper it is yeah, I think the thing that I think we lose sight of is most of the properties up here have basements, so and most of them are refinished a lot of them is where you, where you house, like your washer, dryer, you know basically an extra rec room or living room in the basement. So when we think of costs associated with flooding, we primarily think it's going to be within our basement and it's going to be$20,000, $30,000, $40,000 on the low end. But most of the properties in Florida don't have basements, correct?

Alon: 5:19

You know, in all my history of real estate I've seen one house with a basement and to me it was like I can't believe it such an odd thing? yeah, to see, uh, so it happened once. Um, it was actually really nice house, but yeah, you don't have basements here, uh. But you know something interesting? I literally just talked about it yesterday because of the the storm, there was a house in tempeh that we closed the contract on. That was like a year, probably two years ago, and we locked the contract. There was no storm, no, nothing. And after we locked it, we brought the whole team from South Florida all the way to Tampa to examine. You know, we do like a very in-depth inspection and apparently there was a heavy rain the day prior, not like a storm, but a heavy rain and the whole lot was completely flooded. And they had a garage that was a little bit lower compared to the main house and the garage was completely flooded. And to me, I thank God that if we would have come any other day and it's not raining, we will never know and buy the property. So we canceled it. You know, we brought a whole team from here. I mean we spent a lot of money just from like bringing the whole team and everything it was, and we found out, like I was like thank god, but it was insane to think that we can buy a house you don't know what's going on. And you know, and, and I had another situation. I mean we're jumping from vacation rental but talking about like flooding, we have a house in East Hollywood, you know, in Florida, and I tried to sell this house for quite some time because the real estate market did slow down and I was finally under contract. They already did the inspection, we already like passed the inspection, they wanted to close and a day before the due diligence ended, there was a big flood. So their agent they already went back to New York the buyers, the potential buyers so their agent was like, hey, is everything okay in the house? The house got completely flooded. So I was like I don't even know how to respond, like cause, I need to understand the damages, you know. And then they actually signed an agreement that we will fix the whole house and they're going to move forward with the purchase. But four days after they changed their mind because they were overwhelmed with like the flooding and everything and they canceled the contract and again, again, if that was like a week prior or two weeks prior, it will never happen when we had a closed sale you know, it's not like you're hiding information, but it's like it's a part of living in florida. You know, you don't know what's going to happen when there is a heavy rain yeah, that's uh unique to florida right, yeah, that is definitely unique.

Marcus: 8:26

Like I, like dan was saying, all the houses here usually have basements. Um, I've walked into maybe a handful of houses that don't, and we own one rental unit that doesn't, and even that's like a little odd. So there's there's big differences in terms of structure of homes and how it all works from state to state, even county to county sometimes, but that is one glaring difference from the Midwest to Florida. But it makes sense with your climate. What you got going on, yeah for sure. So we gave now just a brief sneak peek into what you're doing, but just to confirm it for our audience, can you let them know on like a simple level, what it is you do down in South Florida and then we'll open up some boxes from there.

Alon: 9:17

Awesome, yeah, so right now our company focus solely on vacation rental investments throughout Florida. We have about $150 million portfolio, so we have hotels, single families, we have some condos and that's pretty much what we've been doing in the last seven years. Give or take it changed, you know, because Airbnb became more known as a business About seven years. Give or take it changed, you know, because airbnb became more known as a business about seven years ago. It started like maybe a little bit prior to it, and that's really what we're doing in the last few years nice and do you use airbnb as a? medium, I guess. So airbnb is giving us probably 70 percent of all the business, okay, and the other 30 percent will be like vrbo, bookingcom, um, we're probably on like seven different channels and then we also have our own booking site. So for more, for like the repeating clients, we have a lot of people in florida. They have like families coming, so they know us, so they contact us, we give them our booking site and.

Marcus: 10:35

But airbnb, you know, definitely is a big chunk of the market yeah, yeah, and that website that you use for um, like if they're going to book directly with you, is the design vr yescom. Yeah, awesome. We'll also put that in the show notes so people can take a look at that and take a look at some of the vacation homes that you got offered on there. Let's take a look at some of them. Some of them are like luxury. Yeah, I actually so.

Alon: 11:03

I do want to talk about it. You know how we got into the more luxury properties, because it was definitely a process. It's not like the first property we bought. Well, actually, the first property was a very luxury house, but that was how we started. That was like a mistake. Let's call it. It's a house that we tried to sell A good mistake. Yeah, it was a beautiful house on the water in Miami that we wanted to sell and we said, ok, until we're going to sell it, let's rent it. And he rented very well. So that's how everything started. But when we started we bought a lot of single families in East Hollywood. Mostly it was a really good location for the price and we noticed that most of the properties were between, let's say, 400,000 to 650. Then it went up to like 800. And I think the more expensive home we have there was purchased for like 1.5 million and that was like a new construction, beautiful, modern home, and the market there became very saturated. A lot of other companies start coming also to East Hollywood, and also people who bought properties and brought us to us to manage. They just saw the money and they start buying more and more and more and at the end, when they had a lot of properties, they decided to also be a separate company. So they had a lot of properties, they decided to also be a separate company. So there were a lot of people in the same area doing pretty much the same thing and we're always trying to be a step ahead and we saw where it's heading, so we said, okay, what's the next destination? And then we took a risk. In a way we always do, like calculative risks, meaning we're going to buy a property that might not necessarily work for the first house, but we're going to buy it in a very good price. The worst case we're going to resell it. Um, we bought in plantation which, to people don't know, plantation is kind, is kind of like Sovereigns. You know, it's not a touristic area, it's maybe 40 minutes from the beach, not like I mean, you have like a casino, maybe, like you know, 20 minute drive, but you don't really. It's not like people say. I want to go to Plantation in Florida for a vacation. People say well, I'm going to go to plantation in Florida for a vacation. But the sovereigns have the potential to buy acre lot properties that are usually in a lower price point and the square foot of the house, the living square foot, is between $4,000 to $5,000. And we said that if we're going to build a product that can bring people to that area and they don't want to leave, they will probably do it. Bless you, thank you, I'm going to mute. So what we did there was basically in the acre lot. It's already coming with the pool. You know always, I mean there's always like a pool, but in the acre lots nobody's really utilizing the space. Like 95% of the homes, it's just grass. Sometimes they put a tennis court and some they raise horses, but it's not like you know, it's a small part of the lot. Horses, but it's not like you know, it's a small part of the lot. So we said let's do amenities in the house that people would just want to stay there and we start adding basketball court, volleyball courts, artificial grass for soccer and like picnic area, like we really wanted to give an experience, and that's something that really worked for us. I don't think I don't want to say nobody else is doing it, most likely if somebody else is doing it. They saw us doing it, um, but but still it's not a lot like you don't have, because the outdoor cost a lot of money and you also need to know how to really do it you. So we were like it's really working for us, and then we started only to focus on that, which a big part of it was because the increase in the real estate market brought to a point that you cannot get the three, four bedroom homes for a decent price. That will make sense, return wise. So it's not like we're against it, it's kind of like the market and everything made us do it, so we're very happy with it. I feel that that's really what differentiates us from like other companies yeah but at the same time, you know don't get me wrong if, if we can buy a house for half a million dollars, that will work, we'll probably do it. We have a lot of investors coming to us that have like $600,000 and we're telling them that unfortunately there isn't much they can buy unless they want to do like 4% or 5% return, which usually they don't, and those homes are bringing more, like nine to eleven percent return. So that's definitely our niche right now and that's what we're expanding, and we're also looking to expand to other states right now and to bring the same model. So right now, let's say we're looking into texas. I haven't seen a house in tech and texas is huge. Yeah, I haven't seen a house in Texas and Texas is huge. I haven't seen a house that has amenities you know, like real amenities, you know, inside the house, like movie theater, pool table, football, air hockey, ping pong, outside to have all the other stuff that I already mentioned. So that's really exciting for us. I really feel that people will want to pay premium to have something like that.

