Financial Independence thru Long Term Vision with Scott Price

Scott Price of Bonvolo Real Estate Investments joins us to teach us his journey to financial independence through real estate investing. His long term vision, strategy, and determination led him to where he is today, and in this episode he'll teach us how we can learn from his successes and replicate his results for ourselves.

Get in touch:

www.bonvolo.com

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Guest Bio:

Scott Price bought and managed his first rental property in 1994, and honed his skill sets through key roles in various companies as a team manager, program manager, marketing
manager, and even a US representative in Europe. He then later ramped up his real estate and investing work plus education starting in 2003. At that time, he became a full time real estate
broker, and in 2005 purchased his first apartment complex (29 units). From 2003‐2007, he used the full‐time broker status to immerse himself in real‐world real estate, investing, and applied
education. For 3 of his 4 years as a full‐time real estate broker, he was awarded Seattle Magazine’s Best in Client Satisfaction Award. He also obtained many professional certifications,
including Project Management Professional (PMP), Accredited Buyer’s Representative (ABR), Relocation Specialist (RS), and Accredited Luxury Home Specialist (ALHS).

In 2007, he timed the market and got out of full‐time real estate sales to return to his background in team management and program management while simultaneously leveraging the changing market’s buy opportunities and consistently increasing the holdings of his cash flowing portfolio. He went on to manage global real estate programs within the international real estate group at one of the world’s largest and most valuable companies.

Scott then transitioned to his current full‐time devotion to Bonvolo. He actively maintains his broker license to invest in real estate and works with other brokers as their client. Scott provides professional consulting/coaching for aspiring real estate investors on a unique hourly / as‐needed basis. He has been a featured guest on numerous top‐rated real estate investing podcast shows, guest speaker at real estate conventions and associations, and interviewed by magazines, newspapers, and book authors. Scott also actively participates in many local and national real estate investment organizations.

Full Transcript

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[00:00:02] What's going on guys. This is the passive wealth strategies podcast. Today our guest is Scott Price from bond Volo ventures. Today we're going to talk about a lot of his journey and his strategies that he uses as a real estate investor who is. Financially independent. He left his W2 job by investing in real estate with the longterm in mind.

[00:00:26] He's going to go through that story for us, so I'm not going to tell you about it right now. You'll get to hear it from Scott directly. For those of you who do not know, I'm your host Taylor lode. I'm a real estate investor, a real estate syndicator. I buy multifamily real estate with passive investors and split the returns, and I'm also a busy professional.

[00:00:46] Just like you. I love talking about investing real estate, investing and sharing my knowledge that I've built up, uh, with the rest of you. I love learning these things alongside you as well. Thank you for tuning in. Once [00:01:00] again, our guest is Scott Price from bonvolo ventures. There is a lot of fantastic information in this one, especially if you're somebody who is investing for the longterm.

[00:01:10] Building that financial independence. This is the interview to listen to. Without further ado, here we go with Scott Price from bond Volo ventures.

[00:01:19]Taylor: [00:01:19] Scott, thanks for joining us today. Hey,

[00:01:22] Scott Price: [00:01:22] thanks for having me, Taylor. I appreciate it.

[00:01:24] Taylor: [00:01:24] Happy to talk with you. You have some very cool experience in your background and sort of talk about your story today and we can, I think we could learn a lot of lessons out of your story.

[00:01:35] So you know, let's get into . Talk us through the big strokes and you know, we'll drill into the details.

[00:01:41] Scott Price: [00:01:41] Sure. Yeah. So for me, real estate started a number of years ago, and it started with researching how do people live? Well, financially and independently, and, and I was. Reading all kinds of [00:02:00] research and you know, was reading magazines and books and all, and you know, the classic Kiyosaki stuff and all those kinds of things.

[00:02:07] And uh, and really just, you know, dabbled in other things, stocks and, and other kinds of investments. But really real estate was the one that, that made sense to me and or the most sense, I should say. And it seemed to be the most reliable way to achieve objectives and not just in terms of making money, but also, uh, living an independent lifestyle.

[00:02:28] So it wasn't just about money, it was also about, you know, okay, how can I, how can I create passive income? How can I create a team of people that are working with me? So that. You know, but in helping my income and my network, you know, those kinds of things. So I, um, I started out with my very, a number of years ago.

[00:02:49] I started out with, uh, one condo that I bought, and then I moved into a house and I kept it. So that was my very first rental. Cool. And I, uh, [00:03:00] the first tenant was great. Second tenant sucked and I sold it. And, and I, and I actually started dabbling and other stuff. I said, Oh man, there's real estate thing is terrible, you know? And, uh, so I then started realizing the error of my ways and I, I realized that in that case, what I really needed was a professional property manager to have been a buffer between me and that person. And it all would have been good. I wish to this day, I still own that condo, you know?

[00:03:28] But knowing what I know now, you know, but, um, so I, I, Ben got into a development deal on the home that I lived in and I won't, rabbit hole on that one is very complicated deal, but I added considerable value to the property. And. By doing that, I was able to start to jump in and to my real plan, which was to get back into real estate, but to do it, to start doing it right.

