John and Ryan discuss an upcoming renovation project in Livingston, New Jersey. The two debate potential exit strategies and play out various scenarios.

(Transcript below.)

Ep. 3 - The Anatomy of a Deal in North Jersey - Transcript


Ben Shelley: [00:00:07] Welcome to the Brick by Brick Podcast where we take you from the ground up on all things real estate. I'm your host Ben Shelley. We are fortunate to have back with us today the partners of Liberty Hudson Ryan Goldfarb and John Errico. The focus of today's episode is a very common investors' question. How do I determine the highest and best use for my real estate investment. For this discussion the focus will be on the residential real estate market and we defer to our experts to learn their thought process on deal analysis, exit strategy, and everything in between. Ryan, why don't we start with you.


Ryan Goldfarb: [00:00:42] Well I guess I would I would classify it as falling into two two departments so to speak. There is the financial viability and you know from a financial perspective what is the highest and best use of a property. And then there's also the zoning component. So you know anything in midtown Manhattan or any any plot of land is going to support the absolute highest density you can build on it. You know the value that we're in the middle of Manhattan. Real estate is super valuable here. So just about any play you would attempt in a place like this is going to pencil out. The main constraint that you're working within are the zoning conditions provided by the New York City building apartment or the New York City Planning Board, zoning office. I don't know what the jurisdiction falls under exactly..


John Errico: [00:01:28] Probably many multiple...


Ryan Goldfarb: [00:01:30] Seven layers deep so high level, that's how I approach it. When we're talking about things in the residential context specifically in a more suburban setting the subset of opportunities or the subset of options is going to be a little bit more cut and dry than it would be in a place like Manhattan. If you're in the middle of a residential neighborhood you're gonna be building residential. It's probably going to be a single family. The question is whether knocking that down and building new is the play or keeping the existing footprint and renovating that is the play. Or, keeping the existing footprint and then adding onto it as the play. So this is a question that John and I have faced quite frequently in the past and the more we deal with these types of projects the better idea we'll have of what the right candidate for the right solution is.


John Errico: [00:02:24] I agree I think something that I think about when approaching this topic is what if money was not an option and that's not true because money is always limiting factor as well as time. But when considering the highest and best use for property I envision it saying well what if I had a billion dollars. What would I do in this one piece of property to make the most money off of it or to to add the most value to it? And that sometimes you can come up with creative answers that you might not have anticipated before and if you really become convinced of that you might be able to find a way to to raise that amount of money. I'm thinking of for example in Atlantic City. So I've done some investing in Atlantic City and I'm very bullish on Atlantic City for different reasons but a lot of plays in Atlantic City are really ground up redevelopment plays so ripping down existing buildings and rebuilding them. And that is very, very... It takes a lot of money to do that. It takes a lot of time to do that. But hypothetically the value to doing that on a property and selling it as something brand new could be very high. I think perhaps we could get into this topic by addressing a project that we have right now which is in Livingston northern New Jersey. Ryan, maybe you can set the field and we can talk about it.


Ryan Goldfarb: [00:03:41] So we're looking at or we're under contract on a single family house in Livingston. It's a split level home which is pretty common for the area. It's on a very quiet dead end street from an intangibles perspective it ticks every box. It's in a great school district. The block itself is pretty nice. And we're looking at an entry point based on our purchase price that makes a few different plays viable. So when we were looking at this deal we were contemplating a few different, a few different options.


John Errico: [00:04:15] I think just even as a baseline statement so this is a residential area. So building something other than a single family residential home as you said to your zoning issue is just, you can't do that at all.


Ryan Goldfarb: [00:04:25] More than, like, I think the max we could do is probably two and a half three stories.


John Errico: [00:04:30] Sorry yeah. So yeah, in terms of, yeah it's gonna be a single family home. It could be multiple stores but it's not going to be more density than that. And I think I'm not sure if we even really seriously consider this but the idea of doing ground up construction is just not going to be economically viable.


Ryan Goldfarb: [00:04:44] Yeah for that, for that size lot, I don't think we'd be adding enough square footage for it to make sense. And given the state of the existing structure, there weren't any compelling structural issues that would have made that more advantegeous.


John Errico: [00:04:58] We came to this conclusion by looking at other stuff in the neighborhood essentially.


John Errico: [00:05:02] So we we saw this house. You were familiar, you're more familiar with because you grew up essentially around the block and so we saw this house. We were familiar with what stuff generally sold for more or less in the neighborhood and so we said OK well this house could sell for this if maybe possibly it had X Y Z. And we sort of had a decision tree maybe wasn't as formal as that but we had a decision tree where we thought okay if we did x we could make this amount of money. If we did y we can make that amount of money. If we did whatever whatever whatever. So maybe it will be interesting to discuss what the decisions were that we kind of went down.


Ryan Goldfarb: [00:05:41] And on the way there. Something else that is always worth bearing in mind is what's on the block. You know as nice of a town as that may be there's a ceiling on value. So if zoning would permit a 3,500 square foot or 4,000 square foot monster to be built on a block where the average house is 2,000 square feet that may not be the right place for it. So it's always worth bearing in mind that you don't want to over improve your property and you don't want to be going above and beyond what that street will support or what that area will support. So from a very fundamental level I think that that ruled out some of the more extreme options like knocking it down and building something brand new.


John Errico: [00:06:22] Yeah I think from our perspective to it just super risky to have to try to sell the most expensive property in the neighborhood, which could have been an option with what we were doing. But I think there's an adage in real estate like the cheapest property in the neighborhood will always sell. Doesn't matter what the economic macroeconomic environment is. And I think that the most expensive property will always have a hard time selling even when things are great. So we didn't go with the most expensive kind of option.


Ryan Goldfarb: [00:06:50] Yeah right. So that was that was ruled out essentially from the beginning. So the two main options that we were considering at least once we saw the place and once we saw the current condition were option A going in renovating it with a similar floor plan in mind maybe modernizing some things maybe bumping...


John Errico: [00:07:09] So this is a three bedroom as it is now ranges on renovated it's a three bedroom two and a half bathroom property with a formal family room and even in what you'd call it...


Ryan Goldfarb: [00:07:20] A family room, a rec room, a den...


John Errico: [00:07:23] A den, a kitchen, and then like a living room, dining room esque area opening up until a fairly sized backyard with an attached garage.


Ryan Goldfarb: [00:07:32] And an unfinished basement


John Errico: [00:07:34] Unfinished basement, right.


