Investing in Small Businesses: A Guide to Buying Cash-Flowing Assets

[00:00:00]this is the bigger pockets podcast show 6-1-4 that's why i like to buy instead of build as much as possible and people are all like this because the secret is we're not that creative like venture capital you know startups and founders they're like super creative they're coming up with the next tesla i don't have that in me but i can definitely take a business that creates financial models online give it a new website and upgrade some pretty lipstick on the pig and this thing can be a lot more valuable than it is day one what's going on everyone i'm david green your host of the bigger pockets podcast the best real estate investing podcast in the world i'm joined today by my good friend and co-host rob abasolo as we tackle a very interesting topic it's how to make money in business that is related to real estate not necessarily just real estate itself rob so glad to see you today how's your day going so far you know it is going really great because for the last week or so i was a little bit uh down for the count a little under the weather had a throat infection of sorts and uh i'm all healed i went to the ent they did a procedure they fixed me i looked at my dock in the eyes and i cried and i said my wife and i will never never be able to pay you back for this majesty that you've done so um i don't even know if that made sense but i'm feeling good i guess i guess i could have just said i feel good i feel good i recommend you go follow rob on instagram at rob built and look at did you post the picture of the two vials of fluid that they took out of your throat no no i didn't want to do that to my i let people let people like message me and ask i was like if you want to see this message me and i'll send it and i was like thinking oh it'll be like three people and it was literally like 50 people they're like well i stopped after 50. i was like i can't do this anymore but i feel a lot closer and more connected with my my my followers now so that's yeah that's pretty intimate thing to see what they pulled out of here but that i mean in all jokes aside that must been horrible to have that much pressure on your throat you couldn't swallow you couldn't talk couldn't sleep yeah yeah it felt like i was swallowing daggers and then the actual procedure you're just getting poked with needles and stuff and oh man it was uh uncomfortable to say the least but it was literally instant man i was down for six days and then i went as soon as he did that i was like oh man i have never felt so good in my life and he's like well take it easy i was like i don't have to i'm back i'm back baby i can podcast again i was nervous we're gonna have to postpone this well speaking of never having felt better today's guest cody sanchez is an amazing business person who takes what she learned at goldman sachs and other private equity firms about buying businesses evaluating businesses analyzing businesses and now practices that in her world now cody does own real estate and she often buys businesses involved in real estate but she also buys and sells businesses that function like real estate meaning you look at it you see what it cash flows you see what the return on your equity would be you see how much work it's going to be and then you go forward so in today's ever increasingly difficult market to find cash flowing properties we brought you an alternative that is still related to real estate but not directly real estate if you're looking to increase your cash flow rob what were some of your favorite parts of today's show well cody is like the queen of taking a very complicated i don't know idea such as buying a laundromat or buying a car wash or buying a sas product and then doing it 26 times and then explaining it to us and making it sound very very easy and approachable because she talks about her different systems the questions she asks like who should i hire what can i automate what can i outsource that type of thing but she also gives us a really nice perspective on you shouldn't just be looking to acquire real estate but maybe some of the companies that you're already paying think about acquiring them as well so for example if you own long-term or short-term real estate maybe think about acquiring the property management company that's going to manage your real estate since you're already paying them anywhere from seven to thirty percent of your revenue depending if it's on long term or short term so i thought that was just like a really nice very clean perspective from from her and i honestly felt like we could do this like i'm curious i sort of want to go buy a bakery now [Laughter] because you're always talking because of our baker's quadrant so if anyone doesn't understand that that joke people refer to a baker's dozen meaning like 13 donuts so the baker would throw in an extra one there to get you to come back for business so a dozen is 12 a baker's dozen would be 13. rob and i have a uh a way of looking at investment property like a matrix that we look at it through where there's there's five categories to it we're trying to come up with a clever way how we refer to five and quadrant has four and so rob came up with the baker's quadrant and that to this day is one of the funnier things that i feel that way about the famous the famous for the baker's famous four because we we asked the four questions and then the last one is like lastly where can people find out more about you and i'm like well that's not technically a question but it is it is a bonus that's right okay today's quick tip before we get into the show look for fax machines you want to listen all the way to the end of the show because cody talks about when she sees a fax machine what that means to her and where she sees opportunity now it doesn't have to be a fax machine but there are many things you can look for in someone else's business that would indicate there's an opportunity there and if you know what to look for you're more likely to find it so as you're going through your day if you make up your mind that you'd like to buy a business figure out what the fax machines are in that business as the red flag that would draw you to that opportunity same thing works with real estate same thing works out a lot of things in life you're gonna have to listen all the way to the show for this quick tip to make sense but please do because it's worth it all right any last words before we get into the show rob no man like i mentioned uh you know i almost didn't make it today due to due to the six stuff but i i'm so glad i did it because i think a lot of people are gonna leave this episode wanting to buy a bakery i'm calling it i'm calling it right now we're gonna have a lot of bakers a lot of real estate bakers it's a bakery revolution cody sanchez welcome to the bigger pockets podcast thanks for having me yeah so you are a very interesting business person as well as human being from our interactions so far i'm excited for today's show can you tell our audience what you do to make money sure i buy businesses typically boring ones things you wouldn't think about every day like laundromats car washes video production companies and then i cash flow off of them sort of like a bond instead of a stock i don't buy you know companies that i think are always going to skyrocket i buy a company doing a certain amount of profit a certain amount of cash flow and then that i want to hold for a long time and continue to reap the rewards of it so that's most of what i do then i also run a media company called contrarian thinking where we talk about all this kind of jazz so it sounds like what you probably do is look for a business with a some form of cash flow much like real estate you make an offer on it based off of its current cash flows but you see a way to add value to that business to increase it which would also increase the value and then you have the opportunity to exit is that fair yep that's right it's um sort of private equity 101 this is called micro pe so we do it on a little bit smaller scale and we don't always have to grow them actually sometimes we just want to own them now did you learn to think this way from investing in real estate i know you own some real estate which came first the businesses or the real estate oh that's a good question no i was investing in at least from an investment standpoint i was investing in businesses first so i did the traditional route of like goldman sachs and you know how do you know somebody worked there they tell you immediately within meeting them um but like you know wall street um a bunch of different alternative investment managers and in the private equity sphere so i've done a lot of deals over my years and i just saw that i was putting together these really big deals with some of my partners and varying pe firms or investment firms and you know the main guys were taking home a ton of money and i sort of sat there thinking wait a second if they can do this for a hundred million dollar deal or a billion dollar deal why can't i take the exact same process maybe a little simplified and apply it on like a 50 000 or 100k deal and then scale up from there and so that's what i started doing was just applying it sort of in a real estate term applying it on like maybe my first like little tiny studio and then i would go up to a one bedroom and then eventually i made my way to multi-family or industrial or whatever you want to call it you know what this sounds like is when we would interview p that was someone that was a cpa or they were a bookkeeper and they worked for a big firm and they said man our wealthiest clients tend to own a bunch of real estate and that's what got them wanting to get into it you sort of it sounds like you were around people that were doing really big deals pretty smart and weren't intimidated by the thought of buying a business and you watch what they did and said hey i could do that too yeah also i want to point out too that you're like i went the traditional route of uh goldman sachs goldman sachs we were putting together a billion dollar businesses and 100 million deals and i thought why not do this on a smaller scale usually people start with the the boring businesses and maybe work their way up to something like that well i like using house money man i mean i was i was actually scared on my first deal i didn't want to you know if i had to go out right now and i had never bought a business and buy a business put down my own capital or hell get a loan on it just it sounds scary i think i don't think it sounds so scary to get a mortgage on real estate we've sort of normalized it but we haven't really normalized going