Today’s guest has sharpened his skill sets through key roles in various companies as a team manager, program manager, and marketing manager- Scott Price. In 2005, he purchased his first apartment complex of 29 units. He used the full‐time broker status to immerse himself in real‐world real estate, investing and applied education. After being approached by some people, Scott began to provide professional coaching for aspiring real estate investors.
In this episode, Scott shares with us the details of his first deal- what he learned and what he’d do differently, how he managed a full-time W2 job & real estate investing on the weekends, how he became financially free and his current deals.
Episode Highlights:
- Real Estate Beginnings
- Scott’s Retirement Plan
- Advantages of Real Estate
- A Memorable Deal
- 1:1 Coaching
Connect with Scott:
Website: bonvolo.com
– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –
TRANSCRIPTION
Intro: Hey guys, welcome to the show. Today, I’m very excited to host Scott Price. Scott is a real estate investor. He’s also a hard money lender. He’s an active investor. He’s a passive investor. And he’s also a coach. Now, if you’re asking yourself, how is it possible that you can do all these things, then I guess it’s just a type of business that real estate is. It’s just being diverse, being able to think long term. I think what I like about Scott is his long term vision. And that is a key feature that you got to have. It’s something in your mindset, you got to understand that real estate is a long play. So, you got to be patient, and you got to keep working, you gotta keep grinding, and you have your way of doing this. So, Scott’s way of doing this is working a W2 job as he’s investing in real estate. That’s a safe way and that’s a very nice way to do things. So yeah, I think Scott has a lot of value to give. So, without further ado, let’s get started.
Lady: Welcome to the commercial real estate investing podcast with Don and Eden where we cover all aspects of real estate investing with special attention to off-market strategies.
Don: Hey, Scott, welcome to the show.
Scott: Hey, Don, thanks. I’m looking forward to being here and talking to you.
Don: Yes, I’m also looking forward to having you here because I know this interview was rescheduled so many times just out of coincidence, and I really wanted to have you on the show. I think what you’re doing is truly phenomenal. And I know you’ve been listening to the show also, as well. So, you’ve been there on the side of the audience and listener and also now as somebody who’s being interviewed, so I’m very happy to have you here. And yeah, let’s get started. Tell us a little bit about your career, your real estate career and how you got started in real estate.
Scott: Sure. I would say it first started many years ago, was looking at what am I going to do with my life and how am I going to become independent in terms of financial lifestyle and not dependent upon the winds of a company. And even going back to before college, I was thinking those kinds of things, certainly did during college as well and I kind of started on the usual approach of most people who have got a good job, go to a good school and things like that. But from all the research that I did, the thing that kept coming up over and over again was that people who maybe we’re not household names, but they were people who developed a combination of recurring income as well as net worth. It kept coming back to real estate that some people would win the lottery by great IPO or their stock or something like that but it tended to be a smaller percentage, and it was a real roll of the dice as to whether or not you happen to be in the right company or not, or things like that.
I didn’t want my life to be a chance, I wanted to be something that I could control and expand on. And to me real estate was that thing after looking at a lot of different options because it is doable, it’s something you have to work out but at the same time, if you are diligent about it, get educated and don’t rely on excuses but take action, it is something that can get you there both in terms of recurring income and net worth. What I did was I worked a regular W2 job primarily in high tech and usually in program management and team management positions. And at the same time, in the evenings and weekends, I was working on real estate. For one time back in 2005, I was a full-time real estate broker, but I just did that for a few years and was just to get into real estate investing to immerse myself. I still have my license right now, but I don’t represent clients. I currently have it purely for investing purposes.
Don: So, you started back in 2005 right, and then you quit for a few years. I guess you quit because of the crisis?
Scott: I’m giving an approximate from 2003 to 2007. I was a full-time broker and I primarily got out of it because I was doing some commercial, which interested me, but I was doing mostly residential. And frankly, I got kind of tired of all the tire kickers. It’s such a numbers game kind of job, some people love it. And that’s all great. But I want to get paid for my efforts and for the clients I had, who were good to work with. But the people who would waste my time driving around for six months and then decided not to buy it got a little old.
Don: Yeah.
