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The Real Estate Addicts (REA) podcast is a must-listen for anyone interested in real estate development, investment, construction and entrepreneurship. Each episode dives into a wide range of industry topics and features conversations with savvy, successful entrepreneurs who candidly share their career paths, challenges, breakthroughs, and the stories behind the remarkable companies they’ve built. Expect big personalities, thoughtful insights, and conversations that both educate and inspire.
Co-hosted by Ray Hurteau, Dan Rubin (Instagram: @rhinvestgroup), and Marc Savatsky (Instagram: @choose_boston)
Follow the Real Estate Addicts Podcast on YouTube: @RealEstateAddicts
00:09
All right. Welcome back. Welcome to the Real Estate Addicts Podcasts. uh Podcasts podcasts? Podcasts, podcast. I feel like we say podcasts sometimes. I don't know. It's just one, the We haven't played the music in a while, so. Yeah, that was for you guys. Thank you. And our listeners, thank you for listening. Gets me in the mood. Yeah. Good. Pump you up. Yeah. Mark, you have a interesting post that someone wrote on LinkedIn that you...
00:39
Shout out Spencer Barber, is a developing residential real estate in Illinois. He posted, if I could change one thing about my career as a real estate developer, I would have built a business with recurring monthly income first. For a decade, I've relied on large paydays that fund my life for years while I work on the next deal. It works on a spreadsheet, but it creates psychological pressure.
01:05
It's also far less resilient than having a business with steady income that can weather those market cycles. A lot of truths to that. Yeah. Yeah. I mean, you have some rentals, we have some rentals kind of agree that it does help you not feel like you got to be on that hamster wheel going from project to project. I think it's a little so because you have to. like that. Massive.
01:33
The challenge with rentals is once you push those chips into the table, it's like, you know, you're getting a return on them, but like you need another big massive chips to start to keep playing the game. Like you're have to wait for the other players to keep moving around the board for a while. you have to, or you have to amass a significant amount of capital to acquire a certain number of rentals that can cash flow enough that essentially will be.
02:03
Yeah, I mean... uh
02:07
I think timing was fortunate in my career whereby like I started in real estate development, like coming out of the great recession. It's like 2010, 2012. so like the first property I bought was a single family in South Boston for $275,000, which I still own. So that rents for $4,500 a month. That's like the, you know, boomers. Yeah. And that was it. know. Yeah. Yeah.
02:36
Yeah. So the BRRR method I was doing without knowing what BRRR is means was buy, renovate, refinance. Refinance, rinse, repeat. don't know. Yeah. So like I did it. was like, and then I had a bunch of equity because the market was also ticking at 12 or 15 % a year. Well, you've had a very unique experience because you've taken advantage of the uh tax code, which allows you every two years to sell your primary residence, keep a chunk of that uh equity.
03:05
or the capital gains and not be taxed on it. So you've sort of been snowballing and parlaying over a couple of years. Yeah. So it's the homeowner exemption. Yeah. And two of five, if you've lived somewhere for two of five years, you and your spouse are entitled to $250,000 each to do what you will with. A lot of people think that means like, like kind exchange. If it's not, you can bury it in your backyard if you want, put it under your mattress. Right. There's no requirement to roll it in like a 1031 would.
03:35
That is helpful because otherwise, you know, you're taxed as ordinary income as a developer, but, um, kind of away from the idea of like, so, so yeah, it's great if you can do rentals, but like, it's pretty tough to do rentals. It's sort of like a chicken and an egg problem again. So like, what are you going to do? That's going to build, uh, some sort of steady income to help balance out those massive dips and that peaks and valleys that are typical in our cash flows as real estate developers. Um, and.
04:04
You know, I think, um, some people are real estate sales agents. That's, that's certainly effective personally, that those being a real estate sales agent, or if I'm being in the real estate industry in general, doesn't help whether those peaks and the storm when there's a down market, mean, agent and down market. You're not me. Look, I mean, you should probably invest in umbrellas and sunscreen.
