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Turn Your Hobby Into A Scalable Business Jeremy Rupp Robert Dana Design Chief Capital Concord Universal.

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Presentation on theme: "Turn Your Hobby Into A Scalable Business Jeremy Rupp Robert Dana Design Chief Capital Concord Universal."— Presentation transcript:

1 Turn Your Hobby Into A Scalable Business Jeremy Rupp Robert Dana Design Chief Capital Concord Universal

2 How many here need a motivational “rah rah” self development pump up session!? I’m one of those creeps that actually craves this sort of banter. I listen to podcasts and audio books like crazy to get my fix… Love it. To be honest in my humble opinion, that’s one of the most important pieces in starting and maintaining a relevant business. Gotta find a way to stay positive because things aren’t going to go perfectly everyday!

3 It might be cheesy or not wimpy, but getting pumped up about what you do, or want to do, is powerful for your mojo! Meeting and hearing people talk about real life experiences/lessons that are directly related to your goals is powerful… ask all of Jack Canfield, Tony Robbins and Zig Ziglar’s clients!

4 Who are you? Are you a hobbyist? OR Do you want your business to increase its volume? Or Is your business a full blown business already? What is your DNA??

5 Plan of Attack Our goal today is for you to discover if you should scale your business and how to do so if you feel that is something that you should do. **** This business is incredibly hard to scale! A lot of businesses are. Creating a relevant business over a long period of time is much more difficult than doing well for 1 or 2 years!!!

6 Who Am I? Jeremy Rupp  Colorado State University – Construction Management Degree  Built ~100 homes in 2 years  Earned Performance and Customer Service Awards  Professional Real Estate Investor  ~8 years  Have several rentals, ~100 Flips/Rental Turns, Fund via PPM, Licensed GC, New Construction, Wholesaling, Mentoring…  Specialties; Private Money, Rentals, Luxury Flips, Consulting, Education, New Construction, etc…

7 How I Got Started? Rentals: I started by using a “rate and term refi” to gain rentals. A strategy we still use today that helps us minimize our out of pocket cash. Flips: I started by doing one deal at a time. Now I’m involved with a few a month. Wholesaling: I’ve wholesaled about 40 properties…About half were to myself (from one company to another) to pull some profit off of the front of the deal. Development: We have 4 new construction projects going now; 1 on Lake Minnetonka, 1 in NE Mpls, 1 in Plymouth, 12 unit townhome project in NE Mpls.

8 Life Changing Moments  2005 - First Rental  6 rentals in 24 months  2007- Rental to Flip Model  ~3 flips per year  2008 - Flip to Flip/Wholesale Model  ~10 total per year  2009 - Flip/Wholesale to Flip/Wholesale/Rental  ~20 total per year  2012 - Move to MN, Struggle with GC companies  ~15 total per year in MN  2013 - Become GC, Sell Girard, Hire Admin, Get an Office  ~15 total per year  Now a licensed GC  2014 – Establish GC systems, PPM, Hire COO and Designer  ~20 total per year

9 The Hobbyist  1-3 Deals per Year  Average Income per Deal $10k-$40k  Annual Income $10k -$160k  Probably has a “real job” or is a GC/carpenter or running a business that needs work  Bookkeeping is a mess, CPA is lost in the sea of your books, LLC isn’t legit, insurance doesn’t exist, systems don’t exist, solo mission…. smartest guy in the room In my opinion this is a great way to make it big in this business if executed properly!! Have a full time job that allows flexibility or make enough money to manage and hire people to do most of work for you while utilizing the benefits of real estate… Or be a carpenter/GC and do 3 deals a year that make you $50k each… $150k a year isn’t bad!!

