15 at 5 #12: Expanding our Business into a New Market

What is going on, people? 15 at 5, we are back. Another standard episode here. Isaiah, we're going to talk about expanding our business into a new market, so something we're dealing with right now. I'm trying to hit more subjects that we're kind of dealing with right now so it's easier for us to kind of speak about things that are going on in the business right now. But, um, what's going on, Isaiah?

Yeah, nothing much. Yeah, you can hear me all right? I just want to make sure you can hear me.

Yep, you're coming in good.

Cool, cool. Yeah, going— everything's going well.

Out in nature, huh?

Yeah, I think it's a cool background.

So yeah, it is good. It's good. It's a good weekend for it. Okay, I just want to get into this one real quick. I think this is an interesting one, expanding into a new market, because I think some people are in really populated markets. Some people say go where all the competition is. Some people say, oh, well, the smaller markets work really well. So we've been in New Hampshire, Maine, and pretty much New Hampshire for the most part, a little bit of Maine, a little bit of Mass, not really, for the past like 2 and a half years, almost 3 years. So now we're starting to expand into one market. We haven't yet, but we're about to, is Florida. And then even just kind of expanding into like Southern New England of like Massachusetts, Southern Mass, stuff like that. I mean, I guess the main question here is, why are we expanding? Why not just stay? Why are we not just staying in this market?

Yeah. And we'll dive into, I guess, all the things that we look into when we pick that market. But I guess the main reason we are is because even though there's a lot of— we say it's pretty saturated in regards to our main marketing method is cold calling. So we could just text all those people, so it's something to consider. We've only called and we've also emailed a lot of people, specifically the multifamily market. So there's obviously a ton of properties on New Hampshire market, but multifamily we have hit like a good amount in regards to cold calling and emailing. So we were thinking of going to another market. It's cool with the Sub2 community how we have boots on the ground in those areas. So kind of gives us the opportunity to expand to other markets. But yeah, that's kind of my just, I guess, my idea.

I think that's a good point. It's saturated, right? What does saturated mean for people to understand that saturated? Yeah, explain that. What does that mean? Saturated?

Saturated? I would say like we've exhausted— I don't know if that's another phenomenon, but exhausted like the list where we've basically just like reached out to everybody and we still have them like on a drip campaign. We're still reaching out to them., but they're just not ready yet in regards to the— I don't know, I think for like the multifamily in New Hampshire, it's probably like, and within our criteria, like 5+ units to 20 unit, 5 to 20 units, built 1900 or more, kind of put more specific criteria on that. Haven't sold within the past 5 years. It was around like, I'd say like around like between like 7,000 and 10,000 multifamily apartments. And so when I said saturated, I meant that we've basically called all of those property owners and we've also emailed all of them. So in regards to the multifamily, that's why we're thinking to expand into another market, because we basically hit them all.

Yeah, I was thinking of multifamily, because that's easy to understand. So yeah, exactly what you're saying, we've exhausted the list, right? So you have different marketing channels, right? You can cold call, you could text, you can email, you can do PPC. So if there's only 7,000 records in New Hampshire, we've called all of them multiple times, right? Maybe you call through the list 2 or 3 times. So what happens after we've called through a list 3 times is we put it on the shelf, the virtual shelf, right? And if someone says they're not interested, we're not gonna call them for at least 6 months. So after we've exhausted 7,000 records, it's like, what do we do now? Okay, now we can email them. Okay, we've emailed them all, now what? We have to give it some, some breathing room before we can go back and hit that list. Since we're full-time, we have to figure out another market to hit or another lead generation channel to use. We want to stick with cold calling and emailing for now. We're just going to go into another market. I think that's one reason, is a really good reason, it's saturated, right? Meaning that we've already kind of exhausted the list. It's the same thing on the single-family side, right? We have 80,000 records plus in our in our database of records we've pulled. We've cold called almost all of those, right? So now we have to wait 6 months before we're gonna cold call them all again. Um, so in that time we have to pick a new market to, to market to. So that's, that's part of the reason that, that we're moving on, right? So the 2 reasons you move on is either you've run out of data to call, and once you've run out, you can either choose a new market or you can add another lead generation channel, which which we had already stated. It's easier to choose a new market almost because a new lead generation strategy might take you 2, 3 months just to get ironed out and have it working properly, right? So expanding to other markets and especially Isaiah said, we have boots on the ground, partners in other areas, it's easy for us to do that. So that's why we're expanding. I think that was a great explanation.

And going off of that, yeah. So just I guess bring it home. The main reason is because we would rather stick with our current marketing method of cold calling and emailing than, like you said, of doing texting. Because we could do texting, mailers, and really go, like, just really dive into that in regards to those multifamily properties or owners. But at the time, to do that, we were just really trying to master the cold calling.