Scott: So, I decided to go back to W2 actually to work for good companies, good jobs and make a good income with that and not have to worry about all that kind of stuff. But at the same time on the side, again, in the evenings and weekends, I was actively working on my real estate investing. And my general approach was, all of my expenses for me and my family were taken care of by my job, as well as the benefits that I got and the ability to say It’s a lot easier, especially for smaller loans to get a loan, if you have a W2 then if you don’t if you’re self-employed, things like that. So, I use that all to my advantage. I was very strategic and intentional about that. And by doing that, then all of my income, as well as profits from building up equity, doing a cash-out refinance, things like that, as I went along, I could directly roll that back into more real estate.
Again, it was part of a larger plan of not going to work W2 forever, didn’t want to do that. But I was using the W2 job as a way to help me expand my real estate portfolio even more. And everything that I own right now is I own myself or myself and the bank, as they say, if I’ve got a loan on it, but had a need for co-investors, although I have worked with debt investors, and so that allowed me to build up a portfolio. I stayed with it for quite a long time until a couple of years ago. And then I got well past where I needed to be, but I wanted to be again very conservative. And then I had both income and net worth enough to just say, Okay, I’m going full time. So, I did that a couple of years ago.
Don: Okay, so yeah, that’s very interesting. So, you decided to go full time two years ago, right or a couple of years ago, excuse me for asking it so bluntly, but how old are you?
Scott: I am 52.
Don: 52. So most people would retire when they are 64. And what I like about what you’re doing, is the fact that you saw real estate as a long term investment for your life, for the way that you vision your life, right? So, you wanted to take all the money that you make from your W2, your good paying job, I know you were doing a high tech and you did team management for big companies. And so, you got paid well, I assume. And then you got that money and you paid the bill with that money, but the equity that you generated to real estate investing that you just rolled on, and that’s how you got bigger and bigger and bigger.
And by the age of 52, you are financially free, which is a lot sooner than most people, I mean, you went down the road of the safer option, because I see a lot of people that are doing this, that they have a good-paying job but they know that they don’t want to do this forever, and they want to retire earlier than most people. And so, they take the money and they live with it. And the money they make in real estate, they don’t take anything out, you just push it back into the business, whereas a real estate investor, you have to also take money outside of your business so that you could live and pay your bills. Right?
Scott: Absolutely. And, of course, actually did two years ago, so that was at 50. And then on top of that, I could have easily done it earlier. Just to be clear. I mean, I’ve been building enough that easily five years earlier, and that if I wanted to, I could have done that 45 or probably earlier. So, it was just a matter of saying well, I want to be even more comfortable. In other words, I want to have a little bit more properties, I want to have a little more income coming in and things like that. And then finally got to the point where I felt comfortable enough with it.
Don: There’s another thing that I want to talk about from something that you mentioned at the beginning. You said that you noticed that it all leads up to the real estate. It doesn’t matter who you are, what you do. At the end of the day, the majority of them are in real estate. And the question is, why is it so? So I had a guest on the show, that guests were making a lot of money from his business, he noticed that his father was a real estate investor, but he did not want to be anything like his father, because his father was not doing it right, didn’t see the way this business could be passive.
So, it was a lot of work for him. And then he said, I would never be like my father. And then he made a lot of money in a different business. But he found out that he’s paying so much in taxes, and he’s not financially free regarding the fact that he’s successful. So, he ended up investing in real estate. And that’s exactly what’s going to happen with anybody successful. If you’re not investing in real estate, then you’re not in the game in my opinion, unless you’re investing in something else but what’s better than real estate it’s real. It’s not fake. It has value, it has a use, people use it, right?
Scott: Yeah, real estate has several advantages over other businesses. Real estate is a business but it covers other businesses or things like stocks and other ways to make money. One of them is it’s an imperfect market that is not always available to everyone in terms of information, what’s the best approach, things like that. So, because you can look for deals, and you can control certain aspects of it more so than like, for instance, investing in stocks, you can tend to increase your gains significantly more than you could necessarily in a stock, it may go up and may go down a little bit of roller dice for something like a stock.
Don: It’s in your control, you control it. Yeah.
Scott: Yeah, I mean, nothing’s completely under anybody’s control, there always are some externalities, but at the same time, you can plan for those risks. And the other thing is that you can create systems and you can create a team that works around that business to help increase it. And then the other big thing is that you can use OPM-other people’s money to leverage and expand upon so when you combine all three of those aspects, it’s what can create a snowball effect, which is what I been working on of buying one, it goes to two, it goes to four, it goes to eight, that kind of thing. And then constantly snowballing because of leveraging all three of those aspects that other businesses don’t necessarily have.