[00:03:54] I was still early on learning a lot, but to start doing it right and, uh, actually got my broker's license [00:04:00] at that time cause I had just wanted to completely immerse myself in the, in the world of real estate. And, uh, and I, I jumped in, I would say a little bit bigger than I would recommend to people because I would say.

[00:04:13] My first investment, which I'm kind of discounting that, that little condo I mentioned, uh, was a 29 unit and it wasn't a simple one. And so I took all the profits I made from the development deal that I did on my own property residents. And I actually moved into a home that was lower value, lesser neighborhood, the whole deal.

[00:04:35] And I said, I'm full in on this real estate thing. So I bought a lesser home, but I took my money and I. Put it into real estate and, um, I still own that property today. I'll, I'll probably talk about it later actually. But, uh, uh, then that got me on the path and, uh, my, my goal and role was to, uh, work a, a w two job where I was [00:05:00] relying on the w two income for all of my bills and benefits and all that kind of stuff.

[00:05:06] Uh, so that none of my. Investing income was being used for personal purposes. And I actually had, we live pretty simply, so actually had extra income from W2 plus I had all my rental income and I started the process of, of rolling profits forward. And, uh, that was a combination of using income from, from properties that I started buying, and then basically snowballing it.

[00:05:33] And, uh, and then also when I had opportunities to do things like cash out refinance, if I had any, uh, equity built up enough that I could get some cash out, I would again roll it back into new properties and just steadily kept doing that. And, uh, I, I would say I stayed in my, in W2 world longer than I needed to, but I think it's.

[00:05:54] Part of my conservative nature, basically. And the advantage was that, yeah, it was a lot easier to get [00:06:00] loans. And there was, you know, I had the benefits and I was able to get more properties, you know, so that there were benefits to it. And, uh, yeah. And then over over time, I've, uh, accumulated a multifamily office and retail and some singles along the way.

[00:06:16] And, uh, mostly a buy and hold investor. At this point, and although I have sold a few recently, just because, you know, prices are kind of ridiculous. And when somebody offers me ridiculous price on something I own, I'll, I'll say, Hey, I wouldn't, I wouldn't pay that for my property, but if you will, and you can have it, you know, and that, and then, uh, just a couple of years ago, I left my, uh, uh, W2 job.

[00:06:37] Which was actually real estate related with a technology company. It's kind of an interesting mix and, uh, and now full time on my, uh, real estate investing business sense. Cool.

[00:06:49] Taylor: [00:06:49] So thank you for that. And I'd like to put a few dates on this. We'll just, uh, we'll let that initial condo, we'll just set that off to the side.

[00:06:58] Forget about that one. But [00:07:00] when you bought that 29 unit, uh, what year was that? Was that before or after the great recession? Yeah.

[00:07:07] Scott Price: [00:07:07] Before, it was 2005. So, uh, I can, so, and that's when I consider my real investing, uh, phase two started. So, yeah, 2005, uh, I, I, I kept buying other types of properties. Uh, and then during the downturn, I, I definitely was one of those folks who took advantage of it and I, you know, I didn't run the other way.

[00:07:28] I ran in and, um, you know, like anybody who did it, they were during that time. Glad about that now. And, uh, really just kept kept purchasing as I would find good cash flowing properties that were in markets that I had researched and felt comfortable with in terms of their longterm prospects on job growth, demographics, Richard demand and things like that.

[00:07:51] Taylor: [00:07:51] Yeah. Well, at that point, when the great recession happened and you were probably still relatively new as a real estate investor, I would say. [00:08:00] And everybody's panicking, everybody's rushing out and the sky is falling, everything. How did you keep a cool head? And just say, look, I'm going to keep buying because these deals are great.

[00:08:11] How did you not, you know, run with the crowd and sell 29 you know, get out of it.

[00:08:16] Scott Price: [00:08:16] Yeah. I would say the biggest thing, both before the recession as well as during somewhat after the recession, is I've always been an cashflow buyer. Always, and so even when things were running up before and when they're running up now, uh, I, I'm not an appreciation player.

[00:08:37] And you know, some people made a lot of money on that, and I'm, I've likely missed out on some great deals by not playing that game. But the flip side is that when the recession came, you know, I hear these stories of the speculator investors and stuff who lost everything and were wiped out. And. I did fine.

[00:08:54] I was, I was very comfortable. I, you know, I had my cash flowing properties and their [00:09:00] market value went down, but, you know, as they say, market value counts twice when you buy, when you sell. And I wasn't selling and I had already bought, you know, so it's really a matter of whether or not they, they were cash flowing and they were, uh, so I.

[00:09:16] Had enough confidence in the economy that, you know, we weren't, it wasn't apocalyptic, you know, the zombies weren't coming or anything like that. And yeah. So we, you know, even though there was a big downturn, there was still a demand, especially in singles and, and multis for. uh for places for people to live.

[00:09:37] You know what I mean? Yeah, I understand. The household mixes changed and people were . There was a lot going on, but there was old demand. There were continued to be demand, which turned out, of course, to be the case has been, the man has been incredible and it's still incredible. So I just bought, I bought on that demand and uh, got a.