Mm-hmm. Funny you bring up texting, because that's in our next meeting. I'm talking about texting. I think we're gonna I might add texting, but anyways.

I got some bunnies right here.

Are they wild bunnies?

Yeah, I got 2 bunnies right next to me. It's actually pretty sick right now. But anyways, I keep going.

So what are the— so that's why we're going to a new market, right? What are the major things that we need to take into consideration when we're choosing a new market, right? And there's kind of— Yeah, I guess that's one of the major things when picking a spot.

There's a lot on that. And what I did with my mentor Shane, I was always screening neighborhoods. So I've learned a lot about this. But the 3 main things are income growth, how much is growing the area, income growth, population growth, and job growth. Those are like 3 major factors, basically saying like the micro and macro of that. Area, the economy is good. New Hampshire is very— kind of hits all three pretty well for income, job growth, and population growth. And we used, when we were doing the kind of the screening neighborhoods or like cities of markets that we're going to go into, using Neighborhood Scout was like a software. Neighborhood Scout is really good to kind of get an idea of the area. But there's that, there's a ton of things. To kind of look into. It really comes down to writing down your goals of what you're looking to do. So for example, if you're going to do multifamily, you would want to see how many there are. You could look at REonomy or CoStar, a bunch of different platforms, see how many there are. Really, I guess, get crystal clear criteria of what you're going for, of the asset class that you're going for. And then you pick the area from that, talk to other people. I guess it's a very high level of what you could do there. There's a bunch of other things to get like into the nitty-gritty, but yeah, that's the answer to your question.

No, that's phenomenal. I was bringing this up. Tim, see this right here? This map, the blue, this is United Van Lines. This is, it's like a moving service. So it's actually one of the best things to track in terms of migration where people are moving is tracking like U-Haul or van services because it tells you where people are moving to and where people are moving out of. So some of the blue states on here, which are the states that people are moving to, which is weird, Vermont, which is weird, definitely not going into Vermont, but North Carolina, South Carolina are on there, obviously, that makes sense, and then Florida. So we're thinking Florida, right? We're thinking maybe like Tampa area, that county, since I'm probably moving down there in September. September, it might make sense. Um, but just thinking right now, honestly, the Carolinas is pretty hot too, north and south, from this survey and just from what I've been hearing, like talking to sellers and talking to other investors. Like, so many people are moving to freaking, like, South Carolina. Like, it's insane.

So, like, I would— from that information though, I think what we should do is, uh, take into account of, like, and really dive into, like, why, why are people moving? For example, for Monto, like What if there's like a bunch of— another thing to take into account is like job growth. So what if there's all the Amazon facilities just end up in Vermont? Obviously a ton of jobs there. So I would say diving deeper into that data to see why people are moving, why people are moving out is pretty vital because, for example, like California, the app would say, oh, a lot of people are moving away from California. But the reason obviously taxes is a major reason. Uh, so I don't know, just to really just figure out the why behind that, I think is pretty, pretty key because honestly I do not know the answer of why South Carolina and North Carolina— the Carolinas are like pretty big. It might be because they have good job growth, population growth, all that stuff, hit all those metrics. But I'm curious of like the actual reason.

That's interesting. I think that's, I think that's important, um, of the why Is it more important though for multifamily? Is it more important for multifamily? Because when we're single, when we're doing a single family, we're really just wholesaling, right? So I guess it's important to know like where the competition or maybe like there'll be more buyers trending or like why is it relevant to know income growth and all that for single family? You know what I mean?

Yeah, the biggest thing is because your vacancy, right? If you're gonna have a property in your, doing buy and holds, you want that property to be like filled. And if there's no one living there, people are leaving the area, leaving the area, then you're just going to have a vacant property and be most likely losing money every month. So knowing that, and also a huge thing is like when you run the numbers, knowing the area, because you want to be able to like, can you charge this amount, right? When you run the numbers on a multifamily property, you want to charge that certain amount. And I think a good metric on that is, uh, from, uh, my mentor Shane, he was telling me that it's, uh, 1/3 of the income. So basically, if the— if the— if someone's income is $100,000, then the rent could be 1/3 of that. So it could be $33,000 a year for that median household, uh, family. So just stuff like that though, like the affordability It's like a lot of things to take into account. That's a good note though, because it's like different metrics to look at depending on the asset class. Because like single-family—

