Real Estate Foundation Repairs – Align Foundation

Mike: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright, and on this show, I will introduce you to VIP’s 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. So without further ado, let’s get started.
Hey it’s Mike Hambright, back for another FlipNerd VIP interview show. Today I have with me Jason and Josh Spector, who are third generation foundation company owners and they do a lot of work with investors, more importantly than talking about the specifics of foundation, we’ll talk a little bit about that, because it’s not a problem everywhere in the country, is to talk about working with family members and running a small business and facing a lot of the challenges that we all face as a small business. So before we get started with these guys, let’s take a second and recognize our featured sponsors:

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Mike: Hey Josh and Jason, welcome to the show.

Josh: Hey Mike, how are you?

Mike: Good, good, so literally I just told you guys, this is the first time I’ve had two people on, so I’m not sure who to look at here, but I’m glad you guys could join us today.

Josh: Yeah, thank you for having us.

Jason: Glad to be here.

Mike: Great, great. Well why don’t you take a second and introduce yourselves a little bit, introduce your company but also well, each of you individually.

Josh: I’m Josh Spector, Co-Owner of Align Foundation, we do foundation for parents in Dallas, Fort Worth, and Houston area.

Jason: I’m Jason Spector, we’re brothers obviously.

Mike: Yeah.

Jason: I’m the other owner of Align Foundation.

Mike: Okay, what’s the age difference in you guys?

Josh: About 16 months.

Mike: Okay, okay. So almost Irish Twins?

Josh: [inaudible 02:50]

Mike: So I know that there is a legacy with your family being in the business and you guys are obviously running it together now. Why don’t you tell us a little bit about basically being in business together?

Jason: Well, we started our company about four years ago. The economy slowed a little bit and being in business with our dad we decided maybe it was time to branch out and try it on our own. Ever since then, we have been really happy with our decision. We always liked working with our dad before that my dad worked with his dad, so we know a lot about the foundation industry in Dallas, Fort Worth, and now Houston, but I’ve enjoyed working with Josh more than anybody so far, that’s for sure.

Mike: That’s good, that’s good. Well I don’t want to take up too much time talking about the particulars of foundation, obviously which you guys live and breathe every day, why don’t you just take a second for folks, cause we have folks that watch the show from all over the country, talk a little bit about the foundation. We have so many foundation issues here in North Texas and obviously there’s people who have leaky basements and all sorts of problems all over the country but why don’t you just talk at a high level about the kind of, the industry you serve and why it’s such a big deal here in North Texas.

Josh: Sure, well most people around the country hear the term “settling.” Houses tend to settle and here it’s more result of the soil type that we have and it’s extremely active. So from summer to winter time or spring to fall, drought to moist season, the ground can expand and contract a lot, which causes [inaudible 04:46], which is the typical construction, or a beam to move around quite a bit and it can really wreak havoc on houses, destroy framing, mess up doors. One of the worst things it does is it really tears apart plumbing, so it’s a really, it’s the foundation, it’s the basis to the house, so when they start going bad, it’s when we come in to fix them. Other parts of the country they don’t have to deal with the clay that we have, it kind of runs through Texas up into Oklahoma a little bit.

Jason: Our area, it’s almost primarily composed of the clay soils, however they exist all over the country. There are bad foundation problems in other parts, for example Colorado, which is mostly a rocky soil, we get sloughs of clay that run through and they have very expensive foundational repairs to do, as one example. California is another example that has very sandy soil mostly, but then you get these sloughs of clay soil that are highly expansive and end up causing big problems.

Mike: Okay, yeah and I know for some folks that aren’t used to that– I mean, personally I’ve had houses that are– you guys have probably– I’m sure you guys have seen worse stuff than what I’ve had even, but houses that drop literally nearly a foot from the front to the back of the house. They just have literally dropped off, so. Well, so do you guys focus primarily on working with investors?

