Becoming Financially Free with Danny Randazzo

Transcript:

Danny Randazzo  0:00  

You need to overcome that fear by the first property and get the ball rolling, whether it's the perfect deal or not. I think the most important part is to personally overcome that emotion, that lingering doubt.

Taylor   0:19  

Welcome to passive wealth strategies for busy professionals. Today, our guest is Danny rendez Danny is a real estate investor who has recently achieved financial freedom and financial independence and has left his six figure corporate job, he's going to tell us all about that you're gonna learn everything about that. most importantly, you're going to learn the tactics and strategies that he and his wife used to get out of that rat race, get out of that nine to five, let's be real, it's more than nine to five. you're gonna learn everything about what he was doing. You're going to learn what helped him, get out of that rat race, create passive income, and then move on to his new life as a financially free real estate investor. It's a very interesting conversation, Danny's a fun guy to talk to, you're going to enjoy this one. without further ado, here we go. Danny Randazzo, thank you for joining us today.

Danny Randazzo  1:18  

Taylor, thank you so much for having me on. Happy to be here. love what you're doing with the show. with the listeners. however, I can add value?  how about me, I'm all yours.

Taylor   1:28  

Great. you recently left your job full time into real estate? Can you tell the listeners what you used to do and what you're doing now?

Danny Randazzo  1:39  

Yeah, so my background, getting started, I you know, kind of just grew up in a normal everyday family just like you and I, and was always taught to get a good job, get good grades, or get good grades, get a good job, and kind of follow that path a little bit and started out in the in my professional career working as a corporate financial consultant. so I would travel all over the country in the world working with multi billion dollar clients to optimize their financial performance and improve their business functions. 

Maybe we do something, instead of doing a, b and c, maybe we cut the process down, save time and money and do A, B and C because b isn't needed. Or maybe we can implement a new technology to replace the human component of B. so that experience working as a financial consultant really allowed me the opportunity to learn how companies at a very high professional level, again, consultants are, are paid and charge hourly by their clients. 

It's a pretty expensive service. But you can easily calculate the return on investment for our companies. that's really how we sold work was about the ROI. so I always had that financial mindset of making sure that the best use of our time is put forward. we're gaining optimization as we go. we're getting operating efficiencies along the way. so while I was doing that, it's a pretty demanding job, you're typically away from your home, three, four, sometimes five days a week, where you leave on Monday morning, and you're home, typically on Thursday evening, and so you are home, at home with your family with your spouse, significant other, usually less than 50% of the time. 

So knowing that, having conversations with my wife, who's the girlfriend at the time, we decided that we needed to do something different. In the event number one, that consulting job changed or went away. number two, to take control of our time. Because you know, traveling being away more than 50% of the time from the ones that you love and want to be around every single day is a pretty demanding job to have. so what we did is started to invest in real estate to build income streams that generated cash flow. so we came up with our targets and our goals, and worked very diligently towards achieving those cash flow goals. which I call kind of that freedom number. the financial freedom number of knowing that your investments or the money that you've made, is making money on a monthly basis and it replaces your previous whu salary, or exceeds or comes pretty darn close, whatever you're comfortable with.

But that's what we did. we were diligent and it's not, I think Grant Cardone says use real estate as the get rich, slow or get super rich blow mentality, because it took many years to get to that point of quitting the job. But that was always the goal. We sold everything we owned in California, moved to Charleston, South Carolina, to really focus on building that portfolio, having income producing assets. diligently worked at that for a few years, and finally quit the job and went full time into real estate and have have loved the transition Ever since then, there's pros and cons and emotions and feelings that come up before making the switch. even after making the switch, did I make the right decision and am I making mistake. then you've got other times where it's like, this is the best time decision I've ever made.

I can't believe I didn't do this sooner. so it's balancing those emotions out. you know, the other thing that I felt really comfortable with about making that transition and going full time into real estate was having a company that was moving in the right direction, we had steady deal flow, our company focuses on buying hundred and 50 unit plus value add B class apartments in five or six cities that we like Charlotte, Charleston, Raleigh, Greenville, Orlando, Jacksonville, and Atlanta that have a value add component. so we're targeting that middle class renter that wants a great place to live at a an affordable price, maybe 1200 bucks a month. so that's our niche. That's what we focus on. we had really good deal flow to make that transition and help from a productivity perspective.

Taylor   7:03  

Yeah, I want to continue talking about that goal setting and commitment aspects of what you've done, because I think that is not talked about enough or not appreciated enough by the people who want to achieve what you've achieved, then creating financial freedom for yourselves and for themselves. you know, as far as staying committed, I mean, it took you I don't know how many years, but I've known you a few years. It took you a few years to get where you've gotten today. I'm sure you've got plenty of goals moving forward. But how do you set an appropriate timeline? How do you stay committed the whole way through, they teach us the nuts and bolts of that commitment here.