I didn't even think about it until we were talking right now. Like, that's really good. Like, so say we do want to go to Tampa, we should look at job growth and income growth, right? And see where it's trending. Um, because that just means there's going to be more opportunity for our end buyers. Because whether it's— this is the answer, right? Whether we're wholesaling or buying and holding for ourselves, when we're wholesaling, we're finding investment opportunities for other people. Who are going to buy and hold though, right? So it's supposed to make sense for the other people. So I think in areas that are growing, it's going to be easier. And it's always easier to do business in an appreciating market than it is in a depreciating market. You know what I mean? Like when things are on the up and up, you can kind of push the values and you can kind of bet on the appreciation a little bit when you're trying to sell these deals. So I think that's super helpful. So why are we expanding into new markets? Because we've called through all the data and we either need to choose a new market or we need to pick a new lead generation strategy to touch these people with, right? If we've done call and text, maybe we need to do direct mail or something, right? What are the major things we take into consideration when choosing a new market? I think, um, population growth, income growth, that survey where all the moving vans are going, just kind of seeing where people are moving, those types of things are letting us know where the hot markets are. And then number 3, what kind of personnel do we need in the new market to be successful?

Oh, like people that we need. So I would say like that's the team. Before I answer that though, I just want to say I wanted to go back to the previous question and say absorption rate. That's like a huge thing. That's just like a fancy term, but absorption rate is like the supply and demand for the area. Say like there's a bunch of multifamilies being built But then it's just kind of supply and demand, just a huge factor going to another market. But to answer your question in regards to personnel, I would say the basic team. So your team as an investor, you want to build a team. For example, what we have here is contractors. That's pretty huge, but it really comes down to, are you wearing the investor hat? What hat are you wearing? But for us, the investor hat doing wholesaling and fix and flips and buy and holds. I'd say contractor, title company, what else? I feel like there's a bunch, I'm just kind of blanking right now. Contractor, title company, real estate agent would be helpful. And then I could go into each one of why it's helpful, but I'd say those are—

Yeah, quickly go into that, why are they each helpful?

Contractor is the person who would do the work for you. There's also other reasons for that, but just kind of like the main reason. Contractor, they'll do the work for you, They'd be the boots on the ground to tell you how much the repairs for the property. A real estate agent will kind of help you with the ARV, the value when the property's all fixed up after fair value. A title company would be— it's ideal to make sure that you can do wholesales if you're going to do wholesale as an exit strategy. They'll be your main title company that you use basically to do the transaction. What else do you need? A lender. That's pretty key too for that area. Also, property manager. You want to make sure you have a good property manager if you're doing buy-and-holds there. So basically, just having a team of people for that area and really vetting them out. And that's a whole thing that we could do.

I think on that real quick, the quickest and most efficient way to get good contacts in each of those positions is simply to reach out to other investors in the area and ask them, who they use, because they've probably already gone through the entire process of figuring it out, right? It's like when we got a title company, we reached out to Sergio, right? He hooked us up with that title company who could do creative, they could do wholesale, they could do cash, and he's been using them for forever. So why are we going out there trying to vet 10 title companies? We can just ask someone who does $1 million a year in business what title company they use. You know what I mean? Same thing. Someone who has a million-dollar business, who do you use for contractors? Who do you use for Property management, who do you use for a lender? You don't have to go do all that. You just get the referrals. That's the best way.

100%. So yeah, borrowing people's connections. And lastly, I guess my last thoughts on that is the rule of 3 is when you do do that, you want to ask at least 3 people. Because I think rather than just having one, it could be skewed if you just ask one investor. Ask, get to know 3 investors or 3 people doing the same thing. You want to do. Ask 3 of them, get their connections, and then you could see if there's any overlap. Um, and also ask if the people that I should, uh, look away from, like not, uh, hire. That's a huge thing. If they say this property management company stinks, you didn't know that. Uh, so also just ask for the good and bad.

Rule of 3, that's good. So then if 2 people say this property management stinks, then they probably stink, you know what I mean? Or if all 3 of them says it, then you know for sure, like blacklist.

Exactly. You don't want to put all your eggs in one basket.

Yeah, 100%. That's it, folks. 15 to 5. That was expanding into a new market. The 3 things we went over, just why we're expanding into a new market, um, it's kind of the first 5 minutes. Second 5 minutes are what are the major things we're taking into consideration. So I guess I'll recap that. Why we're expanding into a new market: we've called all the data, and once you've called all the data in an area, you can either choose a different outreach method or you can pick a new market. We're deciding to pick a new market. What are the major things we take into consideration when choosing the market? Income growth, job growth, population growth, those things like where— what's flourishing. And then what kind of personnel do we need? We need contractors, real estate agents, property managers, lenders. Anything you need in this market, you need in that market. And the best way to go get those people is through investors that are already working in that area. That's it. That's 15 to 5. Next week, um, I got Mike Gomes coming on. He's gonna talk about some sales stuff, building an acquisitions team. He's absolutely crushing it, uh, in New England, and he does stuff all over. Um, but I'm excited to do that. In the following week, we'll be back with Isaiah, um, talking more about our business. But I hope everyone has a great week. Happy Memorial Day.

See you guys.