10 Should I Scale Tomorrow?  What does it take to scale a business?  A solid foundation to build upon  Solid team or ability to grow one  Mentor / Coach  Connections “It’s who you know and who knows you”  Ability to raise money if needed  Desire to continue to educate yourself FOREVER!  People who you could partner with  Ability to work ON your business not IN your business “If your business stinks it’s the last thing you want everyone to know about”

11 Foundation  Bookkeeping – the money coming in and money going out need to be accounted for so you can actually know exactly what you make on a deal  Legal Docs – LLC, insurance, etc… are you protected from the mountain of liabilities out there?  Systems – can you complete a project/deal from start to finish in your mind right now? If not, you probably don’t have a system that’s easily replicated and can be handed off to a new team member in order to scale.  Income – Do you have income worthy of building upon?

12 How does a deal happen? 1. Find deal (mls or private seller) 2. Evaluate it’s feasibility 1. ARV – Who decides on this? Realtor? 2. PP – Is this negotiable? 3. Fix – Who is the expert here? Can they be trusted? Will the work add value? 4. Sell – Realtor (~10%) or FSBO (?) 5. Money – Pine is 15% and 4 points 6. Holding Costs – Taxes, Insurance, Utilities, Snow/Grass, 7. Profit – 10%-20%? 8. MAO (Max Allowable Offer) 3. Inspect it to confirm Fix above. GC? Inspector? 4. Fund it. Pine? Cash? 5. Put down EM. Who has that if you have offers on 7 deals and each is $3k EM? 6. Confirm layout/finishes allowances along with budget and ARV. 7. Make PA “hard” 8. Pick all finishes/layout; move walls, windows, cabs, rough locations, etc 9. Tee up GC to start ASAP 10. Manage construction; When the cat is away, the mice will play. Timely GC and subs. 1. PM – run schedule and budget 2. Designer – pick out finishes/layout 11. Finalize house; the last 10% of every house seems to be the hardest. Find a way to minimize the stress at the end. It’s not easy…. Ask Wes. 12. Get ready to list 1. Realtor 2. Staging 3. Pics 4. Live on MLS 13. Send file to Title Company 14. Request Payoff from lender 15. Pray that your agent can manage the buyer’s agent since most are incompetent 16. Go to closing with a smile on your face!! 17. Do it over again!!!! 18. Review file to assure that all bookkeeping is in order to assure that you don’t overpay your taxes. 19. Call your CPA to minimize your tax implications; LLC as an S Corp, etc… 20. Call your attorney to make sure that your newly found assets are protected from our litigious world with a correctly set up LLC or similar. 21. Rinse and Repeat…

13 Who’s Involved? 1. YOU/Realtor/Marketing? 2. Feasibility expert(s) 1. YOU 2. Realtor 3. GC?/Designer 4. Realtor 5. Lender 6. YOU 7. YOU 8. YOU 3. GC/Inspector 4. Lender 5. YOU 6. Designer/GC/YOU 7. Realtor 8. Designer/GC/YOU 9. YOU 10. GC/YOU 11. GC/YOU 12. Realtor, stager, pics, mls 13. Title Company 14. Realtor/Title Company 15. You 16. You 17. You 18. Bookkeeper/YOU 19. CPA 20. Attorney

14 Who are you?  What expertise do you have?  Deal Maker  Realtor  GC  Designer  Lender  Bookkeeper  CPA/Attorney I have a CM degree so I assumed that I had expertise in construction. I did not have expertise in “value-add” construction. That takes time… a long time.

15 Your Team Have a full resume OR know which roles need to be fulfilled.  Do you have enough money to pay for EM?  Do you have a person to jump on deals when they come up?  Do you have an expert ARV definer?  Do you have a Value-Add expert? All roles need to be filled in order to properly scale your business.

