Andresa Guidelli (03:17):

But one thing that I want to make sure your audience understands this, we always have lack of money, okay? Every time that we are starting or growing or pivoting our business, scaling our business, going to a different strategy, there always will be a, quote unquote, lack of money. All I want you guys to understand is that this is the game. You cannot use that as an excuse not to get started or not to scale your business or not to grow your business. It is just part of the game.

Andresa Guidelli (03:50):

How you do it, that is a different story that we can talk more in details. But just saying, “Oh, I don’t have the money and I’m going to just continue working on my W2 for the next 10 years to save money and then invest.” It’s just not going to cut. So there’s better ways to do that. And I know that a lot of us, or majority of us, don’t learn none of this in school. So it’s just a new concept. So you’re basically in kindergarten of real estate. So it’s just a completely different world that we don’t talk too much about.

Robert Leonard (04:23):

At the very beginning there what you mentioned was the exact definition of what the B-R-R-R of BRRRR stands for that’s, buy, rehab, rent, refinance, and repeat.

Andresa Guidelli (04:34):

Rent, yes.

Robert Leonard (04:36):

So that’s exactly what that BRRRR, in case you’ve never heard of that in the audience, if you’re listing, that’s what the BRRRR acronym stands for. If someone is purchasing a property that requires a rehab, there is likely no shortage of things that could be fixed. Some may be needs while others are wants, and some may provide significant value while others are just money pits.

Robert Leonard (04:58):

When someone is looking to acquire a property to BRRRR, how can they determine which items should be fixed and which ones should be skipped when creating their scope of work?

Andresa Guidelli (05:07):

It’s very simple actually, but it requires a lot of effort prior of you even looking at a property. That is too late when you’re just there and they’re trying to figure it out and you already bought the property. So before you even buy a property, I would like your audience to go out to open houses and see what they’re seeing, look around. But I want you to look with different types of eyes, right?

Andresa Guidelli (05:33):

When you go inside the bathroom, look at the type of fixtures, the type of tile, tub, everything what’s going on around. Do they have finished basement? Garages? Roof decks? What is it in that property, right? Where most of the laundry is located? All of it. And then I want you to observe those that sold quicker or are being rented quicker, depending on your strategy. Look at those that sold or rented extremely fast and look at the pictures. You’ll see a commonality among them.

Andresa Guidelli (06:05):

So that is exactly what you’re going to do. You’re going to look at your competition, not your competition but your referral references, and really copy that. There’s no need to reinvent the wheel. I’m not a designer, I am not. I’m a real estate investor, plain and simple. I put money in and I want the money back. That’s for a return, right? It’s very simple. So if you are like, “I don’t want to spend time here designing it and picking a tile, a chandelier or whatever it is.” Your ARV or after repair value needs to be super high for you to spend time on it.

Andresa Guidelli (06:44):

If it is [inaudible 00:06:46] in and out three-month, four-month rehab, here in Philadelphia, depending on where it is, it’s very simple. 1500 square feet house, three to one bedrooms to baths, in and out. I won’t spend the time. I have been using the same paint color since 2011. And I always get the same answer, same feedback from people, “Oh, I love this paint color. It’s not gray. It’s not green. It’s kind of like sage.” I was like, “Yep.” “And I love it.” “Yep, I know that you do. And all the other people that bought my houses before also did love it.”

Andresa Guidelli (07:24):

So go for it. And when you are doing it, I want you guys to start creating this finishes list. Go create the finishes list, which is your item. Let’s say I bought this faucet here, here’s the link where I got the faucet, the price, the quantity, the picture of it. Because guess what? On your other rehab, the next one, you don’t need to do it all over again. You just go to your Home Depot or Lowe’s or whatever account you have and you order all those things again. Save a lot of time.

Robert Leonard (07:55):

Do you think people don’t do that? Because let’s just say they do five deals, not necessarily sick of seeing that color, but they think they’re so used to seeing that color, they’re like, “Oh, I need to switch it up.” But what they don’t realize is that you mostly have different buyers for every property. So it’s brand new to that. It’s not new to you, but it’s new to them.

Andresa Guidelli (08:12):

Exactly. I’m sick and tired of the color to be quite honest. Sick and tired of the color. If another color comes up, great. But this is a business, I don’t need to like it. The buyers like it. And if a property sold prior of being done and it’s happening over and over again, and I keep getting the same feedback over and over again about certain tiles, certain finishes in the bathroom and the kitchen, I’m just going to repeat that.

Andresa Guidelli (08:40):

I’m going to all obviously look at the trend, what’s going on. Change the color of the cabinet, absolutely. Give a little differentiator with a back splash, 100%. That doesn’t take too much of time. But I’m not going to redesign every single property, that is insane amount of time.