Danny Randazzo  7:53  

The commitment, the most important part is that, that gut feeling, buy in and complete dedication to what you're doing. that starts even before the goal. so specifically, I can remember it, my wife and I were sitting in California at our dinner table, having a conversation about wanting to control our time. that was that trigger, where in my gut, in my heart, it was like, this is what we're doing. Nothing is going to stop us from working on this. so we made the tough decision to move from San Francisco to Charleston, South Carolina, I think at that table, but it wasn't something that we even thought twice about it was like, Okay, let's move, let's set up our environment for success. 

Let's be in an area where we can buy in our backyard where properties are very much so income producing where as San Francisco, it's a little bit higher barrier to entry just from a capitalist perspective. a lot of those properties, have an appreciation, play with lower cash flow. But having that initial buying is step one where you know, in your heart and your gut, that I'm doing this, and it's a need, it's not just a, I want to quit my job one day or I want more cash flow, it's I need this, and nothing's going to stop me. so having that buy in was the first part and then coming up and establishing your goal. 

I always set a goal and work backwards from it. I remember in middle school in high school getting in trouble in math class, because I would solve the equation without, showing my work to it. so I would always kind of solve story problems with the answer, and then go back to show the work to get there. so for us, what we did is we set up a goal, we wanted to make $5,000 a month in cash flow. that was our initial goal starting out. We knew it would take a little bit of time to get there. But what I did specifically for the Charleston, South Carolina real estate market, I said, What do I need to generate $5,000 in cash flow per month. so I looked at single family. if you wanted to do a single family house, let's just say on average you cash flow to 50 a month, well, you need to get about 40 properties

Danny Randazzo  10:43  

that do my math right there now, for 20 properties to get to 5000 a month. that just didn't seem feasible. It also seemed like a lot of effort to buy 20 properties. I I don't think our capital, our equity that we had available would allow us to go through 20 transactions, 20, closings, and all of that fun. so I also looked at multifamily properties. I looked at commercial real estate. so knowing that my goal was $5,000.

Again, working backwards, I said what property can we buy should we be looking for because if you just want to buy a real estate investment, you're probably going to get bogged down with so much property for sale or opportunity that you don't have a laser focus on what you need to buy. so we started focusing, we said, no single families will come into our deal flow, all we want to look at our commercial and multifamily properties. so the the timing was right.

Our criteria was right, our finances were right. the right property, an office building, we have six units, a Montessori School rents three of those units, and we have other business professionals in the other ones, that property was a million dollars. it cash flowed for us $5,000 a month. so knowing that we had that goal, knowing that we had that criteria, that burning desire that need to achieve it, we bought a commercial asset as our first investment living the Charleston, South Carolina using all of our own money to prove the concept. that really got us started. so, as we've progressed through the years, and our business has evolved to where we've got over 150 million in real estate, now, our goals have obviously changed a little bit, but that same concept, I applied it every time I set a goal, where, if we want to buy a $50 million apartment community, we work backwards as Okay, we're looking for $50 million community.

If a broker sends over a building, that's $5 million, thank you for sending this, but no, thank you, I need to stay focused on my goal of going out and buying out a $50 million, or a $10 million, whatever that goal is get focused on it. You can find, excuse me, but you can be looking for the opportunity. it'll it'll cross your desk

Taylor   13:37  

and actively, engaging with the the brokers and everything?  how about how do you think about setting up all of the back end to make sure you're actually capable of closing that first transaction. now, significantly more transactions, because mindset is all well and good. But we need to be able to execute as well.

Danny Randazzo  13:59  

Yeah, and again, it comes down to that working backwards technique. if I'm looking for a million dollar commercial property or multifamily property, you should have conversations with lenders in your area about what rates and terms that they are offering at that time, or can work with you on and so for us, we were able to secure for that first purchase a 20% loan to value loan for our acquisition. 

And so I knew in Charleston to get 5000 a month from a commercial property, I needed to be looking at a million dollar commercial building. When I have a million dollar commercial building, and I can get 80% loan on it, I need 20% down. that's 200 grand. now that you've got a tangible number, do you have 200,000 your bank account, maybe you've got 50. so you need to find another hundred and 50 to get to your 200,000 to buy that first property.

We're not going to account for reserves or taxes or things like that, at this time, just for easy math, but you get the point that I'm trying to make is, okay, do you want to buy a $10 million property? You know, you may not be able to get an 80% loan, but figure out what those terms are and get down to how much equity do you need? So I think that's where you are going with things as far as you found it. Now, what do you do to close that property, having the equity in place is a huge component to closing the deal.