[00:09:53] Got some good deals then, and you know, it's harder and harder in the current market. I'm S I'm still buying when I can, but you [00:10:00] know, it's in a market like today. The, the, the balance point nowadays is finding a good enough deal that still is a true cashflow deal, which is getting harder and harder nowadays.

[00:10:13] Uh, and, but balancing that with still getting in the game, playing. Yeah. So

[00:10:22] Taylor: [00:10:22] you've, um, one of the terms that, you know, when we talked before, one of the terms you seem to like to use in this context is snowballing, getting a snowball going. So that. The portfolio builds the income builds, and then eventually had enough coming in so that as you've done recently, you can leave that W2.

[00:10:46] What are you seeing today? I mean, prices are high, but I don't know whether you're, you know, pointing newer investors in any particular direction, but what do you think about that? And people who are starting to get their snowball going now? And you know what they [00:11:00] can do to still the building that snowball, even though you know, prices might be.

[00:11:06] Hi today,

[00:11:07] Scott Price: [00:11:07] right? Yeah. The, the, the biggest challenge today is if that snowball is dependent on cashflow, uh, if you set up , you're buying, and if you can find a deal that has equity in it, then you're more likely to be able to get your snowball going by. By building equity, either by repositioning a property, doing some value, you add, you know, even though a lot of those properties have been picked over nowadays, but you know, nonetheless, assuming that you can find those and then actually cashing out that, you know, doing some kind of a refinance to get that back out.

[00:11:48] Then rolling in into your next one, just because the, you know, the general cap rates and the general cashflow is so. Low nowadays that, uh, that part of the snowball is, isn't nearly [00:12:00] as good as it used to be. You know, just as a generalization, um, so you've really gotta, you really gotta be focusing, if you're trying to snowball, I've gotta be focusing on your equity side nowadays, unless you're, I mean, there's certainly, you know, to every.

[00:12:13] Broad generalization, there's, there are exceptions. I mean, you know, there are still some in the Midwest, there are still some really good markets that you can find good cashflow and all this kind of stuff and more risk there. But, but nonetheless. Um, but yeah, I would say that it's a focus on your, your value add opportunities to help you snowball, keep, keep what you buy, but get the value out.

[00:12:34] And refi and then, and then snowball that way, you know, and make sure that they're in a strong market so that. If, and when there's a downturn, the likelihood of rent's going, Allen is, is minimized. And you know, there's never guarantee. But you know, like in the last downturn, the, the market valuations went down, but the [00:13:00] rents generally didn't go down or they went down very little and then they bounce back up.

[00:13:03] And that's what you want, you know, so, you know, if it's lower value, lower price, but. Higher income or the same income than, than you can skate through and yeah, you still need to have that kind of mindset

[00:13:15] now. Hmm, yeah, yeah, absolutely. And you, it seems like, so you went from multifamily to office and medical and retail and a lot of other types of investments.

[00:13:28] Was that mainly driven by the numbers? And you also brought up a great point about locations. I mean, you're in a. You're living on Whidbey Island outside of the Seattle, which is a particular market. I don't, I don't know how long you've been there, but you know, do you invest remotely? Clearly you've made a decision at a certain point that, okay, I can't keep buying these 29 odd units, multifamily deals.

[00:13:53] I got to branch out a little bit. So what was that like.

[00:13:57] Yeah. So part of [00:14:00] the, the overall vision, so to speak, you know, for where I wanted to take it, was to always be able to build an outsource team. So we're, we're a small. Outfit. It's just me and my wife and my wife was able to leave her job about five years ago.

[00:14:16] And she's also full time in our business. And uh, other than that, we outsource everything. Something that, you know, things, especially things like property management and contractors, uh, you know, the maintenance folks on site, all that kind of stuff. And. So bye. By building that we could look at good markets that were independent of where we lived.

[00:14:42] So w, you know, I want to, I want to live in my favorite spot and I don't want to be limited to what I can drive to within 15 minutes. And I get that idea, especially for people who are hands on property managers. Uh, personally, [00:15:00] not only. Is that not my forte for, you know, I feel like I'm pretty good at almost the entire beginning to nuts.

[00:15:08] The ball, let some bolts, you know, beginning to end process. But the property management part is a certain specialty. They own the, they, they, they own that process. They earn their money. And, um, I, you know, I frankly don't want to deal with that. And, uh, and that's good because the other thing is that, you know, people who do manage their own properties, there's good experience in that to an extent.

[00:15:31] And I have done that, and actually we, we manage a few of our properties, but they're triple net properties, so they, we should, for. Uh, listeners who, I don't know what that means is basically a commercial property where the, the, uh, the tenant takes care of everything, the maintenance and, uh, property taxes, insurance, things like that.

[00:15:49] And so those are easy to manage. So we manage those. But, um, but by doing that, uh, we can, we can then consider other markets and how far away they are is not. Is not, uh, an [00:16:00] issue or a question. I still need to be able to visit them, but I don't need to be there every day. So right now we're, we're through, we have properties in multiple markets throughout Washington state.

[00:16:10] Um, I've only owned out-of-state once, actually, so, and I sold that when it was a 40 unit in Memphis. And, uh, so, but at the same time, some of the properties are, you know, a five hour, six hour drive away. So I'm not stopping by on a daily basis, and that's fine. And that allows me to scale. That's the other thing.

