August 16, 2023 • 26 mins
Massively Increase Your Net Operating Income™ with The TCO Method™
Andy makes a few announcements about the new website (check it out here) and starts a discussion about how to identify and start a relationship with vendors to reduce costs, and get better service.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
[Music]
(00:24):
Welcome to the TCO method, the only show focused on helping you massively increase your net operating
income. I am Andy McQuade, thank you so much for joining me. I apologize. I see the say
that a lot when I start this show. I don't really apologize. The last week we didn't release any
episodes because I was in the mountains in the Adirondex, not recording podcasts or much of
(00:49):
anything else. Timing probably could have been better because our episode with Yona Weiss went
live on Saturday before we left for camp. So there was that, but all things considered, things
have gone pretty well. This week we're still going to do two episodes. This one will be a little
bit late. It's going to come out on Wednesday. Tomorrow's episode will come out tomorrow, Thursday,
(01:14):
on time. Couple of announcements in case you didn't see it. The podcast website is live, you can
go to TCO method.com/podcast, you can listen to the podcast there, you can read the transcripts if
you have questions or are not good at taking notes. If you want to watch a video, you can watch
(01:39):
it on the website on the YouTube side or you can go watch it on YouTube directly. I'm not really
super picky how you do it. I just appreciate you listening. If you like the show, please subscribe, and we'll
say that again at the end of the program to remind you. I also had the pleasure to be invited to talk
(02:00):
on the best ever real estate investing advice podcast, which was started by Joe Fairless, and he
doesn't really do a lot of episodes anymore. I got to do my interview with Ash Patel, awesome guy,
apparently likes to invest in Ohio. I would really appreciate you going and listening and leaving a review
(02:22):
in a comment on their program. There's links that are going to be up on the TCO method website soon.
Same thing if you haven't listened to the interview with Jason Ballara on the Lark Capital,
know your Y podcast. Also a very good show. Lots of awesome real estate investors that go on both of
those programs. Definitely worth your time to listen and subscribe to those programs. They're great people
(02:48):
and they just want to share information. Anyway, today's program, I wanted to kind of elaborate a little
bit on something from the best ever podcast. We talked a little bit about vertically integrated
construction in one of the other episodes, which now people know that was actually stolen from that
(03:12):
podcast interview. But I wanted to talk a little bit more about supply chain and where that is and how you
should be building relationships with your vendors. I know we talked a little bit about it in one of
the earlier episodes, but for anybody who's new listening or anybody who wants to go a little bit more in-depth,
(03:35):
there are places that you can go to learn about who's actually doing the best job of providing stuff.
We're talking about physical product vendors now, not services. I know a lot of people call service
providers vendors. They're not really a vendor is somebody who sells a physical item. A service provider
(03:58):
provides a service. You go to a local real estate meetup. You network with local investors. You talk
to people in the industry. You talk to people in the local market. They're going to tell you who's good
at taking care of real estate and real estate investors and who understands what the needs are.
(04:18):
Right? That understands your business. You don't want to go and deal with a sales guy that doesn't
know anything about your business because always going to try to do is sell you stuff. And it's going
to be his stuff. It doesn't matter if it's the right stuff for the job. It doesn't matter if it meets your
long-term goals. All they care about is selling it because they're going to get a commission check
(04:44):
or they're going to get a bonus or they're going to get whatever. Most of the time,
probably in 75 to 90% of instances, they're not looking out for your best interest as a business owner,
operator, investor, whatever. They're looking out for their best interest, making their numbers so
they can move on to the next sale. My biggest complaint about companies like HD Supply, Will Mar, whatever,
(05:06):
they don't really care what you need. They just want to take the business from someone else.
And they don't even understand how half the stuff they sell or more is actually used.
Thank you. Ask them a technical question about pretty much anything that they carry.
What happens if I plug Wigidae into Wigidae B and problem C happens? They're going to look at
(05:30):
you like you just stepped out in front of traffic going 80 miles an hour. Like, during the headlights,
they have no idea. They've probably never even used most of the stuff that they're selling you.
They don't know and they don't ask. So it's not like they're going from customer to customer asking,
(05:51):
"Hey, what do you like best? What don't you?" They don't care. They don't. But if you
talk to the people that are already doing what you want to do or doing what you do and you've just
never had the conversation, do it. The really, really important part about building your relationships
and networking and getting traction in the industry in your local market, whatever that happens to
(06:18):
be or whatever market you're investing in is about using your connections in your network for something
while you give back to them. Having conversations and sharing information about vendors that take
good care of you know most contractors are not going to be brought up in this conversation.