Ryan Goldfarb: [00:07:35] So option A was to essentially keep that same floor plan in mind and just renovate it, update it, modernize it. Maybe contemplate a few changes like opening up the kitchen to the rest of the living space again to go for a more contemporary modern open style feel. But for the most part the footprint would stay the same and there wouldn't be any noticeable difference outside of the aesthetics of the property. Option B that we were considering was to add an addition above the current primary living area. So it's a split level home. If you're not familiar with that... The way to think about it is rather than a colonial or a cape where you have one floor with another floor mirroring it right on top, you have kind of like a half level between between floors. So you have the ground floor. Then you go up about a half a set of stairs to the main living area and then you go up another half a set of half a flight of stairs to get to the bedroom area. So for an addition, what we were proposing was to put up half, or a third, half staircase to go up to an additional half flight above that living room/dining room/kitchen area to put on a master bedroom and master bathroom. These houses were built in the early 1960s so they were built with a little bit different of -- a little different style. The master bedroom in those style houses are not significantly larger than the other bedrooms. There's no real fancy en suite with a walk in shower, soaking tub, anything like that. No double vanities. So the only way to to achieve that is to build it or to significantly alter the current landscape of the floor plan.


John Errico: [00:09:26] Our premise was as Ryan alluded to before this is a neighborhood of primarily families that have moved there probably for the school district or suburban living. It's not, in contrast to say, it's not you know, young urban professionals that are commuting every day to New York. It's not renters. I mean there are people who commute for work but it's not necessarily in a family in a family context. It's not renters it's not lower income housing per se. Generally, I would say, higher, upper middle class type of a neighborhood. So that alone would dictate you wouldn't ever make sense to say convert it to some massive two bedroom or something where each bedroom is humungous. But that might maybe appeal to a renter and it wouldn't make sense to convert it to like a seven bedroom property or something that might make sense for maybe a lower income area where density is more important. So we are sort of constricted of operating in the three bedroom or four bedroom type of realm which is what we think from the neighborhood appeals to families. You know, two bedrooms probably not enough. Anything more than four bedrooms is probably crazy, doesn't make any sense.


Ryan Goldfarb: [00:10:36] Right. So The main goal we had in mind was to build something that is going to be appealing to the average family looking for a newly renovated house in that area. So with the current floor plan we were looking at three bedrooms, two and a half baths, which would certainly work for some. But if you think about the average family who's buying in that area, again, on average, you're likely looking at parents, two children, maybe a golden retriever, and it's safe to assume that if you're looking for a family home, you may also want space for guests, for in-laws, for parents for cousins, whomever. So with a three bedroom layout you are constricted in the sense that if you have one child or if you have like the only one that's going to work and if you have one child or two children who are sharing a room, which at that price point is probably unrealistic. So that put the idea of the addition in play because we could get that fourth bedroom.


John Errico: [00:11:34] Right... And so to use kind of actual numbers the way that we thought about it is our kind of purchase price is $400,000. That's what we're going into it for. We had thought that the after renovated value or sort of the market value after we were done would change based on how many bedrooms we had, based on how it looked. So in a three two and a half scenario which is the current default scenario I think we get maybe what...


Ryan Goldfarb: [00:12:01] Frankly it's hard to comp that out because it's a fairly unusual, most people typically want that fourth...


John Errico: [00:12:08] Which is another issue.


Ryan Goldfarb: [00:12:09] Right. Right. So whatever the scenario or whatever the number would be it is most likely a discount to what the ideal scenario would be for.


John Errico: [00:12:18] So structure. Right. Would you just call it, say, we could get $650k or something. The logic that's going through our minds and we're looking at is OK we're we're in for $400k. And of that $400k gonna put a little bit of money down and we're going to borrow the rest which we're paying interest on. So every month that we hold the property we pay interest on it. The way that we are funding it is with a hard money loan. And that's quite high interest. Not credit card interest but not traditional mortgage interest so it's maybe in the realm of like 10%. So every month that we own the property we have to pay interest on that and then we might loan more than that because we need money to renovate the property. So we're paying interest on that every month or else paying taxes, insurance, utilities, general upkeep, you know making sure the lawn is cut and whatever else you have to, you know, snow removal, which is very expensive apparently. And so, so that's that we have to do that regardless of whatever we do with the property. The variable is how much does it cost to actually renovate it or expand on it. And that price difference quite substantially if it's, we're adding a floor or we're doing an extension in some capacity versus just doing an aesthetic renovation, which as Ryan was saying before was blowing out a wall, redoing the flooring, bathroom, kitchens, and then calling it a day. So the calculus is well if I put more money in to do the extension and then I make more money am I making even more money than I would have had I not done, done any of that at all. Say I'm gonna make $50,000 after I calculate all those carrying costs and also that the sale costs I guess I should mention too are substantial so there's broker fees, attorneys fees, transfer taxes, all sorts of stuff. After all that say if I'm making $50,000 by just doing aesthetic renovation and if I were to do an addition and have to spend $150,000 more but I'd still like to make $50,000 then I would never do that because that would take me six more months to do and I would just do the easier thing which is to do do the very cheap renovation.


Ryan Goldfarb: [00:14:14] Right. And anytime you add to the scope in one way or another you're complicating things. The notion of you know keep it simple stupid certainly applies to real estate and certainly applies to flipping. If you can get away with doing a cosmetic renovation not necessarily going cheap or not necessarily skimping on the scope but rather than getting too fancy with it you can, if you can make money doing that, that is typically going to be your safest play. To John's point that calculus is is applicable and is I would argue that's the right way to look at it. Something else to bear in mind as part of that is you're not just thinking about you know if you're looking at scenario A you're talking about putting one hundred thousand dollars in renovation costs to make fifty thousand dollar gross profit versus Option B of putting two hundred thousand dollars into it to make fifty thousand dollars gross profit - the difference there is not just in your hard renovation costs. The difference is also in your soft costs which would be your holding costs, i.e. taxes, insurance, snow removal, utilities, etc. as well as your financing costs which is your interest for that time period that you are holding a project.


John Errico: [00:15:26] And the opportunity cost of your time. Time is very valuable when you're doing the sorts of things you have to spend eight months on a project versus four months in a project that's four months that I have to at least devote some amount of mental energy and physical energy to do.


Ryan Goldfarb: [00:15:39] And from a qualitative standpoint there's also risk in whether your plans are going to get approved, and whether the exact scope that you have planned from day one is going to be approved, and whether they're going to be alterations required to the existing systems in the building.


John Errico: [00:15:53] And what is the market going to look like in eight months?


John Errico: [00:15:55] I may know what it's gonna look like in two or three months but eight months is a long time.


Ryan Goldfarb: [00:15:59] Especially when you're talking about a specific time of year. So right now where we're sitting here in November and if we close on this property in the next week or so and we go with a pretty simple - I don't wanna say no frills - but if we if we don't get too complex with the renovation having this on the market in let's say six months is quite realistic and I would argue is almost an excessively conservative estimate. But nonetheless that leaves us in the spring season getting towards summer which is by most accounts the best time to be selling a property. Whereas if we try to pop the top off, pursue an addition, and potentially pursue an extension of some sort, there's a lot more volatility on the timeline side of things that may push us out passed the summer to sell the project.


