Joseph Bramante (00:00):
During my stay in Papa, new Guinea, I was full time there and my managers were rotating. So every four weeks they would come and go home. And every time they come back to the job site, they always seem to have like a new rental property and they were buying all these foreclosed houses, dirt cheap. And you know, I’m sitting here, I’m bored on my mind. I can’t do anything. And so I look into buying these houses, you know, I’m young, like to show people up a little bit. I was like, I’m going to buy 80. I forgot how we came with 80, but it was 84 foreclose houses. We were trying to buy and kept calling these banks. I had beautiful spreadsheet showed it. Our take-down schedule was going to take like two years and all the banks just kept hanging up or laughing probably cause I was calling from a Papa new Guinea phone number, but also because of what I was actually saying on the phone
Reed Goossens (00:59):
[inaudible] To investing in the U S a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the U S market join Reed, as he interviews go getters risk-takers and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing
Reed Goossens (01:19):
Good. I get eight ladies and gentlemen, and welcome to another cracking edition of investing in the us podcast from Los Angeles. I’m your host Reed. Goossens good as always every with us on the show. Now I’m glad that you’ve all tuned into learn from my incredible guests and each and every one of them are the cream of the crop here in the United States. When it comes to real estate, investing, business, investing and entrepreneurship, each show, I try and tease out their incredible stories of how they have successfully created the businesses here in the U S how they’ve created financial freedom, massive amounts of cashflow, and ultimately create extraordinary lives for themselves and their families life by design. As I like to say, hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.
Reed Goossens (02:06):
If these guys can do it. So can you now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like to show the easiest way to give back is to give us a review on iTunes and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show, every podcast on iTunes, SoundCloud, Stitcher, and Google play, but you can also find these episodes up on my YouTube channel. So head over to Reed goossens.com, click on the video link, and it’ll take.
New Speaker (02:36):
you to the video recordings of these podcasts. We can see my ugly mug for the beautiful faces of my guests each and every week. All right. And I’ve had a meal let’s get cracking in into today’s show.
Reed Goossens (02:52):
Reed Goossens (02:52):
Tell the show, the pleasure of speaking with Joseph from Montay. Now, Joseph is the co-founder and CEO of a Houston based real estate called try act real estate partners, and a wholly integrated multi-family investment company. First purchased his first multi-family property play back in 2011, sight unseen while working as a team leader for ExxonMobil in P and G or Papa new Guinea, which is the neighbor to the north of Australia. If you don’t know where that is on a map, uh, today he’s growing his portfolio to 1100 units and increasing the NOI by over 80% on average within the first 48 months post acquisition. And the thing that really makes Joseph tick is his passion about using his creativity and analytical ability to solve problems and acquire and develop multi-family properties. I’m super pumped and excited to have him on the show. Cause he’s also spent some time in Australia, in Brizzy where I’m from, but not that I mean, let’s get him out of here. Good. I Joseph, welcome to the show. How you doing tonight? Good. Amen.
Joseph Bramante (03:48):
I get the breakout, my, uh, get the breakout Mazi lingo.
Reed Goossens (03:52):
Yeah, man. Yeah, we’ll do a little before we get into it. Wait where’d you live in Brizzy when you were there and why were you living in Brisbane?
Joseph Bramante (03:58):
So I was in a CBD central business district and I was there. We were at the, kind of the pre-funding stage of that P and G project, the P and G LNG project. So we were, you know, Exxon has stages for projects and we were spinning the first year, right before weddings and country finalizing everything. And then as soon as we got there, go ahead and the project was funded. Then we moved in country. So basically it was our, our closing process. As soon as the project closed and we got a lender lending funding, then we went in country.
Reed Goossens (04:32):
Awesome. So have you been to, I’m just going to spout off some old bars used to go to Fridays on the water there. It was, it was in my club there. Anyway. I don’t know if you’ve been there. There’s a taxi.
Joseph Bramante (04:42):
I did go, there was a lot of bars in the water we went to, um, there was this awesome steakhouse on the water. I remember the sauce was in like a little cow container and you would pour it and it was, you guys have the best steaks overhead at it. It’s weird. Cause we’re in Texas. Right. And Texas has good steaks, but people don’t realize it Ozzies have great steaks as well. I don’t know what it is. The thing is the grass fed. I don’t know. But
Reed Goossens (05:07):
What do you, what are you, what’s your, what’s your thoughts on laying out there? Cause I know we can’t get land here in the states is readily available. It’s a little bit of an [inaudible] um, it’s readily available in the strategy. Did you get tucked into some land?
Joseph Bramante (05:17):
Yeah, I had a little bit. It’s not, not really for me to be honest. Uh, but you know, the kangaroos actually pretty good. Uh, yeah, you put that on the Barbie and as always marinated. So it was good from your list. And I was like, oh no, he hit a kangaroo. Yeah. It was delicious. Yeah.
Reed Goossens (05:34):
On a coat of arms for Australia where there’s an email on the kangaroo, we can eat both of them. So let’s get into the show here. Um, the first question I ask all my guests when they come on, the show is, well, one of the clock. And tell me how you made your first ever dollar as a kid.
Joseph Bramante (05:51):
Yeah. So the first ever dollar, I made a legit, I mean, as cliche as it sounds, I had eliminate in my neighborhood and I know people would go up and down the street and the cars that drive by would give us money or they’d pull it up to us. And by eliminating it, that was all cute. And I just remember one guy paid me an oyster crackers and I didn’t even know what the hell an oyster cracker was. And anyway, I was just some old man had paid me and oyster crackers. Hey, I don’t have any change, but will this work? And I’ll say, sure, I’ll take that. So gave her a couple of lemonade for an oyster cracker or a bag of wish for crackers.