[00:16:29] You know, if you, if you, if, if you're not setting up your processes so that others are doing the property management, and if you're doing the property management, you're always going to be limited on how many properties and units that you can personally manage.

[00:16:44]Taylor: [00:16:44] Yeah. That's interesting to you. Uh, you mainly have focused on investing in Washington state.

[00:16:50] Other than that one property in Memphis sounds like, uh, I dunno. How did that property in Memphis go? There must be a reason that you decided not to [00:17:00] continue investing there right.

[00:17:01] Scott Price: [00:17:01] Yeah. That was an interesting one. I and I, I've only sold a couple of properties recently, sold a couple office buildings and I sold that, that 40 unit.

[00:17:13] And, uh, and both for the same reason, cause you know, somebody paid more than I think they were worth. But uh, but at the same time, um, the, the w the specific one in Memphis was interesting. I. In retrospect, I still wish I own it. I owned it. I wish I hadn't sold it, but at the same time, and that was just a couple of years ago that I, year and a half ago, I think that I sold it and, but the reason I sold that was I basically a horrific property management experience.

[00:17:44] And that one, uh, was. A M because it was so far, they made it a little bit more difficult. What actually happened was when I figured out that they were literally lying, cheating, stealing, in a very [00:18:00] literal sense, uh, unfortunately, and I. You know, I was on them. So I, you know, I was monitoring and it's, and, and I could figure out pretty quickly, Hey, that's something was going wrong.

[00:18:10] And I, I actually hired a security firm, a hired an inspector to go check on things I created tenant liaisons to, to, in other words, relationships with . Directly with tenants so I could get an idea of exactly what was going on. And this is in a pretty fast cycle. I'm talking about here. Cause as soon as I realized something's, something's amiss here, I started getting my spies essentially got confirmation and then okay, I'm on a plane down there to do two things, fire them and hire a new property manager.

[00:18:39] And it just so happened that as I was in process of, and I had selected the new property manager and I think things would have actually gone well with them. Um, uh, from. Everything I've heard about the, the, the group, the new group I had selected. But, uh, it just so happened I met with the broker who sold it to me in the first place.

[00:18:57] We met for lunch and he showed up with a [00:19:00] folder and, uh, and he slides his folder across the desk and he says, I've got some leggy you'd take a look at. And I opened it up and there was a, it was an offer that I had not even. They asked for, you know, and, um, and it was good enough that we made, you know, good money just to profit.

[00:19:18] And of course, it was nice and easy timing for us. I, not that I would have run it ran away from, and I was completely ready to, you know, keep going and all that kind of stuff. But it was, he certainly provided that at a perfect time. Maybe he knew that, you know, it's like, Oh yeah, this is a pain in the butt for Scott right now.

[00:19:34] So let's see if we'll take this offer. Yeah. It was appealing enough that I, I certainly accepted it.

[00:19:40] Taylor: [00:19:40] Yeah. Yeah. It was maybe an offer that you might not have accepted had everything been going very well at the time, but it was still, uh, would have been an attractive offer, but maybe not quite compelling enough to force really gets you to sell if everything had been going swimmingly.

[00:19:57] Scott Price: [00:19:57] Yeah, yeah. I mean, and another way to look [00:20:00] at it as I had no intention of listing it. You know, I, I was, it wasn't for sale, but it was kinda like, Oh, okay, well that's, that's a nice number. That's higher than what I paid for it and I'll, yeah, okay, sure. That'll make things easy. Then I'll go back to Washington, but I be I say all that, but, uh, I am looking out of state now again, and it's primarily because.

[00:20:24] Like across the country, but they're, you know, the, the cap rates or the, the cash on cash returns are just getting so compressed across the country, but they're especially getting compressed in places in, in Washington. Um, so I'm, I'm looking at more cash flowing, uh, markets, you know, in, in other places right now.

[00:20:44] So I very well may be maybe going outside of state again here soon.

[00:20:48] Taylor: [00:20:48] So as you're looking for new markets to invest in, and you're. Presumably picking like a couple, maybe one, two go after. What, you know, [00:21:00] criteria are you using when you're selecting a market? Because there are, I'm sure there are a lot of people who live in the Seattle area or you know, Southern California or New York city area.

[00:21:12] They would love to invest remotely, but they haven't the foggiest idea of how to even pick a market. So what do you, what do you do? Have you

[00:21:20] Scott Price: [00:21:20] look at it. Yeah, yeah. We actually are, have a, I would call it a funnel approach and literally have it written down. It's a, it's a top level to, to minutiae level kind of process.

[00:21:36] And, and when I. Actually, for instance, if I receive a property from someone, broker, off-market, whatever, whatever it is, I'll do some very quick, literally two minute back of the napkin kind of financial estimate to say, is this even worth looking at? Most of them aren't worth looking at, and I just stopped there.

[00:21:56] But if it is worth looking at. [00:22:00] Then I, I, then I jumped to the top and the top is your question. Uh, you know, is this market something that is interesting to, to look at? So I'm, I'm starting real high level, and I'm actually always, always researching and looking at, uh, all the big, the big analysts reports, the, you know, and, and it's, it's, it's a, it's, um, it's a mix of stuff from.