Marcus: 16:49

Yeah, all right. So you're expanding into Texas and you're finding these places that don't have the amenities you're talking about. Is that something that, with what you guys have built and the capabilities you guys have, you'd still purchase that, either for you or for an investor, and then put the money into putting those movie theaters, pool table room, maybe a pool, like those type of things? Would you invest that into the property, right?

Alon: 17:21

How would? that work with where you guys are at property, right, how would that work with with where you guys are at? So, uh, well, first of all, if I will see another area that has a house with amenities that work, that for me will be a much better thing. Like, oh yeah, like we are looking for areas that don't have it uh, it's just that they don't. I wish they had. So then I can really see the numbers. Um, the way that we're looking at it is that see the numbers. The way that we're looking at it is that most likely, if we don't add the amenities, the house will still generate a good return. I'm talking about, like the first homes that we're buying, that we're really like nitpicking, the best of the best for under market value stuff, like that. So if we're buying those and in our analysis, even without the courts, the numbers will work we will still add the courts and we are thinking that it's definitely going to justify it and it's going to make more money. And then, worst case, if it's not, so we're still doing OK return. So we're still doing okay return because the outside it's usually without the landscape it roughly can be like $200,000 to $300,000, depends on what you need to do. So if you're adding all that, it should give you roughly $200 to $300 more per night and that means it's well justified. And so again for the first house, even if you don't get it, but the numbers will meaning, let's say, without it you can make 13% return. And let's say we do all that investment. It doesn't work and it goes down from 13 to 10,. It's still worth to try it because there is a higher possibility that it will work.

Marcus: 19:11

Yeah, and I guess you're not losing in that scenario, like your profit got cut a little bit, but not a lot.

Dan: 19:17

I just want to clarify like you're buying these houses, you're renovating them, you're making them high end with all the amenities, but these are still vacation rentals. Like you're not flipping these.

Alon: 19:27

So we're not flipping. But a big part of the whole plan that we have is that in five years we could sell them for an upside. So it's not really a flip. We're adding a lot of value to it. Yep, and first of all, to sell a house, one of our thinking is that, you know, people are paying for staging. We're buying like high quality furniture, so it's not staged, it's real furniture. When people come, they already have an image of how the house can look like and we thought we saw it as a big benefit. And we also think that the value that all the courts are adding and how easy it's going to be to resell later. So we do see it as, on top of the annual return, how are we going to profit more?

Dan: 20:16

for sure, so how many of these houses have you put in a volleyball court in?

Alon: 20:22

So I play volleyball, and I'm saying it, I, I play indoor volleyball, but you know, in those homes we don't have room for beach volleyball in florida.

Dan: 20:33

No, no, I play, but I play professional indoor oh my god, really, yeah, yeah, well, I played that, I played.

Alon: 20:40

That's how I got here to the United States. I was supposed to play in New York, actually.

Marcus: 20:45

Really we missed all of that in the intro and I'm super sorry. That's very cool.

Dan: 20:50

I saw volleyball was an interest on your profile and my son is obsessed with volleyball. Right now he's 22 years old. He's trying to start up his own little, not little, but his own like grassroots type of teaching adults that want to get into it 16 and older about like getting exposed to volleyball. So he's there. I think he plays four or five nights a week and then two different days he runs a three or four hour like I don't want to call it open gym session, but it's all volleyball right now.

Alon: 21:21

That's amazing open gym session, but it's all nice volleyball right now. That's amazing. Yeah, it's funny because I took a long break after I stopped playing and when I got back to playing I didn't know that there are like still a lot of tournaments and places that I can play. Obviously, I'm 41 now, so I'm not playing like for money, but I'm still playing like competitive and um, I play against kids 22 years old, so. So I see how hard it is. You know, when you're, when you're 40 plus and you feel like you're 20 and your knees are disagreeing with you, you know.

Marcus: 21:57

Yeah, I definitely see how it is uh, but.

Alon: 22:00

But to go back to the, to the real estate, like really want, I said, listen, we're in Florida, let's put like volleyball courts. You know, and to be honest, I don't really think that 95% of the people that reserve with us actually play volleyball. I don't think they use it. It's more for like the pictures. And it's not cheap. To build a beach volleyball court is actually pretty expensive when you do it right. And you know, and after I pushed it to so many properties, you know the, the other people in the management, they come to me like, listen, we need to calm down with the volleyball, it's not worth it. What about pickleball? Oh, so, so we, actually it's. It's funny those questions, because now that's what we're doing every new property. Now pickleball became like such a hot topic that we're actually doing pickleballs. Before the pickleballs, we did tennis courts. Yeah, for us, pickleball is amazing because it's a smaller court, it takes less space, it costs less money. We did one property. Now that we did like a few different courts and we paint them nicely. So one is pickleball, one is basketball, the third one I just forgot what we put there, but I don't. Maybe it was soccer, I forgot, but it looks very nice. But yeah, pico ball, for sure it's. It's insane how big it is.

Dan: 23:28

Uh, here I don't know with in you got you know in your state how it is, but it's definitely big and it's getting bigger here, yeah, and a lot of the people that play here, that I play with, are older generation, so they're 60 plus and they talk about going to arizona or florida all the time. So they're 60 plus and they talk about going to arizona or florida all the time because they're snowbirds, so they'll leave here over the winter months and they'll look for playing opportunities down there.

Alon: 23:52

And it's the new golf you know it used to be golf, now it's pickleball.

Marcus: 23:56

Yep, yeah, by the way, that's the next thing.

Alon: 23:59

You gotta put a golf course on a property what you gotta put a golf course on a property so we we're putting a mini golf, uh, yeah, yeah, like we put synthetic grass. Uh, we were thinking about doing like super nice, uh, um, mini golf. Meaning, you know, like when you go to play in a like a professional, uh, mini golf place that they do all the I don't know, they put a clown and you need to. Yeah, yeah, that's really pricey. So we're not there yet. Like we, you know, we don't think it's really gonna justify the price question.

Dan: 24:33

Question to go back how much does it cost to to put in a pickleball court? If you middle mind sharing roughly, roughly Roughly, it's about $25,000. Okay, yeah, wow, we do everything in-house right now.

Alon: 24:46

I mean, I'm sure that if you're going to call a company, it's probably going to cost more.

Dan: 24:50

I got space right here, right next to me, on the ground, to put a pickleball court and my dad would love it, I would love it, and then you put it and you don't play that no, I would, I would be playing, I would be yeah dan would play pickleball, that is for sure.

Marcus: 25:04

Um, the other thing that we're seeing up here, um, in condos apartments I haven't really gone in any airbnbs and things but the, the gulf simulators they're carving out in our basements. Yeah, they carve out, uh, a little space to put netting and then that's like the amenity they're putting in and you'll see a 10-foot ceiling for those.

Dan: 25:26

So there's some. Some basements will be tough unless you have a more luxury style home, because I know you got.

Marcus: 25:31

Those are all the newer buildings that are being built.

Alon: 25:33

That right so here too in florida, a lot of the new buildings have the golf simulator. Um, I suggested it as well. It's a process, you know, like we're becoming like really good in setting up one thing, that it takes usually like seven months just to really become really good at that yeah and then to start adding more things. It's. It's pretty much like endless in a way. You know there's all, there's so many things you can add. Um, I agree. But then you, when you're thinking about like vacation rental side, you know you put a simulator. People abuse your stuff. You know you have to put like commercial stuff. You don't really watch them all the time to really know you know what they're doing with the club. What did? I don't know they're gonna right, right, damage it in a way, absolutely.

