What if your thoughts on competition have been wrong all along. What if you could find ways to cooperate with your so-called competition to grow the pie? Ryan Paliukaitis tells us more in this FlipNerd.com Flip Show interview. Check it out!
Mike: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright, and on this show I will introduce you to VIPs in the real estate investing industry as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week, which are available in the iTunes store, or by visiting FlipNerd.com. Without further ado, let’s get started.
Hey, it’s Mike Hambright with FlipNerd.com. Welcome back for another exciting VIP interview where I interview some of the most successful real estate investing experts and entrepreneurs in our industry to help you learn and grow.
Today, I’m joined by Ryan Paliukaitis of Real Estate Solution Providers. He’s a real estate investor that really has found his way to working with other investors across the country. A lot of real estate investors, we talked about this before, really tend to see everyone else as a competitor, but Ryan has found a way to work cooperatively with others to make the pie bigger for everyone. So today we’re going to hone in on that topic and we’re going to talk about the power of coopetition and how you can work with other people in your market to each achieve more.
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Ryan: Hey, Mike. Thanks for having me.
Mike: Yeah. Glad you’re on. This is an important topic. This has really come up in a lot of interviews I’ve had. We kind of tip-toe around working together, some people that provide solutions for other real estate investors, whether it’s CRMs and other things. I’m excited to talk today about how real estate investors can work more closely together and hear your story about how you’ve done it as well.
Mike: Before we get started though, why don’t you take a couple of minutes and tell us your background. I know, kind of like myself and a lot of people we’ve had on, you’re what we refer to as a corporate refugee. You left corporate America to pursue real estate investing and probably like most of us have no plans to ever go back.
Ryan: That’s definitely true. I was actually an IT major and I was working for a company that was basically making phone calls over the Internet. Pioneer of VoIP pretty much. That’s what a lot of us use every day. Long story short, one of the other associates that I had gave me “Rich Dad, Poor Dad.” So I listened to that audio during work. I probably shouldn’t even say that now.
Mike: They can’t fire you now.
Ryan: Yeah. Right. So when I first heard it, you fight some of the concepts. It goes against what you’re taught and whatnot. Anyway, I was intrigued by it and then I came across their forums and just started researching. About seven months went by. This is back in 2006, 2007. I started off door-knocking. There were actually houses with equity in them, and I came across a house that I live in now. I knocked on the house and after getting rejected for a couple of weeks of door-knocking on Sunday mornings, the lady says, “Come on in.” I didn’t know what to do next. That goes to show you how little bit of [inaudible 00:04:26]
Ryan: Fast forward. It was the first house I bought. I was planning on rehabbing it. I end up moving into it because it was in the local area and I could live there for pretty much the same price as renting a house, my parent’s house. So then I branch away from real estate a little bit and ended up coming back in 2009. I basically asked my boss’s boss, who knew I was into real estate, to fire me. I collected unemployment and a severance package for a few months, and I just dove into short sales. I actually bought Nathan Jurewicz’s “Short Sale Riches” from an eBay auction. It took me a full year before I actually closed my first deal. I was battling with the short sales, as far as the regulations. They were constantly changing.
Ryan: I was in that for maybe another year full blast. The short sales were my primary business. Then I switched over because I said there’s got to be some other avenues here. These things were so difficult and they’re putting all these restrictions as far as when you could resell them. I went over to the regular wholesaling and it’s just a much easier route, in my opinion, not to take anything away from short sales. There’s great systems in there, such as Brian Meara’s course and stuff.
But wholesaling, as far as dealing with free and clear houses to me is just a lot easier. There’s not much risk. It enables me to form the relationships that you’re mentioning with other partners, especially throughout New Jersey. I can cover all of New Jersey because I have the right relationships in place. In essence it’s just the blueprint. So I have that blueprint and then I take that. I’m established in Philly. I’m established in Miami with Alex [inaudible 00:06:07].
Mike: Right. So before we get into talking about the network you’ve built up, talk a little bit about . . . initially, other than the first house you bought that you lived in, you were generating leads buying yourself, and then wholesaling yourself, and then decided to kind of go off to conquer new lands geographically? Is that what happened?