[00:22:28] Wherever IRR Marcus and Millichap, CVRE and all these kinds of places, that's always interesting. But then you also get all the other classic, frankly, subjective lists, but they're interesting to look at to see, you know, the top 10 take places for tech workers to move to, you know, those kinds of places and start looking for patterns.

[00:22:49] And, uh, and then the ones that are, are repeatedly floating to the top. Then I start doing more of a deep dive on specifics. [00:23:00] So for specifics, I'm looking at, uh, population growth, uh, in that. And that's the biggest issue with some of, for instance, the, the higher cap rate, better cash flowing Midwest market, say, you know, to say you can, you might have.

[00:23:14] Decent cap cap rates, and especially for today at least, but they may have, they may have essentially people who are leaving more people who are leaving that are coming in, you know? So in general, I try to avoid those kinds of places, but. Uh, so looking at a population, looking at local economic drivers, uh, who's, who's moving in in terms of not only not only the people in the renters, but also the companies that are moving in looking at employment.

[00:23:43] Uh, and then also looking at the overall plan that the local government has. I mean, is it, is it vibrant. Does it, does it have a, does it have for momentum to it, you know, is the infrastructure crumbling or are they doing a really cool thing down on the river front that people really want to go to? And, you [00:24:00] know, it's hopping on the weekends, you know, that, that kind of thing.

[00:24:03] And, um, so if something looks really interesting and a very high level, then. Then I start, I start going, going level by level down. And what I mean by that is, okay, got your MSA kind of level or review, and then get down to the neighborhood review. You know, where, where, where are the places that are, uh, are.

[00:24:28] Are gentrifying, or where are the places that, uh, they're on the edge and it looks like they're in the path of progress, you know, those kinds of things. Then I'm looking at a whole bunch of parameters, you know, things like, uh, in column crime, uh, transportation routes. Just literally, I've got this massive list.

[00:24:49] Of of things. And, uh, we, we have it, we have written in, in documents. We've also got it in Excel that we, uh, we, if we're looking at something we haven't looked at [00:25:00] before, um, between my wife and I, we sign them out. So one of the columns is Scott does this and Kern does that. You know, we actually just do two, two, and then we'd get together and we compare our results.

[00:25:11] But I go from the top down. Until I get to a no, and if I get to something that does not meet my criteria, you know, too high a crime or it's trending in the wrong direction or, or whatever, uh, I don't keep going. I don't, I don't waste my time. And, uh, and then if I, if it passes all of these initial criteria, then getting.

[00:25:35] Then I actually start looking at the property, but it's got to pass all those filters up at the top, you know, first and a, and then it's a whole different, you know, well, I should say, in terms of level of minutia and intensity, it's a whole different review process when you get down to the property itself.

[00:25:52] So you

[00:25:52] Taylor: [00:25:52] have a lot of, uh, uh, data-driven. Minutia, I would say, or ma or numbers, uh, [00:26:00] data-driven minutia, if you will. But how does the qualitative, the factor of just driving by the property driving in the neighborhood, how does that impact your decision process? Does it, is it. You know, maybe it's a little relevant, but not really.

[00:26:17] It's, well, I'm basing this on the numbers, or can everything be great in the numbers? Up until the point you drive past it and you're like, once you drive past you, you're just like, okay, no.

[00:26:28] Scott Price: [00:26:28] Yeah, there's certainly a subjective element, no doubt about it, but part of that, yeah, I'm certainly not entirely numbers driven and it's partly, I would say, related to, for instance, some of those subjective lists kind of thing.

[00:26:43] And it's like, you know, where is this cool or not? You know? Is it a, is it a place that people want to live? You know, those kinds of things, which really get more into the subjective realm. And. I do. And the nice thing is with things like, even if it's remote, at [00:27:00] first, I will start with something like a Google street view or something like that.

[00:27:04] And, uh, and I will do a virtual drive around. And if I, you know, Oh, this, this looks, uh, this . This looks great. And then I spin them around 180 degrees and there's this smoke billing out of this, you know, chemical plant, you know, kind of thing. Oh, okay. That doesn't, you know, it's not quite as good. And I'll probably pass.

[00:27:23] So it's, um, yeah, there, there's certainly, and it, it depends upon the, the type of property, of course. I mean, if it's an a. Property versus a C property, you know, the, the subjective elements, or at least what you're willing to accept, uh, may may change, you know, based on, based on that as well.

[00:27:44] Taylor: [00:27:44] Hmm. Interesting.

[00:27:45] Okay. And regarding your first kind of foray into a commercial real estate, which was not commercial, multifamily, getting into your first like triple net property. Yeah. What was that [00:28:00] like? I mean, most people, vast majority of real estate investors out there might own a handful of units and most never. I hate to use this word about it, but no, most never graduate to triple net properties. So you know, what was that like getting into that? It sounds like you got into it maybe kinda soon in your investing career too. Really

[00:28:22] Scott Price: [00:28:22] sure. Yeah. I, I have done fairly extensive research on practically every asset class out there. Uh, there's, there's some that I have not purchased yet and I would like to, and there are others that I have not purchased that, and I don't intend to, you know?