Reed Goossens (06:26):
That’s awesome. Tell me a little bit about your upbringing. You’re from Houston, right
Joseph Bramante (06:29):
Originally? No, not from Louisiana from new Orleans specifically. And it moves around a lot. Uh, God, I’ve lived in one place for more than four years, my whole life until moving to Houston. So it was really bouncing from my life as a kid, uh, lived in new Orleans, then Lafayette Broussard and went to high school in town called new Iberia, which is where I spent kind of the last bit of my adolescents there and then went, uh, to Rustin Louisiana for my engineering degree at Louisiana tech university go dogs. And then, uh, from there I got the job with Exxon. Um, actually during, while I was there, I ended up getting a few internships. So internships in, uh, Baton Rouge for a company called oh and, and Y doing engineering consulting and then another internship for Ws Nelson, a large engineering consulting firm in new Orleans.
Joseph Bramante (07:23):
So that was really cool. And I was all teed up to go work for, for S Nelson after graduation, except Exxon came to town and three months for our graduated interview with them, they gave me an offer and it was substantially more than what I was getting paid as engineers. So I said, sure, I’ll take it. I was, I was pretty poor as broke, you know, engineering student and had lots of student loans. That’s a debt and negative money, my account. So I, you know, uh, anything for a dollar at that point and Exxon had it, it was stomach a lot of dollars. So I graduated two weeks later, I’m working. And it was, I worked through the Christmas holiday, my first ever job as a corporate man, so to speak. And anyway, they moved back, moved back to Houston. And I remember they flew me to interview for Houston, which I thought was coolest first time, really ever fluid, actually that might’ve been the first time I ever flown a plane.
Joseph Bramante (08:15):
It was from my interview with Exxon and they flew me on this small, almost like a private jet plan. Wasn’t a private jet, but it was like a small turbo prop plane. And I was, I was already sold from that point on. I was like, oh, they flew me somewhere. And it was a, it was a cool experience. You know, being in the big city like Houston is all highways. It’s just tons and tons of highways and we’re driving around. It’s kinda, it’s not really a limo. She’s a private car, had a driver and it took me to my hotel and picked me up to me, it’s my interview and did the whole charade and got the job. But I just remember, wow, they get so impressed. How big, you know, he used in his, I mean, you can spend an hour just driving one end to the other. And anyway, that’s how I ended up in Houston. Then nine months later, they moved me to Australia.
Reed Goossens (09:04):
That’s incredible. Well, it sounds very similar that that culture actually, when did graduate, just because I want to understand that time 2007, same year as me. So it’s assignment in Australia to those people that don’t know engineers, you know, those last couple of years there was always in the engineering faculty. There would be a big mining company coming in, struggling on a barbecue, swearing on beers and trying to recruit as many people as possible. And then, you know, some people went down the mining path because in Australia we had a huge mining boom, and it’s still going and you can go out to the mines as a graduate engineer and in bloody six biggest straight out the gate. And it sounds like you work like a dog and you’re working on site and it sounds like you did the exact same path as, uh, as what I did as well.
Reed Goossens (09:45):
So, so awesome. A bit. I want to dive a little bit more into the time in, um, Papa new Guinea before we get into the real estate, because being an American and traveling abroad is, is pretty unique, not unique, but it’s, you know, it’s, it’s, it’s quite privileged. And, but then also going to a really federal country like P and G, how was that an eye-opening experience for you and sort of maybe a grounding experience in giving you a sense of a different culture that did that have a massive impact on you and you and you and your, why you think?
Joseph Bramante (10:13):
Yeah, no, absolutely. I mean, even just go on south Australia, I mean, you guys are first world country, uh, but still just a different culture. And it’s one thing to visit someplace and take pictures and do the tourist thing. But I had an apartment in Australia. I would, I would, uh, my apartment was next door to my, uh, office. I was living in a high rise and my office is on a high rise and it was the first time I’d ever, and I ever had that experience. And in Houston, it’s not really impossible. It really, the only place you can do that is cities like New York, et cetera. And it was just a completely different way of living. I would get groceries on almost a daily basis and I didn’t have a car. I was a hundred percent public transit. It was a really, just a different way of living and the viewpoint and the people and just everything was, it was different.
Joseph Bramante (11:00):
And then, uh, but it was a good, different, it was like it was a relatable different, you know, I can, it was very similar, but different compared to American culture versus going in to Papa, new Guinea was just completely different, no similarities. I mean, very, very minimal of similarities. And that’s very much a, you know, a former tribal and still is and may place as a tribal country. They had tribes everywhere. And there’s, you know, when you look at the country, they speak like more than 800 different languages on a country, the size of, you know, for us, I think it’s the size of Rhode Island or Hawaii, you know, it’s a very small place. And for them to speak that many languages is so diverse. And, um, so, so from that perspective, it was interesting, you know, and the food, the hygiene is completely different.
Joseph Bramante (11:55):
I mean, wow, the hygiene is, I mean, anybody who goes there, you, you, you notice it from the moment you step on the plane going there to when you land. And I mean, there’s just a lot of different smells you’re in you’re, you know, around that. Yeah. That you’re not used to smelling. And then, then you go grocery shopping and then that is an eye-opener, you know, I mean, most Americans, most of my friends wouldn’t buy half the stuff that I was that I had to buy on a regular basis just to, you know, sustain, you know, like just you go to the meat market and it’s stinks. It’s like, wow, the, the meat smells bad if you’re buying it, it takes a little while to acclimate to it. Um, but it was, it was interesting. Did
Reed Goossens (12:44):
You, did you get any, did you get any sort of verbal deli? So there’s, you know, eating the food and taking on the, getting a little bit sick as, you know, Western God coming into a third world country where you got to adjust to it.