Don: That’s terrific. Yeah. So, tell us a little bit about what you’re doing in real estate right now. More specifically, so which asset classes you’re investing at and where do you see your future in the real estate space?
Scott: We currently own a portfolio of multifamily, singles, office, retail, and land. So, multiple asset classes there, our primary interest is multifamily.
Don: If I could pick one asset class that I could put a million dollars and I gotta put that money for 100 years, then I pick multifamily because I do think that over a long period of time, it’s probably the best investment you can make. But over a short period of time, I’m not that sure that this is the case right now, as far as the cap rates are so compressed when you’re looking at multi-families. And so, I want to ask you since you say you prefer multifamily, but you are looking at other directions?
Scott: Actually, last year, I built a custom home. And that was kind of my main job, I guess you could say. So, I started thinking, Well, I have some money to deploy here, let me go on to do plus the market is a bit overheated in terms of prices. I tend to be a cash on cash buyer. In other words, I’m buying for income and the net worth kind of comes along as a cherry on top over time. And it’s obviously just as a generalization. It’s not much of a cash flow market nowadays. So yeah, I started looking at other areas to temporarily expand into. One of them is I’ve gotten into hard money lending and that’s been good because it allows me to utilize some of my available funds, get a return on them.
That’s a good return, pretty steady and also pretty safe. But at the same time, it’s usually at most locked up for a year. And I figure if there is a big swing in the market and where there are some good opportunities, then I can have my money back. It’s not locked up for a really long period of time. So, I started getting into that. That was one thing. And the other thing that I’ve done, which I’ve never done before, but I’ve started doing over the past year is investing in other people’s deals. And primarily because our entire portfolio is in Washington State spread out across a number of markets in the state. And I am interested in investing in other states and I have in the past, but at the same time, there is an advantage to going to some of these better cash flowing markets in other states and if somebody can get me a good return and I believe in the sponsor and believe in their jewelry and the property, hey, then I’ll do some passive investing. So, I started experimenting with that and I’ve invested enough people’s deals.
Don: So, when you invest in other people’s deals are you investing as a limited partner or as part of the GP?
Scot: As a limited partner.
Don: I think it’s a great idea for you because you haven’t done that before as far as syndication, you haven’t syndicated a deal before. So, I think it’s a great move that you’re doing because you’re going to be able to see it from the perspective of investors that are going to work with you when you’re going to syndicate in the future. And you’re going to see what you like less but you like more. So, this way, you’d be able to give your investors value since you had the experience.
Scott: Exactly. I completely agree. And because that is a future area that we’re going to get into is syndication. I worked with debt investors and some of my prior properties. But I have not specifically done equity investors, feel very comfortable with it, certainly been doing it for 15 years as far as on the asset management and fulfilling a business plan approach. And I have my team in place for doing syndication and the biggest problem right now is of course, like for everybody finding good deals in the current market, and things that cash flow well enough to make it interesting for the investor as well as interesting enough for me to participate in.
Don: There’s a way that I found that enables you to get really good deals, even in today’s market, and I don’t mind sharing it with you and with my audience, of course. It’s terrific when you’re able to get to the seller. Because when you do that, then you cut the broker and not that I have anything against brokers, I love brokers, I work with brokers, they send deals my way, close on deals, and it’s all good. But you got to remember that brokers, they have fiduciaries towards their clients, which is the setters and they are going to try to get the best price for them. So, when the deal hits the broker, in most cases, it’s going to drive the price up. And sometimes you’re able to find a seller and it’s a numbers game. You got to try in various ways to get to these people and you got to do some marketing to get to them.
But I found out that when you do that, it’s very likely that you find a good deal because the sellers, first of all, I’m not paying the commissions for the broker. So that saves a little bit of money right there. Also, the price is not driven up by people that are offering numbers that you cannot afford. People that are buying for low cap rates and people that are just looking to park money somewhere or people that are trying to 1031 exchange into that property. So, there are many reasons why people would overpay right, even if it’s not a good buy. So, I have found out that working directly with the setters is extremely beneficial in today’s market and it works for me and could work for you as well. Let’s think about this deal that you have in the back of your mind that whenever people ask you about a certain deal, that’s the one that you really want to talk about. Want to hear about that deal, in the course of your career in real estate.
