Working Capital The Real Estate Podcast

How to Earn More Money Through Real Estate with Steve Rozenberg|EP19

Sep 15, 2020

In This Episode

Steve Rozenberg is an international commercial Airline Pilot who turned investor after the shock of 9/11 turned his airline career world upside down and the “safe-secure” job was anything but that. This is when he realized he needed to be in control of his own destiny. Since then he has owned dozens of rental properties as well as apartment complexes, he has also flipped and wholesaled hundreds of properties in Houston, Texas. He has written and published 7 E-books, and his most recent literary creation “Building an Empire: Failing our way to Millions” where Steve tells an in-depth recollection of his own Entrepreneurial journey. He has produced over 100 video seminars for its “Owner Education Series” and “Steve Rozenberg On the Road”. Steve is a member of NARPM® Houston and Ft. Worth, TX, CE certified and is a licensed real estate agent.

In this episode, we talked about how he started in real estate, how he managed to build a cash-flowing portfolio while working as an airplane pilot, the type of properties he had, how he built a huge property management company and how he and his partner manage their company to be efficient and most importantly, to scale.

Quotes:

  • “To me, that is the truest form of leverage is utilizing your skillset. And it’s the difference of working in the business to working on the business.”
  • “A truly successful investor that’s educated is a contrarian investor, meaning they’re going opposite of what the tides are doing. And so I think it’s important to have that ability and education level to make that pivot.”

Resources and Links:

Steve’s LinkedIN

Steve’s Website

Steve’s Instagram

Building An Empire Feeling Our Way To Millions

 

Transcript

Jesse (1s):

Welcome to the Working Capital The Real Estate Podcast. My name is Jesse Fragale. And on this show, we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you’re looking at your first investment or raising your first fund, join me and let’s build that portfolio one square foot at a time. Wow. What an episode we had Steve Rosenberg on the show. Steve is a very unique individual. He is a international commercial airline pilot that had his life changed upside down in nine 11. You know, with being furloughed in the industry, he had started his, his real estate a career at that time, and he has grown to an incredible portfolio today.

Jesse (43s):

His areas of expertise have been all over the place that property management wholesaling, longterm holds. We talked about quite a bit. Today. We talked about his coaching business. We talked about how he sold his property management business and a lot about getting started in real estate and continuing to develop yourself. If any of that interests you, you’re going to love this episode. So listen to the show, leave a review. If a, if you do like the show, you can go to iTunes, check that out. It really helps the show and helps us create more content for you anyways. Enjoy. Okay. Welcome to Working. Capital I have a fantastic guess on the show. Today is Steve Rozenberg. Steve, how you doing today?

Steve (1m 20s):

I’m doing good, man. Thanks for wearing the same shirt. I’m glad we got that memo.

Jesse (1m 24s):

Hey man, we just look great right now for the listeners out there. Two white shirts, look a look. Pretty good. Fantastic. Got some good lighting on Steve. Here we go. Listen, Steve, thanks so much for A for joining the show. I am, you know, aside from the intro that we just did, I think it goes without saying that you have a fantastic mustache for sporting right now.

Steve (1m 43s):

It’s not hot. It’s not easy to get this takes you years and years of practice.

Jesse (1m 47s):

A hundred percent. I think I had to shave mine after a isolation for a while. It was like, okay, it’s time to go. But yeah, thanks so much for coming. On you know, as we talked about a little bit before the show, I kind of discovered you through A through YouTube and Instagram and like myself, you’re a contributor to the, a bigger pockets, a bigger pockets channel and a, and the podcast. So I thought what I’d, you know, just given the fact that you have such a, such a wide area of expertise when it comes to property management, real estate investing, maybe we could back up for a second. You could tell listeners a little bit about a, your history in regards to commercial airlines, but also, you know, you’re start into the voyage.

Jesse (2m 29s):

We call real estate.

Steve (2m 31s):

Yeah, And it. You know, it’s funny. I tell people I never, in my life ever thought that I would ever own a piece of real estate besides me, but the house I lived in, I never wanted to be an investor. I never thought I’d be an influencer or speaking on stages around the world at that was never a part of the plan. My plan was always to do what I, what my first love was and still is, is being an airline pilot. And I got hired at the airlines very young. I was 25 years old and I was living the life of my dreams, mean I lived in Guam. I lived all over the world. I was traveling flying, and I had the most safe and secure job up until September 10th, 2001. And obviously we all know the tragedies that happened on 2011 and that safe, secure job kind of came crashing down on September 13th.

Steve (3m 19s):

And that was the day that I got my furlough notice that basically said, you’re safe. Secure job really is not safe. And its not secure at all. And you’re a cog and a wheel and we’re going, we have to do what we have to do and you are going to get furloughed. And it really was like, A, it’s like a wrecking ball hitting you in the, the size of the face kind of when you realize, wow, like, aye, I have no control over my destiny. And when you’re so focused on doing a specific job, like being an airline pilot and I’m basically flying a metal tube around the world with people in the back, but at that job doesn’t exist. I’m really not talented or skilled to do any other job.

Steve (3m 60s):

And so you actually realize that the more specialized you are the most vulnerable you are. And a, and it really was one of those life check moments that you go like, Holy s**t, like I really am not qualified to do anything. I couldn’t even drive. I remember looking in the wan ads and I couldn’t even drive a truck because I didn’t have the qualifications. And I’m thinking, this is, this is insane. Like I, I, I studied my whole life for this job and now it’s getting ripped away from me really in a matter of 72 hours. So, you know, when you see industries like, like we know what’s going on in the industry right now in, in the world and people may see trends coming, but this was 72 hours. And you go from a career that, that you basically lived for.