Having the right team in place, the attorney, the property manager, your business plan and strategy, all of those things are really important to do along the way. But I think having that equity to buy because of course the broken going to want to know, and you close this deal, you know how many deals Have you closed before. that whole story, that kind of real estate resume is crucial to being able to perform and close and build that relationship with the broker and the buyer that you're going to close the deal. so again, work backwards on it.

If your goal is to buy a million dollar property, figure out what loan terms you're going to use, figure out how much equity that takes?  then are you personally going to buy it 100% yourself? Are you going to bring investors in for a portion of it? you can kind of take it from there and run with it. But just saying I want to buy an income producing property is not the correct way to go about it. You need to say what is the goal at the end?

Then start to work backwards piece by piece that you can figure out, from a financial standpoint, am I doing on my own? Do I need partners? Do I need investors?

Taylor   17:03  

So you need to have the whole path laid out in front of you very specific criteria of what you're looking for. so that so that way you can filter those opportunities and and figure out which one is the right one for you when it shows up?

Danny Randazzo  17:24  

Yeah, absolutely. I don't think you can be the right property when it shows up if you don't know what you're looking for.

Taylor   17:32  

Yeah, yeah. Okay. we're going to take a quick break for our sponsor. All right, Danny are time I know, our time is short, you got to run. Here at the end of the show. I've got three questions. I asked every guest. Are you ready? I am ready. All right. First one, what is the best investment in real estate that you've ever made?

Danny Randazzo  17:54  

The best investment was that first commercial deal that we did. You know, for me personally, it built that resume, it built the track record. it was the kind of opportunity to prove to yourself that you know what you're doing, you're an investor. guess what I'm putting my money to work. it's because I believe in it. so that kind of built, that was just the the waterfall effect that got everything started. so I would say that's the the best one kind of my favorite. Cool,

Taylor   18:30  

nice. That's great. The second question, what is the worst investment you've ever made?

Danny Randazzo  18:36  

The the worst investment I ever made was a short sale, that we ended up flipping, and we we used a contractor to do the renovation plan for us. it was very early in our career. My wife and I and my brother in law, were working on it together and a contractor. I don't think we knew what we didn't know. We luckily bought it right where we we did make money. But I think there was a lot more that we could have potentially made if we were able to control the renovation budget and just do a little bit more. But again, a great learning experience and a positive outcome. I just felt like it. It didn't. The ROI was very low compared to what it should have been. Hmm.

Taylor   19:40  

Okay, good. Now, last question. My favorite one, what is the most important lesson that you've learned in investing?

Danny Randazzo  19:48  

The most important lesson that I have learned in investing is you need to get started, you need to overcome that fear by the first property and get the ball rolling, whether it's the perfect deal or not. I think the most important part is to personally overcome that emotion, that lingering doubt that sits within all of us in some capacity, and put that emotion that doubt to bed, remove it, throw it away, let the trash people take it all the way to the dump, because you don't need that inside of you. 

By getting into your first property, either as an active or even a passive investor, if you don't have the experience and the track record partner with someone who does, and it's going to build that emotional kind of strength to know that you're an investor and you're going to be successful. go and get involved. Get your first property under your belt. the next one will come two three and four.

Taylor   20:57  

Awesome. I love it. Danny, thanks for everything today. where can our listeners get in touch with you where can they learn more your website all that good stuff?

Danny Randazzo  21:06  

Yeah, to learn more about me just go to www.DannyRandazzo.com. then if you're interested in multifamily investing, go to www.passiveinvesting.com and you can learn about our group their

Taylor   21:18  

www.passiveinvesting.com. That is quite the URL get that one must not have easy, been easy to to get your hands on. 

Danny Randazzo  21:27  

yeah, our group was was very pleased we were able to buy it for an undisclosed sum of money and build our platform around that. we're very happy with that investment.

Taylor   21:39  

undisclosed does not mean small then. anyway, thanks for joining us today. Really appreciate your time and wisdom.

Danny Randazzo  21:48  

Taylor, thank you so much. Passive wealth strategies, listeners. If there's anything I can do to help, please reach out.

Taylor   21:55  

They should sure do that. To all the listeners out there. Thank you for tuning in. I hope you enjoy the show. If you are please leave us a rating and review on iTunes. That's a big help. It helps other people find out about the show and what we're doing here. If you know someone that could use a little bit more passive wealth in their lives, please share the show with them and bring them into our little tribe of investors here. Once again, thank you for tuning in. I hope you have a great rest of your day and a great rest of your week and we will talk to you on the next one. Bye bye

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