Andresa Guidelli (08:57):

People need to think about the cost of the rehab, not in terms of the money itself. There is a monetary amount that goes for it but also there is a lot of time that goes for it and a lot of energy. So add all those three, and that’s your final cost. I don’t need thing that takes a lot of my time, why? If I need to repeat the same thing over and over again, I should create a standard operating procedure for that. So somebody else does it. I don’t need to order all the stuff again at Home Depot, my team does. There’s no need for my brain, my energy to be there.

Robert Leonard (09:35):

And if you’re sick of the color, like you mentioned, you don’t have to paint your house that color. You’re going in these investment properties, right, it’s not your house.

Andresa Guidelli (09:42):

Exactly. It is just part of doing business. Think about people that sell pizza or sandwich. They are probably sick and tired of seeing cheese pizza, but they keep selling cheese pizza. Think about that, investors. It’s the same thing. It’s the same thing. Find what’s working around your neighborhood, what is selling quicker will determine what is your benchmark.

Andresa Guidelli (10:06):

Because the worst thing that you can do is to put your taste there that you think is amazing. And I’ve seen bathrooms from head to toe, everywhere, tile everywhere. It doesn’t sell. People don’t like that, at least here in Philadelphia. I don’t know, if you’re in Italy maybe yeah, but here, not so much. So look what’s going on around.

Andresa Guidelli (10:28):

And if I go to another state, let’s say I went to Texas a couple of years ago and I was looking at my friend’s house, they had this texture on the walls. And I don’t know if there is [inaudible 00:10:38] there, and I was like, “What about this texture?” She was like, “All the houses here have this.” I was like, “I would never know.” So if I were to do something there, I’ll do that texture. So it’s what is working in your market. You need to study your market.

Andresa Guidelli (10:53):

Investors lose money and over rehab because they don’t take time to study the market. They don’t do their due diligence. They don’t do a lot of work that needs to be done prior of even you start looking inside a house. There is a lot of work that needs to be done. Because if you don’t do that, if you don’t know your market, you don’t know what exactly you’re looking for, you’re going to be spending a lot of time going inside houses that don’t fit your criteria at all. So don’t even go inside if the outside criteria don’t make sense, financial sense I mean, don’t even waste your time going inside checking a house.

Robert Leonard (11:31):

We’re talking about the design a bit here, but I’m curious from a fundamental perspective, are there general items that typically add value and then others that are money pits? I know, like you said, tile might not work where you are, but it might be great in Italy, versus some of the stuff on the walls in Texas might be okay, but not where you are. So I get the design perspective. But I’m thinking about the rehab items, is it universal?

Andresa Guidelli (11:54):

Absolutely.

Robert Leonard (11:55):

In a sense like people love really nice bathrooms, is it universal across the US that people want nice bathrooms and nice kitchens? And do you need certain things or is that kind of even more specific to your market?

Andresa Guidelli (12:06):

Sure. I think bathrooms and kitchens, I will dare to say that is universal. I don’t know if there is somebody that already confirmed that, did a thesis on it. But I think it’s needless to say, if you are going to improve certain areas of your property, bathrooms and kitchens. But if we go to take a step back and go to the nitty gritty, we are looking into the HVAC system, the plumbing and the electrical. That’s very, very important.

Andresa Guidelli (12:35):

Sometimes it’s just a matter of, I’ll get technical here a little bit but don’t get confused people. So let’s say you have a 100 amp panel. It’s a very small panel, very used in the past. Nowadays, we have many, many more devices that goes into it. None of my houses can have that. It won’t support. So I always, I personally always take that out, install a new 200 amp panel. So that is something.

Andresa Guidelli (13:05):

The areas that I am rehabing, they require central air. So I don’t have a choice. I need to do a full gut. Probably the houses over here are very old, that’s what it requires. Now I can totally add a lot of value because the houses are very next to each other and there’s not much space, I can create more space by finishing up my basement, by adding a roof deck. Of course, I need to look at the regulations and zoning, the local areas, of course.

Andresa Guidelli (13:37):

But those are certain things that add value here, right? Finish basement. Garage, it would be amazing. Certain other areas of the country, not so much because they have space. So garage is like, yeah, everybody has two-car garage and a driveway. Over here, that’s not the case so a garage will totally add value. A basement and roof deck would add a ton of value. Certain areas, maybe a pool is really necessary because of the hot weather. Look at that area, what’s going on around. There are clues, you don’t need to really do much.

Andresa Guidelli (14:14):

See what’s selling around, what did they do to increase value? Look at how much did they purchase the property and how much they sold the property for. You already have all the comps there, right? One thing that I would say, investors need to be as good or even better there, running comps as appraisers. That is how things go. If you were to sell this property today, today in this market, don’t count appreciation. Don’t count the craziness that is going on around the market. Run your numbers as you’re selling it today and whatever comes along in the next four, six months that you’re going to be ready to sell, that’s gravy.