Joseph Bramante (12:58):
It wasn’t so worried about it. We were taking Malarone every day, which I know that that’s been the news or I think Malik Quinn’s, the other one has been a news lately, chloroquine they’re both malaria medicines. I took it daily for two years and you know, it was any virus or whatever I am dead medicine just killed it. So I wasn’t really worried about it. Um,
Reed Goossens (13:18):
So it sounds like it was an incredible experience being a young guy straight out of uni and just in the stake of it in a third world country and P and G being a pretty rough federal country. And as you said, tribalism is still really quite, quite prevalent.
Joseph Bramante (13:34):
I was sitting in my car, right. If we had drivers, we weren’t allowed to drive anywhere. We were, we had like a handful of bars and restaurants who were allowed to go to a, and they enforced that by ensuring nobody drove. We had that driver would take us everywhere. We had call signs to make sure we weren’t kidnapped or anything. So it was, uh, but anyway, I remember sitting in the car one day and, um, they had just picked up from the grocery store. Um, we’re pulling out of the driveway and we’re in traffic and there’s this man and a woman having a fight on the side of the street and the woman’s got a butcher knife and the man’s got a flip flop or a thong, as you would say. And so I just thought, wow, these guys are, and the traffic’s just continuing ongoing.
Joseph Bramante (14:12):
Nobody’s bothered is continue on. And you know, w here in Texas, we’re used to seeing guns are used to being around guns. It’s a pretty big gun culture, but I’ll tell you what I would, I’m much more terrified of, of everybody having machetes, like what I saw in Papa, new Guinea than a gun, shoot me. That’s fine, but do not hit me with the machete cause that, that I’ve, I’ve seen videos and photos of some of our own workers who I guess, you know, got into arguments in the, in the, in the jungle and they’d have a machete fight and a machete fight is nothing pretty. Mm
Reed Goossens (14:48):
Mm. Yeah. But, but, but overall it seems like a hugely positive experience to come back and, you know, experience something that a lot of people in Papua New Guinea don’t have a lot. Right. And trying to make do. And it just, the reason
Joseph Bramante (15:01):
We are extremely privileged. I mean, even our homeless people, I was, I was telling her like, like I legit saw people dying on the street, like starving. You could see their bones. It was bad. Uh, just here, like our homeless guys are fat. We have obese fat people, sorry. We have obese homeless people. Like how is that even a thing? And we’re, so it’s just completely different level. And you know, it was definitely eye opening for me, you know, I just realized, wow. So glad to be born and raised we’re shall be blessed. So we’re born in a first world country and, um,
Reed Goossens (15:34):
Yeah, you don’t have to worry about your food’s coming from and the hygiene of all that stuff, you know, it’s, it’s, it’s, I enjoy not from a privileged standpoint, but just, I enjoy going to third world countries to realize what I have. Right. And to rely me grateful for that, because it’s so important to just sometimes we get so caught up in our own BS, right. That we don’t never realize we get outside of our comfort zone and realize, oh crap. A lot of people that come a lot more worse than I do. So, um, yeah. It, nothing about that. Let’s get into the real estate story. So you’re a young guy you’re saying, seems like it’s roughly same age as me in the early thirties. What made you get involved in real estate?
Joseph Bramante (16:09):
Yeah, so I was w during my stay in Papa new Guinea, I was, I was full time there and my managers were rotating. So every four weeks they would come and go home. And, uh, every time they would come back to the job site, they always seem to have like a new rental property. And they were buying all these foreclosed houses for, you know, just dirt cheap. And, you know, I’m, I’m sitting here, I’m bored on my mind. I can’t do anything. And so I look into buying these houses as well, but, you know, I’m young like to show people up a little bit. So I was like, I’m going to buy 80. I forgot how we came up with 80, but it was 84 close houses. We were trying to buy and kept calling these banks. I had a beautiful spreadsheet, showed our take-down schedule is going to take like two years and all the banks just kept hanging up or laughing probably cause I was calling from a Papa new Guinea phone number, but also because of what I was actually saying on the phone.
Joseph Bramante (17:04):
And anyway, finally, one of them just said, go buy an 80 unit apartment complex. So couldn’t afford to 80 units, but I could afford a smaller one. So that was the initial kind of conversation. I got my interest peaked. Did some research, read a few books, kind of self-taught myself, this kind of 30,000 foot education of multifamily and away. I went reaching out initially on LoopNet, getting in touch with brokers and then having them show me deals. Uh, and I bought my first apartment. Well it’s 26 unit deals, sight unseen. Uh, and that’s kinda how I jumped to just me and another employee. We put our mind together and we bought that first deal.
Reed Goossens (17:44):
Awesome. Awesome. And then, and when was that time where you actually catapulted the platform of the day job and got full-time into real estate?
Joseph Bramante (17:52):
Six months later when Exxon fired me. Yeah. So it was, it wasn’t really by choice. I was, you know, I was kinda like walking on the edge of the pool then Exxon just kicked me in. So that was kind of what,
Reed Goossens (18:05):
How so? A good cause you weren’t paying attention because it’s too focused on this.
