From Unhappy CPA To Successful Real Estate Investor

Hey, it's Mark Podolski, the Land geek with your favorite niche real estate website, www.thelandgeek.com and today's guest is as you can see on the well, probably you can't see it on Zoom, but Scott and I can see it. Real estate investing is easy, which we're going to talk about. But before we talk to our guest, I'd be remiss if I didn't properly introduce my co host, Six Sigma. The Man Myth. The how many deals last year? Scott?

238 deals last year.

238 deal legend Scott Todd from Scott Todd.net landmodo.com and most importantly, if not automating your Craigslist and your Facebook postings posting domination.com language. Scott how are you?

Mark I'm great. How are you?

I'm good, I'm good. Today's podcast is sponsored by Geek Pay IO the only set it and forget it automated way to get paid with your borrowers. Let's talk to Tom Caffarella. Tom Caffarella, tell a little about yourself.

So I'm a Boston based real estate investor, grew up in an area people didn't have a lot of money and my grandfather was kind of the only one that was ever that I knew that was successful and he was a multi family property owner. So I always wanted to do that growing up. And you know, long story short, over the past five years I've accumulated over 300 rental units and passive income is definitely one of my top priorities right now in my career.

Wow, 300 rental units. So what were you doing before you got into real estate?

So like everybody else, even though I wanted to get into real estate right out of high school, everybody told me I had to go to college. So I went to college. I double majored. I had a degree in biocheming, I had a degree in accounting and I read a book in college, Rich Dad, Poor dad, who I'm sure you know all of your listeners have probably listened to at least once. And that was the book that said, you know what, go with your gut. You've got to go into business. You can't, you know, do anything else. So I ended up working for a big accounting firm right out of college because Sarbanes Oxley had just passed, which is just basically a big accounting bill based on some fraud that happened with Enron. And pretty much the day I got there, I knew that it wasn't going to work for me. I knew I was kind of a misfit. I was too Entrepreneurial. And for the two years that I was in corporate America, every single day I'd show up to work and I'd just be on real estate investing websites learning about real estate investing. And one day they just came up to me and said, look, you're not doing your work. And they asked me to leave. So I, at the time, I thought, you know, my life is over. You know, I didn't know what I would do. And looking back, you know, there was no risk at all for me to kind of try to jump into real estate. I was still very young. I still live with my parents, but I decided I had to go for it. I've got to get into real estate investing. And, you know, I haven't looked back. So since then.

Scott Todd, this, this story, does it hit home with you at all?

Yeah, I mean, what accounting firm did you work for? Was it a big one?

Grant Thornton. So there, you know, there's the top four. I don't know. If you're an accountant, you obviously know there's the top four. And then there's the two other internationals, Grant Thornton and bdo.

So, yeah, yeah, yeah. It's crazy because, yeah, I worked for a big six firm when I was in college, not as a CPA or not as an accountant, but kind of in one of their internal departments. And I wanted to be an accountant, right? Like, I wanted to be a cpa. And I actually have my degree in accounting. But after I worked there for a little bit, I realized I did not want to be a cpa. Right. Like, it is brutal. You know, Like, I think it's a great career path for some, but for me, it was not a great career path.

Well, that was the crazy thing, is that I would say to all of my coworkers, I'd say, guys, this sucks. Right? And I thought, I thought everyone was going to say, yeah, this is the worst thing in the world. And pretty much everybody to a man was like, no, this is an awesome career. Like, you don't know how lucky you have it. And I. That was really. That was one of the reasons I didn't quit, because it was just like, to me, I looked at it like there's something wrong with me. Like, you know, maybe I don't want to work hard. Maybe, you know, I'm just, you know, not meant for this. But I never felt like it was kind of. I was in the wrong. I knew I was in the wrong place, but I didn't know that I needed to make a move. I didn't Know how much it didn't coincide with kind of my belief systems.

It's funny, I mean, I remember working with in companies where I looked around and like all these people would talk about like, oh, we got, you know, we're going to do great this year or man, we did great last year. And I'm thinking like, man, there must be something wrong. Why do I not care about their company, this company's success? Right. Like, yeah, I'm all about being a team player, but I think what it goes down to is the internal clues. Right? Your, your body, your brain, everything is telling you. Yeah, look, for some people it's great. They can have the rah rah, you know, rally around, you know, building someone else's company or career or whatever. But when it comes down to you, you really have to kind of listen to your internal brain. And if you're gonna break out, you need to break out. Right? You know, like, that's not who you are. Don't force it. Live the life that you want to, that you were meant to live.