Steve (4m 40s):

And all of a sudden it’s just wiped from you like ripping off a bandaid. It’s you realized that if you don’t protect yourself and you don’t invest and really understand how to make sure that you can control your own destiny, then nobody will. And so that’s kind of what got me into real estate. As I, I realized I needed to do something else and as I started learning and just trying to figure out, you’re almost like scrambling for air when you’re drowning, I was like, what, what could I do? And as, as I studied, I’m sure as you have all paths to me led towards people owning some form of real estate. And so I just started reading as many books as I could. I started, well, it just to date myself, this is in 2001, I was going to the library.

Steve (5m 25s):

I had a library card. I had to go to the library and get my books. But, but I remember those, I engulfed myself, I read a book a week and I just, I just consumed the knowledge of real estate because I felt like I had to catch up to everyone else that was already ahead of me. And that’s kind of what got me into real estate. And then from there on, I just kind of took off as a, is it still is a never ending educational process of learning, helping, educating, and everything that’s transpired from their, but that kind of how a lot of people are asking, like how does an airline pilot go and become this speaker? And I’ve spoken in Australia, I’ve spoken around the world on investing in property management. And how does that happen?

Steve (6m 6s):

So that, that’s kind of the story of how I got thrust into the real estate industry.

Jesse (6m 10s):

So at the time you, you were, you were flying Boeing seven, eight, seven. So you were A, you’re a pilot, you know, I should probably know more about this at the time, but its not something I think a lot of us thought about during a September 11th, but the industry as a whole where there’s a lot of pilots that, you know, hung in there and eventually whether it was six months, a year later got back into the industry, you know, in terms of the amount that were furloughed, what, what does that look like at the time?

Steve (6m 37s):

It was, it was very interesting. And the oil of the day, the airline industry is very cyclical. Kind of like the oil industry I’m born and raised in Los Angeles, but I moved to Houston August, 2001. So my stuff was actually on a boat coming here when nine 11 hit. And basically, I didn’t know where my stuff was. I mean, it was very, very weird time, but it I’ve noticed that it’s it’s cyclical like many industries like the oil industry that when you get furloughed, it’s a union, it’s a unionized industry. So when you do get a furlough, you will get your job back. It could take six months, it could take a year or it could take 10 years, but eventually you can, you will get your recall number will come back.

Steve (7m 18s):

Now there was about with airlines going out of business, which is a different story, right? A lot of airlines folded and just said we’re we’re liquidating after nine 11. And what happened was, is I got to within, we had a 6,000 Pilot seniority list and I came within 30 from the bottom of getting furloughed. So I was, I was literally skimming the bottom of the Airline and I got, I was flipping out of Houston and I got pushed out to Houston. I was playing in Newark. I was doing all this on reserve and I couldn’t complain cause I still had a job. But what I realized was there was probably about 50,000 other pilots that were on the street and there were going to Korea. There were going to China, there were going down to central America to get a flying job, to do anything, to keep plying.

Steve (8m 4s):

And I thought to myself, wow, like this is everyone is so desperate. Like when you’re desperate, you’ll do what you have to do. Right. But at the time it was almost like a panic desperation where they were, I mean I was thinking myself, man, these guys are up and moving their family’s to Hong Kong and they were going to Beijing and they are going to all of these places just to keep flying because they don’t have any other skills and other people that I knew that had real estate or were involved in real estate, they were like, yeah, it sucks, but I’m okay. And I thought, wow, that’s interesting. And it really no matter at the end of the day. And like I said, I still fly for the airlines. I fly seven 87 at the time. It was a seven 37 at the time, but seven 87 now.

Steve (8m 44s):

And I love what I do. I love flying. And people say like, why don’t you give it up? You do all this real estate, its something that you loved to do. Right? You, you do it because it’s like working out or something. You do it, you hate it, but you love it and you do it. And so flying is something I love doing, but I’m not dependent on it. If the Airline said, Hey were going to have to downsize like right now, this is going on, they’re doing slashes and cuts and I’m like, I’m okay. And a lot of people, what are, you know, I wrote a book on my whole story and everything. And a lot of people approach me and they’ll say, Hey, is this what it was like in nine 11 during 2001? Yeah. And I tell them, I say, yes it is. However, the difference is 20 years of me working, grinding and setting myself in a position that now it’s a much different story than it was 20 years ago when nine 11 hit and B the only difference is my mindset and the action that I took between that timeframe.

Steve (9m 38s):

So its it’s usually, cause I know a lot of guys in the airline industry that are like, Holy s**t, man were going through this again. And oil industries like this as well, that it’s very cyclical and a lot of industries are cyclical. And you realize that your only as good as the swipe have a pen, if they decide we have to do what’s best for the shareholders, which to their defense, that’s their job. Like there job is to protect the liquidity of the company. And I underst being, creating my own business and understanding that I understand their perspective now at the time you’re kind of p****d and you know, screw them this and that. Now I kind of get it and I understand, but at the end of the day there’s there’s people’s lives and jobs. And like you said, there was, there is 50,000 people pilot’s that were on the street without jobs scrambling and its, its, its a very scary thing and I’m sure we’ll see that again in the very near future.