Jason: I would say that our business is probably split 50/50. However, part of the investor visits that we do is also commercial apartments, commercial buildings and things like that. So, for example, we’re working on, we’re going to do our department complex project right now in Dallas/Fort Worth area. And so I would say it’s 50/50 and it depends on the season sometimes. In the winter season, when people are less likely to deal with their foundation problems because they’re less evident. The home owners at least – the investors are always dealing with foundation issues if you get a ready-to-sell house.

Mike: Right. Okay, and I’d heard a stat before, I’m not sure if it’s true but do you guys know how many foundation companies there are just in the North Texas area?

Jason: I’d go over 100.

Mike: Yeah, there’s hundreds, yeah.

Jason: Yeah.

Mike: And essentially, this is not something that you need to be licensed for, right? I mean, essentially you have a truck and a shovel and, in theory, you could be in the foundation business, is that right?

Josh: It’s true to a point, you know. You do have to have relationships with engineers and the cities, you have to be registered in the cities, so is there a lot of ways to get around it? Yeah. But if you want to do things legit, it’s not [inaudible 07:53], but yeah, fortunately.

Jason: I think the relationship with the engineers, because they are required to have a license. It’s the most important part because engineers are less likely to stick their necks out for someone they know is unqualified in one way or another. However, you get bad engineers too.

Mike: Right. Yeah. Well, I know you guys are really concerned and focused on providing good customer service, and I should qualify or mention that I work with you guys and a lot of folks I know work with you guys and you’re always just a call away, but there’s so many contractors that do not provide good customer service and they don’t — you know, it’s frustrating for, for everybody, but I just want to say to some of these contractors, “You want me to show you how you can make 10 times more money, just do what you said you were going to do.” And it’s not just the foundation, it’s every contractor industry. Talk a little bit about the importance that you guys see in customer service and then talk a little bit about why you think some people are so bad at it.

Josh: Well, from the investor standpoint it’s developing relationships. Some people, in my opinion, some people don’t put a premium on that.

Jason: And have the interpersonal skills to do it.

Josh: Correct. And for us, we put a premi on it because there’s nothing better– and I’m sure you can attest to this as well — is the referral market. Especially with investors, it’s a huge network and over the last few years, we’ve realized what a tight knit, small network it can be. And so making that realization, it’s easy. You know – make people happy and they’ll continue using you. I mean, it’s a pretty simple business model but it tends to work.

Mike: Right.

Jason: In foundation and [inaudible 09:51] in particular, I believe that because there’s no licensing needed and there’s really no governing body to watch over the industry, like you said, you can have somebody that has a shovel and a truck and they can go get [inaudible 10:06] foundation repair. The other, the problem that you see is very uneducated people.

Mike: Yeah.

Jason: The successful foundation companies have leaders that do have education, whether it be business or marketing, or whatever it might be, but there are, I would say, a very small percentage of our industry in particular, that even has any education, let alone a college degree, so I think it makes a big difference.

Mike: Yeah. And do you think, that — even for some of the — there’s so many contractors that spend half their time looking for work and then they get work and they can’t look for work so then that job is done then it’s time to go look for work again and if they could just provide the type of customer service they would expect themselves, you know, these folks would really have — could stand — it’s so easy to stand out and I’m not talking about foundation, just in particular more of the individual trades like, painting and carpentry and stuff like that. Some of these guys, the — their ability to do what they said they would do is just terrible and I don’t quite get it.

Jason: And I think it’s so important because even we’re not perfect and we’ll make mistakes, but the difference is that we’ll answer the call and we’ll fix the mistake and I believe that everybody in this industry, whether — whatever they’re after, whether it’s just rental properties, or however they’re doing it, they’d rather have somebody just say, “Hey I made a mistake and we’ll go fix it for you.” Mistakes happen and I think a lot of people have a hard time owning up to the mistake or I guess financially paying for their mistakes. They do happen and I think you have these very small companies that disappear and you never hear from them because they can’t afford to fix their mistakes.