to get a loan to buy a business with a personal guarantee on your assets that's scary but because i did it first with house money even though they were bigger deals like i couldn't it's not like they were like well i'm gonna take your salary cody if this deal goes sideways it was like maybe i could get fired but i couldn't like lose everything and so that's what i think maybe not that scared about it and that's why we talk about it a lot publicly because i had one ceo who told me we get rich quietly here cody we get rich quietly and i was like i think other people should know about this uh and now i can't shut up about it and if you guys follow me on twitter apologies you already know that can confirm and confirm uh i follow you on all of them cody you're very active on all the on all the social medias um so i have a question here i mean when you're evaluating these deals obviously there's like a very specific way to evaluate a real estate deal you know if you're looking at an airbnb or a multi-family you're looking at things like cap rate cash on cash return you know there's a lot of um kind of standard procedures when you're when you're looking at an airbnb for example if you're looking at buying a car wash or you know a laundromat or something like that is it the same scope of procedure like are you looking at it the same way that you would any typical real estate deal how does that differ yeah there's probably just slightly different terms depending on if it has real estate you know involved in it too lots of people use cash on cash return so that's pretty similar most people think about valuing a business on a multiple of profit levels so if i make 100k i want to buy a business for anywhere from let's call it two to seven x my 100k so for you know 200 to 700 000 um so those are sort of some of the main ways typically though when i think about a deal because businesses can cash flow more than real estate on a like on the total amount that you put down or the total amount you buy the business for i'm really more interested in can this deal make me x amount of money that is worth my you know my annoyance that running any business or buying any business or doing any real estate deal is gonna do and so i usually think about it like i need a deal to do to cash flow me at least 100k for me to want to do it in the beginning that might have been like i need a deal to make me 2k a month and that would be enough um so you can kind of figure it out this way in real estate i think a lot of times yeah you want the rent and certainly in airbnb you guys do really well but oftentimes you want the appreciation too i really just want the cash flow in my deals and i think of appreciation as like the extra sprinkles on top yeah actually that was kind of something i was interested in knowing more about too like let's say you buy a car wash your obviously buying that business but you're also buying the lot in all of the materials and all the structures and all that stuff too right typically yeah um so for a car wash you would so that's a pretty real estate or asset heavy business a laundromat for instance you wouldn't you just want to lock in like a 10 or 12 year lease a long lease because they're expensive to build out most of my businesses you wouldn't own like real estate on them or you wouldn't have to you might own equipment like trucks or tools or machines um but i would say you know like the asset heavy ones are things that blur the line like you know mobile home parks car washes rv parks things that are pretty asset heavy as opposed to most of the businesses you don't have to buy the real estate so on some of these you're just you're literally buying the business and then it's just you're leasing out the real estate but you have no association with the actual building that it's in yeah that's exactly right i mean i have a couple friends i'm sure you guys do that own commercial buildings um i don't own any commercial buildings actually um but the own commercial buildings and inside of them have seen sort of the profits that come from xyz company and so then acquire some of those underlying companies as well or percentage of them so i think that's interesting i might do that if i already owned you know a commercial building basically say well i'm just going to also own the laundromat that's in here as opposed to just get the rent from it and i might do that from multiple sites or maybe i want to own the i don't know nail salon in there because i have a good operator that might run it i like owning those little type of businesses too that's exactly what i started thinking when you were describing this that's the perfect marriage is you buy a commercial building one of your tenants is going into financial trouble they're struggling you see they don't have enough capital or they're not managing things well there's some problem that you feel confident you can solve you go in there and you buy their business at a discount and then you manage it is that more or less kind of the approach you're taking so that's called a turnaround in my world and i actually think you should never do a turnaround for your first deal and you know um i think you and rob could do it obviously because you've done a bunch of deals you run a business like this one is but for most people i don't like to buy other people's problems i'm like i want to buy the like nice-ish house on the nice-ish block i don't want to flip for my first one i don't want to fix because there's enough margin and buying businesses that you don't have to think about value-add right away i actually think that's one of the things that's most dangerous if you do it is like don't try to go in and fix something instead because here's the truth there's you know 2.4 to 2.5 million businesses for sale right now in the usa in the us today only one out of 12 businesses listed publicly listed in the u.s will sell within any 12-month period like imagine that in real estate that just it doesn't happen that would be wild if you were on a street there are 12 houses for sale and only one of them sold not gonna happen so there's so many like good small businesses especially sub let's call it a million dollars in ebitda or a million dollars in profit um then i think what you should actually do is go out and buy like a kind of normal business and you can do some value add on top of it but not a ton so let's say for instance you own a commercial strip mall or something instead of you having to go fix a business maybe you've just had that building for 10 years and you know that you know most business owners something like it's a wild number eighty percent of small businesses in the us that are for sale right now are are held by baby boomers and 50 of all small businesses in the us are held by baby boomers that are nearing or at retirement age so there's something like five trillion dollars in assets that are going to transfer from these small businesses to other people so you might just have like dave's i don't know laundromat i need to use a different example because i don't always think laundromats are the best dave's hot chicken okay nope not restaurants we don't like restaurants okay no restaurants dave's no chipotle there we go dang it yeah yeah yeah dave's equipment rental i like that business um dave's equipment rental business it's in your commercial thing and the guy's like 65-70 he's ready to retire he's a great tenant they pay on time you kind of see how he runs the business it seems to be fine you want to talk to that guy and just ask him like do you have a plan does your son want to play on you know video games on twitch all day you know does your daughter want to be on tick tock instead of run your business i could buy you instead you know you know me we've known each other for years and i'll run this business on a go forward basis that would be the deal i would look for man that's super interesting so i i i think you mentioned this before uh not on the podcast but isn't there like a wild amount of people that are just gonna close down their business and not even sell it like just because they don't know that they can sell it yeah i mean it's i everybody always says and like i'm sure people say this on the podcast notes they're like the business is profitable why would anybody sell it this never happens people all get all up in arms when i share my deal details yeah the tick tock comments oh yeah what do you know why wouldn't the owner just keep it for themselves exactly you're like do you keep every house that you've ever owned for yourself even though almost every house has appreciated over the last 20 years probably not same thing but these these business owners like why i started is i have an uncle uncle ebb who's since passed but he owned a plumbing company and why i started talking about this more publicly or thought it might be interesting maybe i maybe i thought people thought i think it was boring was because he had a business that was doing five million dollars in revenue and about two to three million dollars profit and he had run this business called ebb homes plumbing in phoenix arizona for like you could look it up it was like 12 years 15 years 25 years a long time and basically he started getting a little sick was looking to retire he was in his 70s and instead of selling the business because he had no idea you could do that he didn't have a college degree um you know i i was too young at the time to really understand this he wound down the business so he had an asset that was doing two to three million dollars profit which means he could have sold it for like six to nine million dollars and he just shut the business down um and that happens every day that is that's crazy so here's what's popping in my head right and you know what i'm gonna give you an example of what i see happening all the time and then dr cody i'd like it if you could give me the prescription for this i and many people i know many of them work on my team so they're entrepreneurial minded they're people that like rob and i brandon and i they're drawn to ways to make money they're not afraid of hard work and they want and they see the value of we're going to call it passive income even though owning a business isn't passive and owning real estate isn't truly passive but it's not directly tied to getting paid per their their time it's more getting paid for their ability to make solutions i think many of our listeners are like that so that when they're in real estate they're like i want to buy that house and that house and that house and they try to figure out a way to force that deal that square peg through that round hole and it very rarely works out well in business i see it it