John Errico: [00:16:46] To kind of like contextualize it to the actual thing that we're we're talking about are doing.


[00:16:51] We had thought well for us maybe the addition is the only way to do it because there really aren't any properties in this neighborhood that have three bedrooms two and half bathrooms and we may just really have a hard time selling it at all if we did it. Doing the addition was something that we were hesitant about doing because we worried about the building department and whatever else so we were kind of hemming and hawing about what can we do what can we do and then you actually came up with I think a great idea which is now most likely going to be the winning idea which I'll let you describe but essentially to get both right to have add a bedroom but not have to do the addition.


[00:17:27] Right. So the thought here was what does the end buyer in this town want. And in my head It's four bedrooms, minimum two and a half bathrooms, ideally three full bathrooms. And in thinking about that we had been stuck on this idea of doing the addition which would have required obviously a more exhaustive scope from a plans and permitting standpoint. It would have required additional framing. It would have required potentially addressing some structural issues with the existing building.


John Errico: [00:17:58] A ten thousand dollars steel beam apparently...


Ryan Goldfarb: [00:18:00] Not necessarily things that are of immediate concern but things that could potentially be a concern if you're talking about adding additional load to the building. Because if you think about it these buildings were spec'd out and were framed out and designed with a specific purpose in mind and that was to to function as a split level home. So if you're adding another level on top you're talking about adding additional weight to a structure that was not intended to originally support that. So there is potential that something like that can have to be addressed in the future not to mention, you know, just the hard costs of doing that actual renovation that actual additions which would be the framing, the plumbing, the electrical, HVAC, so on and so forth. So in contemplating this I was thinking you know the angle is really to get four bedrooms. Are there any other ways we could do that? Given the existing structure and giving given the existing floor plan... And I was thinking you know for for a family of four, the three bedrooms upstairs is not necessarily a concern. The bedrooms are all pretty decent size, pretty decent sizes and there are two full bathrooms up there already. And then there's also the family room downstairs. I know something that's common is to have kind of a guest suite or at least a guest room. And I thought that something like that maybe more of like a flex room was something that would be of substantial value there. So what we proposed was to build out a closet within the family room on the first floor. A closet is typically a prerequisite to being able to list a room as a "bedroom" notwithstanding a few other requirements like minimum square footage and oftentimes a window. So that got us passed the hurdle of trying to get that fourth bedroom. The next thing was thinking about it from a functional standpoint which would be you know if you have three people living on the second floor and then you have guests saying over... It's great that they have a guest room but they have to go up two flights of stairs to use the shower or to use the bathroom.


John Errico: [00:20:03] So to contextualize at the half bathroom that we have right now that the half in the two and a half is right next to the family room.


[00:20:10] Right. So the remedy to that was the half bathroom that John just mentioned, that abuts the family room. And then on the other side of that is a laundry room. So the thought is to combine the laundry room and the half bath to achieve a full bathroom on that first floor. We may be able to relocate the washer/dryer on that first floor as well but more than likely we'll move that to the basement, which, to compensate for the fact that we're adding a bedroom on that first floor and kind of getting rid of some of the utility space or the family space in that family room, we're gonna be finishing the basement as kind of a playroom, rec room for kids again with this young family in mind. And the great part about that is even though it's a basement there are some windows down there. There is some light. It doesn't feel totally basement-y. And once it's finished and has lighting in it it certainly won't. And most kids are not 6 foot 5 like John so they're not going to have an issue with the lower ceiling height.


Ben Shelley: [00:21:15] So I know we're going to have to definitely do a part one and a part two because I think I'm on the rollercoaster ride of my life right now. I think for people who know me they can't even believe I've been silent for this long but that's how good these guys are. Now we've already got a little taste of what this will be but as a book into this segment can you tell us what is your optimal exit strategy.


[00:21:35] Yeah, from a financial standpoint our goal all along is to have the largest gross profit that we can, to make the most money that we can from the sale of the property. So Ryan's solution is is so great and so elegant because we get to essentially have a four bedroom, three bathroom property which is what we were anticipating we would have if we were to make an extension, b we don't have to actually do any structural work. And structural work as Ryan was alluding to this is very expensive. So we can have an additional bedroom that is within the footprint of the property do a mostly aesthetic renovation to the property and still sort of have all the advantages that we would have if we're to spend a lot of money. So essentially our after return amount like a four bedroom, three bathroom, we could sell in the...


Ryan Goldfarb: [00:22:27] High sixes...


John Errico: [00:22:27] Sure. So we can have that sort of exit while only putting in maybe, a hundred grand in renovation costs. We'll see.


Ryan Goldfarb: [00:22:36] Give or take.


John Errico: [00:22:37] Whereas I think to do in addition we're talking more in the realm of 200 grand. Yeah probably 175 hundred.


Ryan Goldfarb: [00:22:45] I would say two hundred as a starting point. Right. And part of the reason for that is everything that goes along with doing it it's not just the hard costs.


John Errico: [00:22:52] So if it all works out we will have saved if you will one hundred thousand dollars which is a substantial amount of money on a deal of this size.


Ryan Goldfarb: [00:22:58] About a hundred thousand dollars in about six months of time.


John Errico: [00:23:01] Yeah, and a lot of effort and sweat and concern and stress and etc.


Ben Shelley: [00:23:07] Well if you took notes throughout this episode you're gonna have at least the base tools to understand and execute a proper analysis of a deal that you're doing particularly in Livingston but in wider New Jersey residential market. And I appreciate how you guys took us through all the different scenarios blowing the top off versus a general rehab and whether or not you would you just sort of cosmetic lift versus maybe some more serious work. I know I appreciate this I know the listeners appreciate it and guys thank you for your time and your expertise as always.


Ben Shelley: [00:23:46] And thank you for listening to the Brick by Brick Podcast where we take you from the ground up on all things real estate. We will continue to bring you the best and brightest the real estate world has to offer as we leave no stone unturned in helping you, the everyday investor. Thanks for listening.


Host Ben Shelley walks through Ryan and John's journeys toward becoming full-time real estate investors.

(Transcript below.)

Ep. 2 - Becoming A Full Time Real Estate Investor


Ben Shelley: [00:00:07] Welcome to the Brick by Brick podcast where we take you from the ground up on all things real estate. I'm your host Ben Shelley. It is once again my honor and pleasure to be joined by Ryan Goldfarb and John Errico. The principals of Liberty Hudson, a real estate company that invests manages and constructs homes all throughout New Jersey. We're going to discuss with our experts how they both transitioned from their day jobs to becoming full-time real estate investors. A lot of people have their hands in many different pots as they begin to invest in real estate, and all of us deal with similar common questions as we navigate our own lives as investors. Can I invest in real estate while still doing my job? How much money do I need to be making as a full time investor before I can transition to real estate full-time? You both successfully made this transition and so now we defer to you for your expertise. John, how about we start with you.