16 My Team Concord Universal/Robert Dana Design  Kevin  Raise Money  Pipeline  Runs the books, communicate with CPA  Manage Lenders  Manage credit partners  Jeremy  Raise Money  Pipeline  Manage acquisitions/pre deal due diligence process  Municipality relationships on development deals  Oversee GC  Create budgets  Create floor plans  Resident Jerk when Wes needs me  Marketing/Education (like today)  Wes  Run all field operations  Subcontractors  Suppliers  Permits  Be good looking  Pete  Realtor  Don  ARV Master  Due Diligence Master  Workup Creator  Liz  Designer  Product Sourcing  Office Manager Title Company – Premier Title Attorney CPA  Systems  Deal Finding  Deal Turning  Deal Sales  Communication  Accounting  Correct Deal Flow

17 Mentor/Coach About a year ago, we hired a coach. We met once a month for the first 3 months. Then 2 months later and now it’s been about 3 months… Not many things are better than expert 3 rd Party, objective and thoughtful advice from your mentor or business coach. We meet our guy in a couple weeks. Good stuff. We waited wayyyyy too long to make this a priority. Do it right away! Expect to pay $200/hr or more. It’s worth every penny!!

18 Connections Who do you know? And who knows you?  Lenders  GCs  Subcontractors  Suppliers  Politicians  Successful Experts  Local Networking event leaders  Wealthy people

19 Connections Tidbit In 2011 I decided to create a group to put my networking on “steroids”. By sharing what I had learned with others over the previous several years I was able to increase the amount of people that I know and who knew me very very quickly. It took some guts since I was totally flying by the seat of my pants, but to this day, it’s one of the best moves I’ve ever made. I ended up teaching 56 classes in 8 months!

20 Raising Money You probably won’t need it right away, but at some point you’ll need the ability to raise capital in order to scale to the next level. Six $200k houses won’t fund themselves Kevin will be talking about how to raise money in detail after lunch… but know that you’ll need to feel comfortable “selling” your business to people in order to raise money.

21 Raising Money Tidbit If you have solid books, you can raise money in your sleep!? People feel better about investing in your proven business much more than your “great idea”. Hire a bookkeeper/CPA on Monday. A rocking P/L statement will take all your worries away, so do it now as part of your foundation.

22 Education FOREVER Most business authors, gurus and mentors have written about how imperative it is to continually educate yourself. A college education is nice, but in the real world things happen very quickly and continually educating yourself is now a basic part of your foundation… not a perk or extra. Podcasts, books, MNISS, local and national gurus, etc… Hone yourself into a finely tuned machine of a business during your career, not a stagnant know-it- all. Boring. Local and national events are going on constantly. Being here is a great start, but keep going. 1 per quarter is a great amount in my opinion.

23 Education Tidbit Podcasts – free, every subject on earth, amazing speakers and creepy powerful The Money Pillow, The Tim Ferriss Show, Jack Canfield, Robert Kiyosaki, etc… Large profile inspiration for free. Audiobooks – audible,, itunes, kindle read aloud feature. Great for people who drive a lot, plug in your iphone and get smarter!

24 Partners Most people don’t have a full resume to roll solo. Do you? I don’t. Which means you’ll need to consider a partnership of some sort. Maybe you need a money partner? Maybe you need a GC partner? Maybe you need a mentor partner? Maybe you need a …..? I can almost guarantee that you need someone to complete your resume, so get comfortable with it.

25 Partners Tidbit Always get your partnership in writing. With an attorney is preferred, but at a minimum draft it yourselves and sign it. Do your best to think of everything you are doing or not doing… More detail is usually better in this instance.

26 Work ON your business An old adage, but a legit one none the less! All of the daily details of your business obviously have to happen in order for your business to be successful, but allowing your business to lose sight of where it’s going is said to be a sure fire way to fail. So surround yourself with people that will create an environment where you and your team can work ON your business.