Robert Leonard (14:57):

And you’re investing mostly in the Philly area, is that correct?

Andresa Guidelli (14:59):

Yep. Yeah.

Robert Leonard (15:00):

Do you invest anywhere outside of Philly?

Andresa Guidelli (15:03):

Well we have larger apartment complex. We actually closed one yesterday in Kentucky and North Carolina too.

Robert Leonard (15:11):

Congratulations.

Andresa Guidelli (15:12):

Thank you.

Robert Leonard (15:13):

So you’re not doing just flips. You’re doing some larger rental properties as well?

Andresa Guidelli (15:18):

Yes. This was a 640 unit apartment complex, yeah.

Robert Leonard (15:23):

Are you BRRRRing those as well?

Andresa Guidelli (15:26):

No, no. We are holding those for average 5, 7, 10 years. This one is 10 years.

Robert Leonard (15:33):

Are they pretty much rent ready or are you having to do some rehab?

Andresa Guidelli (15:37):

No, our team is going to do a lot of adding value to the properties, it’s a big time add-value.

Robert Leonard (15:45):

Once it’s been determined, which items should be addressed and which ones shouldn’t, how do you actually find someone to handle that work? What are you looking for that indicates a contractor or handyman is someone you would want to work with or not?

Andresa Guidelli (15:59):

My jobs require general contractors because of the extensive of the work. It’s always good to have two or three crews, but I understand it’s very rare to do that. So your level of rehab will determine the level of the GC. You don’t want somebody, a GC that is really, really good at new construction, doing some turnaround for your rentals. And you also don’t want your handyman handling a full gut job. So you’ve got to do a match here. This type of project, this scope of work matches with this general contractor.

Andresa Guidelli (16:38):

Needless to say, you can totally see when you look at the properties that you are visiting around, you can see who did the work. Over here, we look at who pulled the permit. I can tell. By looking around, you can tell by the detail how this person was detail organized, you’ll know who pulled the permit for… And I’m saying this, but it’s weird. You hope that they all pulled the permit. If they didn’t pull the permit at that property that’s a red flag, but I’m sure people are doing what they’re supposed to.

Andresa Guidelli (17:10):

But looking at the permit, you can get the electrical, the plumbing, the HVAC guy, everybody. So if you see that, okay, they did a great job over here, took very good care of this house and he sold very quickly, who did this job? You can find contractors like that. Lots of referrals, meetups, local meetups and [inaudible 00:17:30] are very, very important.

Andresa Guidelli (17:32):

The investor meetups, we have right now, 56 plus across the country and in Canada. And that’s where we are going to meet other people, say, “Listen, this what I’m looking to do. Do you have any referral?” And really please take care of the referrals. Anybody that refers somebody to me, I don’t play with them. Because if somebody is referring a GC to you, they know how much that is.

Andresa Guidelli (17:56):

Sometimes I say I do not have any referrals because I do not know that person and I don’t want to burn the bridge with my GC. I only refer people when I know the GC and I know the person that I’m referring to. Because then, nobody’s wasting anybody’s time. And they do not come with guarantees, right? So there’s some red flags that you can see. You can schedule time to meet them at their property first, one of their projects first, because you want to see what’s going on in their property, it’s going to tell you a lot.

Andresa Guidelli (18:25):

If you visit any project they are currently working, you can see what’s going on around, how they’re taking care of it. What is the vibe? What is the energy that their employees are giving? They have all uniforms or they’re just food everywhere and just a mess? Or there’s nobody working there at three o’clock or 10:00 PM, nobody working, it’s a problem.

Andresa Guidelli (18:47):

I’ll never meet during lunch because then everybody’s having lunch, I don’t have the information that I need. So I meet at that time. During the meeting, you can tell a lot. Did this person arrive on time? Guess what if the person did not arrive on time, did not give you a heads up, that’s exactly what’s going to happen in your project, right? So I like when people respect my time, because I respect their time as well. And it’s very important.

Andresa Guidelli (19:12):

At the beginning of my career, I was like, “Okay, I guess he got late.” And then late, late, late, late, late, late, late. And then my project was late and my profit was lower. It’s just a snowball, one action. You’re looking for behaviors, constant behaviors. And they’re vetting you as much as you’re vetting them. So be prepared, know exactly what you want and what you don’t want there.

Andresa Guidelli (19:38):

It’s not that you’re going to tell them, “Oh listen, this is what it is.” You can share, “Listen, I have a scope of work in mind. I would like to walk through with the property, feel free to make recommendations and we can come up with a scope of work that we both agree to.” But they might say, “Oh I think we should just pull this wall over here because…” Or whatever. Say, “Ah, no. That’s not on the budget. Let’s just keep that wall over there.”