04:34
So that like, if it's raining, you're still good. And, and, and to your point, like, think all of these verticals are highly correlated to one another. So if you are a real estate salesperson and your developed business is struggling, you're probably not selling a lot of homes either. And like, okay, I do development consulting and I do owner's rep work. That business isn't available to me unless I'm a successful developer though. So it's not like you can be 23 and be like,
05:01
I'm available for consulting services for your, to assist you in your next development. Like no one's hiring you. Um, so, so we continue down, like what, what is it that you do? My answer is a GC. My answer is learn construction. You know, it's not quick, uh, riches here. It's, it's a lot of work. Um, but like what a, what better skillset could you have as a real estate developer than to understand construction. It's something that when you are 23 with a lot of hustle and grit.
05:30
and access to AI and all the technology and tools. Um, you know, take that moment in your life where you don't have a wife and kids to get home to, and you can grind 12, 14 hour days and, learn that part of the business. That's my. Yeah, I hardly agree. I also think keeping the W2 job the way while it might not be sexy, it's incredibly valuable from not only. Stiff stream of income, but.
05:59
incredible in terms of being able to qualify for loans, to being able to prove income to lenders. It helps you weather those storms if you are in an industry that is not a real stake. Health insurance. And I don't think we've come across too many people who have also rapidly scaled and found success. And I don't mean any disrespect to anybody that may listen to this or know anybody, but the problem
06:29
when someone tries to do something like that with all the best intentions of, I did one project and it was great. Now I want to do five more. You still are going to make mistakes. And if you make that mistake five times, it's going to hurt five times as much, or could just essentially sink your ship. We've had that analogy before. So it is tough figuring out how to, when to be on the hamster wheel, when not to be on the hamster wheel, when to put your chips into a certain deal.
06:57
That's the other side of real estate that you can't control. You can't control the market when a good deal comes across or when you come across it. There's no magic formula, but you'll know it when you see it and underwrite it. It's the way I like to think of it. Yeah. I think the original sin for a real estate developer is having no money, no cash, illiquid. uh And there's some talk out there of we need to help
07:26
disadvantaged folks of low income become real estate developers too. I support that goal. 1000 % I'm here for it. But not when you're 22 years old, not when you haven't amassed anything to risk of your own yet. Unfortunately, real estate development is a capital intensive business. And if you're constantly, like even if you source a deal and you have people who will put money into it, if you don't have a few of your own dollars to also invest in the thing, it's like building a company for everybody else.
07:54
You know, like, great. You just made that guy, that guy, and that guy money. And you, how much did you make? You know, and if you never have chips, then what do you... Yeah.
08:08
So it's just not realistic. Psychologically, when you have your phone capital at stake, I just feel that there's just that much more.
08:23
I don't know. You're you, you won't take as many risks. You'll be, you'll be, you'll be, you'll, you will be on the purse drains. just, it's just, of course more motivated a hundred percent. will execute better. Urban. have your own capital at risk, but it could be like you said with others, right? You, I would never invest in a deal. Someone else's deal.
08:52
if they had no skin in the game. Yeah, well what if they don't have any skin? Or no experience. Which is to say, no experience. And look, I think it's politically expedient. It's a great sound bite to say like, we want to let young people be real estate developers who, you know, it's not fair that like you have a lot of resources and you can be a real estate developer because you've amassed cash or whatever it wants to be. We want people who haven't yet to be, and it's like, it doesn't work. It sounds good. I wish that could be the case.
09:21
I meet with young guys who really aspiring women and like, I'm here to help. But the truth of the matter is like, you have to do something else for a decent amount of time or inherit a bunch of money. going to say, trust fund pretty tried and sure. Um, yeah, but like experience and to get that experience in work for somebody and by working for somebody, maybe you can take some money and invest in your first deal, but you can't just.
09:49
expect to just jump into the game. Nothing. Yeah. You'll just chase your tail and spin that hamster wheel faster and faster without going anywhere. Um, but so, so again, like we talked construction, maybe real estate sales, property management, like these are the typical verticals. like to make an analogy. We've used this often is like the real estate developers, like the movie producer, right? You, you source the script, you buy the script, you hire the director of the film.