Jesse (10m 27s):

Yeah. It’s a, it’s interesting too, because you know, I’ve had friends in the oil industry as well in a, you know, Western Canada in Texas and similar type of situation. But for you when, when you did, when that did happen and you said you’re at this point now where your reading a book a week, you’re trying to get educated on real estate and business from their, what was the M what was the first action step that you actually took and real estate, whether it was buying your first property or, you know, investing in a, in a fund or with friends, what did that look like?

Steve (10m 57s):

And, and, you know, back in 2001, you know, the internet really, or it was about 2000 To at this timeframe and a internet, none of that was really prevalent back then it was there, but it wasn’t like it is today. Obviously no bigger pockets or anything like that. So what I was doing is I was reading everything and I ended up paying this guy like $10,000 to show me how to flip properties through double closing’s and through option contracts. Right. And that’s what got me started is I started wholesaling problems. It wasn’t called wholesaling back then, but essentially that’s what it was. And I learned how to, how to do double closings and how to option. But the biggest thing I learned was how to negotiate. And I started learning how to communicate with people.

Steve (11m 39s):

And what I realized is the people who communicate actually make the most money on the planet. So the more you can communicate and a better communicator, you are the more successful you’ll be. And that really, really intrigued me because I did not want to be a hands on, you know, swinging the hammer kind of person because I was traveling a lot and I’m not really talented with a hammer to be honest. So I was like, okay, that’s probably not something I should do. You know? And I didn’t want to utilize my time. I was always trying to understand the power of leverage me being gone on a trip somewhere else in the world and dealing with it. So I started doing options and I got very, very good at basically wholesaling contracts to where I was doing $20,000 a contract.

Steve (12m 21s):

And these were houses that were maybe 110 hundred, $20,000 price point. But I got so good at negotiating and I was doing several deals a month. And what I ended up doing was I did this for several years and what ended up happening as I got enough Capital together. Then I went in partnership on my first apartment complex. And that’s what got me into that. And what’s funny is a, one of the people that was the lead on that deal. There was four of us in the deal and the guy who was the lead actually became my business partner. We created a business and ended up selling the business together. And we’ve been partners since that day really. And he wanted to know what I was doing on the wholesaling.

Steve (13m 4s):

Cause that was the grass is greener for him. Oh yeah. I wanted to see what he was doing on the apartments. Cause I thought, man flipping is great or a wholesaling’s rape, but this is a job like this. I stopped sodas the money yet. And they were like, yeah, but the money’s not as good as what you’re doing on a daily basis. So for sure, it’s all a matter of perspective. So I thought that was very interesting, but 10 of your question, that’s how I got into it was through wholesaling.

Jesse (13m 27s):

Yeah. You know what? That comes up time and time again because the A the guys and gals that are doing wholesaling, they love the fact A are the people on the other side, CE that, you know, This these large amounts of cash coming in, right. You know, you did this and you got this amount of cash, but you’re absolutely right. You stopped doing it. And then the money stops. Whereas on the flip side you have apartments. You can have, you can have some areas where your cash flowing like crazy, but some areas where its pretty conservative, but you’re increasing your net worth over time. And, and like you said, when a, when you stop and move to another, a acquisition, the Money doesn’t stop. So he was that the, the company that you built it, this is a, I guess a story that’s not dissimilar from a lot of people that do wholesaling. They end up moving into property management in some capacity.

Jesse (14m 10s):

Is that where you kind of grew grew of business in that regard? Or was that a different, different story?

Steve (14m 15s):

I wish I could say that it was the Cinderella story. Then it just, it just magically, we wrote a unicorn every day over a rainbow and it was great. But the reality was is no, we ended up selling the apartment complex did very well. This was in the 2008, 2007 crash. The church next door bought it cash from us for, for a land deal. So that was great for us. We had this money, we saw the economy crashing. We thought we should hit my business partner. And I at the time were like, Hey, why don’t we by a couple of houses together? Okay, great. I knew how to negotiate. We were still wholesaling deals, but we noticed that the buyer’s side was, he was starting to dry up.

Steve (14m 55s):

And so we realized something’s going on because not as many buyers are getting loans, but we are still getting sellers. It needed to sell it. So I was like, Oh, wait a second. Why are we getting the deals were getting the equity? Why don’t we just keep these deals? And so one day my business partner, we laugh about this now. Not so much at the time, but he comes to me and says, Hey man, I got these great deals. I found like there’s tons of them out there. And I’m like, okay, well what are they? He was like, they give a lot of cash flow and there’s tons of people that could rent them. And I was like, okay, well what’s he doing? He goes, they’re called low income, high cash flow properties. I’m like, that sounds like magic. We should buy ’em. And he says, well, they’re all we can get. As many as we want in a certain part of Houston, which is not a great part of Houston I’m like, Hmm.

Steve (15m 38s):

He’s like, there’s tons of renters there. Great $700. He was like, we can get these for $40,000. They’re worth 60 to 70 cash flows 900 a month. I’m like, why buy one? Let’s all In. So in about a year and a half, we buy about 20 houses now. And then we start realizing why people don’t own these houses is because all of a sudden the phone starts ringing and people want something. And these people are called tenents and they want to know why they have to pay their rent. And they want to know when something’s going to be fixed because you buy these houses that our maintenance differed and there’s maintenance issues. And so we, we start going down this path and all of a sudden, its like this, this snake comes alive on us and we are just battling battles every single day with this situation and in about a year and a half from that point, we’re like, I think we messed up.