Marcus: 26:25

You know, I get that um and I guess a little bit of is trial and error like what? Yeah, for sure and how they break it or how they mess it up and you're like all right, next time we build it we're gonna have to secure this, because obviously that happens yeah, even the type of furniture you know.

Alon: 26:42

I mean we're trying to buy a really high quality furniture that people will buy to their own home. It's not like and that's and we can talk about it too. It's a whole subject that a lot of people that, thinking that airbnb is going to be like such an easy side hustle and they try to save money. They buy like furniture in Ikea or and stuff like that and and they have no clue what's really going to happen in a few months. You know and it's not just to break it's if you don't have the experience after it break. How do you deal with like Airbnb for returns If you have a check out and check in the same day? So they check out at 11 am, the next check-in is at four. You just found out at like 12 that something broke. You need to replace it asap yeah, three.

Marcus: 27:33

Hours what you got like three hours to fix. Yeah, you have like three hours.

Alon: 27:37

So what do you do? You know, and maybe you say I'm not gonna replace it. So trust me, people now in airbnb, the guests, they feel that they it doesn't matter if they pay a hundred a night or two thousand a night, they want five star experience and they're gonna complain about you know, we have homes that is like five thousand square foot homes and they're gonna find like one bug in the whole house and they're gonna say, oh, there are bugs and, like you know, I mean it makes sense, it's florida, 5 000 square foot. There might be a bug coming in from an acre lot. Yeah you know, yeah, we do that here too, like on the long-term leases.

Marcus: 28:16

Like people see one thing and they're like it's everywhere. Yeah, you're like. Yeah, you live in a woodsy area. Like that's where bugs live and the house is not completely sealed yeah, at least we don't have alligators yet. You know that's yeah, I'm glad we don't have those and I'm hoping that you've never had a call of an alligator being in one of your rentals no, no, but you know what I saw on YouTube.

Alon: 28:40

Once I had a house that it was by a lake and a lot of ducks came from the lake to the pool and they pooped all over the area there, the deck, and we were really like you know, we tried so many things, nothing worked. And I saw on YouTube, if you buy like an alligator, um, what do you call it coyote thing, uh, like a floater in the pool, that looks like an alligator oh, okay yeah, so you put it in the pool and they stop jumping in. Really, yeah, that's a good idea, so we tried that. That's as close as I got to an alligator they make them.

Marcus: 29:22

them now that are like RC cars or RC boats. You can just drive them around. That's the next level thing there.

Alon: 29:28

Yeah Well actually that's something I wanted to do as well. I was very close when the market started shifting. I was under contract on a house that was two acres and like almost an acre of it was a huge lake, private, and the owners that sold it they had jet skis and stuff like that and it's private, it's amazing. So I wanted to do something like that, like when you put like a you know a really nice uh kind of like a boat, but it looks like either a car or something like that. Um, but the market changed and then you know the rates were so high so it was too much for that specific uh deal, so we actually got out of it yeah and with

Dan: 30:10

that I mean if you, if you have a jet ski on a property like that or those, you're gonna have a higher liability or insurance coverage right yeah, no, no, we wouldn't put a jet ski, the I'm just saying the previous one for us.

Alon: 30:22

We will put like kayaking and stuff like that just stand up no motors yeah, no, no motor, which is also, you know, like one house we bought. They had a, it was an acre lot but it was very long. Like you know. It was kind of like um, the the one side was super long and they had a beautiful zip line from one side to the other. Like they built like a tree house and then they had the zip line and when I first saw it I'm like, oh, that's amazing. And everybody told me, no, that's a liability, so we have to get rid of it. So that it's like you know, that's a sad stuff in like, sometimes you want to do super nice stuff, but you know, liability wise, it's like you're thinking about every little thing right now.

Marcus: 31:05

Yeah. And you think about like the caution coffee hot and like even if you like warn people and haven't signed waivers, they're still going to hurt themselves on something. Unfortunately, it's on vacation.

Dan: 31:19

People think vacation equals alcohol and drinking and whatever other type of party, and they're trying to do so. People get crazy or stupid sometimes when they it's all.

Alon: 31:31

It's also like you know it doesn't matter, like you guys are saying how much careful you are, at the end you know it's your house and reviews is literally like number one thing that you have to be above like 4.85, and it's so easy to fall very quickly between the cracks, like if you're not on top of your reviews. So if people want to, you know, complain about something, uh, it's going to show right away. So for sure we're trying to limit as much as possible like all the bad stuff that can happen yeah, you know, yeah, definitely.

Marcus: 32:16

Um, you alluded to something early and I wanted to get into it because before the show you talked about, the progression of your career used to be in more of the management in terms of building, and now you're now focusing more on the acquisition side of it. Can you walk us through kind of what is your process to find properties? Or do you look at how many investors you have in and what they're looking for to go target properties? What is your mindset when you're sitting there looking, all right, we got to pick up another property. Where do you go from there? And then we'll go into how do you structure deals.

Alon: 32:56

Right, okay, perfect, good question, yeah. So when I first started with the acquisition side, it was more like okay, there is a current investor, he wants to buy a house for a specific price. What can I find? That changed with time because we almost always have investors in line and we know that if there is a good deal, we'll be able to close it. So the way that we're doing it now in order to be more efficient, so we're identifying the properties which I'll get into and then we're going to start the negotiation process, lock the deal. Only, once we're locking the deal, we're going to give it to the first in line that we have in mind that that will fit him or the group that we have in mind, and if they say no, we usually go to the next in line. We haven't had yet that if a house was good, we had to let go of it. Um, there were times that we closed contracts and then we checked a few things and then we had to back out during the due diligence period. But especially nowadays where, with the current market in florida, where it's still like very high um pricing, you know, for the for the homes it's we're really nitpicking like a lot of properties, the negotiations are way more lengthy. It takes sometimes three months to negotiate just to close a contract and almost always and I'm saying it like in a way like that, it's unfortunately every time we're doing inspections we're we need, we, we have to renegotiate the price. So think about, like three months we're negotiating a deal that we're bringing them to the most bottom price possible and then after inspection period, we have to lower more. We're not the not the type of company just to try to squeeze people as much as possible. It's more because that two things we have to lower the numbers in a way that it will fit our proforma, that we can make the 9%, 10% return. So a lot of nice homes just overpriced not necessarily overpriced, even if it's like market price. They're just not going to work for us, but they're still beautiful homes, so we will try to get them for a lower price. And then the second thing is that we're buying very unique homes that it's so hard to find comparables in the same area sometimes. So the price might make sense, but then if we're buying with the loan, you bring in an appraiser and it's really hard for it to find comps and sometimes it's not in the price of the contract. Now, when we're closing the deal, we're assuming that unless they're already given like information about, let's say, the age of the roof or stuff like that, we're assuming that everything is good. And we find out and that's something we learn with time that there is almost always issues with leaking in the pool leaks it's amazing how many leaks in the pool and and then most of the properties here, which I will. I don't know if it's in your area the same, but it's like septic tanks, yeah there's still some up here, yeah. So homestead are like 30-year-old, 40-year-old the septic always have issues. You know, back in the days there were cast iron plumbing, now it's like PVC. But if it's cast iron plumbing, now it's like pvc, but if it's cast iron, always issues. So so it's you. You know, when you're closing the contract you're assuming, okay, everything is more like, let's say, cosmetic, but then you find out, like so many things that you have to lower the price. So it's very like draining, you know, like emotionally draining. You already invested, you already, just for inspection. We're paying like two thousand dollars just for the inspection part, because we're doing, are you doing?

Marcus: 37:06

multiple inspectors, like a home inspector, a pool inspector, a sewer camera.