Joseph Bramante (18:09):
You know, Exxon’s a very much, it’s a great company, but they’re a, they’re great for a certain type of personality, a cookie cutter kind of organization, a yes or no, sir. And entrepreneurs don’t do very well over there. You know, I was challenging people. I was told I had a disrespect for authority. I was, you know, challenging managers and questioning things and you know, those types of traits don’t do well at Exxon. So,
Reed Goossens (18:35):
Oh, I know exactly what you might’ve spent so many times in many months and weeks in the Bush on a, on a mine site, on, on a camp where I know exactly the type of person I can visualize them standing in front of me, cursing them mouth off. And you’re just like, you’d even do it. Like, you didn’t know what you’re doing your little to snap on you. No, it’s been a bit, you’ve got to go through that type of stuff to realize what you want in life and then that, that spirit of entrepreneurship. So did that spirit come from any way growing up or was that just you sort of, this looks cool and I don’t want to be working for some crappy corner.
Joseph Bramante (19:08):
I had no, my, my stepdad’s an engineer for years, the head engineer for a power company. My mom’s an artist, so she’s a housewife, but slash artists. And uh, so nobody, my, my family is really owns a business or anything. And I had no intention of owning a business until it, it just happened. I was, I initially thought I was going to be a career man with Exxon and then have all these properties on the side because I wanted to retire early. But I guess I never really made the connection that retiring early without the, with all these properties means that you’re going to own a business. It was, uh, I just thought I was buying an investment property. Like many other pests past service we’ll go into.
Reed Goossens (19:52):
Right? No, it’s super important to highlight that because I know I can assimilate with you in terms of that need and want to you discover something. And as the engineering, Brian, and I’ve had many engineers ex engineers on the show, it’s sort of like the unraveling of the thread. It’s like all of a sudden, you just get, you pull out. It’s like, what’s this here. Oh God. And then all of a sudden just keeps going, right. And you just keep going deeper and deeper. And because you’re analytical, you like, well, I, this make so much sense. Like, why am I doing it? Why isn’t everyone doing this? And you eventually take the leap to fight. So that’s awesome. But I want to talk today about in, we spoke a little bit in the green room before we press record here is about the type of institutional level project management that you bring. And, and then I have subsequently also bring, because I came from the engineering background to your business today that maybe the average guy get involved in this indication won’t necessarily. So do you wanna start with, you know, we talked about earlier about contracts and the type of contracts you want to implement when you are making sure you want to hold your GC, speak to the fire and really what are your sort of tips and tricks about that?
Joseph Bramante (21:01):
Yeah. So one you’ve, you’ve got to be aware of the size of your project, right? So if you’re doing a small rehab and you’re your biggest kind of contract or your biggest scope of work is maybe, you know, a low below a million, you know, you might be okay with a smaller, you know, you gotta scale the contract accordingly to the scope of work. Uh, for us, we’ve got an $8 million rehab we’re doing on 220 units. So we’re doing a monster rehab right now and I’ve done other large rehabs as well. And so the real key is make sure you’re one size in the contract to fit the scope of work you’re doing. Uh, and then number two, there’s clauses in there, you know, and you know, the standard kind of construction. I forgot. What, w what is the name of an AI M uh,
Reed Goossens (21:51):
Architects connects Institute at the American Institute of architecture has a stock standard bunch of contracts. Yeah. Sort of keep
Joseph Bramante (21:59):
You can use that one. You can, we, I don’t think we use that. We use a slightly different one. Uh, but I have seen that one before, uh, talk to an attorney, try and get you an affordable attorney, but they’ll have an option for you. Uh, but some commonplace things that you want to want in your contract is, uh, one, you want to have a schedule at least a preliminary schedule for what’s going on. And I think, uh, for us, you know, one of the things that we’ve done is, you know, it’s, it’s how you do this schedule, right? You, some people just want to do a schedule and they do a very loose schedule. And I think, you know, that you’re going to start all these units, but one of the trips that one of the tips that I’ve discovered is, you know, when you’re doing these, you’re doing your schedule.
Joseph Bramante (22:39):
You really want to, if it’s a big rehab, big entry or rehab, you want to group your units. So you say like, we’re going to do groups of 10. So you’re going to be taking out 10 units at a time versus just giving your GC every unit as it comes free. Because if you do that, you’re going to be asking for trouble. Uh, because now he could potentially just have all these units tied up. And, uh, it’s hard to track an individual unit, but it’s easy to track a group of 10 units at a time. So group your units, when you’re doing a schedule and then other ones and others be flexible, don’t try and get it right on the first one. So, uh, the reason I say is you can do, what’s called a re baseline, and we’re doing one right now, actually. So we had this, this big rehab we’re doing, we did a preliminary schedule, we put in a contract, but then, you know, the first say three to six months of any rehab you’re going to do.
Joseph Bramante (23:29):
You’re learning a lot about that property. This is the first time you’ve really kind of stepped foot on it and really gotten behind the walls. And, uh, and so there’s a lot of discovery of what’s going on. And so it’s okay to rebase line and, and get things back in order. So, uh, so just, don’t, don’t kind of think you have to get it right the first time on this schedule. Uh, and then the other would be on liquidated damages. So LDS as they’re called, uh, is kind of your, for lack of a better word. You’re, you’re kind of stick to, to get there, to enforced, uh, the GC with and ensure that he hits those targets, because if he takes down 10 units, for example, and he just takes his time and it takes them three months to turn those units. When he original schedule said, one month, it’s costing you a lot of money to have 10 units down for three months.