can work out but then what happens is you've got six different businesses you own and you're the only person trying to do it all and you're frantically running from one thing to the next like to me it feels like you got you're in a submarine and there's a hole and you like stick your finger in the hole like in the cartoons and then another one pops out over here and then you're sticking a finger there and you're sticking a toe over here and then you're taking a finger out of this one and put it in that one and then the water hits you there and that that's what it's like when you're running multiple businesses and what you realize is i need more fingers i need other people to sit here and help and then you try and then those people instead of plugging the whole or texting on their phone or they're doing their own thing and you realize it is freaking hard to find people to help me do this and then you're discouraged because you feel like a failure you don't want to tell everybody because you probably reflect on instagram telling about this business that you own you want to be a big deal and then you're just getting stressed out and you hate your life and you're going to bed with anxiety it could quickly overwhelm you and i don't know many people that figure a way out of that so is the problem that they shouldn't have jumped in is there is there an approach that you like to take so you avoid that do you have a skill set other people need to build how do you solve that problem of i own all these businesses but i'm the only one that is doing all the work yeah i mean well one i would say um the most important thing is you need to buy a business that has enough profit for you to put an operator in if you don't want to run the business overall so if you are not going to be the one plug in the holes in your business um then you need to have let's call it at least 100k that you can outsource part of the ownership the operations of the business to somebody else and i like to have like at least 100k because right around 100k you can start to hire somebody really good who you can incentivize with equity on the way up or with revenue share or profit share and that person will help you plug those holes because they think of themselves as the ceo of the company they're operating it and then you just have to do really good on your hiring um and you know the what is annoying i think is with all the whole plug-in that's usually when you have sort of executioners people who just execute on tasks as opposed to somebody who operates and thinks about the business from the highest level and so that's what you want um i sort of recommend that everybody mess around and get their hands a little bit dirty for their first deal in buying a business because if you've never led a team before or you've never run a business you know how are you going to know if you have a good operator or not i think that's really hard to do so that's what i would say is first thing make sure you have enough profit to layer somebody on top of it and then to your point there's two ways to play this game decentralized leadership which basically means you do a ton of work up front to hire the right kind of people and you put systems in place to monitor them but mostly it is a ton it's like a colonoscopy to start followed by at the end this person is like massively trusted you know you're not watching their every move you're not micromanaging them because you did a lot of the upfront work and now you just have systems in place with kpis to make sure that they're still running the company well option one option two would be you have you know a process whereby you you have your hands involved in a lot of oversight and that i think is where people get stressed out like my businesses by and large do not call me and instead of calling me they would call the co who sort of runs the operations i have now only two i used to have three businesses i was actively involved in and now there are only two businesses that really take up my time during the day the rest of those businesses are like bonds like i don't call to check if at t is going to pay me the right amount each month they just pay me the right amount then that comes with hiring right and structuring the deal right in my opinion i think you said a lot of good stuff there because a lot of people they either want to get into a business or get into an establishing business like let's say real estate they don't want to work and i understand that right like but i also think that you have to earn your right to not work and so i get a lot of people like students of mine that want to start airbnbs and they just want to go straight to a property management company they want to hire someone to set it up they want to hire someone for every aspect of it and i'm like dude you haven't done this yet you need to learn how to fail several times and you need to fall on your face and you need to like understand what it is to manage it to deal with cranky guess to deal with water leaks you need to do that for at least three months before you go and hire hire it out and pass it on because how can you communicate with the people that are running your business if you don't even know how your business runs so i like that you said that you should get your hands dirty because i think that's pretty applicable to pretty much every facet of real estate yeah i totally agree i mean the other thing is i mean quite honestly i don't know it's something about real estate and business is less i think because it people know that there's lots of levers you can pull in businesses there's not as many levers you can pull to make changes good or bad or real in real estate i don't know correct me if i'm wrong you guys know more about it than i do but for some reason i find sometimes real estate attracts people who are like well i just buy this thing and then i cash flow on it and that's it and then i never have to do anything again and i just think first of all yeah i think i buy it and i sit on a beach no i think it's so boring like you'd get so bored and you're gonna be boring because nobody wants to talk to somebody who does nothing all day and so i actually think people don't really want that they just think they want it because they hate what they do but then when you like what you do like i couldn't pry you out of airbnb some way rob out of your like cold dead fingers you would be fighting me right because you like what you do i just had a very deep conversation with the ceo of the david green team yesterday about this topic cody it's funny you bring it up so i realized about myself i was a police officer i liked the job i did not like the having to work 20 hours a day never having a social life not being able to be fit never sleeping like you can't really have a family and have a good quality of life because your day's off for tuesday wednesday it's just it's hard right so when i was i was kind of sold this dream that you buy some real estate and then you never have to work again your tenants will fund your life and you're gonna travel go on boats sit on the beach like just walk around with your chin up because i made it i worked really hard for three years and i'm done and that seeped into my mind i think it came from a lot of places but overall it's usually a dream you're being sold as opposed to a reality because nobody buys a reality and that's what marketing is it's to make things look better than they are when we take pictures of listings we don't show the bad part right you make the house look great and so i started the david green team and i i figured out how to hire people it's horribly hard i got a system going where i had good agents we it became profitable and i thought i'm done i'm just gonna coast into the sunset and every time a problem happened that pulled me back in i was uh like resentful i just in my head i was like why should i have to deal with this i'm supposed to be over it but what i noticed was when you stopped paying attention to an organization like that that were they were drawn because of me your best people are like well dave is not really around i'm not really getting the leadership i'm not growing the way i thought i'm gonna leave now you gotta jump back in because a really good person left or the person who is running it still sort of needs your mentorship unless they've done this before and i was there's not a lot of people that have it's hard to put on your resume i ran a real estate team there's no college degree you get for that so you kind of have to grow them from the ground up and when they would need something and they could tell i was resentful they didn't want to reach out so and that's been the case with every business i've had like you i don't have to do everything but if you just completely turn your back on it rental properties as well they fall apart your property manager is trying to do the bare minimum that they have to to keep a check coming for themselves they are never going to be as involved in your property as you would want to be and so i came to this epiphany that it was stupid for me to think i was never going to have to work because i made one or two good decisions what i got was a better type of work i'm not working 20 hour days i can wake up when i want to i can work from the gym i can work from vacation i can work with creative elements of my mind that are fun that release dopamine i get growth i'm not just stuck you know in a factory punching some metal like eminem and eight mile for the rest of my life you're not breaking your body there's a lot of benefits to why to do this but it's not you're just done working and even if you bought a bunch of rental properties and made a hundred grand a month you still got to pay attention to what's happening in them there's still a form of work you're still going to have to solve problems and when i accepted that like life doesn't work this way where you just do nothing but you can definitely do better i got happy again the resentment went away i was excited like you're saying this this became fun i started like ooh that's a really good person i'm excited to help change their life and i want to see them grow and you start thinking of things just like what you were saying but there was this block that my expectation was ridiculous i mean it's probably like if you're married and you think once i get married i'm done i don't have to work anymore right now i'm in a long-term relationship i can let myself go i don't have to pursue this person that's probably the opposite right you're gonna work in that relationship but it should be work you enjoy because you like the person is that similar to the approach that you've seen yeah totally