Mike: Right, right. And one of the things – I know you guys have expanded into other parts of Texas over the past couple years and one of the things we were talking about briefly before the show today was — as a small business — and this transcends obviously foundations, any small business, even myself as an investor — there’s always this challenge of scaling your business and can you talk a little bit about some of the lessons you guys have learned or some of the problems you face with scaling your business because you tend to find things that you just don’t outsource. You’re like, “Well, I’ll just do that myself” and it really limits your ability to grow. So talk a little bit about some of the challenges you guys have faced there.

Jason: I think — I have a family member who is a successful businessman and one thing he told me a long time ago is that my job is no longer to do what he’s doing. The physical work, or the even getting in the work. My job is to surround myself with people who can make me more money.

Mike: Yeah.

Jason: And that’s the hardest thing for a business owner to do. Well for myself, I know that I have a hard time trusting people. I have a hard time relinquishing my responsibilities to someone else, but I’ve found in the past few years, especially with our expansion to Houston, you do have to let it go and trust people and when they do well, you have to reward them for doing well. And unfortunately when they don’t do well, you got to let them go. And that’s been a struggle for me, I don’t know about for Josh, but for me it’s been a struggle.

Josh: Yeah, I want to do everything myself typically. You know, Jason has the aspects that he does himself and doesn’t really open up to conversation and kind of the same thing with me and you know, developing ways to become more efficient for the business. It’s hard to delegate those responsibilities, but to a point you have to. There will be a point you get so busy that you have to delegate. We’re dealt with that, we think, pretty well, but if you’ve had some discussions with us, we’re still not away from the occasional 16 hour day. They happen often. I’m sure you deal with them too.

Mike: Yeah.

Josh: But you have to make sure the stuff gets done, you have to when you need it done, and you know, when we have to do that, we will. So.

Mike: Yeah, it’s tough in a small business because you just can’t afford to have redundancy.

Josh: Right.

Mike: So you’re so, you’re so committed, or you have to be so committed to that one person you’ve outsourced to. And then, even in my experience, I mean, academically, you say, “If it’s not the right person, I’m going to get rid of them and find somebody that is.” But doing that is much harder said than done and sometimes when you’ve committed to somebody and they turn out to be not the right person, maybe even after years, it’s easy to overlook some of the problems you’re having cause the pain of going to replace that person is such a burden on you as a small business.

Josh: The pain sits right on our shoulders. We’re the ones who — like I said, I wholeheartedly believe that the hardest job we have is finding the right people.

Mike: Yeah.

Josh: We know how to do foundation repair, that’s not the problem. We’re very lucky that at least in the administration of the foundation repair itself, you have very, very, very qualified people that make us a lot of money.

Mike: Yeah.

Jason: There’s a difference between – besides the fact that we can offer great customer service and we’re a call away, people don’t mind talking to us, all these things – the actual administration of foundation repair is so very important and the people we have are really good.

Mike: Yeah, yeah. And so tell us a little bit about working together, as brothers. I have a brother myself, I don’t think we’re ever going to work together, but not for any right or wrong reasons, it’s just I know it causes some complications. I mean, I work with my wife and we had, in all honesty, we had a little discussion before we started today about things she’s doing that she doesn’t want to do or that I’m not doing enough of, or whatever. I mean, you’re just bound to have those discussions. So talk a little bit about how you guys kind of divide and conquer and keep some sanity within your relationship.

Jason: Well, there are certain things that Josh does very well and there are certain things that I do very well. And we tend to kind of split those responsibilities. There is some crossover and there are always some, not even heated discussions, but I’m not happy, he’s not happy. We just talk about it. I mean, we know no matter what, when the end of the day comes we’re in it together, so just- We have to work together on these things. But I think most importantly, there are certain aspects of the business where Josh has 51% of control and I have 49 and there are certain aspects of the business when I have 51% and he has 49. There has to be a [inaudible 17:36] decision maker for everything, but – And then the bigger stuff we work together on. So.