[00:28:41] So, um, and then there's the multifamily office and retail that I have no direct experience, singles that I have direct experience in. And. The, basically I, I got to the point where there were certain fundamentals with a triple net property that [00:29:00] I felt comfortable with. And for instance, what, when, like, I'll take an example of a medical office building that I own.

[00:29:10] The, the main thing that I was looking at was who is the next tenant. That's the, that's the biggest thing for me with any triple net property, because I'm looking at the current tenant. I, I don't buy vacant potential triple net properties whenever I bought them. They've always had a good tenant in place with a long range lease.

[00:29:32] Uh, so I kind of start out good. Uh, and, uh, and, and that's the, my solid way is also a much easier way to get financing as well. And so I started out with that, but the biggest risk. On commercial meaning office and retail is whenever they're done their five year lease or it could be longer. Like, you know, one of mine has a 10 year lease and you know, things like that, but let's say a five year lease whenever they're done, [00:30:00] if they don't re up then.

[00:30:03] Who's moving in there, and it's a whole different ballgame than multifamily because people need a place to live. It's a little bit more, I would say, of a commodity. Uh, in other words, you, if, if you have a lot of vacancy in your multifamily. And your place is outdated or something, but if you, if you bring your rent down a little bit to a little bit below market or something, you can generally get it filled as long as you've got a strong general market, you know, as far as population and employment.

[00:30:32] However, that's not the case with office and retail. You've got to have somebody who wants that location and they want that. They want the existing tenant improvements, or you're going to have very expensive tenant permits. You've got to put in a, they need that size. They need that exposure. Uh, they need that, uh, the general ambiance of how they want to represent themselves to the world.

[00:30:54] You know, all that kind of stuff. And. And it's not a place that people live. It's a, it's a, it's a [00:31:00] business. And, and, and also in economic downturns, they can get hit harder. So I started focusing mostly on that element. There are a lot of other parts too, but thinking about, okay, does this have the location and the adaptability that if this tenant leaves, I'm very confident that I can find somebody else.

[00:31:19] To fill it. And I'm looking at what's local, how many comparative vacancies are there, are in the area, you know, things like that. And once I got, and I like anything, a lot of my, I did not buy, but, uh, but the ones that I, that met all my criteria in triple-net I was very comfortable with and I, I still own them.

[00:31:38] And even though I hadn't purchased any, uh, you know, once you get in and once you have some good tenants, they're easier than multifamily. So it's a lot easier, you know, not only do you have long range leases, uh, but, and, and generally you have businesses there who are just generally, some businesses can go out of [00:32:00] business, so it's never a guarantee, but generally they're more with them.

[00:32:03] Yeah. Meaning, and what I mean by that is that, you know, they're more with it on their accounting. You get the check every single month, and they take care of things, and it's to their benefit to make sure that your place looks great because it's their representation of the world, of their business. Uh, whereas don't get that quite as much.

[00:32:21] In, in multifamily, you can, and I've, I've known a number of tenants who actually, you know, take pride in taking care of their area and all that kind of stuff. So again, there's a lot of generalizations here, but, uh, but the, the, the triple net, uh, after you get through your initial process and if you can get your financing, and if you can get an, a lender to think, to believe in you and things like that for a while, it's actually easier.

[00:32:44] Taylor: [00:32:44] Interesting. So.

[00:32:46] Scott Price: [00:32:46] One

[00:32:47] Taylor: [00:32:47] of the things that strikes me about this is it's generally speaking, you know, your triple net properties, I've got to be a higher dollar figure, just property to buy, and you've got to bring cash the table to buy it and all [00:33:00] that. You mentioned earlier that you don't sell, but you refinance.

[00:33:03] So as you have those snowballing, uh. Multifamily rentals going, are you refinancing those to acquire the triple nets? Are you bringing in investors or what are you doing to buy them?

[00:33:19] Scott Price: [00:33:19] Yeah. Uh, so I have, I've reafied on all types of properties. Uh, so, you know, so it, it really, it's an, it depends, kind of kind of answer.

[00:33:31] I, I've also, when the ones that I've sold, I've done some 10 30 ones, but again, that's only been a few properties. So, you know, I've been 10 31 exchanges into other properties, so. But to answer your question directly. Yeah. Especially with some of the multi-families, uh, like, I'll give you an example. I refinanced one recently and I put rural longterm.

[00:33:56] A debt on it and uh, [00:34:00] and yeah, use, use those funds to be able to actually get involved in a number of different investments. So, um, yeah, he was, it was really a, it really a, you can refi, you can potentially refi and potentially cash out, refi any type of property. So it just depends on how, if it's appreciated, how much it is appreciated.

[00:34:20] Since I'm a cashflow buyer, essentially the appreciation is the cherry on top. So I don't rely upon it, but when it comes, I take advantage of it.

[00:34:29] Taylor: [00:34:29] Okay. But, but to acquire these triple-net properties, you're still acquiring them all yourself, you and your wife. You're not bringing in investors or anything like that.