Steve (16m 33s):

I think we have a problem. Like when we may have messed up here, as we’re going a little bit further, things are not getting better. Our average tenants are staying about eight months. Our make ready costs are three times our amount because when the tenants would leave, they would take parting gifts with them hiring electrical, light bulbs, you know, plants. And it was just, it was amazing. So like any, any person who thinks that they’re still smarter than everyone else, we decided the best way to fix this situation is by More of them. So we buy it because we weren’t dumb enough by buying though. So we buy another 15 or 20 more properties and we thought that this was the smartest thing we could do.

Steve (17m 19s):

In hindsight, it was obviously the dumbest thing we could do because it was like putting gasoline on a fire and it just exploded in our faces. It went from bad to horribly worse. Like we didn’t know how we were going to pay the mortgages. We had a hurricane come through, we lost half of our roofs. I mean, it was just, I couldn’t sleep at night time and I’m thinking myself, what am I doing? Like I’m an airline pilot. Why am I trashing out these houses and doing this? So we were in a really bad place. I mean, it was bad. And at one point we finally said, okay, we are now this is not working. We need to figure something out. So we basically sat down and set up the infrastructure. We tried to hire out a management company and know management company would hire, he would take them.

Steve (18m 2s):

They said, we don’t want these properties. And I was like, what do you mean? Like, why don’t you want them? They were like, you’ll never make money on them. They’re always going to be very hands on. And we don’t manage these kinds of properties. And I looked at my business partner like, are you effing? Kidding me? Like you said, these were good deals. And he was like, I don’t know what to say. So its like, okay, you know, I get it. We were big boys. We got to step into the fold and we got to fix this. So we started a plumbing we would do with a management company if we manage their own properties and we were a client of ours and because we knew what to do, we are running in an apartment complex. We were just to emotionally attached and we knew what we should do, but we were not doing it.

Steve (18m 42s):

Which a lot of people have that challenge. And we were one of them. So we sit down, we plumb what we needed. We get it stabilized after about another year. And we had other people approach us that were investors in and they were like, Hey, could you guys manage our house? As we like what you’re doing? You fix your problems. And our first answer was hell no. The last thing we want is your problems. We barely fixed ours. We have not want to take that it. But what we realized is if we did that, we would use economies of scale and be able to grow our own portfolio by getting better pricing, better structures. And that was kind of what happened. The first thing we did though, his, we went through a business coach and we said, do we have something here?

Steve (19m 26s):

Here’s what we did. Here’s the mistakes we made. Here’s the opportunity. He looked at everything and he said, all right guys, here’s the situation. You have opportunity. You have scalability and you have marketability in this market. So by definition, yes, you have a business. You guys are not the smartest guys. You don’t know what you’re doing. And you will be out of business in six months in, in a worse position than you are. Now, if you go down this path with what you know, so of course he was the best closer cause he has closed us. Right? They’re so we hired him on the spot as our coach. So now we have a business coach and we’re managing like 50 houses or something. But what we did is we took that model. And for seven years we took that business coach every single week, we went to his office and got coached and got beat up and got grinded down.

Steve (20m 14s):

And we built a company that ended up being a multimillion dollar company. In three cities, we won best marketing and North America, we ended up getting to about a thousand properties and we ended up selling our business to a larger company called mine property management, merged with them. And it, it really was at that point, a great story, but to say that it was easy and it just happened would be a crazy, crazy life. But that, that’s how we did what we did. Yeah. That’s incredible. I never envy a property management companies. I feel like, you know, they are

Jesse (20m 48s):

The first people, you know, to be blamed in a situation that’s dealing with properties. Mmm. So even at, in our brokerage, it just, it’s definitely a certain individual that can do that job. When you did a scale up to maybe just right before you did sell to mind, what, what were you at in terms of employees? What did, what did the actual business itself look like from, from a human resource standpoint?

Steve (21m 11s):

It had about 23 employees. 60% of our business was outsourced to virtual assistants in Mexico. We did. So we got so good at understanding systemization flows and checklists. And, and one of the things that we did is we took my knowledge of being trained in check lot checklists as an airline pilot and understanding checklist methodology of how to run things and my business partners, it background and we, everything we did was a virtual checklists online float charts. We hired a system’s person to flow out our business model. Umm, and what we ended up doing is we were able to outsource 60% of our company to Mexico and we got so good at it.

Steve (21m 52s):

They, we actually created a company and that we started outsourcing for other people and placing people because it was so we took our payroll from 62% of revenue down to 33% with more employees and better service just from that alone. So we were able to Wright person, right, see a lot of task. So we had about 15, 16 in Mexico. Then we had a handful up there. So <inaudible> in Houston and then we were in Houston, Dallas and Fort worth. And we learned a lot about systemization scalability and how we are basically setting up two, go on a national level of franchising before we sold his mind.

Steve (22m 36s):

Our goal wasn’t to sell our goal was to take it nationally with our scalable model. It just happened the mind, you know, we, we liked what they did. They were already a couple of steps ahead of us and it made sense to do that. But it’s a very interesting model on the business side to, to have that discussion, I’ll tell you that

Jesse (22m 55s):

It wasn’t a pure acquisition. It was, it seems like it was a, it was a merger with, with mine. And it did that I’m was that how the conversation started originally or was it always going to be, you know, you guys hanging on and staying with the company or was there, was there a plan to just completely sell, sell the business and wash your hands of, of the operations?