Ryan: Well, I first started off just door knocking. I wasn’t doing direct mail. This is just focusing on foreclosures. The only house that I landed when there was equity really was the house I live in. So I branched away. If you say 2006, 2007, I started fixing this house here a little bit with my father, and then moving into it. But I was still in corporate world. So I wasn’t diving into it. I took maybe a three-year break. I was looking at the forums a little bit, and then it just got to the point where the issues with the corporate world, the glass ceiling.
I had aspirations to be the top coder in the company and I felt it wasn’t going to give me the lifestyle that I wanted to live. I always tell everyone not everyone is meant to be an entrepreneur. I really feel it’s in your blood. While you can go on to vacations to Costa Rica and still run your business, you do have weekends where you work or sometimes you bring your work with you on the vacation. So it really depends. It’s not for everybody, but I wouldn’t trade it for the world.
Mike: Yeah. So when you got back into real estate investing in 2009, did you start right away kind of cooping with other investors?
Ryan: No. I bought Nathan Jurewicz’s system and I was doing these short sales. I didn’t even know how to do it. I did a post in my GSREIA forum and I said, “Hey, look, I’m looking for somebody,” because I had the basis there but I wanted the confidence to work with somebody. Someone reached out and said, “Hey, we’ll work it together.” Not really spoon feed per se, but we’ll meet the homeowners together. We’ll go over the paperwork and stuff. So I linked up with a partner that we were networking with short sales. We did a few here and there, but we’re talking a long time span.
Mike: Sure. And what were you doing with those houses? Were you wholesaling them?
Ryan: It was A to B, B to C closings. So you’re just buying and selling the same day.
Mike: Yeah. Then over time you realized the opportunity to be a lead generation provider I guess for people in other markets. Is that right?
Ryan: Right. Not just a lead provider, but I have virtual assistants that will do a lot of the legwork and basically give these other associates, partner’s leads on a silver platter. I’ll give you an example of, I mean, picture logging into a system and you’re clicking the forward button on your browser and boom there’s another lead. Boom there’s another lead, and it has all the information that they need. So they literally can just say, “Okay. I know this area. Let’s make that offer.” There’s complete detailed screen leads.
Mike: Right. I know you came from a technical background. So talk a little bit about how you saw that opportunity. A lot of people, obviously, most people, what’s most common, is they get in and they’re responsible for everything. They’re one-man, one-woman bands trying to literally do everything from lead generation all the way through to selling to probably doing their own bookkeeping-everything. You came at it from a different angle of saying, hey, I can systematize this and add value for other people and add value for yourself in the process.
Ryan: Right. I can tell you how it first started. When I branched away from the short sales and started focusing more on the free and clear properties, I basically used Cris Chico’s system. I used his exact mailer, postcard. I sent it. I probably sent out about 1,500 of them. I remember it was about four years ago. I was at my summer shore house. I’m checking my emails and all of a sudden I see email come in, and then another one. It’s basically the notification with their voicemails attached. I said, oh, this is great. I listened to it, and it’s a two, three-minute message and I’m putting it in the Excel sheet. And also another one comes, and another comes. I say, all right, this is great. It’s a good problem to have, but this is a problem. I can’t even keep up. If there’s a hundred calls that come in and they’re two minutes each, you have to listen to those. You have to put them in the system. I said, okay, somebody needs to do this. I did a bunch myself. I was excited, but I quickly saw it could be a problem. It’s going to be a bottlenecked system.
Ryan: So I hired out a virtual assistant to screen the leads. The problem was is that there was no Podio at the time. I was not aware of it. So I first started out by using Dropbox and using Excel and they would put the leads in there. Then I noticed I didn’t want to have one VA doing one thing. I know it’s a less to manage, but if something happened to that person my business shuts down. So if I figured if kind of like McDonald’s, one person does this, one person does that, sure it’s a little more to manage, but at least if one person falls out, I can replace them or I have other people in place that it’s not going to suffer as much. So I said, okay, one person’s going to have the duty of screening the calls that come in. The other one’s going to go ahead and call them back and screen further. So I quickly saw with the system with Dropbox that we were putting in an Excel sheet, and then this person maybe overrides this person, just too much process.