um i think it's two two sides um what i've noticed is yes uh i would be super bored if i did nothing and so i think your reframe of hey every chance that i have to engage in this is actually kind of an opportunity is super important um there are some businesses so i've had businesses kind of like the ones you talked about that really require a lot for me i just sold one i signed the deal yesterday actually um because it was too much actually it was like exactly what you talked about it was not enough money for me and then the guy wanted a lot from me and so i basically said i'm out you know you can buy me out or somebody else can but we're gonna sell this side of the business the flip side of that though is i found when you have really good operators and they're incentive aligned like humans are like pavlov's dog like if you ring a bell and every time you ring a bell you get a treat it turns out like when we ring the bell you start to salivate right that's like what pavlov basically taught us and so i think it's the same with operators and with people who run your business you just have to do a ton of work to make sure that your rental your property rental so for instance we have a property management company and we own a bunch of uh not a bunch we own some airbnbs and um the they get a cut uh they get a cut of the rent or the the total income just like most property managers do but they also get a kind of cut of the overall portfolio and so and they get an opportunity for us to put up capital and them to do new deals and then to get equity in those deals if they find the deals and i learned this from my other friend alex who runs the same thing and now has a commercial loan on his portfolio and this guy who runs it is more like a ceo than just you know running a few property managers uh properties as property manager so i actually think the key is really finding good people that are better than you like if he brought me in to run this property management company i would be a mess like i would definitely the business would not work because he's better than me he's incentive aligned and he wants to keep making money and seeing this grow because you know the bell rings and the treat is there every time yeah that's such a powerful part of motivating people i think one mistake that we make in business is we assume everyone's motivated by the same things as we are and that's not the case and the other part is you assume people you underestimate the value of motivation like what you said is the condition like when the bell rings the dog salivates because it knows it wants food it's hard if you if you make someone delay gratification for too long if you're like just work and slave away and in five years this will pay off but they're not seeing the milestones they're not getting that hit of like oh we made progress most human beings are not like us that are just going to grind away until we get there you have to set it up to where like have you noticed that as well oh yeah i mean 100 and but i forget it all the time to your point like i talk about all this like yeah i i get it um but i my usual uh sort of treat that i hand out is is cash right like i'm like hey if you make this much here's how the sort of milestone going gonna kick in and you're gonna make this bonus or x and x if y happens and then i forget like some people just want to go home at five every day and like not have me slack them 24 hours a day you know and like other people just like really like what they do and want to make a good amount and don't want to be scared that they're going to lose you know their job and so i i make everybody do those disc things not for them as much it's for me it's because i need to understand this other type of human that isn't just a total animal non-stop obsessing about business yeah i think you do that right dave don't you uh you make everyone take disc tests too i'm a huge disc believer to me that was the rosetta stone that helped me understand why every human being frustrated me all the time because i did not know that i am a very rare profile and my communication style is not like everybody else's and when i figure that out and i learn how to talk in their way all of a sudden they liked me we got a long way better our relationship improved before that i was like why is only nine percent of the population get it and nobody else does yeah you probably intimidate them too you're a big jujitsu doing dude you know so add that and you're i don't think you're a wallflower dave i imagine you you come out a little strong huh that's what i'm told i probably hear four times a week i'm intimidating and i'm always like why what did i do that was intimidating but they're too intimidated to tell me so i still haven't figured that out 20 years as a cop will probably do it too or however long you said yeah i actually wrote an article about the dick's profile on bigger pockets so people search the blog they can they can see article about what we're referring to i'm curious cody what are you what's your setup oh god uh that's a really good this this shows a lack of self-reflection um so my profile i don't remember what i am what's the other profile that's like the the myers-briggs myers breaks a 60 gram no i don't remember that one either the 16 personalities one i'm not a commander that's my husband this is gonna be a really great answer i can't remember i think you're a high d right because you wouldn't care that's the um decisiveness they make decisions really quickly they're comfortable in situations they haven't been before yes i'm that one dave yeah because a d wouldn't really care what the disc says it's too busy making money and making decisions to stop to but you recognize you need to know for how you communicate with others because you're a leader and that typically ends up being these usually end up in the leadership positions that makes sense so a quick rundown is these are very comfortable making decisions when they haven't been in that environment before they're very decisive eyes are very interactive like rob i would have a very high eye they're they like people they're likeable they're the most popular people in high school the social butterflies yes that's it that's an eye right you you want to get an eye to like you if you like compliment them on something or they can tell you like them they're oh my god they love you if they think they're not liked they don't know what to do it's really unsettling s's are your stable score this is the pace that you like to live life at they don't like surprises they hate change they like predictability they get the same thing every morning for breakfast they want to come in the office if something changes the first thing they say is but i thought we were going to do this they're like the hardest to get along with with these like me are the s's because we changed everything like that this is better let's switch it and then they're like wait wait wait i thought we were gonna do something else and c's are your conscientious score this is your architecture engineers your lawyers your doctors the people that like everything needs to be perfect they're really good with spreadsheets and and data and analysis hmm yeah okay yeah first glance i'm like definitely an eye i think yeah i think you're an ic because you're also very good with detail you you get you catch a lot of detail in a lot of different scenarios it's not that i want to it's like i would rather hire someone or have someone on my team that's good at the details because like i really run free when i'm not having to be the one keeping track or keeping notes or keeping score i just kind of want to run with ideas but as you grow in your you know your wealth your portfolio your business you kind of have to start being more organized or else you're not going to make you're going to stop making money and you're going to start losing money so i'm kind of at that point where i'm like uh so you know i've hired people appropriately to to help me with that i think yeah i think the hard part is for me well i just showed you guys but i have a really bad memory and so what i've realized is we have to have processes and procedures for everything otherwise if you're running a lot of businesses you're gonna forget it um and so i'm i'm really not very detail oriented at all and i have to hire for that constantly like my first hire is almost always a coo for any business or at least a chief of staff because i need somebody who's the opposite of me like don't worry about bringing in the sales you know don't worry about fundraising you know don't worry about sort of the growth plan overall or hiring people but do worry about you know making sure that we pay payroll at you know 12 o'clock on a friday every week um so yeah i think it's it's really important for sure so yeah i guess i wanted to dive into that a little bit because i know you've bought 26 businesses you mentioned which is a lot and from that you sort of have uh baked your your philosophy or your pov on this down to three questions that everyone should be asking when they're buying these businesses is that about right yeah um actually my executive coach told me these it really comes down to like uh not just buying businesses but whenever you have a problem i basically ask myself you know who can i hop instead of saying you know have you guys read the book um who not how read it i own it but no i haven't read it yet i was gonna say is that better or worse so um none of these ideas are like new or uniquely mine but this who not how i think is a an incredible it's a listen you don't actually have to read the book i would recommend audio um but basically every time that i have a problem i come into asking myself um instead of how do i tackle this problem i say like can i who can i hire um you know how can i outsource this problem uh or you know individual issue who can i delegate to you know on this instead and i also ask myself can i buy it instead of build it and so we have like these series of questions that i'm always asking myself instead of how can i do this it's can i buy it can somebody else you know run this business for me can i delegate this this task instead and i kind of go back and forth between those three or four questions almost every time we interviewed the author of that book benjamin hardy on episode 425 people would like to listen man you look that up really fast it's my high d nature things have to get done quick so we've talked about who to hire um i guess let's talk about what can i buy or can i buy it because i know that that's something you and i have talked about um several times i'm like man i want to just go and build this and you're like well