Steve (23m 15s):

No, so, and that’s a good question. We, we never, and again, we didn’t plan on it. They, I had a mutual friend that was working, there is a C level operations and he, we were very, very prominent in the property management industry. My business partner was a regional vice president of NARPM A the national association of property managers. So he was very involved on the operation side and you know, for any business to be successful, you have to have the visionary and you have to have the integrator. And for those of you watching the visionary is the one whose out in front, the face of the company, the operator’s the one who’s actually doing all the work and their actually the one who’s grinding out the operations. And so I was the visionary and my business partner was the operator.

Steve (23m 56s):

And so my business partner, Pete, he truly was the brains of making everything work. I was just the one that people saw. So we were very good at staying in our lanes that he was great at operationalizing and systematizing our business. I was the one that was putting us on the map. I was speaking in Australia and speak in all over the U S and those kinds of things. And we always did a very good job of staying in each other. We stayed in our own lanes. We never, we had very, very rarely crossed into each other’s lanes, a basic cause I don’t want to go sit in an office all day and he didn’t want to go out and speaking on stages. So it worked. So when we went, when mind, when we started talking with mine, they saw the value that we brought to the table. My value of being in a speaker, being able too, to be out on stages, Podcast shows, TVs, all of these kinds of things, and his, for being able to systematize an outsourcing vital operational pieces that no one else really figured out.

Steve (24m 49s):

And we spent a lot of time, energy effort costs creating that structure. So, so basically we ended up getting, they, they really liked what we brought to the table to answer your question. So it was never going to be a, Hey, we’re gonna sell this in, be done. It was like, Hey, we think we have something we don’t have the Capitol you have because they are venture capital backed company. Mmm. And they have a lot of very, very smart, intelligent people. And their concept is that property management should be a hands off operation, like an Uber app. When it, when you think about it, it kind of makes sense. I mean, if somebody, why couldn’t property management?

Steve (25m 30s):

I mean, when you think of property management or when I think of my property manager, I think have this, this lady with a cigarette, half hanging out of her thing, drinking coffee phone, ringing her, not answering stacks of paper this high, like that’s the envision when I think of a property manager. But if you think of that’s like a taxi cab, but if you think of Uber you go, why couldn’t that happen in property management? It could be an app. It could all work cohesively. You just gotta have enough Capital right. And enough smart people to create it. And that’s what mind is trying to do. And mine has managing, I think, 9,000 properties now, or 10,000 they’re in 16 regions and your able to get the scalability basically across the most investible market’s in the U S by having the one management company handle everything, which is an interesting concept that is hard to duplicate.

Jesse (26m 18s):

Yeah. Well scaling in general, especially I think it was Blackstone when they started getting into the market where they would be buying single family homes and scaling that up. Because for the longest time, people thought that you couldn’t do what you did with the apartment buildings and large scale commercial with a single family homes. But once you, like you said, I think I heard you a, maybe it was on Instagram talking about exactly what you just said, taking your experience as an airline pilot and checklists systems, bringing that expertise through that lens to real estate and property management, where on the small scale is probably the area in our industry where we needed it the most on a property management side. And its really only on my a day job. I’m on the brokerage side where I see large asset managers effectively systematizing all of that property management.

Jesse (27m 5s):

But it sounds like you, you filled the gap in the market, at least in, you know, the single family homes and I’m sure they do. They own other asset classes as well. A mine’s a portfolio.

Steve (27m 15s):

Yeah. Well they used to do multifamily and understand the two gentlemen that, that founded mine, a guy named Colin Weil and Doug Bryan. They used to, they basically, they owned a company called Way point homes and they owned 17,000 houses that they bought nationally credible on their own. And so they were the first ones to create a single family REIT. So yeah, when you start talking about people like this and their ability, you’re going, okay, they’ve done it before. Like they’ve run the marathon, they know what they’re doing now. They’re just doing in the property management sector. Now what, what I find interesting is when you talk, you mentioned about some of the apps and gadgets that people use whenever we think of using software or using, we use our phone to do things right.

Steve (28m 2s):

And these are all apps and gadgets, but we don’t think of it. The same thing. When we think of staffing, we think of that as a totally different thing. I can’t tell you how many conversations I’ve had with people and they go, Oh, I have to do that. Or you, you can’t outsource that. Yep. And I, and I tell them, is that the reality or is that the story you tell yourself? So give yourself a job because the reality is is you can outsource anything. Now there are some things I get that physically have to be done. I get that. But we were running maintenance divisions. We were running accounting. We were running leasing. We were running everything out of Mexico and it can be done if you have the right training modules companies, we would all the time.

Steve (28m 42s):

It’s just that we tell ourselves a story as to why we think that we can’t do it. It, the reality is, is it shines a light on the weakness of your company and the weakness and your systems because its not documented. It’s not systematized. And you go, you know what, let me do that. Just get out of the way. I’ll take care of that. Your not going to do it as good as me and then, you know, and that, and that’s, that’s the sad part of ego stepping in that’s your ego is trying to be bigger than your company and its its tough. When you have to outsource what you did. Cause you’re like, wait a second. This is my baby. I created this company and now I’m leveraging it out. But what you have to think about as the opportunity costs of what you could be doing with your time and what you should be doing as a leader and that is not answering the phone, maybe are dealing with low level, low enjoyment tasks.