Andresa Guidelli (20:03):

So it’s a lot of back and forth, but it’s a waste of their time if they come and say, “I don’t have an idea what I want over here. Maybe…” You didn’t do your due diligence. You don’t even know if you want three bedrooms or two bedrooms. You got to have your mindset over there and make their job easier. If you have all the finishes picked, great, they don’t need to pick anything and they can estimate your job much quicker if you have all the finishes already selected. They know what you mean when you talk about the hardware. They know the level that you’re talking about.

Robert Leonard (20:38):

When I started to do my first BRRRR deals, I was doing these long distance. And it was important for me to have a real estate agent who was also an investor because I felt the same exact way that you do about referrals in that you don’t want to burn those bridges. And so I said, “Okay, well, if I can find a real estate agent who is an investor, if they give me referrals to people…”

Robert Leonard (21:00):

And I knew he owned, the agent that I ended up going with, I knew he owned a couple dozen rentals himself in the area. So I said, “Okay, well I can add ask him for referrals and if he gives me referrals, I know they’re probably going to be pretty high quality because he’s not going to want to burn those bridges. He has them work on his own properties and also we can use our weight, even though we haven’t done a lot of deals with them. If they do bad for us, the GC or whoever it is, electrician, plumber, they know that we would probably tell our agent and that’s not going to do well for all the business that he brings in.”

Robert Leonard (21:31):

So it was this kind of win, win, win situation around if you can get really good referrals, whether it be at a meetup group, BiggerPockets or your real estate agent, any way that you can get referrals I think that’s a great source.

Andresa Guidelli (21:43):

Absolutely, rock stars know rock stars, right? So if you have a great drywall person, they know a great painter and vice versa. I always like my HVAC plumber and electrician to know each other. So they get along and they don’t cut each others pipes and anything to make their way through. It’s very important to me. And sometimes you pay little bit more for it, but I’m okay with that because it’s reliable and it’s consistent work.

Andresa Guidelli (22:14):

Then I’m thinking about the other projects that are not going to take… It’s like, “Oh, same thing as the prior one here, nothing different, same finishes.” It makes the job much, much easier, right? But as you were saying, networking is extremely important. But mindful networking, you cannot just go to all the meetings and doing online virtual events and just exchange business card, quote unquote. Real intentional looking for what you offering, what you bring to the table, what you can serve other people too.

Andresa Guidelli (22:49):

Instead of just, quote unquote, picking their brain or getting referrals, ask them, “What do you need?” And I can see if there’s any way that I can help. So I recommend when you go to conferences, really try to meet high-level people, not quantity, focus on the quality of people, of those networking and mindful events.

Andresa Guidelli (23:11):

We have a conference coming up in June and we are focusing on mindful networking. It’s not just like, “Oh, what do you do?” Well, obviously I’m an investor, right? So we can skip that part. So go for what you bring to the table, what you’re looking for and what you can collaborate instead of just picking people’s brains.

Robert Leonard (23:32):

In today’s environment, really good contractors are hard to come by but they’re also just super busy. And even if you get referrals, sometimes that referral is busy and can’t necessarily help you out. I’ve had that be the case sometimes. So what I’ve relied on is just using Google reviews or any other type of review that I can find online of this person or the contractor. Have you had any success with relying on third party review sites to gauge the value of a contractor?

Andresa Guidelli (24:01):

Not really. I did not. That doesn’t mean that [inaudible 00:24:05]. But so far, no. I go directly and I make my own review. I make my own process. I go to their project. Then if it’s a good match, I invite them to come to my project. And then during the walkthrough, everything I’m observing. Are they taking pictures? Are they asking questions? Are they engaging with me as a team member? Are they in the boat with me here, trying to figure out how we’re going to do this together? Are they taking measurements?

Andresa Guidelli (24:35):

If they say, “Oh, I’ll send you an estimating in three, four days.” Then I don’t hear back from them. Or again, an estimate that is completely off with wrong information, with missing pieces and… They give you a clue. They gave you clues all throughout. We just see it or we just ignore them. And I tell you, you’re going to attract the level of contractors in general that you are prepared to handle.

Andresa Guidelli (25:02):

Sometimes you get contractors that are just going to teach you a ton of lessons. And you either learn that lesson or it’s going to keep happening over and over again. When you establish your criterias or boundaries, then you start attracting and selecting people that are not going to give you headaches. My non-negotiable is being on time. Simple as that. One of mine, I have others. But one of mine is being on time.

Andresa Guidelli (25:31):

And sometimes I was like, “Man, I really like that person, why he was late?” Now, not going to cut. It’s not that I don’t think about traffic and things that happen, people, I do. My thing is if I know that I’m going to be late, I see it. I can tell, right? I can do math on my phone. I call that person and say, “Listen, I’m hitting a ton of traffic here. I will be late.” That’s what I’m expecting. It’s about the communication.