can you just go in and just buy something that even if it's not nearly as good as what you want it to be that you can make work so is there a reason here um i mean i know there is but you know what's your personal reason for always just buying something that may not be working and is it because of the value add component that you can add from to actual value increase the value of your business i think i just don't really like risk so if i can buy a business i already know that i'm operating with some level of profit or cash flow flow and so people might think it's risky to buy a business but i actually think it's much uh less risky because if i build something i've got to put a bunch of money down on hopes of future dreams right i suppose it's the same with real estate it's like no i'd rather buy this house that's done i could build it which could mean that it's cheaper let's say to do it but it's going to take a long time and maybe i don't have all the expertise on it and it's the same for a business so like for instance i want to own um a funny i want to own a bunch of financial models and tools for our main business contrarian thinking that's the one that i'd like play with the most these days where we basically go and we talk about how to become financially free free in your mind free in your bank account um and i want to own a bunch of like models so basically you know could you here's a due diligence checklist um here's a mobile home park uh model and i would like to like build out this suite of products and so i was starting to think about okay well um you know i'm gonna hire a bunch of my ex analysts i'm gonna have them build out a bunch of these models because i don't want to do it all and then i'm going to put it here and we're going to have this marketplace of stuff people could pick from and then i was like wait a second there has to be some terrible website located on the internet that's built in the 80s that's full of financial models those don't actually change that much we could slightly tweak them why don't i just buy this business so i started reaching out to a bunch i looked up this one company um i think it's called e-financial models creative name uh terrible website terrible ui ux they wouldn't let me buy it he's based in zurich but if you're listening still interested um but then i found another business that's similar to it and it would cost me in time and hours probably i don't know 100k and a couple months to build out what i want to build and i think i'll be able to buy this business for maybe 200k so you save me three to six months on it i pay a premium of like two let's say you know 2x on the business and then but it's rocking and rolling day one and it already has income coming in to start you know profiting off of so that's why i like to buy instead of build as much as possible and pe people are all like this because the secret is we're not that creative like venture capital you know um startups and founders they're like super creative they're coming up with the next tesla i don't have that in me but i can definitely take a business that creates financial models online give it a new website and upgrade some pretty lipstick on the pig and this thing can be a lot more valuable than it is day one so on that financial modeling business are you actually planning to cash flow on that business or is that just like a like a value add that's going to be part of another the contrary in thinking brand no i'm in a cash flow on it so this is this gets the point where i guess we could talk about ecosystem or satellite businesses so in my land if we think about contrarian thinking it's a media company like similar to bigger pockets right much smaller scale but um i don't know if you like dave have you guys ever grown through acquisition at bigger pockets i know acquisition of real estate obviously but anything media related um i believe in general it's it's typically like in-house organic yeah um so i like to not do that as much as possible it's super it's taken us a year and a half to build 100k newsletter list we have like 1.5 million social followers across the platform that's pretty fast growth but you know some of that's like you can't make that happen you know some of you have to get lucky you got to get viral whatever and so for country and thinking we have this main newsletter business and this media around it which is just social media and i'm trying to figure out i want to own the entire ecosystem of small businesses so when people think boring businesses small businesses i want them to think cody sanchez contrarian thinking and the reason that i'm building a big social following is because i'm going to buy all the companies on the periphery that people are interested in if they're investors in this space so i'm going to buy this marketplace because then i have every financial model you could ever want to analyze any small business and i'll charge you some percentage on them i might even allow people to upload their own financial models and then i'll just take a cut and then i wouldn't have to keep uploading them somebody else could do that for me and i'll become more of a third-party marketplace as opposed to my own um you know i also want to buy well i think we just might have closed this yesterday we'll see once i get back to the email here um we're buying like a chat bot service for small and medium businesses it's a business that's been around for 25 years and basically it's like say you have a locksmith issue and like you're trying to get a locksmith at two in the morning this could be like a real human that would respond to you and say oh yeah great we're gonna connect you to greg you know whatever sends greg over there it's a customer service tool and so i want to buy that company and stick it into my ecosystem and if i owned a bunch of real estate i'd want to do the same thing i'd want to buy companies surrounding my real estate so that i could increase my revenue and profits and diversify in you know non-re recession um or in recession resistant asset classes so what about so let's say there's a real estate investor who's doing pretty good with real estate investing or they maybe i could say it like this a lot of people get into real estate investing because they think it's gonna be passive income and once they get there they realize to be good at this still takes a skill now some people are good with bookkeeping some people are good with operations some people are great at negotiating others find the deals so whatever your natural skills are they show up in this world this isn't just a cookie cutter type of investment like buying a stock so i feel like there's a lot of human beings that will get pretty good at this but we'll realize you know what i don't want to have to keep doing this element of the business i really like this one those people will be naturally drawn to owning a business that sort of focuses in that area what are some ancillary businesses that you think that real estate investors could look into buying to help supercharge their own business and increase cash flow yeah well we have a group called unconventional acquisitions and there were i would say like there were like 10 or 12 guys that started who are all real estate guys one's name is lloyd and he owned a bunch of multi-family units i think it's in south carolina somewhere where there's a lot of weather basically and was having to do a lot of roofing repairs continuously to his relatively large portfolio of multi-families and um and so anyway so he started sort of talking to us about how do you do this and we were like well fir i'd like to do something called a personal p l review so basically i say for yourself personally where do you spend money every single month sort of track any of those businesses that are small enough for you to get to the ceo and then for your business do the same thing where do you where does your money go what are the owners that you could actually get to out of your p l and um and so he was like god i'm spending a ton of money on roof maintenance a year he's like why don't i reach out to this guy and see if he'll let me buy his business and i was like okay definitely could do that but lloyd you've told me before like you don't want to work a ton more and you don't want to operate this business and he was like yes both of those things are true i'm like okay so instead why don't you reach out to this guy and say hey i calculated that i give you i don't know 200 000 a year in uh in revenue from my properties i also have friends that have properties of x which would equate to y of total revenue for your business what i'd like to do is i'm going to buy a roofing company it could be yours it could be somebody else's and i could buy one out right or i could invest in yours and i could invest in years on a discounted term because i'm already giving you 200 000 in revenue uh and i could bring you these additional people so i'll put some money on the table but also give me an earn out for all of the new business that i bring to you and a discount for all the business that i already have with you and so he did that and now he owns part of the roofing company without having to run it so that would be a lazier person's way to do a deal like this and the only thing you want to make sure of is that you're able to track the financials i require that i can see into the financials or my cfo can see the financials of all the businesses we own a certain percentage of so i make sure nobody's skimming off the top i'm sure they still are but you know not too badly yeah that's actually really smart and i think you even mentioned this earlier about you kind of own your own property management company and that that is starting to make a lot more sense to me where i am starting to hire more people in the airbnb businesses like interior designers or property managers this is a whole like rabbit hole we can go down towards but it's starting to make a lot more sense to just sort of absorb sort of not necessarily companies but freelancers that kind of have their own business in kind of becoming like a it sounds sort of like what this guy's doing like a super affiliate where you do own part of it but you're the one that's fueling all the leads that come into that business and thus you get like a payout from that is that sort of is that sort of what this roofing company is yeah i mean i call it a rev share acquisition so basically you buy something meaningful to you 30 to 40 percent of a business let's say and you buy it through the revenue that you're already giving the business and through because you have a giant marketing bull horn in your industry through your additional distribution