Joseph Bramante (24:17):
And so you’ve got to have a mechanism to, you know, kind of call back some of that money that you lost by those units being down. Now that said, as soon as you mentioned this word to any kind of a competent GC immediately, he’s going to go into defense because a lot of people use this as a very kind of in a negative way as a, as a way to literally beat the GC over the head. And, and sometimes you can use it and try and tie them into a really tight schedule that, you know, they can’t meet just so that whenever they break it, you can then get money back on the back end. And, you know, really don’t recommend doing that. They probably could help you financially, but it would hurt you your reputation, you may, and you’ll probably never do business with that GC again, and you’ll get a bad name and he’ll tell all his friends.
Joseph Bramante (25:04):
And so just don’t do that. Uh, it’s, it’s a relationship you’re trying to work together. And all it is is just a mechanism that you’re both agreeing. And then like for us, we’ve got the scheduled dates, say it’s 30 days, and then we’re going to add in, okay, if it’s not done two weeks after that original 30 days, then the liquidated damages starts. So we’ve got an additional buffer on that. There, we’re trying to show good faith and work with the GC and, uh, and get it done on time. And then if it’s late, you know, for us, we just simply charged what that unit would rent by the day. Uh, I used to just take, you know, for the month divided by 30 and that’s per day, what we charge for every day that the units not turned back over to us. Um, but it’s, it’s two ways, right?
Joseph Bramante (25:52):
So you also have to be responsive to the GC. So after you’ve turned a unit over the next responsibility for you is to make sure that you’re punching it on time. Um, and so for us, you know, we, we’ve kind of given ourselves three days to punch every, every group of units that he’s turned over. Um, and you just work to, to not get in that situation, but at back to re baselining. So we got into this and for us on this, uh, 220 unit property, we’re renovating, uh, the day we took over. So like six hours after we took over Houston, got hit with the flash flood. And so we lost with 20 units go down automatically right out of the gate. And I was never part of the plan. We were actually supposed to start three months after closing, we were going to take that time to further refine and develop our plans and say, we were just immediately hitting the ground running, which caught a lot of us kind of off guard.
Joseph Bramante (26:49):
But nonetheless, that was the situation we’re in. So we went in, made best efforts. We got in, we do, we had to due to the flood units, started renovating units and, uh, quickly things started getting out of hand. You know, it happens, you got a lot of things moving on. We’re making adjustments, we’re changing the rehab to the interior, wind up doing a slightly higher rehab than we originally thought, but that’s where we had contingency for which I’ll get to in a second. Um, but that said, you do a rebased line. You kind of hit the reset button on all of your LDS and say, okay, we’ve done this for three, six months. We know what it takes. You know, I can show him, Hey, look, you’ve been taking, we said 30, but you’ve actually been taking 60 days. Now, that’s going to be very expensive for you.
Joseph Bramante (27:31):
And I’m not trying to get money out of LDS. So let’s figure out what is a realistic time that is going to take you to get these units both for our perspective and yours. I need to know. And our operations team needs to know that once you’ve taken over the units, that they can lease it and those units will be ready to them in 60 days for people to move into. Um, so that, that’s how you kind of use a rebase line with LDS and just want to check your pulse right here. Read, am I saying everything correctly?
Reed Goossens (27:58):
No, you say you did. You’re saying everything great. I want to add probably two things in there, uh, which is really important. And, and for the listeners out there, because it depends on the, you mentioned grouping and blowing and going right in your, on your one, your work, but you’re doing heavy value value, add rehabs, right? We’ve done that on a few deals. It obviously hits your occupancy a lot. So you have to be very careful of that and it will drop like a rock. Uh, if you’re not a, you have an underwritten to that and you’re, and you think I’m just going to eight to 10 a month terms, um, then you’re, you’re laughing that you think you’re going to maintain a 90% occupancy. Um, so it’s, it’s horses for courses and we’ve, we’ve got assets now, newer assets that we do a slower burn to keep that plus 90% occupancy.
Reed Goossens (28:45):
Um, but also to add to that, to liquidated damages is most of these GCs, you know, you’re not dealing with the big dogs who, you know, do a hundred million to $200 million worth of general contracting a year. You’re dealing with, maybe they do maximum 10 million a year. Like there’s a sort of 10 to 15 million a year, maybe 20 to 30, if you’re lucky. So you’re not like the old things that you aren’t going to get any money I’d been worked for developers, and it’s gone south, and these are big dogs and they have not, it’s really just sort of been a Rattlestick to them. You guys just had a yardstick. You don’t actually th th th the contract so that the owner doesn’t actually get any money out of it. It’s just like to get them to the finish line. And you mentioned that the escalating LDS as first 30 days, et cetera, actually, we got a two week buffer.
Reed Goossens (29:33):
You give him a notice of two weeks, and then you’ve got a 30 day that’s X price, and then it escalates to 30, 60 days. And anything over 90 days, you know, you probably want to terminate this contract and find someone else. So, um, yeah, but I think it’s really good stuff. I just wanted to add in those sort of different courses for courses, because they’re all, there will be different ways in which attacking and managing the construction in order to best meet your business plan, because that is the most important thing as a, as a construction manager, as an owner, as an investor, to make sure you’re sliding in the right GC to suit that business plan to, you know, whether it’s blowing and going 10 units a month or 12 units, or it’s more of a slow and steady burn. So I just want to add that
Joseph Bramante (30:11):
In it. Yeah, no, absolutely. And just to build on that, um, yeah, so we, for these big rehabs, we’re looking at 24 to 36 month durations for that very issue of vacancy management, because it is a big deal and it will have a tendency to kind of re run away from you, particularly because once people start seeing what’s going on, if you’re doing a big lift, I us we’re increasing rent $500. So the residents are already kind of get a sense that they’re not going to able to afford to live there. So they’re just going to, you know, they do, they think they’re doing you a favor by skipping out. They’re actually hurting your books because you’re depending on their cash flow. And so you’re in a weird situation cause you’re having a backfill with the same previous profile that you’re trying to renovate and go to and put in trying to revert and go to a higher profile.