[00:34:37] Scott Price: [00:34:37] Yeah, exactly. Um, I actually, they're actually number of investors have reached out to me and I'm, I am, uh, planning on doing some syndications coming up, but, uh, I haven't had a need to, uh, just because of rolling profits forward and, you know, and that's fine. So, you know, it's just me and the bank. Yeah.

[00:34:54] Which is nice. You know, it's a, uh, so at least all the, all the profits, uh, you know, [00:35:00] for the properties I own. It, you know, it's just, you know, income to me. Um, so at the same time, to get bigger and to grow, you know, there's a limiting factor to that. So, uh, really, especially now that for a couple of years I've been completely full time.

[00:35:17] I, and now I have the time to devote to making sure that. Things go well for other investors. You know, it's, it's, again, part of my conservative nature as well. You know, I w if I'm going to take somebody else's money, that's a big responsibility. So the biggest issue now is actually, I, like I said, I have investors who want to invest with me, but I, I'm, I'm actually, the bigger issue now is finding the deals.

[00:35:39] So just seeing the current market, you have to make them appealing. And that's why I'm considering looking out of, uh. Out of state again, so that we can find the, there's really appealing returns that everybody will be intrigued by.

[00:35:52] Taylor: [00:35:52] Yeah. But it also sounds like you're a very patient guy, which is to your advantage in a, and then more expensive market.

[00:35:59] You're not gonna [00:36:00] do deals just to do deals. You're going to hunt down the goggles.

[00:36:04] Scott Price: [00:36:04] Yeah. Yeah, and I should, I should actually clarify something. I have, I have worked with other investors on the debt side, so, uh, so some folks, I always, it's not a classic equity syndication. It's been a debt investors, and I've used them, or I mean, use their funds to, uh, to be able to get into deals quick where there was a need for quick turnaround.

[00:36:29] Uh, and some of them, I've even. Yeah. Even held onto the loans much longer than I need to do because the investors love the steady, consistent, dependable income. And then I just got to have more cash sitting around, you know, to use on other properties. And they were happy with it and I was happy with it.

[00:36:48] Taylor: [00:36:48] Nice. I get all the hard money loan cash. Awesome.

[00:36:51] Scott Price: [00:36:51] Yeah, yeah, yeah. I mean, but the nice thing, yeah. Uh, but, uh, I mean, I, I. I'm not, in that case, [00:37:00] it was, it wasn't like the, the classic 12%, you know, hard money loan, uh, you know, due in six months kind of thing. It was a, uh, you know, still a good interest rate, but not that high.

[00:37:10] But it was very consistent and it was longterm and they were very, very happy with it.

[00:37:14] Taylor: [00:37:14] Nice. Nice. So we're going to take a quick break for our sponsor. All right, Scott, I've got three rapid fire questions. I ask every guest, on the show, are you ready?

[00:37:26] Scott Price: [00:37:26] I'm ready

[00:37:26] Taylor: [00:37:26] . All right. First one, what is the best investment you've ever made?

[00:37:32] Scott Price: [00:37:32] All right, so I listened to your show, so I know what the three questions are. So I am going to answer your first and second question with the seat with the same property about best and worst. So. And I'll explain what I mean. So the, the best property that I ever [00:38:00] purchased was that actually the one that I already described, the 29 unit that I, that I bought initially.

[00:38:07] And the reason was that I, I came in, uh. Did it got involve, jump in with both feet and it got my snowball rolling. In other words, I took a bigger risk. I took action, not just buying a little single and then kind of gradually growing. I started with something a little bigger than I'm again, I might recommend, but got into it and I still own that property today, you know?

[00:38:35] And. And by simply by appreciation, I mean, I, I did invest back in the property, but it wasn't some big value add or anything like that. You know, it's, it's been delivering. Um, mostly every once in a while I got capital expenses, no doubt about it. But I'm mostly steady income. That is, you know, frankly, on a monthly basis, it's more than.

[00:38:58] Know, number of people make, you [00:39:00] know what I mean? Just from the one property. And, um, yeah. And you know, it's doubled in value. And you know, again, that's not in that timeframe. That's not like some, some, you know, who a huge, uh, you know, a home run or anything, but that's fine. That's, that's great. You know, it got me started and, uh, and I jumped in, still had it.

[00:39:21] And, uh, uh. I mean still have it and, uh, and, and it's, it's been a gradually increasing, basically ride the inflation train kind of, kind of property. And as the rents have increased, it's, it's been good. It's been good. One that I got a, I was able to cash out from that one. Re-invest. It's been, you know, monthly income, the whole deals.

[00:39:43] So, so there's that. Now. Uh, two, two, two. Joel two. What's the worst?

[00:39:50] What's the,

[00:39:52] yeah, what's the worst investment? I, uh, I would also in some ways say the same. Right. [00:40:00] And what I mean by that is I got, I got schooled in a big way and like S and it was a serious learning lesson. I went back. To 2005 and bought that end.

[00:40:16] Knew what I knew now, I wouldn't have bought it. Um, and I would, I would have bought something else. And the things that I learned were invaluable. So it's a positive, but, you know, just learning that the difference between physical occupancy and economic occupancy. When a seller, you know, stuff's, say a, a, a, an apartment complex full of people, uh, as opposed to pairs.