Because in case you haven't noticed real estate investors, property managers don't like to share
(06:46):
their subcontractors. They just don't. So it's a different type of conversation. They're not,
they're not going to give you the guys that are good. They're going to keep them for themselves if
they're doing any kind of volume in their busy. So what you need to do is ask the questions about
the stuff you can get answers on that'll be honest. Like who's taking care of you? Like if you're going
(07:06):
to a home depot store, what store are you using? Who are you talking to with the pro desk that actually
takes care of you and knows what's going on? Like those are important conversations to happen. Same
thing with lows, same thing with minarts. And now that those stores are like 75% part time on the sales
floor, nobody there knows anything other than maybe one or two people at the pro desks if if you're lucky.
(07:28):
So if you can talk to the people who are already doing business there and find out who they're
using, that'll help you out immensely because those people are going to understand what you need,
how to take care of you, what your expectations are for service levels,
recommend products that other guys are using, right? That's an important relationship to have.
(07:50):
Box stores are not the right answer for everybody by any means. So your local lumber yards,
your 84 numbers, your mom and pop shops, your local plumbing supply houses, your Ferguson's,
your local roofing supply places, whether it's beacon or ABC or any of the companies that
those two monsters have swallowed up or, you know, S.R.S. The people at the desk there
(08:17):
are going to be able to advise you like I was talking to an investor a couple weeks ago about roofing.
And did you know that brand X of shingle takes on a 15 year non-pro-rated warranty if it's
installed on a multi-family residence? Doesn't matter if it's commercial multi-family with 30 apartments
inside or the rest of duplex. As long as it's multi-family, they have a product that's positioned
(08:43):
to double the non-pro-rated warranty if you install it on top of a multi-family apartment.
None of the other brands do that. There's one brand and they're not paying me and I'm not going
to advertise for them, but that's kind of an important detail. Another important detail is if you,
(09:06):
as an investor or a property manager, install shingles on a second layer you don't do a clean
tear off. Yes, it saves you money. You have no warranty on the first layer or the second layer.
Important detail to know. So sorry, tangent. Anyway, but I wouldn't know about that extended warranty
(09:33):
if it wasn't for a sales guy who was dialed in at the local roofing supplyhouse. Like if you're buying
shingles from home depover lows, you're probably doing it wrong because you're putting your guys at risk
to carry those things up to the roof on a ladder. Even if you rent a shingle shooter, you're still
(09:57):
doing more than you should. Most of these mom and pop suppliers in the ABCs and
beacon roofing supplies and whoever else is out there will boom no shingles to the roof the day that
you're doing the install. There's no reason for you to be putting guys on the ground carrying shingles.
Number one, because liability sucks and roofing liability is even worse. But number two, you need to
(10:23):
make sure that you're making the most of the available time to get the job done. You save hours,
like literal hours of time by just having a truck knuckle boom the shingles to the roof and having
the guys on the roof unload it and stage it so they can use it. It should be a no-brainer, but I see
(10:46):
people carrying shingles up ladders all the time. Like do you not care about these guys backs and
knees? Like I understand that they're maybe cheaper laborer and maybe they're not the most well
educated, but come on. Same thing with any of the other products that are out there. Go to a supply
house, find out who's doing the real estate investing world business. Ask questions, hey what are
(11:11):
they using? What's the most common thing that I'm seeing for pecs? Are these in shark bites? Are
they using these? Are they all those? Are they buying coils? Are they buying sticks? How are they
plumbing these houses? blah blah blah, right? Because everybody knows copper gets stolen. You're doing
single family small maltees, scattered site stuff, copper walks. I've seen copper walk out of
massive apartment complexes. I've seen entire buildings with 30 plus doors inside, have the gas
(11:35):
meters ripped off and scrapped and just gas, natural gas pissing into the air. Like they don't care,
man. If they can get five bucks for it, they're going to take it. But you need to be using your network
to make sure that you're making the most of your network. Like it's one thing to have 3000, 4000
contacts in your phone, but if you never talked to anybody, well why bother? Right? Like I'm the last
(12:00):
person. It should be doing this, but I have an email list that's like 5,000 people that I've done
work with for the last 15 years. They're all involved in real estate. Do you think I do a good job
of emailing those people to say, hey, I have a podcast? No, I'm an idiot. I haven't done that yet.
I'm the list of things to do. I'm just have other things I need to do like working and making money.
(12:22):
So that's what I do. But the long and short of it is, again, with your network, you're going to
get out of it, which put into it. Okay? The other thing with your network is, don't be embarrassed to
ask stupid questions. Like most of the time, they're not really stupid questions. The only time it's
(12:42):
a stupid question, if you've asked the same question for different times and you're waiting for somebody
to give you the answer you want, then it's a stupid question. And you might be a stupid person.
That's just reality. If you're fishing for the answer you want, then why are you even asking the
question? Number one, and number two, why ask the question at all? Like if you already know what the
(13:06):
answer is, or you already think you know, and you just want confirmation like outside,
like did your mom not hug you enough when you were a kid? Did your dad not play ball with you outside?