10:17
the actors and if the film makes money, you do great. If the film bombs, it's really your loss and you raise money to make the movie. like, unless you have a trust fund, you have to be one of those things, like a great actor, a director, something. Yeah. Working for a lender. Yeah. Working on more agenda writing. could be, you could do those types of things too. So yeah. So like which of those roles are you going to specialize in?
10:45
those tangential roles to real estate developer. Um, cause there isn't a traditional career path. isn't a business card or like a degree that you can get that's called like real estate developer. No, no, it's either, it's either born through family, uh, inheritance, right? So like, Oh, my parents did this and now I'm learning the business or you go out on your own like we did. And we just kind of started taking risks and growing it from a little snowball. What was the U S.
11:15
Yeah. Yeah. Very different things. I know I was, you're the IT nerd. I went to business. Can I be honest? Um, if you've ever seen the movie blow with Johnny Depp, he, there's a scene in the movie where he says something, the effect of like, went into prison with an undergraduate degree in marijuana and I came out with a doctorate degree in like, you know, cocaine and no.
11:44
I worked at a large established construction company. did high rise buildings. Uh, what I learned in that seat in that job was not at all related. How does that translate to like two and four unit buildings? Right. It doesn't, but it was just a network of guys that are like, like almost who are somewhat entrepreneurial liked construction and it just gave you like, you're familiar with the feather and Dumbo's cap that makes them believe he can fly. Like it was enough to make me think that I could buy this.
12:14
piece of garbage house for 275 grand. And with my own hands and a couple of friends, like fix the whole thing up for $85,000. Right. And we did. And that's kind of crazy, but that's what it, that's what the, the diploma and the years in that place was the network and the confidence. But I'm not going to tell you that like what I learned sitting in that seat really relates to. learned, you learned what it takes to construct a building, but you didn't necessarily learn what it took to underwrite it.
12:44
necessarily and how that could scale down. I could. You could do a lot from a PM standpoint, a super standpoint. That is your song. Well, let me ask you this. When you first started, because I don't know if I've ever asked this, what was your specific role? Were you like a project manager or were you in a specific niche area and then that kind of moved and changed?
13:11
Yeah. Mostly pre-construction and estimating. Okay. So like my thesis was like. So you weren't even seeing boots on the ground initially. You know, I did. I spent a year in the field, a year in project management, and then I was in estimating. And that's where I kind of like decided that like, I'd like to focus my attention and under with the premise that like, you can do anything with time and money. So like, how much is it going to, you know. Right.
13:38
So eventually all deals make sense over time. But moreover, like, sure. You can add three stories and dig out the basement and add a garage down there. Like it's possible. And like, think what makes a good developer from a shitty one is the good developer looks and then goes, that's a terrible idea. Like, of course you can draw it, but why would you? Whereas if you know, like, Hey, just by doing that, you're going to trigger.
14:05
ADA, and now you're going to need an elevator and that's 280, you know, numbers, but those numbers don't tie at all to what we do. You know, high rise building with union construction relative to like small and film multifamily. Right. Right. Um, but, um, I think what it gives you is a filing cabinet, if nothing else, I'll like, I'll argue against myself. It's like a way to organize information as you learn it that comes in so that.
14:34
You've, yeah, you have a resume. Great. Yeah. Great. Great contacts. Like it's like people to trade, you know, uh, baseball cards with the, in our world. That's right. Even, even not having that direct experience, you still have a significant leg up just with the exposure and kind of knowing, obviously knowing just terminology because there's nothing, I'm sure a sub loves more like walking around with some green guy, like my first house I ever bought. want to do this. And like, Oh boy, this guy doesn't know what he's doing. Yeah.
15:03
Yeah, I probably pissed off. I still probably pissed off a lot of subs because, I was learning on their dime in many respects, you know, when the plumber says to you like, all right, I'm going to need the valve for the shower. And your eyes are just like staring like what valve I bought a shower head. that what you mean? you, or you get a valve with a diverter and no diverter. Yeah. Yeah. Yeah. Yeah. Um, so, know, it's tough, like those, those sorts of things.