[00:40:44] So, you know, rent, renters, you know, I learned what that was real quick. I also learned about, uh, older properties and the, the capital needs of that. I mean, you know, if it hadn't been for my WT, there was a period, a short period of [00:41:00] time, uh, where. It that I was feeding that property. It was, it wasn't that it did go that long, but I, in other words, it was not bringing income to me.

[00:41:09] I was actually feeding it from my w two jobs and my personal savings, you know, I mean, I had no, I, I went kind of high end. I got a very nice commercial roof, but I had $100,000 bill on a new roof and. You know, that's, you know, you don't have that sitting around. That's, that's kind of unexpected. And, uh, and you know, there was, there were some plumbing issues, and I, and it's stuff that the inspector doesn't necessarily find or they're not visible or things like that.

[00:41:40] So. It was, it was a serious learning experience. And, uh, you know, everything from learning how to your work with a property manager to how do you deal with flat roofs to, you know, all this kind of stuff. And, uh, in that respect, it was, uh, [00:42:00] especially that, that timeframe where I had to float that property.

[00:42:02] It was, it was the worst, uh, worst one. But, but again, I've rode the inflation train. Fuck it out. I didn't make the same mistake that I made with that first condo where I gave up. It was the opposite. I stuck with it and I'm very happy now. Yep. That'd be the rough patch to get to here.

[00:42:20] Taylor: [00:42:20] Nice. Nice. So, as you know, if you're a listener of the show, my favorite question, the last question.

[00:42:27] So what is the most important lesson that you've learned in investing.

[00:42:31] Scott Price: [00:42:31] Sure. For me, it's, it's about concentrating on the risk, and again, that's perhaps my conservative style, but I concentrate on the risk and the upside comes along afterwards as a benefit. So when I'm looking at out a property or again, market level, but, uh, when I'm looking into specific property, I'm not initially focused [00:43:00] on upside.

[00:43:01] I am focused on all the potential things that could go wrong or what might make the business plan or the pro forma not actually occur. And. Yeah, I've probably given up, uh, you know, I've probably passed on some deals that did in the end. You know, some of those concerns didn't come to be and they were great deals and all that kind of stuff.

[00:43:24] But the flip side is that, that over time, eh, X, over time, all of my investments have been successful. And as I've. I learned like from that first, you know, 29 unit a. As I've learned, they become more and more successful because of that filter. And, and there are some, and there's a couple specific ways to implement that kind of approach.

[00:43:47] I mean, you know, it's not only about looking at the market and looking at the property itself, but it's, it's taking those high level things like what I mentioned about I'm a cashflow buyer personally, which is hard in the current market, [00:44:00] but at the same time, I'm sticking to that. And. Again that, you know, that got me through 2008 to 2010 just fine.

[00:44:08] And I'm also putting longterm debt, uh, like, like when I do these if I can, and you know, for commercial lending you don't get 30 year fixed, you know, so, you know, most of them are five year fixed and maybe they come new or whatever. And like the last one, I just refied I did 12 year fixed. That's actually on the high end.

[00:44:28] I have to pay a little more interest for that, but it's a big. Insurance, a insurance policy for me, that if there is a downturn and the value of my property goes down, even if the rents are still working in the capital, so still working, but if the value goes down, it's an insurance policy for me that I don't have to come out out of pocket or potentially even have trouble refinancing it in five years when we might be in a downturn.

[00:44:53] You know, I got the 12 year one way and I can do something between now and then. So yeah. So yeah, so [00:45:00] that, that's. That's the biggest thing that I generally focus on, I would recommend for others.

[00:45:05] Taylor: [00:45:05] Nice. I love it. So Scott, thank you for sharing all these lessons today. You've been very successful as an investor over the last 14 years, got out of your W2, build a great portfolio, and sounds like you've got a lot of great things ahead of you.

[00:45:19] If folks want to learn more about you and your business, where can they get in touch with you.

[00:45:25] Scott Price: [00:45:25] Sure. The easiest way is on my website, which is bonvolo.com and that's spelled B O N V O L o.com and on there is my direct email and my phone number and other information. So if anybody likes to reach out, happy, happy to talk to them.

[00:45:46] Taylor: [00:45:46] Great. It's been great time talking to you today. Uh, and I'm sure people got a lot of information out of it. If they miss the link, it'll be in the show notes. So if you don't want to punch it in, just check out the show notes and it'll be in there. And, uh, thanks [00:46:00] once again for joining

[00:46:01] Scott Price: [00:46:01] us today. Thank you, Taylor.

[00:46:03] It was fun. It's fun

[00:46:05] Taylor: [00:46:05] talking with you. It's everybody. Thank you for tuning in. If you're enjoying the show, please leave us a rating and review in iTunes is a very big help. If you know anyone that could use a little bit more passive wealth in their lives, please share the show with them and bring them into the fold.

[00:46:17] That'd be, have a great rest of your day and a great week, and we'll talk to you on the next episode. Bye bye.

[00:46:21]

 

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About the Host

Taylor on stage

Hi, I’m Taylor. To date I’ve acquired or partnered on over $250 Million in Commercial Real Estate Investments. I help busy professionals invest in multifamily and self storage real estate through my company NT Capital

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