John Errico: [00:01:02] Yeah, I think it's a great question. I actually think Ryan and I have a very different approaches to this and how we started. So my background was that - immediately prior to being a full-time real estate investor - I ran technology startups and I had been doing that for a few years. I bought my first place in early 2014 which was a 2-family where I lived in the basement and rented that out. And then I bought a second place about seven blocks away and did the same thing. I lived in a unit then moved to the basement, rented the whole thing out and probably in early 2016 I was up to I think four properties so I had done the same thing three times in North Jersey in Hudson County and then I owned a place in New Haven. And my startup that I'd been working on, I was getting a little bit burned out because I'd been doing that for I'd been in the startup world for four maybe five years and my sort of decision points- so I'm a lawyer by education and I had kind of long ago left the prescribed track for lawyers so anyone that has that has entered that the big law universe may know that there is a kind of you you start in big laws and associate and you work your way hopefully to partner maybe didn't has counselling if you ever get off that track you can't really get back on it it's right at a decision point where I thought wow I could I could keep doing startups which I'm burned out of doing, I could maybe go to a different grad school I get an MBA and do something in you know like a pure business role. But I didn't want to do that and work is already going to school for a very long time to get my law degree.


Ben Shelley: [00:02:36] Stacking Degrees.


John Errico: [00:02:39] Right. I could get you know a "normal job" which was I really didn't want to do because I've been working for myself for a while or I could really double down on real estate and I gave myself essentially a year to see if I could make it as a real estate investor full time. And that timing for me was a great impetus because I had to figure out Well how do I make money from from what I'm doing right now because I'm making money from rentals and that's great but it's not really enough activity for me to justify doing it full time and it's not up money for me. The opportunity costs of doing it is really high because I could make you know hypothetically a nice salary doing something you know in the traditional world. So I tried really hard to find more deals and make partners with people and investors. I ended up buying I'm not even sure the exact number but it was at least four or five more properties in that period of time getting more rental income and trying to develop alternate streams of income we can maybe go into that a little bit. But after the year was over, I was kind of in a position where you know my wildest dreams hadn't really been achieved but by kind of more more modest or realistic dreams had been achieved where I thought I'm adding value I enjoy what I'm doing I'm making up money for I can sleep well at night and go to my wife who happens to have a very very high paying job and you know be kind of respected as someone that's at least in some capacity a coequal earner to her.


Ben Shelley: [00:04:01] She'll love that plug.


John Errico: [00:04:02] Yeah, she's great. I love you so much. So this is early 2017 that I mean that I'd been doing it full time since 2016 but in 2017 I was like okay. There's no turning back. I'm going to be full time until I can't do it anymore. That's where am now.


Ben Shelley: [00:04:16] Beautiful.


Ben Shelley: [00:04:16] And, Ryan, what about you?


Ryan Goldfarb: [00:04:18] First and foremost I wanted to say that that's fascinating to hear because I've known John throughout the entirety of all of that, of that playing out, that timeline and I don't know that I knew that in such vivd detail fascinating to hear.


John Errico: [00:04:33] The sweat, the blood toil.


Ben Shelley: [00:04:35] Because I'm very curious and Ryan and we'll hear about a little bit about this in your story that what's the alternative to breaking point?


Ryan Goldfarb: [00:04:42] Critical mass


Ben Shelley: [00:04:44] The critical mass this is an inside job we can't get into this right now but what is the critical mass of money you have to be bringing in as an investor to justify taking that big leap. John alluded to that a little bit but Ryan let's hear your backstory.


Ryan Goldfarb: [00:04:56] So I graduated from college in 2013 and even prior to that.


Ryan Goldfarb: [00:05:02] I knew that I wanted to do real estate. I didn't quite know in what capacity but I think in a perfect world I always had envisioned something entrepreneurial. But I kind of fell into the traditional path that most of my peers were involved with in college and that was you know getting internships lining up jobs accepting jobs and then selling your soul to corporate America for years. So I did that. I worked in real estate finance for a few years specifically on the on the debt side in the multifamily space and a year, six or so months into it, I finally came to the conclusion that it wasn't the path for me and that long term it wasn't really what I was striving towards. So I started looking at other paths and figured know there's there's no real sense in trying to look outside of where I was presently to find something that might be incrementally better. I knew that the only thing I was really gonna make me happy was for me to chart my own course. So I started getting the wheels in motion to to try to find deals locally. I tried to get my feet wet in the North Jersey market which for a variety of reasons seemed to make sense at the time and I ultimately settled on Jersey City. I was a little back and forth between whether I wanted to flip or whether I wanted to buy rentals. Ultimately decided to flip. Bought my first one about nine months after I started looking and it turned out to be a quite an ambitious project for my first undertaking. But I learned a lot from it. It took way longer and cost way more than I expected it to. But nonetheless it was a worthwhile experience and about halfway through that project the time came when I thought that I was ready to do this full time. I wasn't happy where I was. I didn't think that it was the best use of my time and I felt like it was holding me back from being the best real estate investor that I could be. Primarily from a timing standpoint so fairly quickly I made the decision that I was gonna give my notice to leave. I left with, while I was by about halfway through my first flip. Subsequently had a few more deals lined up after that and kind of hit the ground running going full time in real estate investing.


Ben Shelley: [00:07:20] Well it's interesting because this kind of picks up on that theme from last show about being proactive taking the bull by the horns really just going Johns is just trying. I mean just doing the work and you kind of learn from there but I'm curious because we talk about becoming a full time real estate investor but that means different things to different people I know where you guys are concerned that incorporates also a little bit of property management but maybe more so the construction part of the business. So I'd be curious just to know from your guy's perspective as you transition to full time real estate investors. How did you think and treat the construction side of the business and how did you approach also incorporating that under your own umbrella. John why don't we start with you.


John Errico: [00:07:59] Yeah it's a great question. So something that that Ryan and I do is we we run a general contracting business together called Liberty Hudson construction in North Jersey and that was born I think out of possibly two maybe more primary desires. The first was that we just had a lot of projects that we were doing ourselves flips or renovations for buy and hold stuff. And we'd been using third party contractors a lot. Ryan had a contractor that he'd been using quite frequently. I had kind of like a hodgepodge of handymen and people like that and we were sort of looking at the margins that these people were making because what we've been doing in each you know for you know this point three or four years. So we're pretty familiar with materials costs and labor costs and we're just looking at the margins that people are making we thought well this is this is absurd that these contractors are making so much money on us when we really in some cases know as much as some of our, you know, general contractors these are the people running the business. The second component of it though was really for us to try to make money off of our knowledge and our experience in a way. Something that I don't think either of us really set out to learn but ended up becoming quite knowledgeable and is just the process of doing renovations in a property. So whether it be like the nuts and bolts of renovating a bathroom or a kitchen or the complexity of you know going through inspections or working with the city with different issues. I think both of us have dealt with that to a large extent probably much larger than we want to deal with in some of these properties. So for me it's I think less about the dollars although it's very nice to have money coming in and more about the ability to to add and provide value. So the ability to go to even a third party client like not a project that we're not doing and say like because of my experience and knowledge and expertise I can help you but I can add value to you and make something better for me as a really cool feeling. And then obviously being compensated for it it is is nice because it allows me to keep doing it.