Do you really need somebody outside your existence to qualify that you're doing things correctly
for you? Get a life. Anyway, it's going to be a shorter episode today, just because I just came back
(13:31):
from vacation. I've got two of these episodes, so I can do one on Thursday that Thursday episode
will be full length. This episode will be a little shorter. And I just want people to think about
how to make their vendor network better. Right, the partnership comes later. The buy-in from the vendor
will come when the volume of business comes. You're always going to need buying power to get the best
(13:55):
relationships and to get the best deals. But that doesn't mean you need the buying power upfront
to get good advice. Right, start with your network of other investors doing what you do and doing
what you want to do. Talk to the people who are currently where you want to be. Just like when you're
picking a coach or a mentor, the people you take advice from should be qualified to give the advice.
(14:19):
Don't take advice from people who've never done anything, who've never been successful, who've never
done whatever. And it gets one thing to get a bunch of book knowledge and read and listen to podcasts
and all that other stuff. But if they've never actually done anything, why would you take advice from them?
(14:42):
Like it's one thing for them to say something anecdotally like, oh, I heard on this podcast, XYZ,
maybe you should check that out. But they're not qualified to leverage in as an expert because
they've never actually done anything. I think that's my biggest issue with all these internet experts is
that they're, they read a lot and most of the time they look for what they want to believe
(15:05):
and not what's actually true. And then they find all these sources and they just reiterated,
but they've never put it into practice. So they don't actually know.
Like stop talking to people who don't do anything. You want to help people, you want to give
my hand up. But that doesn't mean that you take advice from someone who's not qualified to give it.
(15:26):
Again, it's the whole red shirt going to the NFL to be an offensive line coach thing like you just,
you don't do it. You can know a lot about something and still not be qualified to give advice on it.
Why do you think they don't make MBAs the first year out of school CEOs of companies?
How do you think it works out when they go into it with no experience at all?
(15:48):
Like it's one thing for them to start their own startup and you know, build their experience
internally and build a team and do all this other stuff great on them. But they're putting themselves
in that position and they have to learn through the school of hard knocks just like anybody else.
But you don't see a fortune 500 company grabbing a front line even from Harvard. They're not grabbing
(16:13):
people and putting them into CEO level positions. That doesn't happen. So why would you think it would be
okay to take advice from somebody like that for your business? It's it's ass and I.
Anyway, as far as the materials you're using, as far as the vendors you're buying them from,
nothing will get you where you want to be faster than asking your network.
(16:38):
And it's the same thing when you're looking for a mentor or a coach.
If you want to go faster, bring somebody into the fold who's already done it and already done
all of the groundwork and dealt with all of the problems and been through the school of hard knocks.
(17:01):
So you don't have to. And there's people out there who can help you, right? Like if you want to know
things about vendors, I know a lot of vendors. I was one. I know the companies they can follow through
on what they tell you and what which ones don't and can't. I also know all of the stuff for how they
structure, how they sell and chip and price and pay their people. But I can't do everything for
(17:28):
everybody like your local market, your local network is probably who I go to when I'm going into a
market to do a job. Like I was in Tennessee in April, I went to a couple different real estate
investors meetings, made a bunch of different connections, stopped by a bunch of different supply
houses, once to the 84 lumber that's somewhere between Knoxville and Maryville, I don't remember exactly
(17:50):
where, but they have a trust plant and the door plant and all the crazy stuff I wanted to see it.
Not just because I used to work in an 84, but multiple different 84s, but because I wanted to see
what was available in that market because that's where I want to invest. That's where I want to put
down roots at some point. So I wanted to know what was there. So I went and I looked, you need to do
(18:11):
the same thing. And it might be just the pack of assholes who don't want to help anybody and don't
want to answer questions. Then you don't shop there. You find an alternate that can do it.
If it's not a chain like 84 lumber, maybe there's a local mom and pop there,
right? Talk to the other real estate investors in your network, talk to the people at the groups,
find out who's doing a good job. Most of these investor networks have vendors locally
(18:38):
that sponsor the group. Are they always going to be the best? No, because it's a monetary thing.
And this is where being a consultant and working for the client and not for outside sources
becomes important. You don't want to take advice from people who are getting paid to recommend people.
(19:01):
You go to a real estate investor's meeting. There's vendors there. Don't just take
the real estate investing groups advice and let's call it endorsement that's the right vendor for you.
(19:23):
Most real estate investing groups aren't going to endorse scumbags that fall down on their face constantly
and fail. They're just not. It's bad for their image. It's bad for business. There's always going to be
a shister that comes in every relationship you build for your business. You need to vet. You need to
own it. You need to set expectations and clearly communicate how the relationship needs to work
(19:51):
best for you. That doesn't mean you need to spend a year explaining the ins and outs of how real estate
asset management works to a sales guy behind a counter to roofing company. They don't care.
But if you walk in and you say, "Hey, I've got a duplex or a quad or what, you know,
200 unit apartment complex and I need a couple of roofs. What's the best shingle for me?"