Joseph Bramante (30:59):
So it’s, it’s definitely a juggle that you’re doing and then the other issue, uh, or not issue, but it’s other comment is on those liquidated damages, uh, regarding the size of the GC. Absolutely. You can, uh, I mean, if you really wanted to you, and if these guys really screwed up, I mean, you could potentially put some of these guys out of business. I mean, it’s, it could be, and that’s not the intent. And if you let it get to that far, then shame on you, not shame on them because it’s, you know, way ahead of time that this thing is out of whack, you should cancel that contract right away and up with a better solution. It’s the intent is not to let this carry out for the full term and then be like, oh, well, well, liquidated damages is $2 million. So I need to check now, um, typically what happens is they kind of comes out of their retained, so they get a 10% retention and they would, you know, you’re going to draw down from that. Um, but hopefully will never exceed that retention. So,
Reed Goossens (31:51):
And one thing I want to just jump in there and add is just on a, once you do get off to the races and you start to develop a, what I like to choose for the interior renovations. And it can scale from heavy to light up is let the JC do a couple and get to a, a baseline price. So for the one bedrooms, it’s X into the two bedrooms as Y. And he may make some money on some years, but he might lose some money on some units. And for me, it helps me with the, with the management, all of it, cause it was like we said, it was a dollar, a square foot. So if students still flooring, I don’t want to say adult 50, you know what I mean? So like really squeezing them and giving them that the volume, they can really get their crews going in there and blowing and going and making sure you get that really stock standard price. So next time around when you’re doing deal number two and three and four, it’s just rinse and repeat like, you know, exactly what I want and we’re going to put it in this price. You’ve obviously got to do a couple to get you going. Um, but, but overall we want to get to a standardized price, which I think is super important as well from a management point of view.
Joseph Bramante (32:53):
Yeah. That’s a hard thing to do with, I mean, the GC should know what his prices are already. He should be able to, you know, he should know, based on the square foot, he’s paying so much per square foot, uh, kind of similar to that as you know, the concept of tests units. So like for us, we did two tests units, um, with kind of very similar designs. Really. We were just kind of designed spec and make sure that we liked it because for a big rehabs, you’ve got designer, they’ll go in and know, do a full rendering for you, scope it all out. We move the walls around whatever. And we, but until you actually see it completed, you’re not really sure if you’re going to love it or not to test you and as are completely different of each other, I got completed or finishes and whatnot, and they’re just going to stay that way.
Joseph Bramante (33:33):
And then from those two, we made a final version and that’s what we set the contract on and move forward. And that process, you know, so we spent 60 days on two tests, units finalizing it, you know, making sure we liked it, et cetera. But then from that point on, we did a change order. He set the contract based on that going forward. And that’s how we were at a lock-in prices and lock in the timeline, et cetera. Um, so test units I’d say are very important when it comes to doing big rehabs because it’s just, you know,
Reed Goossens (34:03):
The same product, right? Like you’re not, you may have two different types of cabinets, but look, let’s be honest. We’re even in class item units and adult class, I, at the end of the day, even with class a units, you still may be only going to have a two time different. It comes in, the Patriots might have a dark cabinet and a light cabinet. And really, if you’ve got 200, 300 units, they’re going to be like, these things are being built. So they stack, so all the one bedroom stack and all the, all the plumbing is stacked on the one wall. Um, so the bathrooms are Bobby Shaw, the kitchens are above each other. Uh, and you don’t really, it’s not that complicated to go and standardize a price in order to get you to a quicker finish line. Because I think once for me, at least the way I like to manage all of my extra one JC profits, I don’t, I don’t want to look over your shoulder every 30 seconds.
Reed Goossens (34:48):
And if you can get to a price that I’m happy with, you know, 40, $4,500 a unit, or really like rehab or $12,000 a unit on a big rehab. Um, and it makes my budget and I, and I’m actually sort of, you know, I’m holding some back, I’m telling you what my budget is, but it really I’ve got some, some fat in there to me. It’s like if he’s making money good on him. Um, so I think that’s really, the other thing from a contract point of view is, um, guaranteed maximum price. Do you use G GMP?
Joseph Bramante (35:16):
We’re using lumps, it’s all lump sum contracts. So there’s not, we’re not doing reimbursable. Got it, got it,
Reed Goossens (35:21):
Got it. Got it. Cool. Are you at any stage wanting to bring GC in house?
Joseph Bramante (35:26):
I have GC in house. So try our construction launched in January. How’s it going? It’s gone. Well, I mean, COVID just kind of screwed things up or I said, nobody’s renovating, nobody’s buying. So it’s not a good to have a construction company right now. Everybody’s just sitting on their money,
Reed Goossens (35:42):
Self, or you just, you know, small team and just getting, you know, still getting the third-party GS, uh, third party vendors in like painters and flooring guys and GE and demo guys.
Joseph Bramante (35:53):
Um, I’m not sure I understand the question.
Reed Goossens (35:55):
So self-performing meaning you have a crew of people that, you know, can do everything from a to Z a true GC.