Mike: Yeah.

Josh: We both are fair enough we are both level headed enough to discuss when we do run into issues, which isn’t, honestly, isn’t very often. You know, and I think we both know, typically, when it’s the right time to back off a little bit or “he’s right, I’m wrong” or “I’m right he’s wrong.” And it works out pretty well.

Mike: Yeah.

Josh: At least it has for the last few years.

Mike: Yeah.

Jason: And the thing is, we just both work hard. You can’t really fault one another when you’re working hard. If you make a mistake, it is what it is. So

Mike: Right.

Jason: We just– it would be one thing if one of us was not a hard worker and the other one was.

Mike: Right.

Jason: That would cause a lot of conflict.

Mike: Yeah, you start to resent somebody for not pulling their weight.

Jason: Yeah, but we both work hard and sometimes in our own way. You know, we — Josh likes to work late at night, I like to work early in the morning, so it kind of works out.

Josh: Working late at night. I do [inaudible 18:48]

Mike: Here we go. Why don’t you guys — and obviously you tried to expand into Houston and – for those that don’t know, Houston is about 4 or 5 hours from here to the main part of Houston – So given that there is so much fragmentation in the Dallas/ Fort Worth market, for example, trying to make this relevant for people who are in all parts of the country, how did you decide to expand into a new city versus – cause you probably have an extremely small market share here, just because it’s so fragmented – why expand into a new market versus try to steal more share here?

Jason: That’s a good question.

Josh: Opportunity. We had an opportunity to expand in that area and we talked about it for about 24 hours, maybe 48 hours and just jumped on it and said let’s do it.

Mike: Did you have customers – did you have investors or customers here that were also investing there? Is that what it was?

Josh: Yeah, and they wanted to work with us cause there is a completely different business model for foundation repair companies in Houston and it makes the prices a little bit different but our services, once again, is the key and people have slowly realized that down there as well.
Well yeah, I think it was all about opportunity. You see opportunity and it looks you in the face, you jump on it. That’s what it was. Not to say we don’t want more of a market share in Dallas, we are working on getting that as well, but it was an opportunity.

Mike: Yeah.

Jason: Then we will reach a point eventually in Dallas where we have our hands completely full. At times, we’ve been there, and it fluctuates a little back and forth but besides hiring a lot more people here, it just it may reach a point where we’re fine with the share that we have.

Mike: Yeah.

Jason: And Houston is a really good market for real estate investing, for foundation repair, for a lot of different things, and so, not to mention it’s the fourth largest city in the country, so there’s a lot of share there too.

Mike: Yeah. You just made a comment about you’ll get to a point where you’ll be satisfied with your market share. Talk a little bit about that because I think a lot of small businesses, and I suffer from it myself, is I never seem to be satisfied with enough. I like, I’ve got, I always got to take something to another level, which, in many ways, as a small business owner – I think for all – not everybody is this way, it comes down to your personal demeanor, but a lot of us have kind of a feast or famine mentality – we’re always worried about the famine, so you just continue to feast and maybe to a fault for your personal life and things like that that gets in the way with – talk a little bit about that a little – how you guys face that.

Jason: As an example, in most summer times, which is our busy season, in most summer times, we get to the point where we might be three or four weeks out in schedulings. And it then becomes a burden on our customers that needed that more quickly. To add crews, to add personnel, to do all these things, it may create – in some cases – a lack of quality. And that’s something that we’re not willing to – we’re not willing to trade quality for more.

Mike: Yeah.

Jason: So we do a pretty good – what we think is a pretty amazing volume, and we’re pretty happy with the volume. There’s always – you know, I think we suffer from the same thing. We always want more, we always want it, but I think when you sit down at night and look at what you’ve got, there’s got to be limitation.

Mike: Yeah.

Jason: And we keep our customers happy. I mean, that really is our focus. If we can’t keep the customers happy then that amazing amount of work won’t be there tomorrow.