Yep. And I was so young and everybody was telling me the exact opposite. So it's just like I didn't know it at the time and I didn't have any friends or, you know, even people that I just knew in passing that were entrepreneurial. So it was just like, you know, again, looking back, it was kind of crazy that I was even nervous to leave, but I was.

Tom, what do your parents do?

So my dad worked in the union for dhl, who now kind of has moved out of the US in large part. And my mom ran a daycare. So to them going to college, getting a degree was like a no brainer. And the crazy thing is like I did so well in school that no one would have ever said don't follow that path. So I did so well that it was just like a no brainer. But I was fighting it every single day. I did not like it. Even though I had the ability to do it, it was very unnatural for me to kind of follow that path.

Yeah, it's so funny because I started out in investment banking and I kind of think to myself sometimes, especially because I have three kids, Scott has two kids. Like, at what point in my life did I think I want to grow up to be an investment banker? Like, at what point in your life do you think I'm going to grow up to be a big sick cpa? Yeah, right. Like, how does that even happen.

Man? I don't even know. I mean, I think it's Just, you know, you look at it, it's a safe career path from. For most cases, the money's there. You know, this really, I mean, in both of those careers, I mean, you do well, you're never going to want for anything. You're never going to not be able to afford anything. In most cases with both of those careers, you're probably, your risk of getting laid off is fairly low. So I think to the outside looking in for 90% of the population, they just look at it like, wow, you know, you're, you're super lucky. And you know, they don't know, you know, what you're kind of feeling on a day to day basis when you're checking the clock every five minutes, you know, what time is it and what time do I have to leave?

Yeah. Scott, were you, were you a clock watcher?

Yeah, yeah, it was, it was, I mean, it's painfully like, it was brutal, right? It was painful to kind of go through the day and just kind of, you know, wait, wait until, and serve your, serve your time, you know. You know, it definitely is not fun at all, man.

I remember, you know, I'm serving my time and then my reward for serving my time was 45 minutes of fighting traffic. Like this is what I get rewarded for. You know, it's, it's. I don't want to go too off the rails here, but Tom, let's, let's fast forward. How did you get into multifamily?

So I wanted to be in multifamily really for my grandfather and reading that book Rich Dad, Poor Dad. I had no money to start. So really it was nearly impossible for me to get into it on day one. But I ended up working with a mentor who basically said, look, you've got to start out wholesaling properties. So as a real estate investor, you always have to be finding great deals. So they said, start working on that because that's the most important piece of being a real estate investor. You've got to get properties for below fair market value. You've got to get properties that nobody else knows about. So I started doing that. I started wholesaling properties, built up some capital and then started buying multis. And then from there, you know, I'm following the birth strategy where I'm buying, I'm renovating, I'm renting, and then I'm refinancing out. And the beginning is the hardest part, at least I think for multifamily investing, because you've got a bunch of hurdles that you have to overcome. But then once you get to a certain number of units and then your property, you start to have equity, things just kind of start, you know, cascading from there and getting a lot easier. So the beginning part was the part, you know, it probably took me two to three years to get my first multi and then it probably took me another year to get my second multi. And then, you know, the next year maybe I bought five or 10, and then from there I bought 20 or 30. And then, you know, now honestly the biggest obstacle that I have is that my market right now doesn't cash flow, even if I get the properties at a discount. So that's the only obstacle I have at this point.

That's really interesting. And the career velocity of it where it took two years to get two years to get the first deal. So what was the hardest part about getting that first deal?

Well, the wholesale deal wasn't that hard. So to do the wholesale deals, I did my first wholesale deal within months of starting that. But the multifamily to start was really just a down payment. And so, you know, I mean, I know there are creative ways to get into multifamily with no money, but in my case that's not the route that I went. So I just saved up for a down payment, put it down, and then, you know, again started the brrrr strategy where I'm buying, renovating, renting and then refinancing out.

Okay, Scott, Todd, what are your thoughts?

I mean it's, it sounds you know.

Like.

You know, the whole, the whole concept of like going from scratch, you know, like starting off, I think that stops a lot of people because the thought that man, I have to have, you know, income to, or you know, I've got to have a down payment.

I can get, I got to get.

The down payment somewhere, then I've got to qualify for a mortgage. How did you overcome like that whole let me qualify for the mortgage kind of a thing and all of that stuff? Were you still working at the time?