um and and usually for small businesses i mean what is the one thing most small businesses are bad at it's usually sales distribution is always a major pain point so you can get access to a business sort of two ways um without giving capital one would be give them more you know get them more customers so they'll give you a percentage of the business for the additional revenue or help them cut costs um helping them cut costs is i think never as fun and it's sometimes harder to do so i like if i'm gonna do a rev share deal with the business i'll do it based on how much business i could bring in with them i mean we just did a deal the other week where we're investing as a we're not a majority investor but a minority investor in a company and they are raising capital and we wanted to be meaningful in it but the the level that they're raising capital at the valuation right now is like yeah buddy i want that too for you but it's not gonna happen in this world and um and so i said hey listen like we'll invest in you but we're gonna invest in you at the last round's valuation not this one and the reason why you're going to let us in there is because we're going to be a we're going to be a bull horn for you we're going to be a foghorn for you and we're going is bullhorn a thing i don't think that's a thing is that anybody know i don't know if foghorn is a thing either though foghorn is like the brain isn't it yeah a bull horn is i think what you talk into and it amplifies your voice oh so both work no that's a that's a megaphone so a bullhorn is what like uh it makes a bull sound when you blow into it maybe it's just the horn of a bull i do live in texas yeah that actually makes a lot of sense cody okay got it you're right david it is an electronic device for amplifying the sound of the voice i apologize for calling you wrong on national podcast because i'm such a big person i will forgive you for that literally and figuratively um so we're gonna full circle there cody nice that's exactly right so um anyway so i think uh that's what i would do i love those rev share deals for people who haven't done a lot of buyouts because it's less scary you're like oh i don't have to give you a lot of money i just future potential money that makes it less scary i think that's sort of where i think you know i'm figuring out like where i want to be entrepreneur wise and like real estate investor wise influencer all that kind of stuff because i uh i even forget i said that editor take out that i called myself an influencer uh no i'm just kidding i you know in this space where i'm at my platform it does seem like there are a lot of businesses that i want to build and i understand that there's so much time involved with doing that in the real estate space like thinking about a like a short-term rental product like a service product and this and that but it makes so much more sense to just use my platform to be sort of a super affiliate for businesses that i really really really believe in because then i don't have to build the business i can just send the leads and it's so much easier to do that kind of in my stage right now yeah agree i just wouldn't use the term affiliate because you want ownership i mean you guys know this the hardest dollars are the first dollars and so um even if you're not like materially changing the outcome of a business to like 100x if you are taking somebody from a business that does a million dollars to two or three that's really really meaningful and so i think the problem with affiliates just categorically is you know you get somebody into somebody's ecosystem but you normally don't get paid for the lifetime of that client and for the reciprocal of like the one client who talks to somebody else who talks to somebody else so i really think you want to get actual ownership you want equity ownership that pays dividends on an annual or quarterly basis on the same rate as the rest of the owners so they can't cut you out of deals like if they're paying themselves they're paying you too um that's what i would say i i don't do affiliate deals for that reason kind of exclusively yeah and i agree let me clarify it's more like i call it super affiliate but what i really mean is like hey once i get to once i get you to x in revenue and if that matches kind of where you're at that's when i'm sort of brought in as an actual partner equitable partner in that company or fund or whatever yeah um i like it so we talked about uh the roofing company if you're a real estate investor and you're looking to broaden your horizons is there any kind of other real estate niche or anything that they can jump into and diversify outside of something like buying an actual company that you're spending a lot of money on yeah i mean well i mean i think um so do you mean types of companies or structures of deals or both yeah both really anything in the real estate space yeah there's a ton of sectors i think that makes sense for real estate i think you should just go from proximity bias so like closest to real estate would be um normally some of your biggest expenses so property managers less let's say then it might be owning the mortgage company then it might be owning the marketing company that does all your social media marketing for your company overall then it might be the higher you know the hr recruiting company that recruits for your underlying real estate company um so i think you kind of go out from like what's closest to your business and you know move that way i have another guy that owns um commercial property and buys landscaping companies he's bought like two or three sold one for 10 mil um and it's because they serviced all of his commercial properties and so he got to know the guys they showed up all the time on time they were underpriced often they weren't automated they had no bad systems my favorite businesses like every time i see a fax machine i just get all hot and bothered i'm like oh this is gonna be so good because you know that if they're still using a fax machine like i can only imagine what their yelp profile looks like right uh i'm real fun at a party guys is what i'm trying to tell you um and so anyway is that a machine back there i know like nobody's invited her again um but i so i like those businesses that you can add just a little bit of technology to that are close enough to real estate um so that's probably where i'd go first last diatribe here is um i also might like you know how you guys probably just see it like you know how you can see a property probably online or you could drive by it you're just like that's a good property like i bet this person does x with that i don't have that muscle for real estate because i don't see as many deals as you guys do like i've sent airbnb's to robbie's like nope 30 seconds let me tell you why like oh okay cool got it um and so you get that with deals after a while so what will happen is the second you start thinking how can i buy the solution to this problem instead of build the solution to this problem you'll start talking to other owners and they'll be like yeah i'm retiring i don't know what to do next like i have this business you know i'll probably hand it off to the grandkids and they'll burn it to the ground and you like are on them like white on rice so it doesn't always have to be exactly real estate related it could just be in real estate you guys know so many people in the community use that to your advantage it's really great well i mean there's a couple ways we can go with this we can actually jump into the deal deep dive and talk about one of them or you can also you know rip apart one of our one of our deals uh what do you think dave let's go to the deal deep dive i want to hear about a business that cody has bought yeah well let's go let's go with the recent one i'm gonna pull up some numbers here so i'm not lying to you guys because that's not a good way to start a relationship so we will we will ask you questions cody we'll fire him at you and you can just fire back oh i like it let's go all right question number one what kind of business is this uh this business is a sas services business so it's a business that um does like templated um processes for hiring and uh how did you find it i have a lot of the reason i am so much on social is so that people will send me deals so this one one of the people that follows me on social sent me this deal next question how much was the deal the bus this business was 120 000 with an additional 135 000 of earn out uh so 255 dollars 55 thousand dollars wow that's a good deal maybe in the sixteen hundreds back when it was a louisiana purchase that's funny that's a that's a real that's a historical deep cut is what we call it yeah that'd be great for tick-tock that should probably go down as the best real estate deal of all time have we ranked like best real estate the louisiana purchase has to be up there i think that's up there i don't know it's gotta be i don't think that one's up for a contention um how did you negotiate it so this was relatively easy this business they've been in business for six years it's one of the guys projects he has multiple projects so it's getting kind of no love and it's a really cool interface but no distribution on it so i found it because we used the tool in one of my businesses to hire people and then uh just reach out to him i was like what are you doing with this what's happening got to know the guy never i never really just usually reach out to people and say hey can i buy your stuff that doesn't usually work out as well i just say like i'd love to talk to you this is a cool business i get to know the guy and he tells me yeah it's just one of the things i run but i'm really focused on this ai such and such i'm like great and so i asked him a little bit more about the sort of numbers on the business he tells me uh and then we start kind of talking sales okay when you decided to buy it how did you fund it this one i bought with cash uh not much it wasn't a huge capital outlay um and i wanted it to close quickly so 120k down and then the earn out is that additional 135 000 that he will get but he's he's funding me in seller financing over the course of i believe it's two years okay and what did you do with this business haven't done anything yet except started to take over the business and run it you know it's a profitable business it's not huge it probably does something like you know eight to thirteen thousand dollars a month in profit and this business um is one that what i wanna do is plug it in with this other company that i'm gonna buy and i already have the operator that's running this new business and he's gonna run both of them and then i'm going