Steve (29m 32s):

When you should be thinking about growing your business and adding more staff and making sure everyone gets a paycheck and all that kind of stuff. So a lot of it is is we, I think we can be our own worst enemy when it comes to growing and building our own businesses.

Jesse (29m 47s):

Yeah. Well I always say its like its like the surgeon doing his own oil changes, like there is a point where you do realize that the value, you know, like you said, if somebody says a, you know, that’s something I used to do when you kind of had the light bulb moment where actually my value is being able to set up this system a systematization. So for instance, I find, I totally agree with you. I think everything can be outsourced. Its just different things has a different amount of upfront work that comes with that. And you know, whether its a virtual assistant, maybe you have to find them one that has these areas of expertise and they got to teach them. And like you said, there’s, these modules have actual training, but once they are there and you’re like, wow, five months after that, you’re like, I can’t believe like it runs like clockwork.

Jesse (30m 29s):

So at least people that have done this before and I find like yourself, you know, hiring virtual assistants or on social media, having a marketer that works with you, it was all the upfront work. That was really the challenge. And then there’s, there’s that first year, first six months that you have hiccups. And then over time I find that yeah, you can, you can absolutely leverage the people around you, but you know, sometimes like you said, it’s people just have a story. They tell themselves of why that can happen.

Steve (30m 56s):

Yeah. And, and you know, it’s interesting. And again, we love technology. We love all these apps and gadgets and all these things. And a perfect example is I’ve got a gentleman that I’m working with, who he’ll heal. It’ll be coming out soon on bigger pockets and stuff, but I’m coaching him and he’s in North Carolina and he bought a house in Atlanta. It has never been to Atlanta. Doesn’t know anything about the market. And I’ve been coaching him along sight, unseen using team, getting leveraged through other people and using everything that he needs an all the resources I was able to basically go through three deals. Two of them fell out because of maintenance and inspections is up. Ended up closing on a third deal, got the price.

Steve (31m 37s):

And he needed everything without ever leaving his desk. To me, that is the most truest form of leverage that you’re utilizing your skillset from here up. And you are being the CEO of your company and its the difference of working in the business to working on the business. And you know, I told and one of the things that we’re doing is as I said, what you need to do is you need to document everything. So this is your playbook. So that if I said, Hey, you need to buy 20 houses in five different markets. You take the same playbook and it’s copy paste, repeat. And that’s what successful people do. And you utilize all the skills that you have available to you, the leverage of automation and systemization and you know, the internet and you know, bigger pockets is great because its such a big community of likeminded individuals.

Steve (32m 24s):

You are able to tie that in. But again, if he just sat there his mindset at first, it was, I gotta go to Atlanta and I’m like, you’re not going anywhere, man. You’re staying right here and we’re going to do this from your desk. And it was yeah. Was that scary feeling of Holy s**t? Like I don’t think I could do this. I’m like, you can do it. Like we’re going to walk through this and we’re going to get it done and sure enough it is. And it’s in the rehab phase right now, so it can be done.

Jesse (32m 46s):

Yeah. So I want to talk, I wanna kinda pivot to coaching kind of what you’re doing right now. But before we do, in terms of the, on the investing side with real estate, are you actively acquiring right now? Are you, you know, what does a portfolio looks like right now in and what are your thoughts given the next couple of years, obviously knowing that none of us have a crystal ball. What, what’s your 2 cents on that?

Steve (33m 10s):

Yeah. So right now I’m kind of in a stacking, my chips ready to push in right now. And I think a lot of people, our, and I think that within the next 12, probably six to 18 months, we’ll say they’re will be more wealth created in real estate than was created in the last 10 years. So the difference is the people that have the financial ability and have the reserves to do this and the knowledge and education to do this and the ones that do. And that had been preparing, I think they’re will be a lot of wealth to be had. Unfortunately, the people who had bad business models who over leveraged did not think that that would ever be a downside or a dark side of the moon is going to realize that real estate is cyclical and normally goes in seven year cycles.

Steve (33m 56s):

And we’re about to go into winter. We’re about to go on the dark side and you know, the people that are ready, they have their night vision goggles. They we’ll be ready to execute when the time happened. So I’m mostly a single family person. I like single family. Although I am an a, a mobile home park fund with Brandon Turner in those people. And then I’m also in opportunity zones. I’ve got some oil interest and oil Wells and stuff. And a, I started buying some stocks because it started crashing. So I started going out and buying stuff and I’m teaching my son to do that as well. But I, I look at things of saying, okay, when everyone is running out, that’s when you run in. So whenever you turned on the news and they are talking about the horror, that was when my 10, it goes up and go, maybe this is a time because a truly successful investor that’s educated is a contrarian investor, meaning they’re going opposite of what the, what the tides are doing.

Steve (34m 49s):

And so I think it’s important to have that ability and education level to make that pivot. I’m also working with the, a couple of rehab people to do some, to find, to fund some rehabs that they’re going to turn around. And

Jesse (35m 14s):

That leaves you as far as Steve

Steve (35m 17s):

And Texas and other people. I think it’s a bit over leveraged. I think we’re going to see some major re corrections. I think the cap rates are going to be horrible for the next 12 months. And I think a lot of people are, aren’t going to realize when that pendulum swings back the other way, it is an ugly beast and it leaves, it clears a path. And I think the path will be a lot of multifamily syndicators that did purchase correctly.