Andresa Guidelli (26:01):

Now, if you’re constantly late, then it’s over. Because it’s just a behavior across the board. And I just don’t work that way. And it might work with other people that might be more flexible. But I personally, I think you can waste my money but when you waste my time that’s a big problem for me.

Robert Leonard (26:21):

I’m looking for similar types of characteristics about contractors. But what I like to do is, especially if it’s not coming from a referral, it’s a little different, but if it’s not coming from a referral and I have to find them myself, I tend to try to just work with the ones that have good online reviews. So if I have five to seven different contractors, I could work with, say there’s five or seven different electricians in the area, I’m not going to invite out the ones that have one or two star reviews.

Robert Leonard (26:46):

But if there’s four or five of them that have a ton of four and five star reviews, those are the ones that I would then invite out, to just save myself some time from dealing with the ones that historically don’t have good reviews. Because like you said, if people are late consistently or they do certain work for other projects, that’s going to continue for you. And so I feel the same way about online reviews. I just try to shorten that process for me by just bringing out the ones that already have really good reviews.

Robert Leonard (27:09):

At what point do you think, I guess in terms of the level of severity in a project, do you need to hire a GC versus acting as the GC yourselves? I think as an investor, we could hire the plumber, the electrician, the flooring guy, the finish guy. We could hire all these people ourselves or we could just hire a GC. At what point do we need a GC instead of doing it ourselves?

Andresa Guidelli (27:32):

In Philadelphia, the type of work that I do, I do not have the right to do that. I have to hire GC and the GC needs to hire everybody else. You always think it, but I understand there are other locations where that’s possible, right? It comes down to what do you want in five years? Do you want to become a GC? How much time does it take? Do you have the personality, the skillset and time required to manage projects?

Andresa Guidelli (28:01):

When I say personality, and I mean it, for everybody that hasn’t done personality tests, please do so you know what you’re really good at and things that you should not be doing whatsoever. Many people should not be managing projects. It’s not in them. They’d rather talk to sellers, build a rapport and having conversations with people.

Andresa Guidelli (28:23):

Managing projects, you’ve got to be thinking two weeks ahead at all times, high in organization. Many times you’ve got to be rough with the conversations that you’ll have with them. If you are afraid that people are going to, “Oh, I don’t know how to have that conversation.” Or, “I’m just going to not going to have it.” You’re not the right person to do it. And I don’t mean to be rude or anything like that. You just need to find the rhythm with the people that you work with.

Andresa Guidelli (28:51):

But if you are just that friendly butterfly, it’s not going to work. I’ll tell you right now, your project’s probably is going to go over time, over budget. And a lot of things are happening at the end. Really understand how much time do you have available to provide to the project? If you put systems and process in place, the other operating procedures, that time gets shortened as you go along, as you continue doing projects with the same people, much less.

Andresa Guidelli (29:24):

But as you are building, that’s a lot of time and effort that you need to put into it. At the beginning, I was doing five and at some point 15 projects at the same time. I had no other choice but systems and process in place, no longer desired to do that. I just don’t have the time to do that. And I want to work with high level GCs that require very, very little management. They can make a call on things and I don’t care, I want to get resolved.

Andresa Guidelli (29:58):

I no longer care about the details of certain things. Still the same high quality, the tile, the mechanicals will need to look very, very sharp. And I have no problem getting a hammer and hammering a drywall to say, “You’ve got to replace the entire thing. This patching work over here did not work.” And if I can see it a buyer can see it to. And when the buyer sees it, they’re going to say, “What else did they cut corners?” I don’t cut corners. There’s only one way to do things, the right way and do it. Do it the right way and I go from there.

Robert Leonard (30:33):

What are your favorite personality tests that people listening should go take?

Andresa Guidelli (30:38):

My favorite one is called PRINT, but this is very advanced. I will highly recommend it’s called Personality Index Assessment. Kolbe is another one. The most common one is JYSK. So there are a couple of different ones, but I think that personality is a very underrated tool that we need to really understand so we know if we’re the right person for the right seat and our partners are very good partners to us.

Andresa Guidelli (31:07):

You don’t want to partner up with somebody that is bringing the same thing that you are to the table. That’s a big, big time mistake. Then we’re both bringing the same thing to the table, there’s no leveraging whatsoever. Or you’re managing projects where you shouldn’t at all. And if you’re not playing the arena where you’re leveraging your strengths, you’re really costing a lot of money to your company.

Robert Leonard (31:32):

One concern investors have when working with contractors, especially as a new investor, is that they might get ripped off. There are various different ways that this could happen so how do you protect yourself from getting ripped off by contractors?

Andresa Guidelli (31:46):

There’s no guarantees, right? It’s all about… Even prior, all of the things the conversations that you do prior of giving the first check, that’s what it comes down to. So when you are signing a contract, you must have a payment plan attached to the contract. The payment plan describes exactly what the payments are related to.