to integrate it into everything else that we do so like it would be like i guess if you had like a lead gen software or something like that or a hiring software or something like that for your real estate company i just want to plug it into my ecosystem make it easier for my company to grow and then i'm going to distribute it through our social and media following awesome all right so so far what has the outcome been uh the outcome here has just been i mean sales are our uh standard i mean i got this deal at so if we're making let's call it split the difference and say we're making ten thousand dollars a month just to be even across the board that's 120k a year and that's essentially what i put down so i bought the business for one 1x down with the total value of the the business is or i'm sorry what the total profits of the business is and then let's call it another two point i don't know one x uh on the i'm sorry another 1.1 x on the future revenue of the business so right now you know we're profitable buying this business inside of two years if nothing grows like at the end of two years every dollar that we make on top of it is gravy um so that in itself would make me happy but the thing that we're going to do is connect it with this other company and then i think this thing could be worth a few million dollars i mean my target for it i modeled it out and thought we could turn this into a 5.7 million dollar business sort of with our ecosystem and not buying any other companies so we'll see 5.7 million oddly specific but i love it yeah last question for you what lessons did you learn from this deal um probably a couple things i don't know if i learned from this one in particular but first would be um keep the deal terms really simple so this is an older you know kind of gentleman uh that was running this company and he didn't want a bunch of like i wouldn't give him a full term sheet basically i typed out bullet points so this is what we're gonna do nothing else besides you know these main terms will get snuck in there and that allowed us to turn around the deal within like 48 hours and and then we papered it with the attorney so i would say keep it really stupid simple and you'll close a lot faster and not scare the seller off awesome all right well thank you cody we don't get to hear every day about you know what let me ask you one last question before we get out of here yeah if somebody is interested in either buying a business or selling a business they have how do you find the equivalent of a real estate agent to handle that transaction yeah it's called a broker you can't really do it for there aren't really brokers for you if you're buying a business you can get on the rolodex of a bunch of sell side brokers that's the norm so any broker is almost always going to represent the seller there's not like buy side brokers um unless maybe you're really big and then you bring them in-house and those are usually called business development guys um so the way that you find them is you go to somewhere like quiet light brokerage you could go to e-commerce flippers you could look on biz by sell and they're going to have a lot of brokers listed that you could work with they're repping deals and then you start to develop a relationship with them like hey when you next get a seller that's doing x y or z call me if it's these parameters um and i do like to develop relationships with them they'll give you especially if you buy something from them once they know you're a player you're not going to waste their time they'll give you a lot of deals so would you just google like business broker yeah well i would go to those three i really like if you're gonna buy online businesses i'd go to quiet light brokerage or e-commerce flippers but yes you could just google business brokers you could google i would try to be more specific i might say like business brokers in this geography i might say uh business you know hvac business brokers laundromat business brokers kind of like narrow down what your specific segment is so there's oftentimes specialists and like support groups industry groups basically so when are you going to buy a business brokerage to make money from businesses that are sold and then get the first shot at businesses that are coming available boring business inception yes nobody's nobody's listening right um funny story actually so when i was first starting to do this this is this is only funny to a nerd but i reached out to this company called biz by cell and they have this like terrible interface it's super 1980s it's not optimized there's a bunch of trash on the website and um and you know i'm not a billionaire but i reach out to these people and i'm like hey you know has anybody ever spoken to you about buying your business like i'd like to buy biz by sell and you know i don't get a response and i don't and i kind of like try to get a bunch of different ways and then i um google who the parent company is and realize that they're owned by cormark which is like a 47.3 billion dollar company and so uh so i have tried to buy business buying sites but the really good ones are very valuable like i bet that company is worth 60 to 160 million dollars something like that i'd still buy it at those terms if they would sell it actually i just need other investors but i might invest in two smaller marketplaces that i'm looking at right now there's really there's not great options to go up against them like we need a zillow or redfin for businesses that's really well done and it just doesn't quite exist yet for for hard asset businesses for online businesses there are some options hmm i wonder if there's anyone on this podcast that's capable of taking that on i don't know guess we'll see i would like to talk to them because this is an issue that i often have i you know here cody i'm going to kind of tie this together what i love about this and why we wanted you on the show well first off you're awesome at what you do it is very rare you come across someone that can do what you do and it also is personable enough to explain it typically the people like you are very hard to understand they can't articulate what's in their head it's it's you know what i'm getting at but in this era we're finding it harder and harder to find cash flowing real estate it's getting increasingly difficult because in general owning real estate is less work than owning a business so all this money's been printed by the government it falls in the hands of smart people they have to deploy it it's usually less risky and less time consuming to go buy a bunch of real estate than it is to go buy a business where you have to like you were looking at you have to oversee it make sure people aren't skimming out the top it's a little more labor inducive so that has created this really big bubble in the real i shouldn't say bubbles it's not like it's going to pop but it's created a very hot market where it's harder to find real estate deals but business deals are everywhere like you're saying there's all these baby boomers that are aging out there's a there's an epidemic of fax machines that are screaming come by me right so this is a way that if you're into real estate and you want to work in the space that you can become an owner of a business and and still find income coming in from something without just buying real estate so i want to thank you for sharing this and for rob for you how do you guys know each other by the way i never asked that i don't even remember how did we become friends oh i could be online your podcast like a year ago i think but i just meet you online was i just following you yeah yeah i think so you're like oh this guy builds tiny hosts i'd like to have him on my on my podcast and then i think i i ghosted on accident i was busy did you i was busy learning who i was and then you you emailed me like three more times i was like fine i'll do it and then i was like oh my gosh he's so cool once we actually did the podcast and then we've been buds ever since yeah and then you came and spoke at my conference which was rad that's right ah man that was really that was really really really fun thank you for having me up you're a killer speaker oh stop stop yeah you should be on a podcast or something all right well this has been mind blowing i love talking this stuff i hope we can have you back on cody again to talk about it in a little more depth because i think with the market we're in it only makes sense for real estate investors to sort of broaden their perspective look around a little bit and say hey i still want to buy real estate but i could buy some of these businesses that complement real estate that's a big thing brandon and i talked about was the synergy right like it's if you're flipping houses and then you go to the burr strategy it's not a huge jump you're not doing something completely new if you run a glue factory and then you want to go start like a lumberjack business that's a really bad idea you don't there's no congruency between the two things so what we're talking about is if you already love real estate you already know how to value it you kind of get how the world works why not consider running a business that's in that world it's not a huge jump so thank you for that all right we're gonna move on to the last segment our show what is the world famous famous four at this segment of the show cody we ask every guest the same four questions and i will start question number one if you have one what is your favorite real estate related book it's so cliche to say rich dad poor dad um i guess that would i don't that's actually terrible i don't have any real estate books that i would read besides rich dad poor dad or actually know where i would go dale carnegie's biography not exactly real estate but one of the largest real estate owners in the country at his time and i think anytime you can read the biography of great men who have amassed massive wealth you walk away learning a ton i think walter isaacson wrote that book who's also an incredible biographer but check my facts on that one okay question number two favorite business book this is also a little controversial it's not for the political leanings but you know dave you already know that i like to be controversial so we'll just throw it in there we'll get everybody canceled early um there there's a book uh there's a book called um atlas rug that lots of people talk about another one called fountainhead and the reason i like those books they're novels written by a woman who came over from communist russia to the u.s um and the reason i like them is because they were the first books that i ever read that make me feel like it made sense when you love