I was not still working at the time, but I was making enough money on the wholesaling side of the business and I also had my real estate license too. So I was doing some listings and things like that. So I qualify based on the self employment income of my real estate business. So yeah.

So knowing what you know now, is there anything you would have done differently from the start?

Yeah, I probably would have worked harder in the beginning to raise capital to fund those deals because I got fired in December of 2007 and really there Was, no. I don't know if there's going to be a better opportunity in, in my lifetime to get into multifamily real estate. I basically got fired the day the entire world was collapsing. So what I would have done differently is I would have spent more time raising capital, which I've done really successfully now in the beginning and really done less wholesale deals and less fix and flip projects and push more money into the multifamily real estate. Because, Boston, the way that our kind of real estate economy works is when it crashes, it crashes pretty hard. But then when it rebounds, it rebounds like crazy. So some of the properties that I wholesaled or that I fixed and flip back in the early days, I mean, man, if I had held on to some of those, it's just a huge net worth difference.

So you never experienced a chicken egg problem where, you know, you want to raise money but you have no track record, right?

I did. I mean, I did in the beginning for sure. I think everybody experiences that. And, you know, even with the track record, I mean, now we do over 100 fix and flips a year. I mean, we've got a big office that showcases everything that we do. We've got tons of credibility locally. But it's still not easy. I mean, you're talking about somebody investing with you. Even though it's in real estate, it's not the typical investment. I mean, you know, the average person likes putting their money in a CD or even a stock. Even though a stock to me might be more risky depending upon what you're investing in, it's less common to just lend to a mom and pop company. So even though we've raised a lot of capital, we still get the same objections today that we got on day one. But, yeah, it was harder on day one without the track record. Scott.

Man, I mean, there's so many ways that we could kind of talk. Talk. Take this, this podcast, Mark. But you know what? Like, how did you, you know, like, how did you, like, kind of continue to build? I mean, what was that, that, like? I mean, did you continue to go through the wholesaling piece? Did you, like you. I mean, because you had these multifamily. At what point did you stop the wholesaling and go all in on the multifamily?

We haven't stopped. So the way my business kind of operates today is my number one job every single day is finding discounted properties. And depending upon the nature of that property, you know, if it's a single family, for example, I'm probably not going to buy and hold it because it's not. The numbers aren't going to work in Boston. So we spend a bunch of money on marketing. We've got a 200 person real estate agency and we train all of those agents to prospect for deals for us. So the agents that are on my team will literally cold call through all of the cities that I want to buy properties in in order to make offers. So basically I've got a big marketing funnel that allows us to get face to face with about 100 sellers a week and we make offers to those sellers and depending upon what makes the most sense for the seller and what makes the most sense for us, we're either going to list the property or we're going to do an investment deal. And if we're going to do an investment deal, it depends on what the deal is with the property. If it's a multifamily and it cash flows, I'm probably going to hold on to it. If it's a good one for a wholesale, we're going to wholesale it. If it's a good one for a fix and flip, we're probably going to do a fix and flip. So really like to me, real estate investing, at least from the residential side is all just a sales and marketing business. You're marketing to get the face to face appointments and then you're doing the sales in order to get the properties under agreement for less than market value.

It's all about deal flow, non stop deal flow. Don't stop the deal flow. Sounds familiar, doesn't it Mark?

It really does. And you know, in our land investing niche we, you know, we scold people all the time, you know, because they want to stop writing campaign out of fear that okay, now I've got all these deals, I need to sell them first.

Absolutely, absolutely. I mean that's the biggest thing is you just, you've got to keep that going, you've got to keep that machine running. I mean if you get a good deal, there's a way to make money on it, period. So you never want to hold back on the marketing piece because you can always get rid of that deal and make money somehow.

What do you like the most about real estate investing? Multifamily and just the way you've structured your entire business?

I mean, I think what the best thing about it is is they just accelerates really quickly. I mean it's not linear growth. So I mean, you know, I look at, you know, my net worth and I've got this calculator that I use because we gain net worth on multifamily real estate in a lot of ways. Number one, there's appreciation on the property. Number two, we get monthly cash flow, and number three, we're paying down the mortgage. So every single year, even if I didn't get appreciation, my net worth is going to go up based on those things. But once you add appreciation into it, it just really is not a linear equation. It just goes up exponentially. And so that's the part of it that I like the most and the part that when you're talking about active income, like flipping and wholesaling, you stop flipping, you stop wholesaling, the money stops coming in. But when you have passive income, I mean, that money rolls in forever and your net worth just increases exponentially.