Jesse (35m 39s):

My opinion. You’re a, you’re not the first person to, to bring that up on the show. It’s a, it really comes down to over the last, like you just mentioned over the last five years, there have been people that have been very prudent in how they acquire and buying. Right. And yeah, I think that there, there’s going to be an exposure to people that didn’t do that correctly, but it’s also interesting. You, you mentioned mobile, the mobile home side, you know, right now we’re, we’re seeing an acceleration of, of technology and work from home on the office end, we’re seeing retail, you know, get accelerated into what people thought was going to happen eventually. And, and, you know, just having less retail, especially in the States where its just so overdeveloped. But yeah, I think there’s going to be some areas where people over the next few years, months, a few years there going to be able to be very smart with Capital and the ones that I had stayed liquid during this time.

Jesse (36m 29s):

I think there’s going to be a lot of opportunities in terms of the coaching that you do. And the, you know, that’s something that really caught my eye. When I first found you, you know, your stuff online, how did you move from a, you know, you mentioned you already hired a business coach, so right away, I know it takes a certain individual to actually, to, to make that move, to actually realize that you can, you can add value by hiring coach. So how did you know what was the rationale for that and what, what led you to do coaching on your own and, and how is that going?

Steve (36m 59s):

Yeah, so, you know, the coaching what’s funny is I knew that I didn’t know that glass ceiling. I knew that I was young when me and my business partner or the first time we had a coach talk to us, we realized, man, there’s a lot of things. We don’t know, whatever. We knew, God us, to a point, if we wanted to get to here, we needed a map and we needed someone to give us that guidance. And we had no idea if we were getting closer to our goal or further away. And I started, you know, and again, as I said earlier, I had done a lot of reading and every successful person that I ever met ever had some form of a mentor or coach.

Steve (37m 40s):

And just because they got to a point, they did not stop that mentoring or coaching. You know, you look at, you look at tiger woods, you look at Michael Jordan, you look at any of these people and they not only have one coach. They have multiple coaches. Yeah. So I think a lot of times its kind of, it’s our ego that says I don’t need a coach. But when you think about it, what’s what is going to get you to that next level that you want to get to in, when I, when I, the people that I want to emulate, the ones that I want to be around or the ones that have their own corporate jets, the ones that are talking in the millions and millions of dollars of revenue, not the hundreds of thousands. So I think to myself, how do I get to that level? What do I need to do?

Steve (38m 21s):

And I was talking to one of our main, one of my main mentors and I probably I’ve very easily, probably invested over $500,000 over this time in, in coaching and self development in myself. And some people may say, wow, that’s, that’s, that’s a lot of money. Well it is. But if you took a business and fold it for a several million dollars, is it a lot of money? I, I then I would say maybe not because I probably would not have had a business, had it not been for it to sell. Is it a lot? I don’t know if I spend a hundred thousand dollars to spend three days with someone that’s going to make me a million. Does that make sense for me? It does. Maybe not for everybody, but I remember talking to two, the, one of my main mentors and I said, how, how do I, I, how do I, what do I have to do to have what you have mean this guy, he ended up being our business partner in the management company and the guy owned the whole coaching franchise on a worldwide level.

Steve (39m 18s):

Okay. He had, I’m going to say 1800 coaches in 88 countries. And we were the first ones, whoever do a deal with him that brought him in and gave him ownership rights. Cause he was showing us how to grow and scale that, that, that that’s where we we’re. So we’re having, we’re talking to this guy’s guy is a 31,000 square foot house in Las Vegas. Right? We’re at his house. This guy is, he’s so smart. Right? And we’re, we’re talking to him and I said, How what do I have to do to have this? And he says, you know, Steve, that’s the problem. You think it’s what you have to do. It’s not what you do. It’s who you have to become. You have to become this person doing is just going to make you tired and is just going to grind U out and your going to get spit out the bottom.

Steve (40m 2s):

Like everybody else, you have to change your mindset and become this person. And I was like, well, how do I do that? You know? And he’s like doing what you’re doing. You have to be around these types of people and you have to emulate and you have to be willing to give more than you get. And I thought about that a lot. And this leads into what I do. So the coaching I do and I’ve done coaching that I, that I have charged when I’ve traveled and a lot of money that people pay me. And I also do a lot of free stuff. I do a lot of free. I do a mastermind once a week and it’s totally free that people can pick my brain. They can talk to me about real estate. They talk to me about business.

Steve (40m 43s):

It’s all free. I don’t ask anything. And to me, the reason I do that is because when we were coming up and we were just getting knocked every which way, there was no one really to tell us what we were doing wrong. And I think the challenge in this industry as a whole is that everyone is here to show you how to get to deal. They show me all the fast, sexy things, but nobody actually shows you, what do you do on day two? Once you own the deal, what are you doing? When a tenant says, Hey Steve, I lost my job and I’m not leaving and I’m not paying my rent either. Suck it. What do you do write? And you’re like, Oh, that’s not in the way that wasn’t on the Instagram picture of that. Wasn’t in the mangrove. How to flip this a page 34 as I started looking into a manual right now.

Steve (41m 26s):

So to me, I think that that’s a disservice that we do in the industry as entrepreneurs. I think as entrepreneurs, we’re, we’re very selfish. And what I mean by that is you and I, we, we we’ve, we are dedicated to educating. We do all of these things. And the average investor goes to courses. They go to bigger pockets, right? They watch Podcast shows. They invest in courses, but they never share that with anyone else. Yeah. They hoard it and not even their family are their children. And so to me, that’s the most selfish thing you could do because you’re not giving back to anybody. And you know, one of the reasons that, you know, I was On Brandon Turner’s podcast and other people’s is my son when he was 14, bought his own rental property.