Mike: Yeah.

Josh: When we say the word ‘satisfied’, it’s not that we’re going to – we sit back and say, “Oh, this is where we’re at, we’re done accepting new business.” We’re always out there pushing it and trying to expand. So when we first started, our goal was to be a third or a quarter of the size we are now and we’re like “Oh, we’ll get to that point, we’ll be happy, we can level off there.” And we’re four times bigger than that at this point, where we’ve had to hire out people and expand into Houston. So it’s not that we’re satisfied, it’s we do have to take what Jason was saying into consideration, and we always will, but when it grows it’s not like we’re going to turn away from it, so.

Mike: Right, right. For you guys, is part of the goal to eliminate yourselves from your jobs or is it just to maintain – I mean for a lot of the small business owners, that is their goal – how can I get this thing built and set up in a way where I don’t – if I’m gone for a week or a day or a month, the business doesn’t suffer.

Josh: Our industry is really difficult because it can take a long time to learn what we know and it’s a really cutthroat business so to hire people that were already qualified in the foundation repair business could undermine you really quickly with [inaudible 24:34] and things like that. It’s a really, really bad cutthroat business, so to eliminate ourselves from the business completely might be very difficult.

Jason: In our industry, it’s a home improvement industry that’s extremely technical.

Mike: Okay.

Jason: Whereas, some home improvement industries are not very technical. You know, painters, you have a certain standard – you go in and paint. There may be aspects of it that are more technical but it would be hard to eliminate ourselves completely.

Josh: I think elimination would be putting it up for sale, which we’re always for sale, so.

Mike: So do you guys – one of the things that I’ve seen with partnerships – not just foundation necessarily, but all businesses, is you have the ability, the flexibility to say, “Hey, I’m going to go somewhere for a week or two, you take over, and visa-versa.” That’s a little bit hard in – because my business, my primary real estate investment business is primarily a partnership with my wife, but of course we travel together, so it makes it kind of hard but I’ve seen partnerships that are brothers, other family members, father-son, and – or just good friends that are able to just push everything off on that person for short periods of time and of course they return the favor when they get a chance.

Jason: We do, we do a fair amount of that. I think we’ve taken one trip together in the last four years.

Mike: Yeah.

Jason: And it was a short weekend trip, and man were our phones ringing the whole weekend. So it kind of takes away from that trip. It’s nice when we both — he’s able to leave for a vacation and I’m able to do the same thing.

Josh: I think — yeah, my wife’s a small business owner as well and the amount of preparation she has to make to leave is far greater than what I have to do to leave. Only because I just say, “Okay Josh, these are all the things that I need done while I’m gone.” And we try really hard not to bother each other on vacation.

Mike: Yeah.

Josh: It still happens, but.

Mike: Yeah. Yeah good, so talk a little bit about — I know that a lot of — and again not just foundation companies, but all sorts of contractors — they either focus primarily on owner/ occupants, like home owners, or investors, and I know that – other contractors I know that specifically only want to work with investors – there’s a lot of reasons why they do, so usually because they can – it’s easier to get repeat business, the standards might be a little bit lower in terms of — I know on my investment properties we try to put out a very good product, but if somebody is working on my personal home, I’m much more particular than I am if it’s an investment. And then, obviously, typically speaking – prices – the revenue you receive from an investor is probably less than it is from a homeowner. And talk a little bit about why you guys have chosen to work with both and why some choose one over the other, I guess.

Josh: Well, when we work with investors, we like to think we are offering the same product, the same quality. And I know there are people who don’t work with us because we are not willing to cut a couple corners here and there. But ultimately, they’re able to sell better products so their stuff goes faster. Just like you said, you like to put out a good product, so we — and so focusing on both bark, it’s — there’s not a whole ideology change between the two for us, so it’s kind of easy to go back and forth between them.
Of course the investor market — as long as you can keep them happy now. I find that investors, they know what they want, they’re intelligent, they know what they’re looking for, so they’re particular about what they want and you have to deliver. If you don’t deliver they go find somebody else.