15:33
I'd like to think one of the reasons that like we collectively have been successful in developments and specifically the construction part is like, uh, we know what we want and we're decisive and there isn't a lot of friction or delay, which allows the subs to get in and get out. The only way to make money for any of us is to execute electrician, developer, plumber, who, whatever. It's like jobs that take three years that should have taken 11 months.
16:01
I don't need a spreadsheet. That deal sucks for everyone involved. Right, right. There's no, there's no benefit. And I mean, we've seen it on, on jobs. mean, we had our, uh, we had a sub that the guy on site, the super, whoever he was, the, head person in charge, so slow. And for whatever reason, the company just allowed it to keep going on forever and it messed with our timeline, messed with their profitability. So it's like you said, it's, it's no win for anybody. So how, so
16:30
Getting back to the original thesis of the LinkedIn post is when do you go from, how do you get to that passive income when you start from nothing, right? You have to do projects. You have to do something to get there. So knowing when to put the chips in, where to put them in, it's also location specific. I mean, we're in Boston and it's an urban area. You're not going to find a lot of single families. Other places like Ohio, that's all they have are single families, except for like downtown clusters. So.
17:00
Everybody's strategy is gonna be a little different also. There's a guy on uh TikTok, I haven't seen him too much more. He's like the Section 8 guy. He just loved bragging about how much money he was making off Section 8, single family rentals. So good for him, right? He did well. There's no magic code. It's gonna depend on where you live, what housing costs, what labor costs, and what you know and what you're willing to learn. There's an old Yiddish saying, uh to a worm in horseradish, the world is horseradish.
17:29
You know, I've written that up say like, to me, everything is like, Oh, well be in construction, learn construction, and then buy a single family. Like I did, like that was an unlock for me personally. Uh, and the unlock is that when you're buying something for yourself, not as an investor, your rates are much more attractive. Your down payment is much lower. You need a roof over your head. You're 20, whatever years old, hopefully you're not, know, you don't have handcuffs on yet. You don't have the stress.
17:59
Mm-hmm.
18:02
Yeah. Yeah. So go sleep next to the boiler in the basement while you've got the kitchen upstairs, showering your gym. Like, you know, everybody's got to lay in the dirt at some point, um, unless you have a trust fund, which God bless you if you do, but, uh, you know. Well, how about this? We've never really talked about this. Let's say you've got a bunch of chips, but you just don't want to deal with the stress, the uncertainty. You don't know enough about it. Maybe you never want to actually get into real estate.
18:30
you, but you do want that passive income. Why not just invest in a REIT or become a lender to another developer? I invest in, uh, our, our de advisors. do private lending. mean, that's a, yeah. Or not to be so concentrated, uh, literally a REIT in the stock market probably pays anywhere between three and 6 % unless you can get something, you know, when the market has a dip, but there's plenty of those out there and they're.
18:57
large diversified operators or they're specialized in one or two areas. I'm not saying don't invest in real estate, but for people who just can't get off the sideline, that might be a better option. oh Yeah. mean, relative to like being an LP. You get the appreciation and the, uh see a REIT has to pay out 90 % of what it brings in. So you know, there's going to be distributions. That's, that's what allows them to have that status. We're going to end up getting sued for this somehow. This is not fine.
19:27
This is, yeah. Check with your financial advisor. Ray's like, those technical terms about a reinvestment. What I'm saying, listen, there's no controversy to that statement. They have to pay out numbers. I'm just teasing you. So, it's easy. But for any of the, you know, digital lawyers out there looking to come after me. That was Ray Herto, our H Investment Group.
19:54
Choose Boston has no affiliation with the prior statements. Is that not an option that you'd recommend to somebody, especially if, especially if they just. I mean, sure. Own stocks, own bonds, own REITs, have a diversified portfolio, but yeah. You'll be to drive down the street and be like, I invested in that. Well, only if you made money on it. I mean, the flip side is like, if that building is the one that never gets finished, like you lost.