Scott: When I first started getting into multifamily, the first one I purchased was a 29 unit, and that was back in 2005. And the thing to me that makes that an important property for me among all my other properties, being an older building, I certainly had a professional inspection done had every unit looked at. So, I was prudent on that. Nonetheless, some of the longer-term capital expenses, I really went in were not familiar with how much they would actually cost. And as an example, within a couple of years for that property, it was just 29 units, it’s not huge to replace the roofs on it, it cost me out of my personal savings, about $100,000.
Don: Wow! It was back in 2005 also, right?
Scott: Yeah, exactly.
Don: That’s a lot of money.
Scott: Yeah, yeah, exactly. And learning about plumbing and electrical and what aluminum wiring means or let’s say rusted, galvanized, or all these kinds of things, but what all that really means in terms of the impact to the bottom line on a monthly basis, and then the idea of coming up with reserves. Also, other things like economic occupancy versus physical occupancy, meaning basically I learned that they had stuffed the building prior to listing so, they looked all filled but then I got their bad tenants that they had quickly stuffed into the various units and not all of them were well-qualified tenants. So, I had to go through the eviction processes on some of them and things like that. And then also just about overall property management because going from a single to multifamily is a whole different deal.
Don: Apples and oranges.
Scott: Exactly. So, things like that and it was all for the better in the long run. Over the years, I’ve obviously learned quite a bit on that and many other properties and I still own that property.
Don: I think what’s beautiful about what you’re saying is the fact that your mindset is right and even back then at the end of the day, it’s not just about how much money you make it’s about also what you learn because knowledge is infinite. Now you’ve experienced dealing with 29 units and so now you know how to do it and now we know about galvanized plumbing and you know aluminum plumbing and electric panels and you know about property management. So, even if it was difficult and even if you lost me, you still learn some valuable lessons that would be there infinitely, because knowledge is infinite. Money comes and goes but knowledge once you acquire it, it’s going to be there until the day you die. So, that is what I find beautiful in your story, because it was one of your first deals and you weather the storm and you managed to make it happen for yourself.
Scott: Yeah, that was the biggest thing I was pushing through and then also applying that knowledge for my future criteria. So, in terms of would, I do it again with that same property? Probably not. With what I know today, I probably would not have you know that I would have bought something else. However, here we are 14 years later, and I still own it and it’s making nice cash flow for me and it’s allowed me to buy the property. So, it’s like okay, well push through and keep it in the portfolio. There you go, inflation will help you out.
Don: Definitely. So, let’s talk about that deal that you’ve just done with investing your money as a limited partner. Tell me a little bit about the experience and how you felt about that, the size of the deal may be and where it’s at so we can get more information about that.
Scott: Sure. Well, I’ve done a number of them and I’ve done it through different sources. I’ve done it through people that I know, I’ve done it through online marketplaces and others, not people I know, but that have a lot of good information and I can least research and I’ve done probably 10 or so different investments in other people’s deals as an LP. It’s been good for several reasons. Number one, it is, of course, passive investing. That’s kind of nice.
Especially since I’m an active owner on everything else. It’s nice to have part of my income stream be just classic mailbox money and it’s kind of nice to be part of the portfolio. The other thing is it gives me exposure to markets that I don’t know well, I only invest in other people’s deals in markets that I like. So, I’m not just randomly saying, ‘Oh, this one says it’s going to have a high return. So, I’m going to go with that one.’ No, I always start just like I invest with the market and the team and the property and go through a similar evaluation process as if I was buying it directly.
Don: What kind of markets would you say are the trending markets right now that you’re looking at and you like?
Scott: There are a lot. I have some that I can mention that I like, I wouldn’t say they’re the only ones. But there are some that I’m particularly looking at and that I’ve invested in. Examples include Atlanta, couple Midwest ones, like Columbus and Indianapolis. I’m interested in Pittsburgh, although I have not yet invested there. But a lot of these you have to be very clear on what submarket that you’re working in. You can’t just say whatever.
Don: And how do you filter the sponsor when you decide to go on and deal with somebody because you got to trust that person and their ability to make something happen with that deal, right?