Ben Shelley: [00:10:08] Well it's it's interesting. And Ryan I want to hear your opinion on this as well because when John talks about having the background the knowledge the expertise and also the ability to to sort of execute on the practical construction side of the business. I think it's a clear advantage for Liberty Hudson where you know you see other funds who they raise money and they just outsource everything and that's fine if you make smart investments you can still make money. But I think it's in many ways it's it's what sort of distinguishes Liberty Hudson the rest of the competition.


Ryan Goldfarb: [00:10:36] Yeah, for sure. I think to touch on John's point I think there are a lot of people who like to call themselves accidental landlords but I think we could coin the phrase accidental contractors as well because I think that encapsulates our journey to to this point and then to your point about that about having everything in-house. I would say the single greatest advantage of that thus far has been the knowledge that we are relying on ourselves and on ourselves alone. We're not beholden to a contractor that we have an agreement with who may or may not be holding up their end of the bargain or who at the very least may not be holding up their end of the bargain to the extent that we would like. You know typically the two biggest variables on that front are going to be timing and cost both of which are in some ways intertwined. I think having a little bit more control over that for our own projects is a huge value add. And then secondly to John's earlier point about being able to add value one way I like to approach any interaction I have with another investor or with a would be seller or anything like that is to think about how I can be of value. And I think there are a lot of investors who go out there and meet with a potential seller and they have one thing on their mind and that's to to buy their property from them and they don't take the time to listen to what their needs are into what their situation is and they're just trying to force their ideal outcome on the seller who may have a different ideal outcome in mind or who may need a little bit of guidance to get to that ideal outcome. So for us I like the fact that we can refer them out to a network of agents who we who we work with one of which is my brother. I like the fact that we can offer them construction services if need be. I like the fact that we can offer them the ability to sell their house all cash quickly and kind of be the outlet that they need for whatever situation therein. And lastly the fact that we have other connections in the industry and we know plenty of other real estate investors who may have a greater appetite for certain types of projects at any given time than we do.


John Errico: [00:12:39] Yeah I think that that's a it's an important point and it brings up something to me that I've reflected on a real estate a lot which is that I think for for better for worse most probably for worse is that a lot of people who are involved in the real estate industry particularly on the residential side and the side in which Ryan and I operate I would say are just are just not great at what they do. And I don't say that lightly because I interact with a lot of people but I'm talking from the perspective of landlords for example I've met so many very very bad landlords or property managers from the perspective of real estate brokers real estate agents I've met so many bad brokers and agents we've met so many bad construction guys, contractors there are surprisingly few people in the business I think that do it because they A enjoy it and B want to add value in the way that we're talking about and there are a lot of people that do it because they want to make money fast. And like in any business you can make money fast doing this but the longer term outcomes are going to be are not going to be good. And so you know one reason why Ryan and I found each other work together I think is because we both valued our connection even if we weren't friends or you know weren't hanging out all the time.


Ryan Goldfarb: [00:13:56] We're gazing into each other's eyes as you say.


Ben Shelley: [00:13:58] Yeah I mean I kind of feel like I'm intruding.


John Errico: [00:14:00] It's a little bit intimate actually right of it. But you know we we value to respect each other and we're helpful to each other we didn't feel like we were competitive with each other. We we didn't say like well if Ryan is successful that means I'm not successful. That kind of mentality, while maybe if Ryan and I were looking at the same deal maybe if I won that deal that means I make a little bit more money but it would have meant that I totally foreclosed on the opportunity to work with Ryan. And now years later we're partners and we've done things together already that I think would be far greater than the advantage of getting a single deal over each other night. Personally I think we both try to deal with people that way too. It's never zero sum game it's always you know - a rising tide lifts all all ships sort of mentality.


Ben Shelley: [00:14:43] Life is truly a relationship business and I'm witnessing that right here and now. So from a construction background I'd be curious to hear from both of you. What are the kinds of things as general contractors yourselves can you advise people to look out for as they're making that transition and working on their first few projects.


Ryan Goldfarb: [00:14:59] First thing I would say is I've heard this before but I don't think it rang true until I realized how it applied to me. Nobody's ever going to care about your project as much as you do and particularly if you're working with a contractor who has a viable business going you're not going to be the guy's only or gal you're not gonna be their only project. And you're going to be competing with other projects for their attention. When there's a fire to put out at another project. That contractor is going to have their attention over there and that is typically going to happen at the expense of your project. I think to John's point earlier there aren't a lot of people who run this as a business or in the way that a "business" should be run. It is often mostly reliant on one person more than on a business where things are segmented and where things are fall on different people shoulders. To that end the one way that anyone who is doing a project can add value is just to care. Just be there. Just watch. Defer to the experts where you can defer to the experts but know that you're gonna be the one who's moving the project along. And at the end of the day, the buck stops with you. And if things aren't moving at the pace that you think they should step in do something about it and grab the bull by the horns.


John Errico: [00:16:19] I would say to dovetail on Ryan's point. Something that I learned early on but I keep learning is that there's more than one way to accomplish something. And sometimes contractors and people in real estate will tell you that the way that they do it is the only way that it can be done and that ranges from things as basic as installing cabinets in a house to as as complex as an entire renovation. And we're discovering that all the time everywhere. So when when you encounter a contractor when you approach a project and somebody tells you like this is the way it is I would treat that with a lot of skepticism. And if you were inquisitive enough to try to peel back the onion and figure out the different ways that something can be accomplished you will learn a lot more and you may realize that there are other ways that you can do it more cheaply or more quickly or more efficiently or whatever might be.


Ryan Goldfarb: [00:17:13] To that end just to piggyback off that point a little bit I know this is supposed to be one final thing.


Ben Shelley: [00:17:18] I love the pinball here.