(20:12):
Depending on who it is, they should be able to go, "Oh, there's this brand of shingle that if
you put it on a multifamily, it goes to a 15-year non-porated warranty." No kidding. Wow, let's do that.
What else do I need to know? Well, you can't put it on a second layer because you won't have any
warranty from any shingle manufacturer if you put a second layer down. Oh, that's good to know. So,
I got to pay for a tear off in a dumpster and have a day of labor to just strip a roof. Okay,
(20:37):
that's good to know. How does that work when you need to boom shingles on a roof? How far along in
the stripping process do they need to be for you to put shingles on a roof for me, Mr. roofing
supplier? Like, these are the questions you need to be asking in a relationship you need to start,
but you need to do it yourself. No matter what you hear from your network, no matter who sponsors
(20:58):
what at your local real estate investors group, what they recommend and what they're talking about
needs to fit for you in your business model. You need to understand what your standards are. You
need to have a plan and a set of goals set up so you can achieve success. You don't have goals. What
the hell does success look like? How do you know when you're there? You just keep moving the bar?
(21:22):
Or is it just, ah, it's good enough who cares? Because I'll tell you right now, ah, it's good
enough who cares is what costs you more money in the long run and reduces your net operating income.
The whole purpose of the TCO method, total cost of ownership. That doesn't just mean
put the cheapest thing in today and put a bandaid on it. Because if that was the case, I wouldn't have a job.
(21:44):
Anybody can do that. They've been doing it for 60 or more years. The goal is to make more money
over time. You can't make more money over time if you don't understand or don't know what you want
it to look like. What is success? How do you gauge it and measure it? If you don't have a plan,
(22:09):
you don't have a strategy. You can't. If you keep comparing yourself to everybody else,
it's all smoking mirrors. Very rarely will you find somebody who will just open your books and show
you all the bloody noses and bullcrap that they've put up with. I see those bloody noses and bullcrap
and that's how I built the system I built. But I don't know a lot of companies that are just
(22:33):
getting invite Joe Blow in off the street who's literally competing with them and go, "Here's our
books. This is how we operate our business. Take what you want." That's not how it goes. You can't do
that. I can do that. But I also have a 14-page long contract where I basically say, "Hey, if I disclose
any of your trade secrets or any of your confidential information or talk directly about your stuff,
(22:58):
you can sue the crap out of me." And my insurance will probably pay for at least a couple million
dollars of it. I don't know. Sorry, insurance guys. Don't sue me. Anyway, don't cancel my insurance either.
I'll be pissed. Yeah, anyway. You gotta do your own due diligence. You gotta build your own
(23:19):
relationships. But you gotta start somewhere. Find out who doesn't suck and use them. Start there.
If they can't do it for you because of something, maybe they don't have the right brand. Maybe they
don't have the right service model. Maybe they, like a home depot or a low, as you pay $3,000 and you
get 20 different deliveries and you basically spend $3,000 just in labor meeting trucks. But maybe that's
(23:44):
not a good model for you. You either have to work inside that model if that's your vendor of choice,
right? Maybe have it all pulled and sitting up at the pro desk and you just send a guy in at 6am
when the door opens and he takes the cart and loads it, signs a piece of paper and he's gone.
Right? Maybe that's the solution. Maybe you use windshield time. So you're not using more time
(24:05):
on the property waiting for 20 different deliveries to show up from five or six different stores.
Could be or maybe you just don't buy from home depot or lows and you start working with mom pop.
Like you go to a lumber yard, they don't just sell lumber. They sell cabinets. They sell builders'
hardware, interior doors, trim windows, exterior doors. Like you're not shoehorned in to one vendor
(24:31):
in this business. You don't want to go and spread the wealth around and have 22 different vendors to
get a job done. But between like three and 10 total vendors is probably okay. Three to five would be
better. One isn't realistic because eventually they're going to screw up and you're going to be left
(24:53):
told in the bag with no buying power anywhere else. Like it's a balance. It's just like when you do
your investing, there's a risk management profile. There is a risk management profile for your
procurement supply chain. What does that look like? Do you know what it is? Do you have one? If not,
I can help you set one up. You should call me. Anyway, no, seriously, you should. I think I'm done.
(25:16):
I'm at 25 something minutes. I'm probably not going to edit this episode very heavily. I put some new
audio filters in. I'm still playing with the sound quality. Didn't like how some stuff was sounding.
Took too much time for the editor to edit the episodes and cut crap out of it other than me just
rambling and having my ADHD moments. So hopefully this episode sounds good and I won't have to screw
(25:40):
around with it very much. Please, if you're enjoying anything on this show, subscribe on YouTube, hit that bell.
If you like something in an episode, leave a comment. I will respond on YouTube if you leave comments
on YouTube. If you are on Spotify, Apple podcasts, Google podcasts, anywhere else, please subscribe,
(26:07):
like review. I don't even care if you listen to the show. Please just subscribe. It helps
drive the numbers and helps eventually. Hopefully get this out to more people. I appreciate you listening.