Andresa Guidelli (32:11):

What do I mean by that? Okay, when you finish drywall, painting or whatever it is, there is a number attached to that. This way, that’s how banks work, right? Banks will not give me a draw until certain phases are completed. So if I’m using a bank, a hard money lender, my own cash, I don’t care, I use the same process.

Andresa Guidelli (32:35):

So we agree to a scope of work. That scope of work, it’s converted into a payment plan. So there is a deposit in usually five phases, and then the punch list, the final. And there’s values attached to that. And that can be flexible, let’s say, I had 8,000 concrete, but the weather was really not good for this here. So we’re going to pass concrete in another phase because it didn’t work over here. So now, because concrete is on phase one that you’re going to, for sidewalk not for foundation, for sidewalk for example, then you need to pay that.

Andresa Guidelli (33:13):

You only pay for things that were completed and installed. If the windows were delivered to your property were not installed, that means it’s not completed. When they are installed, then it’s completed. So it’s very simple. So miss or Mr. GC, do we agree that everything I’m going to make payments on, things that are 100% completed. And then here’s what happens, you will know very, very quickly if the general contractor is running a business as a business or not. Because people that are running a business, they have cashflow and capital enough to start the other phase, the following phase, before you even pay for the phase one.

Andresa Guidelli (34:01):

You don’t want to work with people that are waiting for that to start the other phase. They cannot order the kitchen cabinets because they’re still waiting for phase one. That’s a problem. You don’t want to fund anybody’s business [inaudible 00:34:18] and vice versa. So it’s very important that they have this schedule really attached to the payment plan. So all of those are conversations to have prior of giving the deposit.

Andresa Guidelli (34:30):

And the deposit changes. It’s not like this fixed thing, it’s all negotiable, right? I always look, okay, what will be done with this deposit? If I have a property that is a shell, there’s no need for demolition, no nothing. It’s very different than a property that hoarders were living there and there’s a ton of things that need to be done, right? The deposit will be different. So always look for what is going to be done with that money.

Robert Leonard (34:59):

I think that’s really important for everybody listening to hear. Because I think a lot of contractors require or try to require upfront payments or a significant amount upfront, 50% or 75% upfront. So I think it’s important for everybody listening to hear what you’re just talking about in terms of not paying until 100% has been completed.

Andresa Guidelli (35:17):

Yeah. And I did learn that in my first deals. I paid for folks and they run away with the money. There’s no motivation for them to come, especially when they’re doing multiple projects at the same time with other folks. Here’s what happens, if you do that, you’re actually not financing your job. You’re financing somebody’s else job. Because they didn’t manage the cash flow accordingly in their own company so they’re getting Peter to pay Paul and vice versa. So it’s a never ending thing.

Andresa Guidelli (35:47):

So you’ve got to establish all those nitty gritty situations prior of signing the contract. Have those conversations prior. Have those conversations prior. You don’t want to start having conversations about payment plan after.

Robert Leonard (36:04):

I’m guessing that you are able to compete with homeowners in terms of getting contractors to do work for you because of how much volume you’re doing. But I’m thinking about a little bit smaller volume or smaller investors who are doing their first BRRRR or they’re maybe going to do one BRRRR a year or two BRRRRs a year maybe. So they’re doing much, much less volume. How does somebody like that, a new investor just getting started, how do they compete with homeowners who need the same type of work done? Because generally speaking, homeowners are willing to pay the GCs and these contractors more money than an investor is for their same project. So how do we compete with those types of competition?

Andresa Guidelli (36:43):

Usually the general contractors that I work with don’t work with homeowners. They don’t have the patience for it, for them. They change their mind. There’s a lot of customization. So we are not talking about the same folks. I think it’s a law of average. You’ve got to interview more people and find what is the match for you. You won’t be able to pay for folks… At retail, it’s always higher, but you might not be looking for the same type of GC that they’re looking.

Andresa Guidelli (37:13):

You might come across people, but you got to find where are the GCs for investors hanging or how can you get referrals? Local meetups, conferences, where the investors are. You’ve got to talk to other investors to get those referrals. If you go to your aunt and ask her who did her kitchen, guess what? The price of your kitchen is going to be astronomical because it’s a retail price. That’s not what you want.

Andresa Guidelli (37:40):

And I moved to a new house and I look at a couple of kitchen companies over here. It’s just ridiculous. I was like, “I know how much all those things cost. Your profit is tremendous, tremendous.” It’s not even a possibility that I could work with those companies. You’ve got to look for folks that are already providing services for investors, that they know what the deal is.

Robert Leonard (38:07):

A key factor in successful BRRRR deals is the appraisal that comes on the back end. If that appraisal comes in lower than expected when the analysis was done on the front end, the investor might have more money stuck in the deal than they expected. If the investor does receive an appraisal that is lower than they expected, how can they challenge that appraisal?