Steve (42m 10s):

And so a lot of people come to me and their like, how did he do that? How did he get alone? How do we do this? Are you allowed? Yeah, they are what everyone is asking you the how questions. And I’m like, you’re asking the wrong question. You should be asking me, why did the kid come to me and say, dad, I want to buy rental property. You’re focused on the How the How that’s like saying, going to the moon. They said, first we’re going to the moon. Why? Because we want to be the first ones. They’re how are you going to do it? I don’t know. These guys are smart. They’ll figure it out. But we’re going my sense that I wanted to buy a rental property. I’m like, okay, let’s do it. We’ll figure out the How, you know, you got a good, you know, as well as I do, you get a good enough deal. The money comes, right. Everybody’s so focused on getting the money first and then they look for the deal.

Steve (42m 50s):

It’s the wrong way. So I just think it’s giving back as something. That’s it just something that’s important to me. And that’s why I do a lot of the coaching and mentoring. And if I can help someone, it has helped me hundreds of thousands of ways over and over again. And its just my way of giving back really. And that’s why I do so much with bigger pockets. And I really don’t ask, you know, I think that when you get to a certain level, you, myself, a little, all the, all the contributors on bigger pockets, you know, Brandon Tarrel Scott A, Jay Scott, all of them. We don’t really do it for the Money, you know Money is great. I get it. Right. Everybody likes Money but I don’t do these Podcast shows and everything for the money. I do it because I’m trying to make a difference and I’m trying to help me.

Steve (43m 31s):

And if they walk away and go like, yeah, I can help someone. I can give some education then to me I’m doing the right thing and I’m paying it for it. And that that’s the only reason I do this.

Jesse (43m 40s):

Yeah. And, and just what you said, the gratitude piece of like putting yourself out there doing more and it does come back. I mean, it’s so funny. It’s something you were taught when you were a kid and in our industry, in our space, once you actually do take the leap and you put out say free content or are you start a podcast, are you going to contribute it really, it really does pay dividends. And I think the people that have put themselves out there, those are the ones that finally were like, Oh wow, you’re getting a DM. Have somebody that’s maybe can add value into your business in this way are that way. And then all of a sudden you start seeing that the more I do of that, the more that I get and it really is, it is one of those things that it does actually benefit everybody involved. So yeah,

Steve (44m 20s):

I mean I can, the people that I’ve met just by doing favors and talking to people, you know, I had Bradley on the bigger pocket show. I get these people on these shows that are just, wow. Like I would never, if I, if I never gave myself out there and I never gave away free information, I probably would have never sold my business because nobody would know who we were because I would have said, well, I’m not speaking at that event unless they pay me. But I did a lot of things for free. Right. We all do. We do stuff for free without the expectation of getting something back. And I, you know, I’m sure like you I’ve talked to a lot of people that they’re always saying, well, what’s in it for me. What do I get out of it it’s like that to me, that’s just the wrong mindset to have in my opinion.

Jesse (45m 1s):

Yeah. Well its add value for us and we’ll have to put a link to the a, the Bradley episode, what it is, man, what it is. It’s a cool day. Don’t you know what? I’m just looking at the time and I knew this was gonna happen. Cause I thought, ah, this would be, this will be a lively episode. We’re just wrapping up here. What I’d like to do, Steve is the areas that people can reach out to you. I’m sure just a Google search will find it. But if there’s anything, you know, I know that will put a link to the book. A will put a link to a couple of, of podcasts A anywhere specifically people can reach out whether its in regard to real estate coaching your story, work in a work in, they find you.

Steve (45m 35s):

Yeah, well they can, they can go to my Website Steve rozenberg.com. Where are they have a bunch of stuff. If anybody wants to sign up for my mastermind, they’re more than welcome. Like I said, it’s free. We, we normally get about 50 to 60 people a week on there and its been really, really good. A lot of people are getting great education from it. They can obviously find me on Instagram. Rozenberg Steve with a Z, Z N B E R G ’em. And they can go two Facebook find me they’re and if they want to know more about property management and scaling, I mean, that’s kind of my thing as I help them understand, you know, what’s your, why, how do you grow? How do you scale? And that kind of, they can talk to me about that. We can talk about mine are happy to have a conversation about how to make sure that it fits them.

Steve (46m 16s):

But again, if I can help anyone out, I always return messages, people, DME, all the time I get back to them. I’m one of those guys. I’d make it a point that if somebody takes the time to ask me a question, I’m make it a point to respectfully answer as much as I can with them.

Jesse (46m 31s):

I guess it has been Steve Rozenberg Steve. Thanks for coming on the show. Thank you.

Steve (46m 35s):

I appreciate it, man.

Jesse (46m 40s):

Thank you for listening to the Working Capital Podcast my goal is to help individuals break into real estate investing as well as educate experience with investors. If he enjoyed the show, please share with a friend subscribe and give us a rating on iTunes. It really helps us. If you have any questions, want to learn more or lightening to cover a specific topic on the show, please reach out to me via instagram@jayforgalsorheadtowwwdotjessefragale.com. My name is Jesse Fragale and I’ll see you back here for the next episode or the working capital real estate podcast.