I want you to have a great rest of your day. I will be back on Thursday. Go do real estate.
[Music]
[Music]
(00:24):
Welcome to the TCO method, the only show focused on helping you massively increase your net operating
income. I am Andy McQuade, thank you so much for joining me. I apologize. I see the say
that a lot when I start this show. I don't really apologize. The last week we didn't release any
episodes because I was in the mountains in the Adirondex, not recording podcasts or much of
(00:49):
anything else. Timing probably could have been better because our episode with Yona Weiss went
live on Saturday before we left for camp. So there was that, but all things considered, things
have gone pretty well. This week we're still going to do two episodes. This one will be a little
bit late. It's going to come out on Wednesday. Tomorrow's episode will come out tomorrow, Thursday,
(01:14):
on time. Couple of announcements in case you didn't see it. The podcast website is live, you can
go to TCO method.com/podcast, you can listen to the podcast there, you can read the transcripts if
you have questions or are not good at taking notes. If you want to watch a video, you can watch
(01:39):
it on the website on the YouTube side or you can go watch it on YouTube directly. I'm not really
super picky how you do it. I just appreciate you listening. If you like the show, please subscribe, and we'll
say that again at the end of the program to remind you. I also had the pleasure to be invited to talk
(02:00):
on the best ever real estate investing advice podcast, which was started by Joe Fairless, and he
doesn't really do a lot of episodes anymore. I got to do my interview with Ash Patel, awesome guy,
apparently likes to invest in Ohio. I would really appreciate you going and listening and leaving a review
(02:22):
in a comment on their program. There's links that are going to be up on the TCO method website soon.
Same thing if you haven't listened to the interview with Jason Ballara on the Lark Capital,
know your Y podcast. Also a very good show. Lots of awesome real estate investors that go on both of
those programs. Definitely worth your time to listen and subscribe to those programs. They're great people
(02:48):
and they just want to share information. Anyway, today's program, I wanted to kind of elaborate a little
bit on something from the best ever podcast. We talked a little bit about vertically integrated
construction in one of the other episodes, which now people know that was actually stolen from that
(03:12):
podcast interview. But I wanted to talk a little bit more about supply chain and where that is and how you
should be building relationships with your vendors. I know we talked a little bit about it in one of
the earlier episodes, but for anybody who's new listening or anybody who wants to go a little bit more in-depth,
(03:35):
there are places that you can go to learn about who's actually doing the best job of providing stuff.
We're talking about physical product vendors now, not services. I know a lot of people call service
providers vendors. They're not really a vendor is somebody who sells a physical item. A service provider
(03:58):
provides a service. You go to a local real estate meetup. You network with local investors. You talk
to people in the industry. You talk to people in the local market. They're going to tell you who's good
at taking care of real estate and real estate investors and who understands what the needs are.
(04:18):
Right? That understands your business. You don't want to go and deal with a sales guy that doesn't
know anything about your business because always going to try to do is sell you stuff. And it's going
to be his stuff. It doesn't matter if it's the right stuff for the job. It doesn't matter if it meets your
long-term goals. All they care about is selling it because they're going to get a commission check
(04:44):
or they're going to get a bonus or they're going to get whatever. Most of the time,
probably in 75 to 90% of instances, they're not looking out for your best interest as a business owner,
operator, investor, whatever. They're looking out for their best interest, making their numbers so
they can move on to the next sale. My biggest complaint about companies like HD Supply, Will Mar, whatever,
(05:06):
they don't really care what you need. They just want to take the business from someone else.
And they don't even understand how half the stuff they sell or more is actually used.
Thank you. Ask them a technical question about pretty much anything that they carry.
What happens if I plug Wigidae into Wigidae B and problem C happens? They're going to look at
(05:30):
you like you just stepped out in front of traffic going 80 miles an hour. Like, during the headlights,
they have no idea. They've probably never even used most of the stuff that they're selling you.
They don't know and they don't ask. So it's not like they're going from customer to customer asking,
(05:51):
"Hey, what do you like best? What don't you?" They don't care. They don't. But if you
talk to the people that are already doing what you want to do or doing what you do and you've just
never had the conversation, do it. The really, really important part about building your relationships
and networking and getting traction in the industry in your local market, whatever that happens to
(06:18):
be or whatever market you're investing in is about using your connections in your network for something
while you give back to them. Having conversations and sharing information about vendors that take
good care of you know most contractors are not going to be brought up in this conversation.
Because in case you haven't noticed real estate investors, property managers don't like to share
(06:46):
their subcontractors. They just don't. So it's a different type of conversation. They're not,
they're not going to give you the guys that are good. They're going to keep them for themselves if
they're doing any kind of volume in their busy. So what you need to do is ask the questions about
the stuff you can get answers on that'll be honest. Like who's taking care of you? Like if you're going
(07:06):
to a home depot store, what store are you using? Who are you talking to with the pro desk that actually
takes care of you and knows what's going on? Like those are important conversations to happen. Same
thing with lows, same thing with minarts. And now that those stores are like 75% part time on the sales
floor, nobody there knows anything other than maybe one or two people at the pro desks if if you're lucky.