Andresa Guidelli (38:27):

My first challenge, I didn’t even know that this was not a thing, right? That people were not going to challenge it. So the first thing that you got to do, if it comes lower than what you expected is request a copy of the appraiser report from the bank. And then you’re going to dissect it, dissect it every single line, check the number of bedrooms, bathrooms, square footage, location, every single thing, every single picture, and find the mistakes. That’s basically what I had to do, find the mistakes.

Andresa Guidelli (39:02):

In our case, they missed a bedroom. The square footage was off. It was just all over the place. He was using comps that were really far away from a completely different neighborhood. So I created my own report. And that does not mean that, okay, then the bank’s going to swap it and then go for it. That’s not the case. The goal is to say, “Listen, I found a couple of things over here.”

Andresa Guidelli (39:29):

You always need to build a rapport with appraiser when they come to your property. Have all your information printed for them, the comps that you use, breakdown of the rehab, everything, everything. And then send an email with everything too. Because many of them are going to take a ton of pictures, but I doubt that they have a specific folder with your properties name on it, where they’re uploading automatically all those pictures as they go.

Andresa Guidelli (39:57):

So at the end of the day, they saw, I don’t know, three properties, four properties. I’m not sure how many properties they see. And there’s a lot of freaking confusion if they don’t dump all that information that day over there, right? So if you provide clear information about your property, you’re helping them to do the right job. Square footage, numbers of bedrooms. And all the pictures, you label it. Bedroom number one, bedroom number two. So then they can compare with their pictures.

Andresa Guidelli (40:27):

So there’s a lot of work that needs to be done prior to avoid that to happen. But if that happens, you talk the person again and say, “Listen, I found a couple of things here. Would you mind taking a look at this report that I put together with some thoughts?” And if you already build a report with them, it’s very likely that they’re going to see it. Or if there are clear mistakes, say, “Listen, I saw one of the bedrooms were missing so I’m going to send you a report, would you mind taking a look and then we can catch up and address accordingly?” And then go from there.

Andresa Guidelli (41:00):

The first one, they raised my appraisal to $25,000 and I was able to pull a [inaudible 00:41:07] of $68,000. That $68,000 propelled me to invest again and again. And I have done this a couple of times. I think I’m closer to $300,000 that was not available to me and I dissected and I was able to get all that back.

Robert Leonard (41:25):

One of the other ways to get past not having enough capital as a new investor is to partner with someone else on a deal, but not everyone is interested in that. Some investors see it as a way to combine two people who don’t have enough capital alone so that they can get a deal done while others have no interest in partnerships because they don’t want to split the profits. Why do you encourage investors to embrace partnerships in real estate?

Andresa Guidelli (41:49):

To leverage. Leverage their time, their money, their skillsets. The biggest problem is that when somebody that does not have experience comes to an investor who has experience, you need to understand what is the problem that this investor has that you’re solving. You need to add something to the table, otherwise it’s not going to cut. So you’re not bringing the experience, you’re not bringing the money, so what are you bringing? Bring the deal. Bring this deal to the table.

Andresa Guidelli (42:19):

And my first deal that I brought to an investor that we did several deals together, I brought the deal to the table, to him. He had the experience and he had the financing for it. As I said, I had $68,000. That was not going to cut it to do that project, was a burned house. And then I said, “Listen, let’s go for it.” And I was really, really on point in terms of observing every single thing that he was talking to the GCs, every single meeting that he was with the GC, I was there too, observing, observing, observing.

Andresa Guidelli (42:54):

I gained a lot of money. A lot of money? No, a lot of time and experience by just observing what was happening there. At the end, I think I made $7,000 because my split was very little, because I did not bring too much to the table at that time. And right now, I look back and it’s like, “Oh my gosh, that was a harsh split.” Well, it was not. Don’t expect to say to an investor, “I’ll bring the deal to the table. You have all the cash, all the experience, let’s go 50, 50.” That’s not going to cut.

Andresa Guidelli (43:27):

I don’t care if I make zero. If I was inexperienced investor, I can make zero. I don’t care. I care about what I’m going to learn from this person. All the things that they’re going to see it that, “Oh…” All of that. It’s a daily lesson. You are in school basically when you’re doing that. And all the information that I gained from this investor, I was able to go to the second and third project with him. And then I took over the management because I already knew what needed to be done and he trusted me to take over that portion.

Andresa Guidelli (44:00):

And then my split started increasing until the point that I was like, “Okay, we don’t need that anymore.” Because then, it reversed. Right now, I have the experience and I have the cash too so what are we bringing to the table here? And each partnership evolves. You’ve got to understand what each person is bringing to the table. If you don’t have anything to bring to the table, I ask you to think again. We always have something to bring to the table, skill sets from other professions, anything. Boots on the ground, anything. Investors that have experience have two problems. It’s the deal flow and time, so how can we resolve that?