20:22
all your money. so that's why I, you're saying that if someone doesn't want to get their hands dirty, they can obviously be in, they don't have to be a GP. Or if they can't find something that it's not working. It's like, they've got the chips. They don't know where to get started. Maybe put them in there temporarily while you're looking for something else. Again, it's what are my options or partner and learn from them.
20:51
then the deal is a deal. If there's enough meat on the bone, then go to someone and say, hey, I found this deal. I have a bunch of chips. I don't have any experience and I want to work. Right. Just make sure you do your due diligence and all disclaimers for that. That's an option as well, right? I think there's so many creative ways that you can get into real estate. But I think from the gentleman that posted at the beginning, you can't get into the game.
21:19
or, or I would be, I would not, we would not advise anyone to get in the game with your nothing. Yeah. It'd be impossible. Well, I mean, people do over lever. You could borrow other people's money. Yes, I hear you. But I guess who are those people investing? I'll take their money. If they have that much, uh, right. Yeah. They have that much confidence in someone with no experience. You're not wrong that like it's harder today than that was.
21:48
five, six years ago when money was free and everyone was just like fat and happy. Um, but there, there were, we have friends. Yeah. I know. No money. I know. That's usually like wholesales or something where it's still low. they'll tell you, can flip a house by have $1. Um, but yeah, be no, that's not real. And if, if it is.
22:18
And you can get into that deal. think the other thing I like to caution people is like, don't buy yourself a job, right? Like I know what I can make as a salaried employee in the market. Uh, I don't need to sign a personal guarantee to correct, collect that much money and have health insurance. You are not taking the risk. There are so many guys I see do a deal where I'm like, wow, you just made 125 grand on that project. It took you a year and a half. Um,
22:47
You could have had a job like that. What do you don't do that? Um, like you said, you'd have insurance. could be doing 401k. Yeah. I mean, guess there's a happiness factor too. And someone corrected me on this last night. They cited some study and I should look it up, but it was basically like, even if you're making the exact same amount of money, but you're working for yourself, you're two times as happy.
23:17
Right. You definitely have some flexibility. You don't have a boss to necessarily report up to. To which I said, yeah, that assumes like you're making money. I don't think I'm two times happier if I'm like, you know, going into personal bankruptcy because I signed a PG.
23:31
All right. Well, let's not be depressing. there, there are, there are ways, there's a lot of ways to take some chips. And like you said, don't start with no chips. So if you have no chips, then don't invest in real estate. Well, I think the overarching theme here is be patient. It's there's not, there is not a get rich quick. Yeah. Yeah. If you're, if you're trying to get in the game and you just want to like instantly be on the board and have a few monopoly houses, like no, you, you have to get there.
24:00
Would you recommend any kind of like apprenticeship type things for people who want exposure to real estate and learn, and maybe they can kind of help out within the trades? know, within the trades, And certainly like I think being in the trades, learning electrical plumbing, what have you, just, it's also kind of hard just to be straight into being a GC. So yeah, if you can learn one trade and like see all the others that that is effective. I'll tell you what's not effective in my humble opinion is like, um,
24:27
Following someone shadowing someone who's a developer. Like I've had this offer come up. I'm sure you do too. Hey, can I just check in with you at the project once every other week and see what's changed and what's transpired and we can walk the building and point at things and talk. It's like, you're not going to, that's not really gonna. Yeah. The only thing that you might get out of that is again, the feather in Dumbo's hat, the like belief that you can do it, but like, unless you're living it. don't. they're like that, that one hour.
24:56
a week that you're on the job.
25:00
No, there's no osmosis here. You don't just like get to absorb it by having stance stood out. in that, seven days that you're doing all this other stuff specific to that project. Right. How many phone calls are you making to make sure guys show up on time and materials arrive or fixing things? Contrast, finished materials you buying, how many design questions you're answering, how many meetings with architects and designers.