Scott: Yeah, so I’m going to be looking at the track record. And that’ll be the first thing I’ll start with just to see what they’ve done in the past, how they have been able to follow and implement and hopefully go full cycle on a particular business plan, and at least achieve if not exceed the original business plan, and looking at their team, and then I get down to the documentation they’re providing. I somewhat give it the sniff test meaning does this come across to me as an experienced investor as more marketing than reality, and if I get anything like that where I think they’re blowing smoke, then they get tossed pretty quickly. So, there’s all that and then on top of that, that’s about the sponsor. Then on top of that, I’m going to do my due diligence on the property itself and the market as well so that both aspects.
Don: Nice. That’s very, very interesting. I think what I like about your persona as an investor is that you’re very diversified. I know you also got into coaching recently. So how did that go?
Scott: About a year ago, some people started approaching me. I’ve been somewhat involved in the local scene and also done some public speaking and things like that. And people started approaching me about the potential to do some direct coaching. And it wasn’t even part of my plan. And I said, Yeah, that could be interesting because the thing I find about coaching is that it’s interesting and fun working with somebody serious enough to want to get into coaching, not just somebody who wants some information, disappears and never does anything with it, somebody who wants to apply and do something. I like working with that kind of person.
Yeah, that’s one thing. The other thing is that I found that being a coach keeps me sharp. Usually, I am able to address most of the things that come up for most people, but at the same time, even if I already know it, or think I know it, I’ve still got to be very clear in my mind about what’s the most important thing to communicate, what’s the best process behind this, that’s the best way to approach it? And that helps me as well. So, it’s a mutual benefit.
Don: There’s a saying for that, “Teaching is the best teacher.”
Scott: Exactly. I didn’t want to start some guru program or something like that. That wasn’t my interest, never has been. And what I did was somewhat unique actually, in the coaching world. I do it purely hourly.
Don: Sorry for cutting you but I’ve seen people trying to get into commercial real estate, and I’m going to mention names, but people in the industry know, you know what I’m talking about and who I’m talking about, and I’ve seen people that are maxing out their credit card in a seminar. These are people that have nothing, they have no way to pay the bills, but this guru or this mentor is selling them on a dream. And then I saw it firsthand. I’ve seen a seminar where I’ve been there. And I’ve seen how these mentors charge older people $40,000 on their credit card, and if the credit card doesn’t go through, then they’re going to try five others. And that’s mean, that’s something you don’t do.
Yeah, you could think you could help that person achieve success but what if you don’t? It’s also entirely on the person as well. I mean, they gotta want it and they got to be qualified to do that. So, it’s not illegal, but it’s just not moral in my opinion. I think it gives a ton of value to a person who’s trying to get into that industry. If you offer mentoring by the hour, I think that there is a huge clientele for that. There’s a lot of people trying to get into that and just don’t have the straight-up $10,000, $20,000. So, whatever it is, you’re charging, I’m sure it’s reasonable. I’m sure if it’s by the hour.
Scott: It’s a lot less than hiring an attorney, that’s for sure.
Don: Okay, so I know it’s less than 200 to 300 bucks. That’s fair enough. It sounds to me like a lot of people check that out. So yes, Scott, tell me what would be the best way to connect with you if anybody wants to learn from you, go through coaching or just to talk?
Scott: Sure. Yeah, the easiest way is to go to my website, which is bonvolo.com, that’s spelled B O N V O L O .com. And on there, I have my phone number and my email and contact form and whatever works well for you. That’s all there.
Don: All right, Scott. So, I want to say, first of all, thank you for coming to the show. I know it’s been a long time coming, but it was sure worth it. One of the most interesting interviews I’ve had in a while and I’m sure people are going to contact you and get to know you a little bit. So yeah, thanks a lot, and we’ll be in touch.
Scott: Thank you, Don. It was fun.
Don: Okay, Scott, you have a great day.
Outro: Hey, guys, I hope you enjoyed the episode. Scott is amazing, and he’s one of my favorite guests so far. I just wanted to remind you that you could get a 30-minute phone call conversation with me and Eden if you give us a review on our podcasts on iTunes, it’s very simple. Just get in rate and give us a review and then just shoot us an email at Hello@DonandEden.com and just copy the body of your review. And you will get scheduled for a 30-minute phone call conversation with us where we could talk about real estate, we can talk about investments, or we can just network and get to know each other. So, until the next time, you guys have a good one.
Lady: Thanks for listening to the real estate investing podcast with Don and Eden. Stay tuned for more episodes. Till next time!