Ryan Goldfarb: [00:17:19] I think the best way to achieve that particularly if you don't know a lot about construction is to recognize the fact that you don't know a lot about construction and to rely on people who do. So if you're going into your first project meet with three electricians before you sign a bid. Meet with three plumbers. Meet with three general contractors. I guarantee you will learn something from each and every one of them. And a lot of it will be the fact that there's not one way to skin a cat. Sorry John I know you have two cats. But you'll learn something and you'll learn that there's not only one way to do it. You'll learn that there are a variety of ways and none of them -- not one single way is going to be the right way. But there may be a better way to do it for a given project given the parameters and given the constraints. And I think the only way to really figure that out is to get a variety of opinions and to talk to the experts and to figure out how they would approach it. And the last thing I'll say is you also will just get a better sense of how an electrician how a plumber how a general contractor, so on and so forth, how each of them think about and approach their craft and over the long haul that's gonna be super valuable.


Ben Shelley: [00:18:26] I know I appreciate this. I know the listeners appreciate it and guys thank you for your time and your expertise as always.


Ben Shelley: [00:18:41] Thank you for listening to the Brick by Brick podcast where we take you from the ground up on all things real estate. We will continue to bring you the best and brightest the real estate world has to offer as we leave no stone unturned in helping you, the everyday investor. Thanks for listening.


December 20, 2018

Meet the Partners

Join Host Ben Shelley as we "meet the partners" - John Errico and Ryan Goldfarb.

We'll dive into the origins of how John and Ryan wound up in the field of real estate and into the genesis of their partnership.

(Transcript below.)

Ep1.MeetThePartners - Transcript

Ben Shelley: [00:00:07] Welcome to the Brick by Brick Podcast where we take you from the ground up on all things real estate. I'm your host Ben Shelley. Today, I'm lucky enough to be sitting with the two principals of Liberty Hudson who teamed up to create a thriving business as they invest and build homes throughout the wider New Jersey area. Liberty Hudson primarily invests in one to four family residential homes. To date, they also manage properties and build homes as general contractors themselves under Liberty Hudson Construction we now are fortunate to get to meet the principals of Liberty Hudson, Mr. Ryan Goldfarb and Mr. John Errico. Gentlemen it's a pleasure to have you both in studio today. Off the bat, it would be great to hear about some of your accumulated experiences as well as some of the reasons why you got into real estate and how you got to where you are today. So let's jump right into it. Ryan, how about we start with you.


Ryan Goldfarb: [00:00:59] Sure. So I am Ryan Goldfarb. I began my real estate investing journey several years ago I was actually as I was finishing up my undergrad career at the University of Maryland, go Terps! I started actually looking at turnkey investing opportunities out in Memphis Tennessee way back when. This was in late 2012 going into 2013. Long story short, I ended up securing my first investment out there with my brother. We went in on something together as 50/50 partners. Closed on a turnkey rental right around the time when I graduated which was April or May of 2013. Got you and I knew that was the kind of thing that was never going to make me rich never gonna leave me broke but I figured to be a good opportunity to get one under my belt. So we went through went through that experience did what I wanted to do that went under my belt. And since then I've dove into it a little bit further.


Ben Shelley: [00:01:57] So I know you said Long story short although we're here today to get the long story as best we can. Before I go to John I'm just curious. I know you talked about what the first project was but what is it about real estate in general that story. Was it since you were younger that you knew that you wanted to get into it or was it some experience maybe later as you had gotten to college.


Ryan Goldfarb: [00:02:16] It's actually something I've wanted to do since I was maybe ten, eleven years old. I was like to say it's from moment I realized I wasn't to be a professional baseball player.


Ben Shelley: [00:02:25] A true story for every Jewish male out there in the world today.


Ryan Goldfarb: [00:02:28] Exactly. I know I'm not alone in that here. So, Ryan, please continue.


Ryan Goldfarb: [00:02:34] Yeah, I actually I have a vivid memory when I was a kid going to Pier Village. I want to say that development in Long Branch, New Jersey. Ocean front, kind of luxury development. I was maybe 12 years old at the time something like that. I think was right around and it had just opened up. And I remember going there for the first time and just being in awe of this brand new development, right on the ocean in the middle of New Jersey on a place that was previously, you know, downtrodden remnant of decades and decades of neglect.


Ryan Goldfarb: [00:03:09] And I remember being fascinated by the fact that you could take something like that from a state of nothing or a state of despair and with a little planning with some resources and a little bit of time you could turn it into something that's a bustling vibrant oceanfront community. I think it's still standing today and every time I go back there I think about that same like that same feeling of awe I had when I was probably pre-teen, seeing it for the first time.


Ben Shelley: [00:03:34] This is for listeners out there.


Ben Shelley: [00:03:36] I think it's important I mean because there's a reason that everyone obviously money is a reason for a lot of people. But fundamentally I think the back end of what drives us to do what we do is a love of real estate a lot of shaping communities and opportunity you get your hands dirty with real substantive and productive work. And I appreciate you sharing this Ryan. We're going to continue that way but John I want to I want to bring you in here now. John is a real mystery to most of us. He's a brilliant individual. He's like a multilayered milkshake. He's a fifty thousand piece puzzle. He's in a Rubik's cube. We want to know who is John Errico and what makes him tick.


John Errico: [00:04:10] So I got into real estate in maybe an unusual way so I'm actually a lawyer by education and experience. I went to law school and I had no real particular interest in in real estate in college or law school. I actually worked in law for a little bit and then I left that to do technology startups. I ran a couple of startups in the real estate space, or at least a startup in the real estate space. Then a few others in related spaces and I was living in Manhattan. This is maybe four or five years ago with my then girlfriend now wife. We really wanted to we didn't want to rent anymore, and we wanted to buy our own place and started looking in areas within commuting distance of midtown Manhattan. We settled on northern New Jersey just because of the cost and the relative distance to where my wife was working at the time and bought a 2-family. It was a foreclosure so we had no no real conception of what it would be to live in a property that had been foreclosed on and had been abandoned. This is early 2014. So we we immediately moved because we were so excited but we realized that the property basically didn't have a roof. Didn't have electricity in one of the floors and didn't have a working bathroom and so very quickly we sort of were forced to learn a lot about home ownership. We learned about renovating our place and kind of all that the details that go into moving into somewhere that hasn't been lived in for a long time. We eventually started renting out the second floor which was a two family house. We started running at the second floor to tenants that went really well. We eventually moved from the first floor to the basement and started renting out the whole property to tenants and we had originally been living in Manhattan paying $3,000 a month in rent. And by living in this house living in the basement renting out the two units that were renting out we were essentially making, I think at least a grand a month above our carrying costs the property so above the mortgage and taxes and insurance.


John Errico: [00:06:14] So we had within a six month period of time like a $4,000 dollar per month income shift which was transformative. So we all of a sudden were able to start saving money start investing in other real estate we bought a second place and we've kind of been growing since then. But so the genesis was maybe four years ago that I've been doing real estate. I'd been doing real estate full time for about two years.