Ryan: So, again, having a computer background, I quickly said, okay, we got to develop a system which they log online. And you see all these CRMs which say assigning tasks or my tasks. And it’s funny because I felt like I invented that because that was just part of my thing of, okay, we’re going to pass the baton and you now handle that task. When you’re done you hand it to the next person. So that mindset was pretty much developed just by going through the everyday processes and what seemed to be most effective and efficient. Anyway, we had this system, very basic, that people would go ahead. They would put it in the system online, and then it would assign them to certain VAs. They would log in and say, okay, these are my tasks for the day. I have to call this person back. I have to make this offer, etcetera.
Ryan: So my associates will utilize those VAs as much or as little as possible, but they also have an account so when they log in they say, okay, this is a perfectly screened lead. It has all the information I need. I can call them and make the offer. Or I’m busy today. Let me have the VAs go ahead and make the offer, or whatever other task it may be.
Mike: Yeah. I’m pretty big on virtual assistance as well. We had a number of people on before talking about VAs. Where are your VAs based? Is there a certain area you like?
Ryan: The Philippines seems to have the best English for making phone calls. If you’re going to do simple data entry, I was utilizing some of the VAs even before I had the ones that were making calls. So if I had cold data from Morris County, for example, and get the lis pendens, I’d have an automated scripted do it, or I’d have them go ahead and manually do it. I found the cheapest and best is actually from India if you’re doing simple data entry.
Ryan: As far as making phone calls and stuff, I find that Philippines is the best. Then, also, for any coding of the websites, that can vary. I know the guy I have now doing most of my stuff, I believe he’s from Romania. I know he’s not from India. I know he’s not from Philippines.
Ryan: So it really depends on the task.
Mike: Cool. So at what point did you kind of realize that, hey, there’s more opportunity here than I can handle myself and so maybe I start to branch out and find people in different markets that I can work with?
Ryan: Right. It’s very easy when you’re first starting out to see other “we buy houses” signs, especially if it’s in your home area. Oh, no, who’s this person? You view them as competition and you can be territorial, but you flip your way of thinking. Every time I see those signs I look at them as potential partners. A lot of my business is co-wholesaling. When you’re driving around each day, when I was back in the day door knocking or if I had to visit homeowners in a certain area, a lot of your time is just taken up just from being in the car. You’re saying: is that the best use of my time? So what I thought was, okay, look, I want to be able to cover all of New Jersey. But there was no way I could go ahead and drive down to Atlantic City, which was two-and-a-half hours away, and then go back up to Sussex or whatever. It’s just impossible.
Ryan: So I figure, look, let me find the boots on the ground in that area. Number one, it’ll help save me time, but, number two, they’re going to know the area better than I will. For example, I have one partner in Trenton. He knows the area like the back of his hand. I was telling you before, that one street neighboring another may be a totally different area.
Ryan: I wouldn’t know this. So from with his expertise, he’ll know a better offer amount to make so that we’re not wasting the homeowner’s time, we’re not putting in offers that are going to get accepted for houses you can’t even give away.
Ryan: It’s a win-win. They’re basically getting leads on a silver platter. They’re not paying the money for the marketing. We are doing all that backend work, and they’re going in their backyard and they’re meeting the homeowners, they’re meeting potential buyers, they’re taking photos, etcetera. They’re doing some of the leg work on the ground because, again, it’s in their backyard and I’m doing some of the backend work to help them save time and money, and likewise with me.
Ryan: So we split it 50/50. I have those partnerships throughout New Jersey and other parts of the country.
Mike: So talk a little bit about when you’re trying to find other people to work with the importance of what you look. At the end of the day, I think a lot of investors are suspicious of other investors for all the reasons we’ve talked about, but at the end of the day, there’s obviously a lot of good, honest people out there. But what are you looking for when you’re working to find ways to integrate and work with other investors?
Ryan: Right. That’s actually a big part. What I first do is I’ll look for some of the bigger players, or someone that’s in business in that area. If I’m looking to start in Denver, I’ll type in “we buy houses” and see who’s got a decent presence, who’s not just doing this on the weekend, which there’s nothing wrong with that by any means. But I’m looking for somebody that, if I’m generating the leads, it’s my reputation on the line. They’re going to take care of it in a timely manner and they are a true expert in the area.
Mike: Right. You can’t make any money unless they perform.