Robert Leonard (44:41):

When looking for a partner, what questions should someone ask the other person to help determine if it’s a good fit?

Andresa Guidelli (44:48):

Well, we got asked this very, very much so we actually put together a partnership sheet with questions you should ask yourself, questions your partner should ask themselves, and questions you should answer together. Because there’s a ton of them, right? You guys can go to therealestateinvesther.com/giveaway and you can download that for free.

Andresa Guidelli (45:11):

But in a nutshell, you really have to have, “Okay, if we partner up together, partner up on this deal and going forward together, what are your goals? What are you looking for? What you’re good at? What are you not so good at? What are expectations here? How about if we go over budget? Over the schedule? If the property doesn’t sell? If you get hit by a bus? If I get hit by a bus? If both of us get hit by a bus at the same time, what happens?”

Andresa Guidelli (45:38):

So all of those conversations, it’s very important to have it. And many people don’t want to have those conversations because sometimes they’re uncomfortable. I’d rather have them than go through different harsh partnerships that had to be break in the middle of the project because it really was not working. So that’s harder, much harder. So I would highly recommend to have those conversations prior.

Robert Leonard (46:04):

Not only in business or real estate partnerships, but in any partnership or relationship, resentment can be a big issue. How do real estate partners stop resentment in their partnership?

Andresa Guidelli (46:16):

Checking in, it’s always checking in. My business partner, Liz, and I, we build The Real Estate InvestHER community only able to do that because we really trust each other and put what we call money in the bank in our relationship. What does that mean? Is that we have weekly meetings, level 10 meetings, in a weekly basis. And then we have strategic meetings in a monthly basis where we answer to ourselves and to each other, what is working? What is not working? You’ve got to be honest. You’ve got to be honest.

Andresa Guidelli (46:49):

I don’t care what is it, you’ve got to share what is working, what is not working in terms of business, communication, money, all of it. All of it. We have different areas in our company as we grow. So we have teams that we need to talk about, what is working, what is not working with different team members? It’s much bigger than before, but we started very little. We started with our podcast, The Real Estate InvestHER Show, with $630 investment.

Andresa Guidelli (47:17):

So we started very little with one podcast, one meetup, and our projects in the backend because we are investors. So it’s having that trust and putting money in the bank is that you are spending time with that person and getting to know that person in completely different levels. So when things hit the fan, when there’s a breakdown, you have money in the bank. Meaning you can do a draw over here.

Andresa Guidelli (47:46):

People partnerships don’t fail because think about you’re going to the bank and you have zero balance there and you’re trying to withdraw a thousand bucks. There’s no money there. So if there isn’t trust with that person, did not spend time, did not build a relationship with that person, there’s nothing to hold back. You will break. You will break.

Andresa Guidelli (48:08):

And don’t expect partnerships to always be rainbows and sunshine. That doesn’t happen. But what you do when things go south is, “Okay, what can we take responsibility over here? What are the things that we’re going to improve and move forward? What do we need to shake over here in order for this to not not happen, but what are the lessons that we are learning from this situation?” If you don’t do this in a consistent basis, there’s no way you can grow a multimillion dollar company, neither build a team.

Robert Leonard (48:44):

Andresa, I really appreciate you coming on the show today and sharing all your knowledge with me and the audience. For those listening that are interested in connecting with you more after this episode, where’s the best place for them to go to find you?

Andresa Guidelli (48:56):

Sure you guys can find more information about The Real Estate InvestHER at therealestateinvesther.com or follow us on Instagram @therealestateinvesther. And I would love to invite you guys to join us on June 23rd and 24th for InvestHER Con 2020. We have five amazing keynotes led by Kim Kiyosaki, coming to Charlotte, North Carolina, and we have over 20 sessions. The best of the best in real estate, they’re going to be there. All the women that you’ve seen it from short term rentals to out-of-state investing. Those women are walking the walk.

Andresa Guidelli (49:38):

So I would love for you guys, if you’re listening, join it. It’s going to be a full circle transformation experience. This is not going to be the traditional real estate conference. We are pushing the boundaries on this one. And so I ask you to check the website, therealestateinvesther.com/investhercon for more information about the agenda.

Robert Leonard (50:00):

That sounds like an awesome event. I will be sure to put a link to that event, some of your other resources, your website podcast, social media, everything else that we’ve talked about throughout the show, the personality test, in the show notes below for anybody that’s interested in checking them out. Andresa, thanks so much for joining me. I really appreciate it.

Andresa Guidelli (50:17):

Thank you so much.

Robert Leonard (50:19):

All right guys, that’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro (50:24):

Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday we teach you about Bitcoin and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts or courses go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision consult a professional. This show is copyrighted by The Investor’s Podcast Network, written permission must be granted before syndication or rebroadcasting.