25:30
And agents, it's just the amount of shit that you do that is, does the, that doesn't require you to be on site for a specific project is way more time consuming. So I don't think anyone will get anything by this.
25:48
Yeah. So, know, the, guess one more thing to offer is that the benefit of a paid something, some something that evens out those cash flows is that it lets you have more optionality of when you enter the market. So you don't feel like there's a gun to your head where you have to take a deal. I I got to keep them the beast fed here. It's like, look, I've rentals, I have this income over there. Like, yeah, I'd like to do a development. Those are typically the like extra base plays.
26:18
Um, but shit, I got a nice standup double and the market's kind of funny right now. So like terrific. Yeah. Yeah. And this guy last night, a really successful developer, uh, rode the wave in East Boston to his credit, saw, saw sort of the vision for that neighborhood, invested in it early, invested over and over again, uh, sold his portfolio, but I love that he led last night with, uh, when I met him.
26:47
How many days, how many days skiing did you get this year? And you know, skiing, golf, fill in whatever you want, fishing, but like, what's it all for? You know, I think that is like an important part of the mindset. I appreciate that about him is that like, he, he was kind of big into that. Yeah. Yeah. But like he worked really, really hard and, and he can, yeah. Then jumped off the hamster wheel, realized maybe.
27:15
know, family and life was important. I mean, that's, that's where we dreamed to be, right? That's kind of the goal. That's the, vision is that you don't have to work anymore. Now it's totally up. But like, yeah, I totally, yeah. It's like, uh, I think I wanted to be a lifty, you know, out West at a college. I'll just take a couple of years. be like, no, like you haven't done anything or like, God bless you. If you're doing that, I actually really kind of am jealous in many respects.
27:45
But you're trading it's everything's a trade. Everything is literally a trade, but it's harder people that Know that that graduated was like I think I'm gonna travel for the next year or so I'm gonna take the next year or two off Yeah, and it's like, okay, it's I mean, yes, you're seeing the world. You're getting brighter experiences. It's like you're delaying Things now like weird is that land you? Yeah, I don't know. Would you rather I don't know if that rather have that in the front end
28:16
I listened to somebody whose, her theory was work really hard for five years and then take six months off to celebrate your accomplishments. I don't think there's anything wrong to say about that if you're able to. Yeah. But then five more years hard. mean, the other thing is like, how often should you change your career? Like, do you want to be focused in one aspect of real estate or real estate altogether? Or do you take your chips off the plate and put it somewhere else? if you have enough chips.
28:45
And you can just put it into something that yeah, it's less risk. You're not ripping your hair out every day and you get enough cashflow off of it. Let's say it's a reader or some other investment passively. What's wrong with that at some point, right? You can always pull your chips back out and put them back on the table again, if you want. Yeah. I mean, I do like the adrenaline rush of it. I like my phone ring. I like to be super busy. You like talking to Boston, uh, transportation and cars in some respects.
29:16
Um, but, you know, and I guess it matters how you derive happiness. Like some people are really good with just like, um, you know, a Margarita and a, and a pool float and, and that's, that's eight hours of their day. And that's great. Like probably that's old after a while. I'd like to move more towards that. I'm trying. The other thing is like humble brag buddy. other thing is like, who's your friend group once that happens, right? You're right now we've got all the guys that we know that are the same boat as us were more or less.
29:44
then if you were to take your chips off or you were able to take the chips off and just kind of unofficially retire, is it going to be the same? You could probably get up in different circles at some point. I don't know how that would work out. Yeah. All right. Well, we're kind of, don't want to be depressing about it. hope I'm not being depressing about this. Oh, Question from someone that it would be cool to answer more questions or get our is on search.
30:12
I think we would like to have sort of a viewer, you know, we answer your questions like an AMA almost, right? So anybody looking to submit questions that you may have, anything related to real estate or even just your career, just send us. DM, comment, whatever, we watch it all. We'll be listening. Slide into Dan's DMs. Thanks everyone for rating, review and listening. Can't thank you enough, really. If you leave a review, helps the podcast grow.