Ryan: Exactly. When I was first going into Philly I sent out a lot emails and made some phone calls. You can kind of get a feel for the right people. I had some people that I explained exactly what the relationship is and then they’ll say, “Well, if I’m going to do this then I only want to give 25 percent.” I just said, “You know what? They don’t get it.” I have these relationships with many other people. They understand long-term dealing in volume. If it just kind of has that feel to it, I’ll just thank and then I’ll move onto the next. I can say 9 times out of 10 I get the right person.
One of the biggest concerns is, well, what if that person will screw you over for a deal and I give that asked all the time when I’m co-wholesaling or people want to provide me with leads? I say, listen, you know what? You only burn me once. You may burn me but it won’t happen again.
Ryan: Who would be so foolish that if you’re going to screw me for a couple hundred dollars, if you’re not seeing the future as far as making thousands of dollars over a long period of time?
Ryan: So you know what? Let’s say I did a mailer for 1,500 or 2,000 and they stiff me on a deal or something happens. Okay. Our business venture ends there and then I go onto somebody else, but I can say that for 90% of the people that I have dealt with that hasn’t happened. I can say for the small select that have maybe done some unscrupulous things, ironically enough, that has led to other relationships, most of which are in New Jersey here. So it is what it is. It’s just part of the business. I don’t have a full proof way, and especially some people have all the, “Let me have the NCND and all that signed or whatever.” I’ve had people tell me that’s as good as toilet paper. And, really, am I going to go ahead and take somebody to court and waste all that money? It’s not going to happen.
Mike: Yeah. So in order to pull off what you’ve done here, you clearly have to have mapped out the entire process of real estate investing from lead generation all the way through to the final sale. Maybe you can give some advice. This isn’t necessarily things that you’re doing, but other ways for people to work together and cooperate as a business, what are some of the logical ones that make sense?
Ryan: Not sure I understand the question.
Mike: So if folks are listening right now and they’re not going to go out and build a detailed system, a CRM that others can log into and see their leads and all that stuff, what are some easier steps for people to consider start cooperating with each other and work together in their business?
Ryan: Okay. Right. They don’t need a fancy system like the one I had built. There are CRMs out there. They really can do it through Excel. The reason why I had my system developed was because Excel just wasn’t going to cut it. If people only deal with a couple of leads, email may be fine. But I know when I’m getting hundreds and thousands of leads coming in for that month, you’re going to lose them in email and you need a good way to track them. But if you don’t have that kind of volume, you can do it through email, you can do it through Excel, or whatever application you have.
The best bet would be just to reach out to those local professionals in the area. If someone’s starting off, go ahead and scan Craigslist and stuff and find the “we buy house” people. Go ahead and call the “we buy houses” on the signs that you see. Attend your local REIA. I mean, pretty much the standard stuff that most people talk about. [inaudible 00:20:02] interviews and stuff and just reach out to them and tell them that you’re looking to generate leads and basically co-wholesale with them. If they come across a lead maybe they could put it out to their buyers because obviously somebody starting out is not going to have a list of a thousand buyers. They may have a handful or a dozen.
Ryan: Just reaching out to those other wholesalers to try to cooperate in that manner.
Mike: Yeah. Do you find, in your experience, when you start working with others and cooping a little bit, that those relationships can last, ultimately both sides see the value? Or is it usually like a stepping stone to where somebody kind of sees what you’re doing and then they start to think, well, I can just do this myself. I don’t need him anymore. Or, even, quite frankly, do you ever see it from that perspective of I’m giving up too much of the pie here and maybe I need to find another solution?
Ryan: It’s funny you say that. No, because, again, a big part of my business is not doing the running around, not the boots on the ground of those other areas that are far away. I had one student that was doing wholesaling deals, and still is, and the reality is that I would never turn down a lead. Let me put it this way. I have that associate in that area. I’m not about to just hop in the car if a lead comes to me and say I want to get 100 percent of the profit.
The reality is I am giving away 50 percent but I’m also saving so much time. It’s the amount of volume that I can accomplish, so you would think it’s human nature. But to be honest with you, I think that’s shortsighted thinking. But some people, maybe that’s applicable, but for the most part, no. For example, I have associates in South Jersey that I would do the same for them. If they came across a lead and they said, “Hey, Ryan, I got this lead. Why don’t you go ahead and visit them?” It’s in my backyard. I have no problem. It’s easier for me to go ahead and visit them than it is for them to make the drive up here. So those relationships are both ways.