(07:28):
So if you can talk to the people who are already doing business there and find out who they're
using, that'll help you out immensely because those people are going to understand what you need,
how to take care of you, what your expectations are for service levels,
recommend products that other guys are using, right? That's an important relationship to have.
(07:50):
Box stores are not the right answer for everybody by any means. So your local lumber yards,
your 84 numbers, your mom and pop shops, your local plumbing supply houses, your Ferguson's,
your local roofing supply places, whether it's beacon or ABC or any of the companies that
those two monsters have swallowed up or, you know, S.R.S. The people at the desk there
(08:17):
are going to be able to advise you like I was talking to an investor a couple weeks ago about roofing.
And did you know that brand X of shingle takes on a 15 year non-pro-rated warranty if it's
installed on a multi-family residence? Doesn't matter if it's commercial multi-family with 30 apartments
inside or the rest of duplex. As long as it's multi-family, they have a product that's positioned
(08:43):
to double the non-pro-rated warranty if you install it on top of a multi-family apartment.
None of the other brands do that. There's one brand and they're not paying me and I'm not going
to advertise for them, but that's kind of an important detail. Another important detail is if you,
(09:06):
as an investor or a property manager, install shingles on a second layer you don't do a clean
tear off. Yes, it saves you money. You have no warranty on the first layer or the second layer.
Important detail to know. So sorry, tangent. Anyway, but I wouldn't know about that extended warranty
(09:33):
if it wasn't for a sales guy who was dialed in at the local roofing supplyhouse. Like if you're buying
shingles from home depover lows, you're probably doing it wrong because you're putting your guys at risk
to carry those things up to the roof on a ladder. Even if you rent a shingle shooter, you're still
(09:57):
doing more than you should. Most of these mom and pop suppliers in the ABCs and
beacon roofing supplies and whoever else is out there will boom no shingles to the roof the day that
you're doing the install. There's no reason for you to be putting guys on the ground carrying shingles.
Number one, because liability sucks and roofing liability is even worse. But number two, you need to
(10:23):
make sure that you're making the most of the available time to get the job done. You save hours,
like literal hours of time by just having a truck knuckle boom the shingles to the roof and having
the guys on the roof unload it and stage it so they can use it. It should be a no-brainer, but I see
(10:46):
people carrying shingles up ladders all the time. Like do you not care about these guys backs and
knees? Like I understand that they're maybe cheaper laborer and maybe they're not the most well
educated, but come on. Same thing with any of the other products that are out there. Go to a supply
house, find out who's doing the real estate investing world business. Ask questions, hey what are
(11:11):
they using? What's the most common thing that I'm seeing for pecs? Are these in shark bites? Are
they using these? Are they all those? Are they buying coils? Are they buying sticks? How are they
plumbing these houses? blah blah blah, right? Because everybody knows copper gets stolen. You're doing
single family small maltees, scattered site stuff, copper walks. I've seen copper walk out of
massive apartment complexes. I've seen entire buildings with 30 plus doors inside, have the gas
(11:35):
meters ripped off and scrapped and just gas, natural gas pissing into the air. Like they don't care,
man. If they can get five bucks for it, they're going to take it. But you need to be using your network
to make sure that you're making the most of your network. Like it's one thing to have 3000, 4000
contacts in your phone, but if you never talked to anybody, well why bother? Right? Like I'm the last
(12:00):
person. It should be doing this, but I have an email list that's like 5,000 people that I've done
work with for the last 15 years. They're all involved in real estate. Do you think I do a good job
of emailing those people to say, hey, I have a podcast? No, I'm an idiot. I haven't done that yet.
I'm the list of things to do. I'm just have other things I need to do like working and making money.
(12:22):
So that's what I do. But the long and short of it is, again, with your network, you're going to
get out of it, which put into it. Okay? The other thing with your network is, don't be embarrassed to
ask stupid questions. Like most of the time, they're not really stupid questions. The only time it's
(12:42):
a stupid question, if you've asked the same question for different times and you're waiting for somebody
to give you the answer you want, then it's a stupid question. And you might be a stupid person.
That's just reality. If you're fishing for the answer you want, then why are you even asking the
question? Number one, and number two, why ask the question at all? Like if you already know what the
(13:06):
answer is, or you already think you know, and you just want confirmation like outside,
like did your mom not hug you enough when you were a kid? Did your dad not play ball with you outside?