Ben Shelley: [00:06:37] Well what I love about that is it's it's a background of yourself but you also worked in there some of that genius that that allowed you to be successful early on in the business and there was cultural reasons why you moved out there, too, right? I know you and your wife are both bilingual. Obviously we know that northern New Jersey has a big Hispanic population there's a lot of Spanish spoken among other languages. So can you talk a little bit about that as well?


John Errico: [00:06:58] Yeah. So we where we moved from Manhattan is a city called Union City which is actually the most densely populated city in the country I believe. If you assume that New York is one city and not just Manhattan but so it's a city of I think it's about 50,000 people right on the other side of the Hudson River and it's predominantly Hispanic, Latino population so probably 95 percent of the population speaks Spanish or grew up in a Spanish speaking household. And my wife speaks Spanish basically fluently. Had lived in Spain for a year. So we were drawn to that culturally. We looked at other places in New Jersey like Jersey City and some places in Queens and the Bronx. But we liked culturally Union City a lot. The food the language the culture. So that was a humungous draw for us. And it's funny when we move to Union City, the story that I always tell is that maybe the first week that we're living in Union City we were the first people on our block that I think was not or is not of Latino descent or heritage. So we were walking outside of our house and one of our neighbors stopped us and said oh you're going the wrong way Hoboken is that way, the opposite direction.


Ben Shelley: [00:08:12] You can't live here.


John Errico: [00:08:14] Yeah no it's funny that that same neighbor I think told me like you know we all get along here we have, you know, Colombians, Hondurans, Mexicans, Ecuadorians, then Americans putting to us that is you.


Ben Shelley: [00:08:26] Well it's kind of a beautiful thing. I mean people don't realize sometimes like Union City for example, it's a hop skip and a jump from Manhattan. It's right across the river. And the dichotomy between what you find right in Manhattan and the diversity not just ethnic diversity but lingual diversity that you find right across the water Union City et cetera is quite profound. And so I guess Ryan I'm curious what got the wheels turning about working together in this field.


Ryan Goldfarb: [00:08:51] So we actually met I want to say it was about three or four years ago I think we were both fairly new at this. We had met through a real estate networking platform, BiggerPockets. I'm sure many people have heard of that. And we originally connected because we were both introductory investors. John was a little more focused on rentals. I was a little more focused on flips. But we met for lunch actually in Union City and we met on - I remember we went to a I guess it would be classified as an authentic Latin American-


John Errico: [00:09:25] Oh yeah, is that the place with the mirrors?


Ryan Goldfarb: [00:09:27] And back then you eat meat. I think...


John Errico: [00:09:29] Right.


Ben Shelley: [00:09:30] Enlighten us because there's a lot of inside there, the place with the mirrors. What is this place?


John Errico: [00:09:34] I don't know exactly. I mean it's...


Ryan Goldfarb: [00:09:37] I want to say it was on Bergenline...


John Errico: [00:09:38] Definitely on Bergenline and... Bergen line and 15 16 something like that and it's like maybe a Honduran restaurant could be I don't know.


Ryan Goldfarb: [00:09:47] I remember I got meat I got rice and I think maybe some plantains - it was good!


Ben Shelley: [00:09:53] These are important details.


Ryan Goldfarb: [00:09:53] Yeah. Leave no stone unturned. So yes that was that was I think our first encounter. And then I think we just kind of kept in touch after that I don't think we it is probably you know we maybe saw each other like six months after that.


John Errico: [00:10:08] I think we ran into each other at some meet ups. Maybe you could.


Ryan Goldfarb: [00:10:12] Did you have your meet up at that point?


John Errico: [00:10:13] Not At that time but I think maybe a year after I started doing that I think you came to you the first answer too. Yeah.


Ben Shelley: [00:10:19] So I'm curious because obviously you guys have brought me to an extent we like to joke. Ryan was very kind when we were off air. I said I work for them and he said I work with them which was very flattering very exciting to hear but I'm curious now kind of of how successful you guys have been individually over the last couple of years both in the buy rehab hold and flip range of all kinds of properties whether it be wholesale traditional foreclosure at market. What have you. I'm just curious what is sort of the this is a big question sort of the secret sauce method behind the madness for you guys when you're looking at these deals and maybe if you can bring in some of those background accumulated experiences what is the way that you look at this? John maybe we'll start with you here.


John Errico: [00:11:03] That's a great question and it's it's hard to give a really succinct answer to that. I guess I will preface my answer by saying that something that I see all the time in real estate investing among my peers and I run a Meetup group in New Jersey so people that come to my Meetup group and even in myself is this idea of analysis paralysis. So I think an obvious answer to your question is like, oh, well, I open up a spreadsheet and I run numbers and I do sort of you know underwriting kind of on my computer and that's a component of what I do. And I think we we both do. But for me if there are people listening to this that are just getting into real estate or just thinking about investing or maybe are buying their first place it's so important to just do it. You know to not get sucked into the details of you know the financial data that you won't be seeing. I mean just today I was talking to somebody about you know where we in the economic cycle or like the real estate cycle and you know maybe we're nearing the top of the cycle so maybe we should not invest at all and I don't know exactly where we are in the cycle it's really not the bottom of the cycle but if you have that mentality you're always going to find a reason not to invest. So not to not answer your question I just want to say that to begin with. How I actually invest is I you know I have primarily as Ryan alluded to mostly rentals so what I would call buy and hold property so I buy properties that are distressed or in poor condition that need renovation usually from you know not not a traditional kind of sale technique so I don't necessarily go on like the MLS and search for stuff but I might find stuff for sale by owner or maybe from foreclosure short sale anything like that. I'm familiar with a lot of the numbers in North Jersey in terms of how much stuff rents for. How much I need to pay in maintenance costs operating costs taxes insurance whatever else and I will put that into a very basic spreadsheet and look at things. Like the numbers that I care about are cap rate which we can go into at some point you know cash on cash and then just pure cash flow and by looking at all those numbers for me I can get a sense of is this an investment that I'm interested in and is not investment that I'm interested in. If it's an area I don't know I really want to go there drive around the neighborhood look at the streets north New Jersey is very block by block. Ryan knows super well in Jersey City that level of detail and I know to an extent in Union City too and other areas but yeah. So my approach is trying to find stuff that is obviously distressed using some very basic numbers putting into a spreadsheet looking at some metrics and then making a decision essentially from there.


Ben Shelley: [00:13:43] And it's funny you mentioned that and we will get into sort of the back in numbers in future episodes but I think the underlying skill here is a proactivity. This idea of jumping into the fire understanding the metrics behind what you're doing but having the confidence to take the bull by the horns. And I've seen firsthand John break into our own foreclosed properties going into through the windows and through the front doors and so I think there's a combination of understanding this from the back end and metric side and also just kind of going for it and being confident that you'll make some mistakes but the net gain will be worth it. Ryan what do you think.