Alon: 37:11

We're doing regular inspection, roof inspection, pool leak detection, which is a separate company septic they actually opened the septic, they you know.

Marcus: 37:20

So yeah, each company is like you guys down in florida have a bug termite inspector? Yes, because I I heard from a friend that we got some cockroach problem down in florida.

Alon: 37:34

Uh, not really roaches, but definitely there are termites, for sure. I mean, it's not really bugs, but termites yes.

Marcus: 37:50

Termites are everywhere. That comment was not to scare any of the listeners.

Dan: 37:54

There's bugs everywhere. It's not just for that. I wouldn't even ask.

Marcus: 37:59

But no like up here. It's now being added into offers to purchase um with that specific like termite inspector. The normal building inspectors or home inspectors will not touch those things, just like chimneys are their own separate inspector oh, chimney is another annoying thing.

Alon: 38:19

There's always a problem with the chimney, it's like there is a fireplace. I'm like no, um. So, regarding the termites, I think because maybe it's more like like florida is so big into it that most of the inspectors, even if you don't pay them for a specific termite inspection, they're looking for it and they will tell you if they see something. So usually the way that we do it and so far we saw that it's money wise, it is the most like efficient way is that we're not really paying for a termite inspection but the regular inspector is checking for it and if he sees, then we bring a termite inspection. It's an issue I mean, mold can be an issue as well that we're trying to really be careful. You know some people try to hide it I unfortunately had to move from my previous house. Well, my wife decided we're going to move due to mold and I try to fight it as someone who has experience with, like construction, everything. We ripped up the walls, everything. It just it did not go away and so we're really being careful as much as we can. You know there's only so much you can do, um, but that's why in florida, the new construction. It's concrete. Nobody built from wood here anymore, but the old homes. They will have those issues. I mean, can't have those issues so they're doing exterior walls as concrete now too yes, yes okay that would make sense to probably hold up a little bit better with the storms coming through yeah, so you know to, if, if you're connecting it now with the insurance cost, if you're buying a house that was, uh, built like with the concrete, I don't really see a reason why to pay 20, 30 000 a year for wind where, first of all, the house been there for, like you know, at at least 20 years, some of them 40 years. They never flew away. You know, when am I going to get my money back? So you're saying, you know, maybe something happened, the roof stuff, I mean roof will cost you like $30,000, let's say so if you know you're saving on the wind and something happened, so just buy a roof. You know kind of like how we look at it. But again, it's only if we're buying cash, if we're buying like as an investment. You know company that like a few people are into the deal, more like a fund or syndication. So we usually going to do it just because we want to protect everybody, you know, not take risk. But if it's a private buyer, sometimes they say let's not do the wind.

Marcus: 41:11

Yeah, they can waive that Because if at the end of the year, you're still putting in less money by just buying the new roof than paying the premium every month for your wind insurance and again, it's not going to happen every year- I mean, even if it happened the first year, let's say, which sucks, and you buy a new roof.

Alon: 41:33

you're going to have, first of all, a new roof, so it's going to add value to the house, but still you're going to, probably for at least five years, not going to have another storm that you know fly your roof. It's more going to be maybe like a tree that is falling on it or something.

Dan: 41:51

so if it's a newer roof, you're not going to need to replace the whole roof, like yeah, what I'm hearing is is, if you were a smart business person, you would create a roofing company and move down to florida first of all, roofers here are making a killing during storms.

Alon: 42:07

The roofers are making absolutely a killing. By the way, in Texas last time, last storm, a lot of people from Florida went to Texas to close roof deals. They made a fortune. Also, I will say more than a than a roofing company, become a public adjuster. Public adjusters are making a lot of money during storms and, by the way, from storms, if you're asking me from investor point of view, I love storms. We're making a lot of money when there are storms. Every time a house is flooded we're repairing the whole house, we're making it newer and we're still getting probably$20,000, $30,000 on top of it to keep in the pocket. We have one house that is in a flood zone that already got damaged three times and the investor is the happiest person he's like every time. That's going to cover for all the losses that I was doing. So some people are happy with that Interesting. I managed, like you mentioned, the storm like five years ago. So five years ago I managed a 50-unit building that got damaged in that storm, 50 unit building that got damaged in that storm and it was for me it was my first experience as like a whole building that got damaged where it's like fully occupied. It was a nightmare. But the owners, they made to their pocket around two million dollars just from that, from like the supposedly damages. But you know they on top of like the, their upside was like two million to their pocket. So as much as it was a, I mean they got a renovated, more renovated building and they got money in their pocket. So in florida we're okay with if you're protected, I mean you know yeah, that's the big thing.

Marcus: 44:07

Yeah, I've heard of like roofing and siding companies mobilizing, like their main niche area is, I don't know, south carolina, I don't, somewhere close. Right, they'll actually move and it's more beneficial for them to house the crew down in florida. A storm, pick up all those jobs and then when they I don't know they're done with all their contracts, they just go back home.

Alon: 44:31

But they live in.

Marcus: 44:32

Florida for three months.

Alon: 44:36

By the way, I can tell you an easy way for people to make money that you don't need to be a genius, you don't need to have a lot of money before a storm I'm talking about like a month before, not two days, because then you're not going to have anything go to home depot, buy all the plywood and then go knock on doors and cover their windows. People don't have impact windows or don't have accordion shutters. People will pay you good money for it, because people are. You know, every time there is somebody that can be scared, people can make money out of it, you know, yeah, yeah we used to cover all our houses every storm, but then we saw that it just doesn't make sense. Like you know, it's. It's just not worth this. It's a lot of money that we're spending just to cover them and, you know, nowadays a lot of more houses have already impact windows, stuff like that, so it's just not the same.

Marcus: 45:27

Yeah, interesting. Do you guys see yourself continuing with the same model? Because you're talking about going to Texas. Are you going to replicate that same model, or do you guys foresee something with where the market is right now, what you're finding in Texas? Do you guys see yourself pivoting a little bit? Or are you going to try to take what you've created and then implement it kind of the same template in Texas? Or whatever other areas you go into.

Alon: 46:01

Yeah, so there are a few ways that we're looking into it. Yeah, so there are a few ways that we're looking into it. Again. We start doing all this stuff because of the market. So if the market in a way will change, we might also put a lot of efforts in different aspects of the market, for example, multifamily. We would love to buy hotels. Really hard to find those right now to make sense, people are selling them at supposedly 5% 6%, which usually it's not really 5% 6%, and then there are always issues. And then if you're getting now, let's say, a 6% mortgage with the rates that went down, it's like 6%. It's just not making any sense to buy hotels and nobody's selling hotels for like 8% cap or stuff like that. It just it doesn't happen. So if that market will will kind of like change because people have been talking about it for the last few years that it will change. So we will be ready Like we'll buy those as well and then maybe we can shift our focus because those are bigger projects. You know that might be more lucrative, but we will never really like stop what we're doing with the amenitized homes. For sure that will stay in our model and we do want to duplicate it into other places, because that's what making us unique, that's what we know how to do. Um, however, another thing that we have is so we have a software. I'm not personally the owner of the software, but we have a software that was, at the beginning, an in-house software that we were the only one who used it, and then we decided to split it into, basically, the design vr will use that the software as a as a side company, meaning we're paying for the software, even though it's the same owner in a way. Um, so the software it's called boom boom. If you're going to Google, like boom nowcom, it's a very big uh software that right now, uh, people all over the world are using for vacation rental segment, it's more for, like, bigger accounts, and what we are looking from our point of view in design VR is that we have, all of a sudden, a lot of information about a lot of investments all over the world. So, let's say, people are using it in Portugal, spain, france, greece, africa. We have numbers in each place how much the returns that they're doing. You know how busy it is, what people are paying per night, and then we can say that our next investment will be in, for example, greece. You know I'm not saying it will be Greece, but we all of the time have a lot of information that we can utilize and that's something that for sure will happen in a few years. But I think the the more immediate like what's going to happen soon will be something like texas, you know. For example. Uh, me personally. I am doing other stuff, like I am investing right now in a hotel in zanzibar, africa, for example, so it's oceanfront hotel and I am going to expand also there and and once we're going to, for example, bring the software to Zanzibar, so maybe Design VR will invest in Zanzibar, you know. So, again, it's more like a private thing, but I'm just showing you how we're looking at things to grow, you know. So the company will not just go all over for like adventures but when they see that there are already existing numbers. So then we're definitely looking to expand and our clients want diversity. If someone is buying with you let's say you have a family office that buys with you five, six properties then they're like okay, what's that? Like the next destination or other locations.