Amen, brother.

Amen. And I know you guys are all about passive incoming. I am, too. I mean, like I said, I never even had any interest in flipping or wholesaling to start. It was all about the passive income piece. But I couldn't myself, I couldn't get to the passive income piece without the active income piece.

Yeah, yeah, absolutely. So I've got a high schooler. Scott's got a high schooler. What advice I've got. Well, I've got three almost.

We got two.

Getting ready for college. What advice would you give our children getting ready to start their life? They're going to go to college, they're going to have to figure out a major, and then they're going to figure out what they want to do in life in their 20s. What advice would you give them?

It's so tough. I mean, at that age. I mean, you don't have any clue. I think that the best piece of advice that I wish I did more of is really get actively involved to see what the careers were like before I started doing a major, before I started putting effort and energy into having that career. So if there's any way for them to kind of narrow down what they want and then to actually start shadowing some people. Because when I was in college, I mentioned I double majored, I was a biochem major because I was pre med, and I did everything I had to do to get into med school. And the reason I didn't go that path is because I actually shadowed a doctor. It was part of something I had to do in order to get into med school. And I realized, man, this is not for me. So I spent almost three years of my life, you know, taking biochem and taking chemistry and Taking, you know, all this other, you know, math, math stuff that, you know, was just a waste of time. So I think if there's some way for them to just shadow, you know, different industries just to see kind of what maybe we'll take with their personality because their personality is probably going to be somewhat similar. Like you know, what they, what they, you know, they may not be able to define what career path they go down, but stuff that they really hate that may not change.

Hey Mark, did you, did you do anything with like, in terms of like when you were in junior high school or high school, did you do anything with like career sampling or you know, like, like, you know, they used to call it like in my area, was part of the Boy Scouts, like Explorers, you know, like, you know, you had different career paths and they had different groups that you could go and sample these things. Did you ever do anything like that?

You know, I was always a hustler from like age 10 from the lemonade stand. Then I started my own cookie company. And then in high school, I mean I had several jobs. Like I love to hustle and I remember like I was like the mafia in high school. If you wanted to get a prom or a homecoming corsage, you had to go through me. Right. And like I was like, I was the middleman for all these florists and that. If you wanted that.

Yeah, for him it's like a no brainer because I mean that's just like, you know, he was born an entrepreneur type thing, you know.

I don't think so. I don't think I was born that way. I think, I know, I think my dad was an entrepreneur and so I think I saw that, I think I got a lot of praise for doing that and I was just like a pleaser.

Okay.

And so I, you know, but eventually like it expanded beyond like my parents approval I think for me.

Okay. So yeah, so I was kind of in the, you know, my parents weren't entrepreneurs so they wouldn't have encouraged that. So that's kind of interesting seeing somebody who went the other way. That's probably how I'll be. So I'll probably end up encouraging my kids to do entrepreneurial things whether they want to or not. Maybe that, you know, remains to be seen. But my kids are so young though. I've got a four year old and one year old and a four month old. So career paths aren't something that are on the horizon anytime soon for us.

Look, not too young to start sending out those offers, Tom. That four Year old, put that, that stamp on. Yeah. Like, like, hey, this, this could be worth this amount of money one day. This is your inheritance. Yep. They don't, they don't. You know, the funny thing is like, they don't care. But it'll be, I think it's going.

To be interesting though because, I mean, careers are changing so fast now with technology and just small businesses the way that they're run today. I would be curious, once your kids actually get out of college, kind of what the job environment looks like compared to when I was in, you know, when I finished. And I'm not that old, but I mean, it was, wow, geez, 14 years ago when I graduated. So I am getting somewhat up there.

Yeah, it's, it's interesting. I love that, that line from Jeff Bezos. If everything's going to change, what's not going to change? And you know, it's, it's really something interesting to think about. So, Tom, we're at that point now in the podcast where we're going to put you on the spot and ask you for your tip of the week. A website, a resource, a book, something actionable where the art of passive income listeners can go, improve their businesses, improve their lives. What have you got?