Ryan Goldfarb: [00:14:19] Before I dive into my answer that reminded me of a story from a few months ago. Just real quick to give you a sense of how John operates. We were at one of our foreclosed properties trying to gain access to it for the first time and I would say we probably spent about a good hour trying to break our way into the basement. And then once we got into the basement John took a hammer and broke through the world's strongest solid core wood door. And eventually he he broke a hole through that door that was large enough for him to get through so that he could then unscrew the the studs that were holding it in place on the other side. After the fact we went back, we went through the house. Eventually exited and at the end of it we realized that the front door was wide open the whole time.


John Errico: [00:15:09] I was there this morning actually.


Ben Shelley: [00:15:11] See what that tells people is you guys are operators and that's what you do.


Ben Shelley: [00:15:14] Yeah you go in and you... I'm just imagining, picturing that in my head right now and it's too funny. But it's back to the essential question of not that that wasn't a wonderful sidetrack back to the essential question of the way you look at deals and how your accumulated experiences have affected that. What would you say?


Ryan Goldfarb: [00:15:33] So the way I look at things high level is to break it down into a few different categories. I think there are a few different ways that you can find deals and that you can make the numbers work and really drive returns. I would classify that as falling under into one of these four categories. It would be management, effective deal sourcing, financing, and construction. I think you'll find that most people who are in the real estate space particularly those who do this at scale and who do it well will tend to have some level of expertise in at least one of those areas. And I'm talking like true expertise to where you know they they've been a contractor for 30 years and really know the construction side or they're super well-connected on the financing end and have that on autopilot and they're able to get money at will and inexpensively. Or they're experts at marketing and they know how to find deals better than anyone can. Or you know they have a large management company and are able to handle that thing that stuff in-house. So, so typically it falls under that umbrella or one of those four categories within that umbrella. And one thing that I think working with John has got me to realize is how much of it is really just tenacity at least in the beginning. There is a resourcefulness that is almost a necessity. There's a the old adage that nothing's really a problem that you can throw enough money at it. But for a real estate investment you know that that may be an option but it's not always the optimal option. So you know whether it comes to, whether it's being resourceful in the sense of being able to fix things less expensively without compromising the longevity of that repair or whether it's just using a space and a little bit more creative of a way that's going to get you the highest and best return for that investment. I think those kinds of things go a long way and I think it's really hard to learn those things without being boots on the ground and without being in it.


John Errico: [00:17:27] I think that that's that's a great point. It's a super important point too about how different there's a lot of creativity in real estate investing that may not be obvious from the outside. I think when people go into it they they might have this opinion like I have to buy you know a turnkey property that will gross rents at a certain rate and that's how I'm going to do it. But pretty much every deal I think that I have done and I think the same is true for you Ryan that every deal is unique and different and the ways to make money on the deal are very unique to the deal. I mean we've had conversations where we bought something that we thought it was going to be a long term - I'm talking about myself here - I thought is gonna be a long term rental play I just have a long term tenant in there and it turned out that it was great to do Airbnb in that particular property for some reason. I think you've had properties where you thought maybe you were going to rent them out or that might have been an option then you ended up flipping them or even vice versa. Part of the, part of this skill is learning the suite of options that are available to you and I'm still learning that too about different ways to use properties and different to do deals.


Ryan Goldfarb: [00:18:32] And I think that's I think that's an evolution that you never quite reach the end of. I think that's particularly applicable around here where you have not just markets that change town by town, street by street, but you have buildings that have been here anywhere from since you know 150 years ago up through new construction and everything in between. And anything that was built in 1900, you can you can bet that at some point changes were made and even the two houses that are right next door to one another probably are a little different from each other when you look under the hood.


Ben Shelley: [00:19:06] It's interesting because I can even speak from a very short experience working with you guys that when I came aboard I looked at things in a very linear fashion and I've appreciated the diversity of ways that you look at deals. And we are running out of time here. But before we go in this introduction of the general partners of Liberty Hudson I would be interested to just hear from you guys maybe a last bit of advice or suggestion you would give to an upstart investor. Something you would say to somebody who was you 5 years 10 years ago as a way to inspire them or maybe a guide to what they should do first to make it in the business. John let's start with you.


John Errico: [00:19:40] Yeah I mean... So my point would be what I what I said before which is just to get started. Real estate investing is, I consider it, an entrepreneurial endeavor. And something that I think is very true about entrepreneurial endeavors is that they can be very lonely. Something that was great for me was discovering Ryan mentioned before a online BiggerPockets. It's actually how we met. But even beyond that just talking to people that are in real estate and do real estate is immense because I remember some very early conversations I had with people that were you know real estate brokers were on real estate finance and just asking them even really simple questions like "What is an FHA loan?" Or "how do I buy a house?" which are not obvious things I mean I didn't know that information despite going to law school, you know, I had really no conception. So I would say talk to people about it ask questions. There are great resources online and in probably your local communities friends mentors whatever you wanna call it ask talk about it and just get started. That's if I didn't... I almost was so ignorant I knew so little at the beginning that I didn't know how daunting a challenge my first house would be. But if I had a sense of that risk I never would have done it. So I'm very happy that I took the plunge.


Ben Shelley: [00:20:57] Ryan.


Ryan Goldfarb: [00:20:57] Sure. First of all thank you for putting us on the spot Ben.


Ben Shelley: [00:21:00] That's what I live for.


Ryan Goldfarb: [00:21:03] So I will go in a little bit different of a direction maybe something a little bit more tactical. I remember one thing that I think it took me a little bit of time to get passed when I was first beginning was you know I fell into the bucket of what John described before as paralysis by analysis. And I think that that is certainly not unusual for would be investors. One thing that I think helped me get passed that was to really focus on one area or two areas of a particular city in my case it was this Jersey City. And I'm not going to say that I was an expert on those after just a few months but I put forth all of my focus on those parts of town and those parts of that city specifically whereas previously I was distracted by every new town I was learning about or every new town I was exploring in North Jersey. And what I found was once I honed in on that one area on those those like two or three neighborhoods of that one town that gave me the baseline level of understanding that I needed to do every subsequent deal that I've done since then. So I don't know that that would have happened without having put forth that degree of focus at the beginning. It took some discipline especially when I just wanted more than anything to do my first deal in the area. But I think it was necessary and I think that was the catalyst for a lot of things that happened thereafter.


Ben Shelley: [00:22:27] I know I appreciate this I know the listeners appreciate it and guys thank you for your time and your expertise as always.


Ben Shelley: [00:22:42] And thank you for listening to the Brick by Brick Podcast where we take you from the ground up on all things real estate. We will continue to bring you the best and brightest the real estate world has to offer as we leave no stone unturned in helping you, the everyday investor. Thanks for listening.