Marcus: 50:09

They don't want to just be too much saturated in one area to do the same thing, so we need to give them the answer you know, yeah well, you found it with uh zanzibar, and I hope I'm not the only one with this question. How did you find the property in zanzibar?

Alon: 50:28

so it has to be a wild situation yeah, um, well, I I will tell you. But. But I'll tell you also, you know the important for us to go to a different country. We have to have an operator that we feel comfortable and trust that we can work together.

Marcus: 50:49

The boots on the ground. Person Right.

Alon: 50:52

We have to Like we're not just going to start hiring from here if we see a potential in another place, it's not going to happen. So, specifically about there, it's more about a story of my best friend and it's more like his story is more interesting than mine. I just joined him. So, my best friend, he actually went to Zanzibar seven years ago to propose to his wife and he fell in love with the place and he actually we used to work together here in Cal. I also lived in California for a bit, so we did some stuff in California and then I moved. He had a solar company, he sold it, he went back to Israel and he was like already in his like mid thirties and he's like I'm not married yet. I, you know like he had the crisis, I guess. So very quickly he met, like his future wife. He was like you know, and she's great. So they went to Zanzibar. He fell in love with Zanzibar and he said you know, a lot of things are missing here. And then he found a lot that was very cheap in Africa. You know it's cheap's cheap.

Marcus: 52:08

And he said listen you feel comfortable talking about price like what is cheap in zanzibar?

Alon: 52:13

africa. So back then, I mean seven years ago I think, he bought it for like 300k. I mean that was the price of a oceanfront lot, you know how many acres? Uh, it was like an eight. Uh, not acre um I know I think like two acres or something like that. Okay, something, something around there. Uh, again, I'm not a part of that hotel. Uh, right now it's a hotel, but but so the way his story started is that, you know, he said, first of all, he's one of the best salesperson I know. Like he's a really good salesperson and I'm saying it because he thought that he will put money down for a land which he put like maybe 30,000. And he was pretty not broke, but 30,000 was pretty much what he had, you know, not broke, but 30,000 was pretty much what he had, you know. And he said I'm going to go back to Israel and I'm going to bring investors and close the land. And it's amazing, and again, he's a really good salesperson. He went back to Israel and every person he talked to was like, what do you have to do with Zanzibar? Like now you're coming with Zanzibar, like you have zero, first of all, all he has zero experience in real estate. So he's like, why will we invest in it? You know, you just saw the country for the first time. Now you want to do a hotel and stuff. People thought he was crazy, um, but he didn't give up, you know, and I think that's very inspirational, that like it doesn't matter how no you, how many times you hear the, the word no, he didn't give up. And then he end up finding a person that was very experienced in the hotel ministry, that he paid him for consultation for one meeting, and he met him. He gave him the, the vision that he saw, and the other guy told, told him I want to be your partner.

Marcus: 54:09

So they actually became partners Must have been a good vision.

Alon: 54:12

Wow, it was a great vision. They're actually. He built a five-star hotel 86 units. That hotel is number one on TripAdvisor right now in Zanzibar. He's doing amazing. Since then he built a few more hotels Zanzibar, he's doing amazing. Since then he built a few more hotels and I was one of those people that he came at the very beginning and he said let's invest. And I said you, zanzibar, not yet. But I told him listen, you definitely have the abilities. So once you do have all the experience, then I can set up a lot of you know, funds that will go toward your way and we can do a lot of stuff. So I actually waited a very long time to have a good opportunity plus experience, plus to show numbers for the last two years of returns, you know, yeah, and to me. So he's an operator, you know, that I definitely trust and that's the only reason, like, even if you give me the same, like the same opportunity, but he's not there, I wouldn't go there, you know. So it doesn't matter to me. I'm also looking in Guatemala right now, but guatemala it's the same thing. I I will not go there if I don't have an operator I can trust. So there is probably not going to be my best friend, but for sure someone that we know personally that can show us track record, because those things you really need to be careful, you know for sure. And and then there are there are other companies like that you know, like, for example, hilton right, they also have a hotel in zanzibar. I'm sure that hilton, that you know themselves, didn't have like a best friend there. They just saw an opportunity and they brought their team. So you could, you can do it, but you need someone on ground that represent you.

Marcus: 56:03

Uh, for sure, but that's as a company, how we see like to involve yeah, and the the boots on the ground, the project manager, property manager, whatever you want to call them. Uh, whatever investing you're doing, whether it be short-term, long-term flips, the most important piece to that is the person that can get there like that needs to be able to step on the lot and figure out what's going on. Um you're you're handicapped if you don't have that and you're very vulnerable yeah, I'll give you an example.

Alon: 56:37

So there is a guy we've been working with. I've been working with, uh, we did a few flips and he always had great deals. And one day he came to us and he gave me a deal that he was like three and a half hours, which is far enough for me not to to to rarely see it, you know, but I saw everything like from far away. I didn't even go there. The numbers worked. So I, I, we, we ended up buying it and I actually lost a lot of money on that deal. Now, why did I lose the money was because, as much as that guy did business with us that specific business, I mean that specific like home, uh, we got really screwed up, like, like, screwed. We pay him a lot in advance because we've been working with already in other deals and he did not brought, he didn't bring the actual right people to do the renovation that was needed, and you know what I did, the analysis like. So so I did check before myself. I didn't trust anybody else. I, I checked all the numbers. I end up selling it at a big loss and whoever bought it from me at the last put the money that I was that I paid him to do the same renovation. Literally they did exactly what I wanted to do. It wasn't like a high-end thing, it was like a flip and they sold it for exactly the same price that I put on the analysis like three months after. Yeah, so you definitely need someone like 100% that you trust. I mean Tampa, for example. I go very often to look at properties and I always stay there for a few days, but at the same time, we have in-house people there, like you know, we have a couple project managers that are there and we have other people in our team that goes there every very often and we we have to, you know yeah, no, it's an important piece to the team.

Marcus: 58:39

um, you talk about the team that you have in south florida working with you when you go across borders or across countries, in that case, with Zanzibar, still need to bring the team.

Alon: 58:51

That's still an important piece to it, so for, example, if we'll go to Texas, for example, the first few homes will probably use a local management company that we most likely will not really know personally, but we're definitely going to look into them, see their track record, we'll see how many properties they manage. So so we're okay with that. You know I'll be on the line like flying there often. We are okay with that. You know, again, I'm sure it's not going to be like, even if you have a great team, when you're doing something yourself, it's different. Going to be like, even if you have a great team, when you're doing something yourself, it's different. You know, you go there, you see it in your eyes. It's always different when it's your own thing, that you're. You know that you're doing um, but yeah you, you need to a good team, you know.