Do you really need somebody outside your existence to qualify that you're doing things correctly
for you? Get a life. Anyway, it's going to be a shorter episode today, just because I just came back
(13:31):
from vacation. I've got two of these episodes, so I can do one on Thursday that Thursday episode
will be full length. This episode will be a little shorter. And I just want people to think about
how to make their vendor network better. Right, the partnership comes later. The buy-in from the vendor
will come when the volume of business comes. You're always going to need buying power to get the best
(13:55):
relationships and to get the best deals. But that doesn't mean you need the buying power upfront
to get good advice. Right, start with your network of other investors doing what you do and doing
what you want to do. Talk to the people who are currently where you want to be. Just like when you're
picking a coach or a mentor, the people you take advice from should be qualified to give the advice.
(14:19):
Don't take advice from people who've never done anything, who've never been successful, who've never
done whatever. And it gets one thing to get a bunch of book knowledge and read and listen to podcasts
and all that other stuff. But if they've never actually done anything, why would you take advice from them?
(14:42):
Like it's one thing for them to say something anecdotally like, oh, I heard on this podcast, XYZ,
maybe you should check that out. But they're not qualified to leverage in as an expert because
they've never actually done anything. I think that's my biggest issue with all these internet experts is
that they're, they read a lot and most of the time they look for what they want to believe
(15:05):
and not what's actually true. And then they find all these sources and they just reiterated,
but they've never put it into practice. So they don't actually know.
Like stop talking to people who don't do anything. You want to help people, you want to give
my hand up. But that doesn't mean that you take advice from someone who's not qualified to give it.
(15:26):
Again, it's the whole red shirt going to the NFL to be an offensive line coach thing like you just,
you don't do it. You can know a lot about something and still not be qualified to give advice on it.
Why do you think they don't make MBAs the first year out of school CEOs of companies?
How do you think it works out when they go into it with no experience at all?
(15:48):
Like it's one thing for them to start their own startup and you know, build their experience
internally and build a team and do all this other stuff great on them. But they're putting themselves
in that position and they have to learn through the school of hard knocks just like anybody else.
But you don't see a fortune 500 company grabbing a front line even from Harvard. They're not grabbing
(16:13):
people and putting them into CEO level positions. That doesn't happen. So why would you think it would be
okay to take advice from somebody like that for your business? It's it's ass and I.
Anyway, as far as the materials you're using, as far as the vendors you're buying them from,
nothing will get you where you want to be faster than asking your network.
(16:38):
And it's the same thing when you're looking for a mentor or a coach.
If you want to go faster, bring somebody into the fold who's already done it and already done
all of the groundwork and dealt with all of the problems and been through the school of hard knocks.
(17:01):
So you don't have to. And there's people out there who can help you, right? Like if you want to know
things about vendors, I know a lot of vendors. I was one. I know the companies they can follow through
on what they tell you and what which ones don't and can't. I also know all of the stuff for how they
structure, how they sell and chip and price and pay their people. But I can't do everything for
(17:28):
everybody like your local market, your local network is probably who I go to when I'm going into a
market to do a job. Like I was in Tennessee in April, I went to a couple different real estate
investors meetings, made a bunch of different connections, stopped by a bunch of different supply
houses, once to the 84 lumber that's somewhere between Knoxville and Maryville, I don't remember exactly
(17:50):
where, but they have a trust plant and the door plant and all the crazy stuff I wanted to see it.
Not just because I used to work in an 84, but multiple different 84s, but because I wanted to see
what was available in that market because that's where I want to invest. That's where I want to put
down roots at some point. So I wanted to know what was there. So I went and I looked, you need to do
(18:11):
the same thing. And it might be just the pack of assholes who don't want to help anybody and don't
want to answer questions. Then you don't shop there. You find an alternate that can do it.
If it's not a chain like 84 lumber, maybe there's a local mom and pop there,
right? Talk to the other real estate investors in your network, talk to the people at the groups,
find out who's doing a good job. Most of these investor networks have vendors locally
(18:38):
that sponsor the group. Are they always going to be the best? No, because it's a monetary thing.
And this is where being a consultant and working for the client and not for outside sources
becomes important. You don't want to take advice from people who are getting paid to recommend people.
(19:01):
You go to a real estate investor's meeting. There's vendors there. Don't just take
the real estate investing groups advice and let's call it endorsement that's the right vendor for you.
(19:23):
Most real estate investing groups aren't going to endorse scumbags that fall down on their face constantly
and fail. They're just not. It's bad for their image. It's bad for business. There's always going to be
a shister that comes in every relationship you build for your business. You need to vet. You need to
own it. You need to set expectations and clearly communicate how the relationship needs to work
(19:51):
best for you. That doesn't mean you need to spend a year explaining the ins and outs of how real estate
asset management works to a sales guy behind a counter to roofing company. They don't care.
But if you walk in and you say, "Hey, I've got a duplex or a quad or what, you know,
200 unit apartment complex and I need a couple of roofs. What's the best shingle for me?"
(20:12):
Depending on who it is, they should be able to go, "Oh, there's this brand of shingle that if
you put it on a multifamily, it goes to a 15-year non-porated warranty." No kidding. Wow, let's do that.