business i don't know if you guys or anybody listening relates that like some people just like their eyes glaze over they like can't and i would love nothing more than to talk business all day i don't care what's on tv i don't care about your kids i don't want to hear about the dog the weather's out of the question but if you want to talk business strategies like i'm there for it all day and that book made me realize oh maybe there's other people like that uh so i really like that book i think that's what rich dad poor dad did to a lot of people when it comes to finance and real estate is it was that is what i've been feeling this whole time and now i don't feel crazy there's other people out there that feel it too and those are always impactful moments when you have that like yes now it makes sense like that's what the disc profile was for me with communications oh that's how you got to do this so these are powerful books even if you end up not agreeing with everything that's in the book i don't think there's anything wrong with reading it trying to understand the viewpoint of the person that wrote it and seeing if those principles might apply at some other part of your life even if it's not business yes i agree um actually i will say credit to your conference that when i was there and i was in the green room with all the speakers that's how i felt i was like oh this is how like other entrepreneurs like think and they all like the sim dashboards we're going everyone's like talking about the game plan everyone you know just super super successful and i was like wow this is i felt very elevated being in a room with other people that were like same you know same mindset i love that so when you are not uh buying 26 businesses and and working them and you know hiring the team and operators and doing all that whole thing what are some of your favorite hobbies you know you brought up jiu jitsu earlier dave but um my husband's really into jiu-jitsu i actually really like muay thai so we do a lot of muay thai a lot of yoga um i think you know our saying at contrary and thinking is civilize the mind make savage the body build the bank account um and so i try to do things every single day that i think are are hard physically that's maybe one of my favorite things because it makes everything else easier then it's like oh we lost some money this month okay whatever is anybody gonna die so i would add mma i would add yoga and then i would add i'm really into lately uh saunas and cold plunges i think that's become a thing now but um those are some of my favorite activities so pretty much anything you can do that is hard yeah i don't like heights does that count yeah that's not my favorite all right let's go skydiving i'll do it i just won't like it rob all right in your opinion what makes successful investors different from those who give up fail or never get started ego it's all about the ability to ask questions i used to think that i had to be really smart private equity is a weird world and lots of people are not the nicest in that space um and so for a long time i was really quiet and just like would nod my head like of course of course i know what uh you know paripasu means and then i'd go google like pro rata paripasu what's that mean and um and then i realized wait a second like none of these people actually know and the thing that is their achilles heel is that they're all pretending that they know everything so they sound smarter than everybody else and i realize the smartest investors were like explain that to me like i'm a toddler and they had no e it didn't mean that they weren't smart they just didn't care if they didn't know all the answers um and so i'm a former journalist and that really opened my eyes to a lot i was like oh if i just ask the right questions i can get any answer i don't have to have all the answers i love that so former journalist uh goldman sachs uh ex worker slash crazy business owner of with 2600 really quite the resume cody thank you so much for joining us can you tell us where people can find out more about you on the interwebs yeah i'm cody sanchez pretty much everywhere we're pretty big on tick tock and twitter and instagram and then contrarian thinking if you want any of the business breakdowns that's where those will be yeah yeah definitely go follow her on instagram tick tock literally cody went from like i don't know it was annoying 150 000 followers to like 800 000 followers in like a week and i was like dang it now i'll never catch up that is not gonna be on my tombstone i don't i don't know that we're going to care about that in a year or two so i think but we care about it now cody especially rob that's right i won't sleep until i beat you this was always what i had to feel when brandon was on the show is it was he would be like hey follow me and he'd get 9 000 followers and i'd get like four mostly the four people that felt bad like oh but like what about david like just give him a pity follow and what people don't realize is i'm perfectly fine with a pity follow i'll i'm not above that whatsoever true he is well i will want to say one one quick warning to everybody go follow cody go follow go follow fodo or follow me uh at raw built david davidgreen24 what's gonna happen is you'll follow us immediately upon following us you'll probably get a robot that follows you back yeah don't fall for the robot guys they're out there we're all working on the blue checks i don't know cody cody might you might have a blue check but me and david are working on it yeah none of us talk about crypto so there's your first uh trigger yeah they talked to you about crypto although you shouldn't have said it say it now that you said it it's out there now wow also i think like there's a little bit of like darwinism happening here because i'm like you guys if you're falling for these bots maybe you needed to once because you're never going to fall for it again like this is like this is like you know you're nigerian from africa come on guys you gotta get smarter than the bots yeah i have a lot of people that will send me the screenshot and they're like hey this is rabilithi four five six seven eight is this you and i'm like no you're you're messaging me this is me we've established that this is my account did you make up another fake account spell your name wrong on purpose copy all your own pick the same pictures from the one you had to the other one just to message me from that one i mean i what about it's understandable that they're confused it's just funny that that's the way that they phrase the question to it i'm not kidding you i get minimum minimum 30 to 50 of those messages a day oh yeah ditto the same my favorite thing is just i take this i go on my like a another account just because you know they block you from seeing them so i can't ever see it it's annoying yeah so i go to this other account and i just do a screen share of like the 452 versions of cody which is funny because like nobody even cares about the one cody i don't know why they think the 400 but somebody out there has fallen for it so you got to wake up because if people don't buy this stuff anymore i think the scammers go away and then we're solved wait until i get scammed then i'll come back on here and you guys can ridicule me mercilessly well uh everybody cares about the one cody all right let me clear that up for everybody yes and on that note thank you so much cody for being on the show for sharing your expertise for giving us a new perspective on how we can make money through real estate and enjoy what we do um again what's your preferred method for people to reach out if they do want to talk to you uh where we usually do the most engaging is probably twitter so okay get at me on twitter i respond to all the comments on our tweets uh and i think twitter is actually pretty fun and you can engage with humans there easily tick tock forget about it i don't no promises what's your thoughts on a business person in elon musk buying twitter i think you probably know where i'm going i think he's crazy for doing i would nev you couldn't pay me enough money to buy twitter with all the nonsense that goes on from there but um i think it's good for the platform uh okay do you think it was good for him as a business you think that made sense no no i don't think it's i mean maybe he's a rocket scientist so he actually you know knows how to do a much more difficult problem which is send rockets to space i think you can probably figure out how to stop people from you know corrupting our free speech problem here in the u.s so i think it probably makes sense to some degree but um i'm curious what type of synergy there is between his goals and twitter because like as we were just saying you buy a business if it's related to something you already do so there's some angle i'm sure elon musk is seeing would you agree well he kind of said when he bought when he set out to create tesla and spacex he said um they're really hard problems to solve i think we have about a 10 chance of solving them um but they're worthy problems of solving so i'm going to start it regardless and so i think he probably feels the same free speech is worth saving it's a hard problem uh but it's worth trying to do and uh and then he said it's not in my nature to give up and so that makes me think he'll probably be successful with twitter just like everything else that is a good point rob what's your preferred medium where you'd like to be contacted um oh youtube you can follow me on youtube at rawbilt or instagram at raw built alrighty i'm at davidgreen24 facebook messenger is probably the best way to get a hold of me if you have something important that's uh i'll give you guys a little secret there it's not a secret now that i've said on the podcast but take instagram we get like 700 messages a day facebook messenger i get two so if you really want to get a hold of somebody important that's the best way to go about it assuming they have the app on their phone that's like my go-to move if i ever want to get in touch with somebody famous or something is uh until i have a blue check mark they don't know which of the david greens it is so i use facebook messenger and then you can follow my youtube at davidgreen real estate very boring just like me uh cody any last words before we get out of here no just you know go diversify try try to buy something even if you don't use money there we go rob anything from you um i'd say go go diversify and you know go make money or even if you don't have to spend money sounds smart all right well i'll get us out of here thank you guys this is david green for rob copying cody's ending line abasolo signing off [Music] you