Marcus: 59:39

Yep and, like I said, it's not always your friend, but you do have to make the phone calls and we've had a couple shows with people that invest out of state, cross country, all that kind of stuff. And vetting a property manager is important, even if you don't know them. You got to know, like you were saying, how many properties you manage. One is what do they manage? Are they managing more long-term properties or are they a property manager for short-term rentals and do they have the capability, like you mentioned earlier in the show? Checkout is 11 am. Something's broken. Next check-in is four. Can that property manager, when you're in Florida and your house is in Texas, get there in that three-hour?

Alon: 1:00:18

window. Yeah, of course.

Marcus: 1:00:19

Or are they not capable of doing that? Because then your boots on the ground is not really functional and that the people work for you, they, they have to be happy.

Alon: 1:00:28

You know, like, for example, zanzibar, a nice salary for a hotel manager is like 2500 in zanzibar right, which it sounds like ridiculous but it's considered like a pretty decent paycheck a month. The guy that we have there that basic but he's supposed to end up making like 7,000 to 8,000 a month where everything's stabilized and it's a very, very high income. For someone like that in Zanzibar it's extremely high. But we are like, if we all make money, you know you should be very happy and you're like the leader in a way. I mean, if you're the property manager for a nice hotel that is bringing great numbers to the investors, you should be happy, you should be compensated and and if not, they you know they're probably not going to leave but it's going to show on the magic panel.

Dan: 1:01:26

Yeah, they're also not going to cry very hard.

Alon: 1:01:28

So for sure to have people that are good in what they do, but also to keep them happy, because if they're not happy, they're going to look for something else if they're good.

Marcus: 1:01:38

Yeah, I just heard a term, I think it was like passively quitting. Like, if they don't feel like they're passively quitting they're not gonna quit, oh yeah like are you gonna get their best effort? No, and that's the, that's the line you got to play with, and I mean, anytime you fall below it, you're uh, you're in trouble of losing your, your team and your support a hundred percent.

Alon: 1:02:01

I mean your team is. You know, there's only so much you can do by yourself.

Marcus: 1:02:07

Yeah, for sure.

Alon: 1:02:09

What do you guys do there, like from like investments and stuff like that?

Marcus: 1:02:15

We started out with, I mean any investment we have, it's either going to be in our rental part of it, which is our buy and hold long term leases we haven't dabbled into Airbnb or short-term and it's all very local, so we haven't expanded. Zanzibar seems like a different planet to what our investing is. And then we have renovations where we flip homes and they're a quicker transaction.

Alon: 1:02:43

So what returns do you see there for right now in today's market for long-term?

Marcus: 1:02:51

Returns on turnkey properties.

Alon: 1:02:54

Like long-term investments.

Marcus: 1:02:59

I know Are you asking for like what do we cash flow on properties for?

Alon: 1:03:05

like return wise? Yeah, what is your cap rate on like properties that you're buying right now for long term?

Marcus: 1:03:12

cap rate. As of recent, I would say it's closer to five wow yeah, and they're all single family homes, like we haven't broken into any multi-family yet. Because when we started getting into it, when started, we wanted to go into rentals and, I'll admit, my purchase took our company in a completely different direction. We bought a house. We were just gonna do a roof repair to it. We found out that everything was framed incorrectly. So it turned into either we sell the property, take our 20K loss I think it was around 20K and just selling it as a lot and let the next person go in, or we need to get somebody who can build a house. So we ended up opening up a construction company. So I feel bad for our numbers on the rental market because we don't have any really recent in the last, say, two years.

Alon: 1:04:11

Got it.

Marcus: 1:04:12

Everything we've been doing has been pumping the construction company.

Alon: 1:04:15

So what do you see from flip side? Like return over there 15,.

Dan: 1:04:23

I think, maybe closer to 15 to 20%.

Marcus: 1:04:26

Yeah, I was going to go 15 because I'm conservative with that and it's usually like a year or less, less than a year okay, it's not. It's not bad. We've had a flip that lasted longer than a year, and that was the one I was referencing, where it was like got it man, it went. It went backwards so many times where I didn't all right now we're at, we're our backs against the wall, and then you find out that that wall was not structural, it was just a partition. So you blow through that and you're like, okay, we can't go back any further than this. And then you find your floor system is screwed up. So then you go back even farther that one start and stop so many times. That project was not a great one.

Alon: 1:05:09

Yeah, but that's made you who you are today.

Marcus: 1:05:11

You learn a lot from it.

Alon: 1:05:13

Yeah, but, by the way, when you're saying like 5% return, so I used to manage long-term hundreds of units. I mean I used to manage, I started as a property manager and the returns that we gave to investors after management, everything was about eight percent, like very accurate, like the average was eight percent, uh, cop rate uh, which was great. Uh, you know, that was like seven, six until seven years ago and backward, and one of the reasons why I personally wanted to get into the Airbnb was because the same investors that wanted to buy more. I was like there is nothing. I mean that's how I made my money. It's not like there's nothing I can find anymore, because the returns became like 6%, you know. Then it's like five. So, yeah, I hear you Like it's definitely, you know.

Marcus: 1:06:16

Yeah, when you try to run numbers on things like a, 10% is almost non-existent anymore, at least in the single family space.

Alon: 1:06:29

How easy it is for you guys to find, like to do flips, like for 15 stuff like that. Like is it easy to find the deal?

Marcus: 1:06:36

and it's more about like finding the deal yeah, finding the deal is the hardest thing and, uh, and structuring is is difficult. Now, too, we're we're going. We're leaning now the direction of getting less off of traditional financing, with interest rates and all the fees that are associated with the holding costs are a little bit higher. We're hoping that if we go with the non-traditional lending, we're going to save some room there.

Alon: 1:07:06

You mean like hard money lending, or?

Dan: 1:07:07

yeah, yeah, that's the thing. There's no, not, not a lot of cash is going into the deals, it's all yeah, hard money and what is like an average cost for like a flip?

Marcus: 1:07:18

do you have like an average cost or it depends on what kind of property we're in and the one thing that we we're running into because prices are so high, holding costs are so high your, your window of opportunity to improve the property is going to go down because most of your capitals not most- yeah majority of your capital is just going to go into purchase and holding. And if, if we were four years ago, with interest rates that were unbelievably low, like you, have a wider window to hit more areas and get your property to the next level. The last couple that we've done, minus, we bought the oldest home in this community and we obviously no walls were parallel. Nothing was running how it should.

Alon: 1:08:06

How old was it?

Marcus: 1:08:08

oh, I think that was not 19 25, 28 I was gonna put 20 that's like 100 years old yeah, it was an old, old home. It had the original carpet in it. It was some like gross carpet in the bathroom. It was weird. It was weird. The bathroom took up half of the floor plan on the second story. So the bedrooms were super small but the bathroom was like bigger than both bedrooms. It was super weird, so we moved that around a little bit. But in order to do what we really wanted to do, to make the house operable and like actually function, you put more cost in than what you'd really want to do to get your return. And then it was the teeter-totter of like all right, do we make this good or do we make our profit higher?

Alon: 1:09:09

and that was like one of those things where do you buy those homes like from, like as a from a wholesaler, or like we bought them all off market, off market? Yeah, I, I mean, that's for me something I notice here, because I'm personally will still love to do good flips, right, um, and I know wholesalers, I know like people send me like off-market stuff, but then it's always like you know, if everything goes perfect, it's like 15 but, then you're like well, if you know things go south. then you're like eight percent, and then for the eight percent to waste so much time, plus the market here, how long in average it takes you to sell a house from what the day it hits the market.

Marcus: 1:09:53

The last thing I read was like 45 days. It's not bad, like.

Alon: 1:09:59

I have your homes, that you know. Now, specifically, maybe because of elections or maybe because people are waiting, you know, with the the for the interest to go down, I I don't get a lot of calls um for people that buy, want to buy for the like as an end user. I'm not talking about like investors, because investors, you're always going to have investors um, so it's really hard. So when I'm thinking about like a potential flip, let's say I'm saying okay, 12, which is okay if it's six months, but then all of a sudden I can get stuck with it for like six months on the market just standing. So I'm being super cautious about like flips right now here.