27 30,000 ft View Tidbits 1. Pipeline Management/Cashflow - If YOU want to NET $100k in the next 12 months, work backward from that number and create weekly landmarks. 1. How much does your business need to make in order for you to make 100k based on your overhead? 2. PM, Office Manager and other misc overhead are $100k/year so you have to bring in a net of $200k in order for you to bring in $100k net. 3. That’s $4k/week (assuming 2 weeks off per year) or 6.667 deals completed that make $30k each. 4. Do you want those to all happen at the same time or evenly throughout the year? You could probably make a case for either, just need to decide and act on it. The point is; do your best to think about how much money will be coming in the door, and when, vs when you’ll need to be sending it out the door for fixed costs like your PM, Office Manager, etc…

28 Life Changing Moments  2005 - First Rental  6 rentals in 24 months  2007- Rental to Flip Model  ~3 flips per year  2008 - Flip to Flip/Wholesale Model  ~10 total per year  2009 - Flip/Wholesale to Flip/Wholesale/Rental  ~20 total per year  2012 - Move to MN, Struggle with GC companies  ~15 total per year in MN  2013 - Become GC, Sell Girard, Hire Admin, Get an Office  ~15 total per year  Now a licensed GC  2014 – Establish GC systems, PPM, Hire COO and Designer  ~20 total per year

29 Life Changing Moments  2005 - First Rental  6 rentals in 24 months 1 or 2 of these were meant to be flipped. I learned to have a second exit strategy or have a ton of cushion in case I’m wrong or the market changes dramatically.

30 Life Changing Moments  2007- Rental to Flip Model  ~3 flips per year I’m now a full time investor and learning about cashflow. Waiting several months to get paid is not fun Find a way to create steady cashflow as you grow. It’s not easy, but it’s hugely important.

31 Life Changing Moments  2008 - Flip to Flip/Wholesale Model  ~10 total per year Here we learned the power of wholesaling. Sometimes to other subsequent investors and other times to ourselves to pull income off of the front of a deal to help with cashflow.

32 Life Changing Moments  2009 - Flip/Wholesale to Flip/Wholesale/Rental  ~20 total per year Here we reintroduced rentals since we knew how to correctly wholesale. This allowed us to do deals for others. We would sell a client a future rental; pull ~$5k off the front and then do the project for them… while still doing deals ourselves.

33 Life Changing Moments  2012 - Move to MN, Struggle with GC companies  ~15 total per year in MN We scaled too quickly since we didn’t have a well established team on the ground. New weather, new city rules, new culture of buyers/sellers, new network, new game plan… All equals “drinking through a firehose”. Lots of learning in a very short period of time!

34 Life Changing Moments  2013 - Become GC, Sell Girard, Hire Admin, Get an Office  ~15 total per year We decided that with so little success in finding a legit GC that I’d become one. Another pile of learning to do, but a solid solution to a seemingly continual problem if we want to grow. We also ventured into luxury flips with 1903 Girard. $1.8m ARV, $550k PP, $700k Fix… in the end we did very well. We came out with some great learning experiences and some cash. Now it’s time to get really serious.

35 Life Changing Moments  2014 – Establish GC systems, PPM, Hire COO and Designer  ~20 total per year Our GC company is now legit. We hired a COO and designer. We established a PPM (private placement memorandum) to raise capital. We’ve correctly positioned ourselves to have several sources of income; GC, rentals, flips, new construction, development, wholesale, etc…

36 Today We just sold a Luxury New Construction home on West Lake of the Isles Parkway. We have ~10 deals going on at any given time; $170k ARV to $3m. We have started taking on GC clients… slowly but surely we can market this company and safely leverage this source of income. We are continually looking for capital, partners and deals since we have the infrastructure to sustain a high level of deal flow…

37 Hindsight is 20/20 Stay a hobbyist as long as you can in order to assure that you have a solid foundation and then attack!!! Solid books, legally covered, great understanding of who your team needs to be, basic understanding of the market, etc. Be a sponge!! Network!! Put yourself out there!! Live in the now, while planning for the future!! Consider a Whole Life Policy/SD IRA or other similar tool to utilize as a lending vehicle!!

38 Do Not! Be a know-it-all!! Think you will get rich quick!! Be greedy!! Overlook the important of a solid foundation!!!

39 Questions??

40 Thank You Pine Financial All of you for attending Jeremy Rupp Chief Capital Robert Dana Design Concord Universal

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