Joseph Bramante (36:02):
Yeah. Yeah. They’re subbing it out. So we’ve got to go. He has a group of, he has his kind of main guys that are in house, and then he supplements those with subs. We’ll add subs based on the size of the project and based on the volume of units we have at hand. Uh, but he’s, he’s hiring and firing upon, been through, you know, a dozen different subs already just on this one project. So he’s out there constantly monitoring progress and performance on subs, which is what GC, that’s what they’re for. That’s his that’s his main job is make sure these subs are doing their job on time with good quality. And
Reed Goossens (36:38):
That’s the hard thing with, with, with subs. And I’ve definitely experienced it here in LA and definitely in Texas is these Sotheby’s, uh, the, the sort of very cashflow orientated in terms of their parents pay check to paycheck. And when you slow down a little bit, I know I’ve got to give, I’m keeping my GC at a five unit per month minimum clip, because if I don’t have a good lesson that then he starts to struggle because guys was to walk to other jobs. You know, you get guys who go get paid two bucks more an hour, and they’ll they’ll excuse my language will off. So it’s really important to manage that sub base in order to make sure the job is, you know, they’re being paid on time and volume to get to complete the job. But at the end of the day, subs can make or break the job. I’ve been on jobs where the electrician sub just went bankrupt and he’s like, we’re going to replace you halfway through our jobs. Like, oh my gosh, that’s that takes time and energy and completely stops the work and stops the flow of electrician and the drywall or in, and the plump, you know, all that sort of stuff. So it’s very, it’s a juggling pace and I’m, I’m, I’m, I’m glad to hear that you brought it in house, which I’m sure you’re learning a ton, right. As a, as a drug.
Joseph Bramante (37:39):
Yeah. Well, it’s brought in house, but it’s, uh, we’re still using the same GC we’ve been using. So basically we just kind of partnered with the GC that we’ve been using. So I’m not doing the work. It’s really, it’s just a name change. Uh, we kind of franchise the triarch brand, so to speak with our own partnership agreement for it. Uh, but, and I’m just supplementing and helping him grow, try our construction. But from a day to day, it’s still his standard systems. And cause production’s a different animal, you know, like we do project management, but they’re boots on the ground, like hardcore project management. We’re, we’re up here at this higher level. So it’s different, different types of project management. And
Reed Goossens (38:22):
For those people who missed that, that’s very smart. What you’ve essentially done is go to Jay JV with an existing contractor who has these systems in place. And he’s a little black book, which is what you’re paying for, who have all those subs in there. Right. And that’s what you want to get access to, to make sure that he’s got six painters, you know, six different painting companies that he can call upon. If one stuffs up a different roofing company, like all the different trades that you want to go in and just boom, boom, boom, boom, boom, and make sure you’re negotiating directly. So that’s awesome stuff, dude. Look, I want, uh, I could talk to you for hours on this sort of stuff. It’s, it’s a, it’s a cool topic. Obviously I’m, I’m geeking out about it. Um, but I do want to get to the end of the show. And at the end of the show, we do a lightning round called the top five investing tips, ready to get into what is the daily habit you practice to keep on track towards your goals?
Joseph Bramante (39:06):
Daily habit might seem like it has nothing to do with anything as I was to go to gym in the morning, every morning in the gym, 5:00 AM and phones off. It’s not with me. And it’s kind of my meditation because I just get to think about the day what I’m going to be doing chorus while I’m, you know, doing my sets and, and whatnot. But it’s, uh, I, I have a lot of aha moments in the gym when I’m just quiet in my thoughts and, and I, I’m not a headphones guy. A lot of people are in there with their headphones on. It’s just silence. I have a lot of,
Reed Goossens (39:42):
You’re an odd cut from the same cloth. I don’t run with headsets. I don’t workout with headsets. I mean, literally no phone whatsoever. I see other people just like scrolling, what was it getting hurt and finished? I want to use the bench.
Joseph Bramante (39:52):
Yeah. They’re working their thumbs more thing in the gym.
Reed Goossens (39:58):
Love it, man. Love it. Question number two is who’s been the most influential person in your career to date
Joseph Bramante (40:02):
Influential person in my career to date. Hmm, that’s a tough one. Uh, I got to think about that. It’s, I mean, it’d probably be my two partners, you know, we’ve, we’re partnered, uh, together back in 2013 and they’ve really kind of, they’ve brought so much property management experience, uh, and kind of mentored me and show me what’s possible. What’s not possible because you know, as, as you know, I came from oil and gas, Exxon mobile. And so we’re trying to geek out and do all these things that we learned and the engineering world that then the project manager world that, that don’t necessarily apply to multifamily. And then also just, you know, we all watch podcasts and we see all the advertisements for all the different, you know, thousand different marketing or whatever things you can do. And it’s very easy to get distracted in this industry. Uh, and so to have, you know, two veterans like that, just kind of help guiding the way and keeping us focused on what’s possible also is what properties, you know, I, I tended to be a bit, uh, or optimistic on what’s possible with some properties when I started out. And they, they were pretty good at keeping my feet to the fire and letting me know point blank. No, we can’t do that. Or yes, we can do that. So
Reed Goossens (41:24):
Right. No. And those roads rose tinted glasses on mate as a, as a young buck. Now I love it. Uh, question number three is what’s the most influential tool in your business. And when I say tool, it could be a journal or a phone, or it could be a piece of software that you use on a daily basis. So what is it?