Ryan: Not to say that I do that often, but if I have free time I have no problem. I am bouncing around for rehabs and rentals here and there. If I could tie it in, that’s fine. But some people may be like that, but for the most part, no. What we value mostly is our time.
Mike: It sounds like everybody you’re working with here is ultimately kind of wholesaling it because rehabbing enters another complication of how you split that.
Mike: What do you do in situations where you have a lead, you’re handing it over to somebody, and they decide that they want to rehab it?
Ryan: Right. It’s funny you mention that because most recently I’ve been diving into rehabs. I can say for my relationship with that particular associate, we do have a 50/50 and we’re also 50/50 on the rehab as well. Because it was something a little new for us, I would drive down there and go through the process together. So screening the contractors . . . he’s the boots on the ground so he’s actually there more onsite than I am.
Mike: And you’re making half of the investment as well. You’re putting up half the capital for the purchase and rehab and everything?
Ryan: It depends on the deal. I can say that’s another interesting thing. For these particular deals I brought on the private money lender, so it’s really all these relationships based on give and take scenarios. Everyone has to bring something to the table for it to be worthwhile. If you’re providing a lead and then you’re not going to the rehabs, you’re not providing any of the money, fair is fair. You probably don’t deserve 50 percent of the profit on there.
Ryan: But for all intents and purposes, we’re each bringing something to the table and they see that what I bring is of value, and likewise. So for the rehabs I have going on right now it is a 50/50 split. If it was somebody that I was not partnering with, I would just be wholesaling it to them just as a regular wholesale deal.
Mike: Sure. Awesome. Ryan, if folks want to learn more about . . . obviously you have the house buying side of the business and then you have the partnership side of the business. Where do they go to learn more about what you’re doing or how to reach out to you?
Ryan: Then can just go to my website: RyanPal.com.
Mike: That’s Ryan P-A-L.com.
Ryan: Right. I have a forum set up. It’s mostly geared towards new investors, mostly for people in New Jersey just because it’s supposed to be a localized centralized thing. People here about, hey, we can do this type of creative transaction in this state. Well, we really want to know what’s going on, what works here. That’s REIUnite.com. There’s a forum on there. So if anyone that’s listening is in Jersey and they’re looking to get started to network with other investors, it’s REIUnite.com
Mike: REI U-N-I-T-E?
Mike: Awesome. Hey, Ryan, thanks so much for joining today and sharing your story. I think early on in my real estate investing career, if you will, I was probably much more close-minded to working with others and stuff like that just because real estate investors get caught in this feast or famine mentality. It’s very much a feast or famine business. It’s not like we’re selling tacos, pizzas, or something where you’re selling and buying something every single day and lots of it. Your volume is 3 to 5% up and down. It’s a roller coaster. I think that causes that feast or famine mentality, and a lot of people that have been successful in this business just tend to put their head down and don’t work with others and do their own thing, but that’s a hard business to scale and it’s not nearly as fun as if you find other people to work with. I definitely think what you’re doing is great.
Ryan: Yeah, you couldn’t have said it any better. The reality is that those that have that shortsighted mentality, they’ll quickly kind of phase out. I don’t mean out of the business, but you’ll gel with those that have that long-term mentality, that they’re not going to try to negotiate you out of your own deals, that they’re not going to go ahead and try to fight you for it. “Hey, we understand that it’s a 50/50 relationship. It’s long-term,” and you just focus on the deals. No one wants to work with someone if they feel that they’re going to try to screw them out of their money, the profit, each time. You may deal with a couple of those people, but if you have good work ethics and you do attract those people, and I can say that the people that I work with, they all share that same mentality and that’s probably one of the biggest reasons of how I was able to accomplish and increase to where we’re at now. So it’s good.
Mike: Awesome. Ryan, thanks for joining us today. Thanks for sharing your story. We’ll add the links to how to get a hold of you down below the video here for anybody that wants to reach out to you. Thanks, my friend.
Ryan: All right. Thank you.
Mike: All right. Stay in touch. Thanks for joining us on today’s FlipNerd.com podcast. To listen to more of our shows and hear from incredible guests, please access all of our podcasts in the iTunes store. You can also watch the video versions of our shows by visiting us at FlipNerd.com.