Marcus: 1:10:40

Yeah, and we are as well, because it's tough, like you run the numbers that you find off market and they're either posted on forums on the internet or facebook marketplace or and you run your numbers on those and man, that the margins are so tight, um, and then, here, you're always gonna hear like the latinos, you know the gc they're like being deconstructing, like cuba.

Alon: 1:11:05

Or they come to you. They're like I can do it with no permits, don't worry, I have the price. And you always get caught, you always get screwed. It's almost like double the price at the end.

Marcus: 1:11:15

I know, I don't know if, with it being such a seller's market, I guess on this point everything is going retail pricing market. I guess on this point, everything is going retail pricing. So it's hard to find those like those discounted properties, and that's what we've done in the past is getting all these distressed, old, outdated, like really a lot of deferred maintenance properties. But now more and more of those are like all right, well, we'll buy it retail, and it's like oh that was our business model, plus for flips.

Dan: 1:11:50

It was just a little transition.

Alon: 1:11:52

You pay 50% taxes if you're doing the flip less than a year. People don't really think about it right away, unless you do some sort of like 1031 or something. But it's also something that people say oh'm gonna make 12, I'm like, but you're paying like half, you know to, for taxes unless you're holding it more than like a year at least. But I don't know, people don't really have like the whole analysis usually, you know yeah, yeah, but it takes a while to get that and yeah, yeah, for sure.

Marcus: 1:12:26

I just hope that people, if they get excited into this, do love that side of it, because that's where things get a little fishy the details and those yeah, you need to enjoy what you do.

Alon: 1:12:38

That's first of all. Oh, definitely, it sounds like you do, which is very cool.

Marcus: 1:12:43

Um, I think you're only one of. Maybe we've had two or three guests, you including one of them that does short-term vacation rentals, and it's always been a little niche of real estate that I've been interested in. But for me and I don't know why, the risk is so much higher because it could sit vacant, and to me is like I was. You have overcome that and you obviously know that that is a false worry because it sounds like everything is getting uh pretty active on your spots but but that, that little question of like ah, is it going to get rented this weekend?

Alon: 1:13:25

well, you always have. We always have fear, right for new adventures. I mean, it's always a fear, even for me, if I go to zanzibar, it doesn't matter how long I've seen everything, there is a fear, you know, because you put a lot of your own money into it. Um, I mean you have softwares like air dna that work, you know, through airbnb, and they give you pretty good numbers about occupancy in some areas and stuff like that. Um, if you're doing it yourself for the first time and that, by the way, that's something that I've noticed that I'm trying to educate people about, not just like it's good to jump in the water, but a lot of people like they jump into the water thinking something is so easy when they don't know the full scope. So I'm not saying to be scared of doing stuff, but the problem is most people don't do the correct homework for new stuff. I have a few homes that are I posted for rent and every house I have for rent I know exact numbers of what it will do in Airbnb and I get so many calls from people that said, oh, can I rent it? I'll pay you a few months in advance, can I do sub list to it for Airbnb. And now they start giving you stories like, oh, I'm going to live in the old house, but can I rent one room for Airbnb? I'm like, look, I don't care about the stories, you, you can go ahead and rent for Airbnb, but I'm telling you that you will lose money, like I know for a fact that you will lose money. Now I'm not saying it. You know that you will lose money. Now I'm not saying it. You know if someone will want to pay me for rent, I mean, after he knows the details, I'm like, okay, I want you right. Usually after I warn them they don't move forward, right, but but that's something that a lot of people they see on YouTube, all those videos I'm not going to mention names, but there are some people talk about it like how good and easy and how much money you can make sub-leasing a property and how you can make. You know, a thousand here, two thousand here. You just get like five properties and boom, you're making like eight to ten thousand a month. I'm like, no, you're not. You know, first of all, you're buying furniture, that minimum, minimum, minimum, like thirty thousand dollars, and you buy them for thirty thousand dollars. It's going to take you a length, a long time to cover that. Thirty thousand dollars and you have zero homes so far. You don't know really you know where to advertise, how to deal with the people, who's going to be your crew, like people don't know. Now I'm not saying they cannot make money, I'm saying that they're coming into it without knowing anything and usually if it's my friends you know want to do it, I'm like you can do it, but then they keep asking me like a hundred questions and it doesn't go anywhere. You know like they keep asking questions. They don't do it and I and I tell those people you know what? And it doesn't matter if it's us, someone else. If you really want to start and you feel like you got a good deal, use a management company that, yes, it will take most of your money, it will take most of your profits. But at least from that management company, if it's your first property, learn all the ropes, like how to do stuff, how do you deal with clients, where do you advertise, how to decide how much to charge per night, like so many questions. Are you licensed? You know? What is your insurance? What, like, how long is the lease that you sign? What's going to happen if next year, the owner will come to you and he say, okay, cancel the list, you didn't even cover your expenses for furniture. What's gonna happen if he wants to sell? Like, there are so many points where you can lose money. So use someone who know, make even zero money. But look at it as like learning, education, right, like a learning curve, educational like. Think about, if someone wants to do something, usually they're gonna go and pay for a class or for a course or something. So instead of doing that, if you want to cut through everything. Pay for at least someone that will help you while you already have it like you know. You know.

Marcus: 1:17:44

Yeah, learning the field would be like the most beneficial thing. We always talk about like if you went to college or high school and you learn in the classroom or a real estate license. Like you go in the classroom and you learn when you get out into the field. Like things are different, like learning from a book and learning the field are different. So why would you not get, even if it takes away your cash flow? Let's say you have a property and all your cash flow goes to the property management company. You're still technically making money on appreciation, but you're learning the ropes of what it is to operate that in the field, which is probably your best learning situation you can give to somebody is learning as it's going.

Alon: 1:18:29

Hopefully they make the right questions, or ask the right questions, make the right moves if you're looking into, like most of the successful people in in life, not just real estate, most of them have mentors yeah, most of the successful people. So why someone who barely have like 20k in his bank account that is willing to risk it in a way because he thinks he's gonna make easy money, doesn't wants to do all that, risk all his money but he's not really paying for a mentor? You know, I'm not saying I'll be a mentor. I'm saying like, like pick whoever you want, like you know. But like pick someone, like ask for guidance, you know, and don't be shy about it.

Marcus: 1:19:12

Yeah, and the cool thing with real estate I have never reached out to somebody and asked for help and they're like no, thank you. Everybody that is in real estate is willing to have a conversation or give you a little bit of advice.

Alon: 1:19:24

You want to show off their knowledge.

Marcus: 1:19:26

Yeah, yeah, or their, I mean, I guess, or their contact list, like call this person, he'll be able to help you with that Right right. They're always willing to help.

Alon: 1:19:34

Yeah.

Marcus: 1:19:34

It's a field that is very different Because, like I mentioned before, me and Dan work together, working within that industry. We were fundraising. You're not getting help from other people Like they will go out of their way to take you down rather than help you, and to come from that and to go into the real estate where everybody's like, yeah, here's contacts, here's lists, I can help you with that. Here's my phone number. Breath of fresh air, which is super cool, and that's why I tell people if you want to get in like get in in, people will help you.