I mean, I think the Tried and True Rich dad is like the first book that really should be read because in the beginning, I think it's all about mindset. You've got to get over that hurdle that there's a different world out there that's not just, you know, show up to work 9 to 5, get your 5 or 10% raises each and every year. The other good one that I really like is the four Hour Work Week. Not that I believe at all in the four hour workweek, because I work an 80 hour workweek, but I believe in a lot of the principles in that book and how you can kind of leverage yourself out and how you really have to start thinking about how you spend your time and what you're doing. Are you doing what you love? And if you're not, then you really should be.

I love it. Scott. Todd, what's your tip of the week?

Well, Mark, not, not to introduce shiny object syndrome to everybody, but it's kind of relevant to what we were talking about today. And it's a book that I, I'm kind of reading. I'm not necessarily, you know, jumping on the bandwagon here, but it's called Crushing it in Apartments and Commercial Real Estate. It's by Brian Murray and it's really a cool I think perspective, if someone's looking for something that's not land, another component. There's a cool book out there. There's cool resources.

I think, though, like, you know, we talked, you know, about books. I think my biggest tip period, would be find someone who's doing what you want to do, because I did personally spend a lot of time reading books, and I love reading and I love learning. But how I've learned the most over the course of my career is really by finding not necessarily mentors, but people that are doing what you're doing and just getting into that kind of, like, group. Because at least for me, when I grew up, you know, I was surrounded by people that didn't want to do anything like what I wanted to do. And once I started kind of breaking out of those circles and breaking into circles where people were doing the types of things that I wanted to do, it was a game changer for me.

Yeah, it's so true that, that, that Jim Rohn line. You're the average of the five people you hang out with the most.

100%.

And. Well, my tip of the week is learn more about TomCaffarella@tomcaffarella.com. no one's gonna be able to spell Caffarella, but I will have a link to it as well. And, you know, Tom's got a really great site. He's got, you know, weekly training recordings. He's. I mean, he's got video tips. I think they're on itunes. Is that right?

Yeah, we've got a. We've got a podcast, and we're doing training sessions every single day practically for real estate investors. So we give everything away. It's all free content. So if you go on the site, you'll see, I mean, there's at least one or two postings a day of new content that we do where kind of a big believer in kind of the. The Gary V. Philosophy where you've just got to basically become a production company because that's what people want nowadays. I mean, people do like to read, but everything's kind of going video. So we try to put everything that we can on video, including the podcast, our trainings, company trainings, everything that we have, we put up there.

Fantastic. Fantastic. So go there, learn more. And, Tom, are we good?

I think we're good. Yeah, absolutely.

Scott, are we good?

Mark? We are great.

Well, I want to remind the listeners, the only way, the only way we're going to get the quality of guests like a Tom Caffarella who's crushing it in multifamily is if you do us three little favors. You got to subscribe, you got a rate, you got to review the podcast. Send us a screenshot of that review to support@thelandgeek.com we're gonna send you for free our $97 passive income launch kit. So please do that, Scott. Are we just gonna do it?

We're just gonna say, 1, 2, 3, let freedom ring, ring.

Tom's like, oh, no, I don't know.

I know what I mean, but I don't know the context.

Listen, it's a lot better than it used to be.

Yeah. You know, Scotty, one of my first questions I was gonna ask Tom was, how come you can pronounce your R's and Mike Zaino can't?

Well, he's from a different part. Like, he's from.

I'm one of the few people in Boston that does very, very few. Very few.

Why is that?

I don't know. I never moved out of Boston or anything like that. I have no idea what. Just one day, I kind of. I'm not completely Boston accent, you know, it's not completely gone, but I've lost a lot of it, and I don't know how it happened. There's no explanation.

When's the last time you called somebody wicked smart?

Oh, this week, probably. Yeah, yeah, that's what I'm saying. I mean, you know, people. People can pick up on that. I am from Boston, but the R's, for some reason, they are now pronounced.

All right, we're gonna have to work on our buddy Mike Zane, who lives in. I'm not gonna pronounce it. Scott. Is it Haverhill?

Oh, we. That's where we buy a lot of our multifamily. It's a great multifamily market, that Haverhill. Yeah, we do a lot there.

Haverhill or Haverhill.

We call it Haverhill.

Haverhill.

But, yeah, Haverhill.

Haverhill.

Yeah. But yeah, that's a great. That's one of the few markets in the greater Boston area right now that does cash flow. So we are buying there. But even there, it's getting tough.

Mark, are we kind of like honorary firemen there?

We are. We have the shirts. So, Tom, not that we could save your life, but we could look like we could from Mike.

Don't call us. Okay.

Don't call us. Yeah. All right. Thanks, guys.

Thanks.