Jason: And home owners, I think, that we become educators to home owners, because it’s such a technical industry. Whereas, the investor has done this before and maybe there is some particular aspect of the house that we need to educate them on, but most of it they already know. And, but that’s okay. And we came up – we did very little with Ester business working with our other family. So we came up educated people, dealing with homeowner complaints and issues and things like that.

Josh: Now we like both markets, but we also realize that the investor market will not always be as robust as it is right now. And I guess just like any investment professional will tell you: you need to diversify. And so if we don’t keep advertising, if we don’t keep our name out there to the general public, then one day – and we’ve seen this happen with companies that do deal strictly with investors – foundation companies that deals strictly with investors – one day, it goes away and you’re stuck, so we don’t want to be stuck.

Mike: Great, well any last minute thoughts on — I guess tips for people who are watching who are thinking about maybe working with family members, or maybe bringing somebody into their business, or starting their business? Now you guys started this together, I guess some challenge may be bringing a family member into an existing business, versus starting it together because one person, you know, is probably set in their ways, but talk a little bit about – for folks that are listening that are thinking about starting something or expanding or bringing family in, some of the things to think about.

Josh: I think we both have something to say on this. I’d say start with having a solid business agreement. If you have guidelines that you have to follow, then if you have to disband it at some point, it’s set in stone. So you don’t have to fight over money, you don’t have to fight with your partner, you know, agreements and stuff like that, so I think having that set up, which would be set up fairly early, you know, there it outlines it and there’s borders, so you know what to follow at that point.

Jason: That’s probably the biggest mistake people that do business with family — it’s hard to look your family member in the eye and say, “Sign this so that we both understand what our responsibilities and what our share of the business basically is.” And that – I think it’s a big mistake because in the end, if something goes wrong, you may possibly lose your family member as a family member. At the same time, I don’t think people should be afraid to work with their family. I think it gets a really bad wrap, but if you can trust the person that you are working with, whether it’s family or not, I think you’ll be okay.

Mike: Yeah.

Josh: Yeah, being able to trust each other, it makes the world of difference, because like you were saying before, the business relies so- your business relies on so much on you. Us, if we have to step back for a week, it’s okay. It’s – it will definitely put a load of stress on the other person’s shoulders, but it’s okay. You have that ability to step back a little bit. I mean, as long as you can trust the family member you’re working with.

Mike: Yeah.

Jason: [inaudible 32:06]

Josh: Yeah.

Mike: Yeah. Yeah I know some – another real estate investor that I’m pretty good friends with – is a father and three sons and their business is just roaring and I think one of the benefits as far as not having redundancy and finding the right people, I think one of the benefits of working with family members is you probably can be a little more frank with them in terms of, you need to step up, or something that you wouldn’t with an employee that is going to be put off my that or leave or something like that.
Might be a little more candid discussions.

Jason: Definitely agree with that.

Josh: Yeah.

Mike: Yeah, awesome. Well hey guys, thanks for joining today. Really appreciate it. Glad that we had a two-fer, that you both could join us, that’s awesome.

Jason: Thank you, Mike.

Mike: Yeah.

Josh: Yeah definitely, thank you.

Mike: For anybody that’s interested in – specifically the people who are in the Dallas area, or Houston, why don’t you tell us how to get a hold of you guys?

Josh: You can go to our website, which is in the middle of being completely re-done and overhauled, so www.alignfoundation.com A- L-I-G-N or you can call us at (214) 710-2555.

Mike: Awesome.

Jason: Yeah, anything you need for Houston or Dallas you can call us at that number. We have a Houston area manager that’ll help you, but you can get us there.

Mike: Okay, and we’ll put links for that below the video. So awesome, well hey guys, thanks for joining today, I appreciate it.

Jason: Thanks, Mike.

Josh: Thanks, Mike.

Mike: All right, we’ll see you around.
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