Alon: 1:20:11

You won't know it, but, right, don't get stuck in analysis but ask for help. That's you know. Yeah, because people, I don't know, when someone starts something and he has some experience, they, they feel like, oh, if it's, it's like a sign of weakness if you ask for help, but it's it's not. You know, it's better to ask for help and even pay for help and not to lose money, because for people who starts that only have like tens of thousands of dollars that they saved, their setback is going to be so hard you know that it's going to take them a long time to try again. And that's you know. I'm happy to you know me, right now I'm really surrounding myself with the best of the best that I could get. You know, again, some people can get maybe better people or stuff. But and to know, and to know your weakness is also important, like I know, uh, maybe not all my weaknesses, but some of my weaknesses. I'm aware of them. So I'm like, okay, how can I still be successful in what I do with my weaknesses and how can I cover for them? And that's not really a sign of weakness, because every person has like down. You know side, that he's not great at. You know you're talking about fundraising. There are probably peter people better than me in fundraising so I'm like, okay, I'm gonna pitch them the idea that they're gonna want to be on board, they're gonna make a lot of money from that deal and they will raise the money.

Marcus: 1:21:43

You know, yeah, that's perfectly fine yep, yep, that's what makes the team go around.

Alon: 1:21:51

I like that the only way if you want to grow you know it's the only way.

Marcus: 1:21:55

You have to delegation, you have to yeah you delegate to where you're, uh, weakest or where your interests are not, and you put somebody in with stronger interest there, it does complete the team.

Alon: 1:22:08

I can tell you that the partner I have in the brokerage so his software Boom Now that I mentioned he brings incredible people to his board to be a part of the board and they get some percentage in the company. And those are people that, if I start sharing names, it's like really high ranked in the industry with so much experience. It's unbelievable that they're here. So for him he's like you know, okay, I'll offer them something and they can take me to the next level, and without those people he wouldn't be where he's at now and it's a hundred percent the way I see it. And again, everybody should profit. You know, I mean, we live one once. Yeah, make it, make it comfortable for everybody yep, absolutely, I like it.

Marcus: 1:22:59

That is a a very interesting story, a very cool career that you're into. Um, I know we went over our hour and I want to let you go on a Friday here, but I want to see how this move into Texas goes. I've always been fascinated with the Texas real estate. I'm excited to hear what happens with that one.

Alon: 1:23:22

I can give you a quick example just how I'm looking at it right now. So you know, I've been to Texas but I'm not like the most familiar with all Texas. So I start looking online like what are the best locations for Airbnb? And then you see a lot of a list of, like, let's say, 10 different areas in Texas. Each area I go into and I'm starting to look in like, okay, how many Airbnb units they have, what is the average occupancy price. And then I'm looking whether they have even acre lot properties there in that area. Whether they have even acre lot properties there in that area, because it might be like more like, you know, like a family area that is like smaller lots or stuff like that so like that's how. From that I made it into like three areas that I find that are good and then I'm looking like okay, how much a property costs in this area, this area, that that area, that like? Like that's like kind of like how I'm getting into the best locations. Then I'm finding like companies in that area that already manage properties, starting communication with them to see what they think about the numbers and everything. It's a, it's a it's a process you know, and then to know all the, of course, the regulations, which is super important. You don't want to be canceled a month after you start. So I think, everything realistically, probably in like two months we'll have more knowledge about like okay, let's book a flight and start looking into properties and then, very quickly, I mean because we have the funds to start. So it's like we're pretty much, I think. But to get to even the point today, why Texas? And it takes like a year, you know yeah.

Marcus: 1:25:20

No, I mean, that's a big plan for you guys, but it looks like you went through your due diligence. So it sounds like you went through your due diligence. So it sounds like, uh, maybe summer of 25 you'll have some action going on, and yeah we'll do another podcast in summer of 25 summer of 25. Well, at least have one down there, if if you're looking to buy within the next two. So you're hopefully isolating something by january. Bararring nothing goes weird with the economy.

Alon: 1:25:48

We always got to put that little asterisk in there 25, beginning of 25 makes sense and, by the way, we have to Like I noticed that if a company, it doesn't matter what you do if you don't think a step ahead. I mean, we could still buy properties in Florida. We're still buying properties in Florida. We just closed on like four properties in the last months and a half, but it's it's like we always want to be prepared what if this happened or what if that happened? Like where to go next, and if we're not gonna always think like what's next? What's next, then we're not going to be a successful company. Like that's the way I see it yeah, always looking for progress always yeah, or you're gonna drown yeah

Marcus: 1:26:36

a lot of sharks out there, start the show with flood and you end the show with flood. Um no, that's, that's cool, dan. Hopefully we can get him back on middle of uh 25 because I'm interested to see how this transition into uh to uh texas goes. And selfishly, I like hearing more and more success stories of uh getting outside of your bubble, outside of your state, investing long distance. I think the more successes I hear will nudge me in that direction.

Dan: 1:27:11

Getting more comfortable with it.

Marcus: 1:27:12

Yeah, yep, look at the end you know, I don't know if I'm going to Zanzibar yet, but we can at least get to like the other Midwest.

Alon: 1:27:22

You know what I tell people, like in Zanzibar, for example, you know. I said, let's say people are open to invest in different countries. And I'm like, okay, let's say it doesn't matter where you invest right now, will you be happy with 15% return annually? They will say, of course, I'm like great, we're making 20% to 30% return. Say, of course I'm like great, we're making 20 to 30 percent return. Now, every question they might say like okay, but it's a third world country, what if? What? There is an answer for everything, right. And and then it becomes to a point that when you start showing numbers, so as as scared as you can be, there are legit numbers, you know so. So then the question is like, why is a person really scared to do the next step? And I think that's more important to to really understand, like, why someone is. Because it is scary, like. But I'm saying like to me, if I go to um europe again, doesn't matter where in europe, you know, portugal or Africa, it's not where I live. When I get two hours from where, I am like, ok, so why does it matter? Where I'm not there, it's someone else. So that's like how I see it. And then if I'm scared like, ok, why am I scared? By the way, I just closed another deal there. I'm not as involved, but I closed the investor in Serengeti. Serengeti is in Tanzania and it's the second safari in the world like size wise. It's the second one in the world and we have a land in the safari that we can build a hotel. It's going to be like a glamping hotel and you cannot find now a lot in serengeti to build a structure that is not moving with the season. So so you could find areas that, because the animals move seasonally, so you have to move with them, you cannot find more lots that you can build, like to stay, because it's stationary, is like a different construction, so we have one. Um, and again, people are now this, not you know, but the question is like, look at the numbers like you have four season in serengeti, for example, and night per person, over a thousand dollars a night, wow, and you can build it. Like you can build a structure there for for nothing. You know, like it's cheap. So so the question is like, why are you scared? You know, and I think once you realize I have no answer to if you have an answer, okay, but but, once you keep replying to all the fears, then what's left? like, okay, let's do it. You know, yeah, that's how I look at it and I trust me, I'm not a gambler. I ask a lot of questions before I put my money in somewhere, but then when I really get an answer for everything, I'm like, okay, let's do it.

Marcus: 1:30:22

You know, yeah, no, definitely. I like the perspective of once. It's over two hours, it's long distance. Even if it's in the state, you're still not getting there. I'm not there. I like the perspective. You're pushing me, you're giving me a little shove in the back to get there.

Alon: 1:30:37

Well, you guys can come to Florida and see what we have.

Marcus: 1:30:42

We're going to do that in the middle of the frozen tundra.

Dan: 1:30:46

Tampa and Clear. We're going to do that in like the middle of the frozen tundra, Tampa clear water area for sure.

Alon: 1:30:50

Well, let me know when you're in Florida.

Marcus: 1:30:52

We will. We will Well, thanks for giving us the time. We are going to link your website into the show notes.

Alon: 1:31:01

Yeah, I'll give you my links too, for my just like my social.

Marcus: 1:31:06

Get ahold of you or find out more information, let us know, because we'll put that in the show notes for you so people can reach out alright, guys, pleasure, and we'll be in touch, for sure we will have a good weekend thank you, guys, you too bye.