Joseph Bramante (41:41):
Um, you know, we, we use Smartsheets quite a lot. It’s pretty impressive software. And honestly I used it to not purchase other softwares. I see other software I like, and I’m like, Hmm, how can I do that in Smartsheets? And I go and I do it. And so that one little piece of software has allowed me to create a bunch of other pieces of software and we’ve come, we completely automated our entire, uh, a lot of our company, a lot of our weekly reporting is all done through there. I’ve got a dashboard I can see on a weekly basis how all the properties are doing, and they all get ranked from number one to number 11 and, uh, shows us, you know, you don’t want to be number 11. So it’s always going to be number one. And if you’re at the bottom, we’re going to be looking at you harder. So, right,
Reed Goossens (42:27):
Right. No, I think that’s awesome. It’s for those people that aren’t as spot sheets, it’s sort of a glorified online Excel spreadsheet with scheduling capabilities and linking capabilities and tagging capabilities. It’s, it’s, it’s quite, it’s quite powerful. Um,
Joseph Bramante (42:41):
Highly recommended if a sauna and Excel had a baby.
Reed Goossens (42:46):
That’s exactly what it is. Yeah. A hundred percent cool. The question before is in one sentence, what has been the biggest failure in your career? What’d you learn from that
Joseph Bramante (42:53):
Failure? Um, yeah, I mean, Exxon was a pretty big failure. Uh, it’s the anniversary of that’s coming up on the 18th of July. So it’s, uh, eight years ago. So it’s, it was a, I mean, it was one that I remember back on, on the everyone annual basis. So it’s, yeah, that was one of those failures that I beat myself up because me getting fired is never a good experience and people have a tendency to take, to put, make it about them and they all, I was a failure, you know, it’s never it’s man, it’s still, it’s hard to explain, but being told that you’re a failure or an actually failing at something, especially for like myself, I graduated top of my class. I was always winning my whole life. And I was the first, you know, point blank. You failed kind of, uh, experience that I ever had.
Joseph Bramante (43:46):
And that changed me quite a bit. I dropped a lot of ego after that. And it also, because I was at that point, uh, I had owned a real estate. I don’t my first apartment complex and it was negative cash flowing. I had didn’t have insurance on it, or the interest I had was a scam. And I just recently got notified that I had a speced this on it. So it was, it was just kind of the nail, the last nail in the coffin for me when I lost that job. So that was a big learning experience was, uh, uh, what’d you, what was the, what
Reed Goossens (44:20):
Was the number one thing you learned from that?
Joseph Bramante (44:23):
Then one thing I learned from that would be, um, you know, I learned a lot of things from egos one. Yeah. Let’s just stay on ego, you know, when you, and maybe it’s just cause I was 25 or 26, you know, you, you feel a bit invincible. And I think it’s good for people to get kind of checked so to speak at least once in their life and let them know, no, you’re, you’re normal, you can be hurt. And I think at that point, I, I felt pretty invincible my whole life, because nothing had actually really hurt me that much. I’d always, I’d been through some hard times, but I’d been able to maneuver around it. And just like in this one, I maneuvered around it. And that was a thing I learned that I just leaned on my perseverance, you know, like the next day I dropped 10 grand joined a real estate group. I didn’t, I was hurt for a little while, but I wasn’t going to stay down. I found a solution. I got out of it. Um, and so I learned I was stronger than I was. So, you know, it’s one of those things that you think that man, you lose your job. It’s the end of the world and know it. I lost my job on a negative cash funding property. I’m still here. So.
Reed Goossens (45:31):
Awesome. Awesome dude. Well, last question is where can people reach to continue the conversation they want to be in your sphere? Where do they go?
Joseph Bramante (45:38):
Uh, so just reach out on LinkedIn. I’m pretty active on there. Uh, otherwise it can go to our website, try our corrupt.com. There’s a dozen different options to get in touch with us. They can get in touch directly with me or they want to get in touch with, you know, our construction team or our property management, whatever, uh, there’s made of avenues get in touch. Otherwise it can just send email to info at [inaudible] dot com and we’ll get you routed either to me if you’re trying to get in touch or somebody else at the company. So. Awesome.
Reed Goossens (46:09):
Awesome. Well, look, I want to thank you so much for jumping on the shutter. Those will reflect some of the things that I took away from today’s show just to summarize it for the audience. I think the biggest thing for me talking to you is your ability to adapt to the situation. Obviously adapting to Australia, adapting to Papa, new Guinea, adapting to the failure of a big fine, constantly adapting and changing as you’re growing, I think is really, really important. And maybe having that failure at the beginning, when you’re 25, you needed to sort of to be checked at the door to make sure you’re keeping those boots on the ground in terms of all the technical stuff. I really love what you’re doing in terms of making sure you’re grouping the units together and getting the GC on board and making sure you’re holding this he’s, uh, he’s he’s he’s feet to the fire in terms of I liquidated damages. And for those people that miss that liquidate the averages is backed into what the monthly rent was divided by 30 per day. So I think those things have been some of the big things that I’ve taken away from today’s show don’t leave anything out.
Joseph Bramante (47:03):
No, no, I think that was, we covered a lot, so. Awesome.
Reed Goossens (47:06):
Awesome. Well, look, I want to thank you again, enjoy the rest of your week and we’ll catch up very, very sentence. Well, they have another cracking episode jampacked with some incredible advice from Joseph. He is a wealth of knowledge. If you do want to get in touch with him, please get up and check him out on LinkedIn. He’s very active. That’s how we met. Um, and he he’s really cool. Got down to work. So go check him out and check out what he’s doing with his team down. And then in the Houston. I want to thank you all again for taking some time out of your day to tune in, to continue to grow your financial IQ, because that’s where all about here on the show. And we’re going to do it all again next week. So remember be bold, be brave and go give life a crack.