What else do I need to know? Well, you can't put it on a second layer because you won't have any
warranty from any shingle manufacturer if you put a second layer down. Oh, that's good to know. So,
I got to pay for a tear off in a dumpster and have a day of labor to just strip a roof. Okay,
(20:37):
that's good to know. How does that work when you need to boom shingles on a roof? How far along in
the stripping process do they need to be for you to put shingles on a roof for me, Mr. roofing
supplier? Like, these are the questions you need to be asking in a relationship you need to start,
but you need to do it yourself. No matter what you hear from your network, no matter who sponsors
(20:58):
what at your local real estate investors group, what they recommend and what they're talking about
needs to fit for you in your business model. You need to understand what your standards are. You
need to have a plan and a set of goals set up so you can achieve success. You don't have goals. What
the hell does success look like? How do you know when you're there? You just keep moving the bar?
(21:22):
Or is it just, ah, it's good enough who cares? Because I'll tell you right now, ah, it's good
enough who cares is what costs you more money in the long run and reduces your net operating income.
The whole purpose of the TCO method, total cost of ownership. That doesn't just mean
put the cheapest thing in today and put a bandaid on it. Because if that was the case, I wouldn't have a job.
(21:44):
Anybody can do that. They've been doing it for 60 or more years. The goal is to make more money
over time. You can't make more money over time if you don't understand or don't know what you want
it to look like. What is success? How do you gauge it and measure it? If you don't have a plan,
(22:09):
you don't have a strategy. You can't. If you keep comparing yourself to everybody else,
it's all smoking mirrors. Very rarely will you find somebody who will just open your books and show
you all the bloody noses and bullcrap that they've put up with. I see those bloody noses and bullcrap
and that's how I built the system I built. But I don't know a lot of companies that are just
(22:33):
getting invite Joe Blow in off the street who's literally competing with them and go, "Here's our
books. This is how we operate our business. Take what you want." That's not how it goes. You can't do
that. I can do that. But I also have a 14-page long contract where I basically say, "Hey, if I disclose
any of your trade secrets or any of your confidential information or talk directly about your stuff,
(22:58):
you can sue the crap out of me." And my insurance will probably pay for at least a couple million
dollars of it. I don't know. Sorry, insurance guys. Don't sue me. Anyway, don't cancel my insurance either.
I'll be pissed. Yeah, anyway. You gotta do your own due diligence. You gotta build your own
(23:19):
relationships. But you gotta start somewhere. Find out who doesn't suck and use them. Start there.
If they can't do it for you because of something, maybe they don't have the right brand. Maybe they
don't have the right service model. Maybe they, like a home depot or a low, as you pay $3,000 and you
get 20 different deliveries and you basically spend $3,000 just in labor meeting trucks. But maybe that's
(23:44):
not a good model for you. You either have to work inside that model if that's your vendor of choice,
right? Maybe have it all pulled and sitting up at the pro desk and you just send a guy in at 6am
when the door opens and he takes the cart and loads it, signs a piece of paper and he's gone.
Right? Maybe that's the solution. Maybe you use windshield time. So you're not using more time
(24:05):
on the property waiting for 20 different deliveries to show up from five or six different stores.
Could be or maybe you just don't buy from home depot or lows and you start working with mom pop.
Like you go to a lumber yard, they don't just sell lumber. They sell cabinets. They sell builders'
hardware, interior doors, trim windows, exterior doors. Like you're not shoehorned in to one vendor
(24:31):
in this business. You don't want to go and spread the wealth around and have 22 different vendors to
get a job done. But between like three and 10 total vendors is probably okay. Three to five would be
better. One isn't realistic because eventually they're going to screw up and you're going to be left
(24:53):
told in the bag with no buying power anywhere else. Like it's a balance. It's just like when you do
your investing, there's a risk management profile. There is a risk management profile for your
procurement supply chain. What does that look like? Do you know what it is? Do you have one? If not,
I can help you set one up. You should call me. Anyway, no, seriously, you should. I think I'm done.
(25:16):
I'm at 25 something minutes. I'm probably not going to edit this episode very heavily. I put some new
audio filters in. I'm still playing with the sound quality. Didn't like how some stuff was sounding.
Took too much time for the editor to edit the episodes and cut crap out of it other than me just
rambling and having my ADHD moments. So hopefully this episode sounds good and I won't have to screw
(25:40):
around with it very much. Please, if you're enjoying anything on this show, subscribe on YouTube, hit that bell.
If you like something in an episode, leave a comment. I will respond on YouTube if you leave comments
on YouTube. If you are on Spotify, Apple podcasts, Google podcasts, anywhere else, please subscribe,
(26:07):
like review. I don't even care if you listen to the show. Please just subscribe. It helps
drive the numbers and helps eventually. Hopefully get this out to more people. I appreciate you listening.
I want you to have a great rest of your day. I will be back on Thursday. Go do real estate.
[Music]
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