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From Poverty to Prosperity: George Salas' Journey to Real Estate Success · Go Big with Gib Podcast

• 0:00
  Speaker 1: Welcome to the Go Big With Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins.
• 0:06
  Speaker 1: Welcome to this episode of Go Big With Gibb.
• 0:16
  Speaker 1: Today, I've got a very special guest here with me, George Salas.
• 0:19
  Speaker 1: George, how are you today?
• 0:21
  Speaker 2: Man, I'm doing fantastic.
• 0:22
  Speaker 2: Brother, it's an honor to be here, man.
• 0:24
  Speaker 2: Thanks for having me.
• 0:25
  Speaker 1: Yeah, absolutely.
• 0:26
  Speaker 1: So just to start things out, I'd love it if you gave a brief introduction.
• 0:31
  Speaker 1: Just tell the audience a little bit about yourself.
• 0:33
  Speaker 2: Yeah, absolutely so.
• 0:35
  Speaker 2: Well, my story really started when I was six years old, started off in a dobie house, living after my parents got a divorce this is back in the 80s, you know and I moved into a small town of about 50,000 people myself, brother and mom over to grandma's house.
• 0:52
  Speaker 2: All of a sudden you know, a few months later we had a small issue with the home, like there was some issues with the roofing and we were so poor that we weren't able to fix them.
• 1:01
  Speaker 2: So the entire half of our house had collapsed and since it was an adobe house, water comes in and imagine, like this is the 80s, right.
• 1:10
  Speaker 2: You come in, you've got no money to fix something and all of a sudden half of our house collapsed.
• 1:15
  Speaker 2: So we lived on the other half.
• 1:18
  Speaker 1: And what country are you from?
• 1:20
  Speaker 2: I was born and raised in Peru and the small town was Tarapoto, which is on the Amazon Valley side of Peru.
• 1:29
  Speaker 2: I moved here about 24 years ago.
• 1:31
  Speaker 1: You're born and raised in Peru.
• 1:34
  Speaker 1: You're living in an Adobe style house.
• 1:37
  Speaker 2: Like true Adobe.
• 1:38
  Speaker 2: This is made out of Adobe and you have paint outside and you make a hole.
• 1:41
  Speaker 2: It's Adobe, right.
• 1:42
  Speaker 2: Fast forward a few years later, right, um, I'm starting in hospitality here and um, you know, I always had a dream, give, and the dream was I wanted to build a business, I wanted to be a business owner, I wanted to have my own thing and be able to serve people, right, and to take care of my family, and I started investing into a new build out of a venue that we were building out, right, so I invested as an LP, as a limited partner, right, about three hundred thousand dollars out of the cash that I had saved.
• 2:19
  Speaker 2: Two years later, we're opening up the venue in huge debt over a million dollars in debt.
• 2:23
  Speaker 2: Right, we do this every day now, right, but back then it was like I'm a scared kid.
• 2:28
  Speaker 2: I knew nothing about investing.
• 2:29
  Speaker 2: I knew absolutely nothing about partnerships and limited partnerships and structures, and boom, we open up huge debt.
• 2:39
  Speaker 2: This is an events venue.
• 2:41
  Speaker 2: So now I made one big mistake, and the mistake was I did not properly get to understand the full structure.
• 2:50
  Speaker 2: So my biggest lesson was like never invest in something you don't know, right.
• 2:53
  Speaker 2: Warren Buffett says invest in what you know.
• 2:56
  Speaker 2: I didn't know, I didn't know business in sense, like to that level.
• 3:00
  Speaker 2: We got shut down because of a because of the past rent on on the lease that the actual general partner did not do a proper due diligence and rebuild on, meaning he was behind rent.
• 3:17
  Speaker 2: He didn't do the paperwork to catch up and have an agreement with with the landlord.
• 3:20
  Speaker 2: So imagine, say, for seven years, just me, I lost 300,000 plus.
• 3:25
  Speaker 2: At that time I was, I was so broke that I could not even buy a Whataburger the day we opened that venue.
• 3:34
  Speaker 2: From there I didn't know what to do at times.
• 3:37
  Speaker 2: So when you hit rock bottom it's like you either stay at rock bottom or you wake up.
• 3:41
  Speaker 2: One day I told myself I can't stay here, I cannot stay where I'm at, I'm going to do something.
• 3:47
  Speaker 2: So I get a phone call from a friend of mine and he's like come to my this renovation that I'm doing.
• 3:53
  Speaker 2: He owned a bunch of single family real estate properties, went in there.
• 3:58
  Speaker 2: I walk out of there, a new man really.
• 4:02
  Speaker 2: There's a saying that goes like you must have renewed your mind.
• 4:05
  Speaker 2: I renewed my mind and from there I went on to learn real estate seminars, courses, networking events, just to meet and build relationships.
• 4:14
  Speaker 2: So for four months, I went all in and that's the way to do it If you're out there and you're just getting started.
• 4:20
  Speaker 2: You got to go all in and I launched my first real estate venture in February of 2018.
• 4:26
  Speaker 2: And then, from there, everything is history.
• 4:29
  Speaker 2: That first year I did over 20 property acquisitions.
• 4:33
  Speaker 2: It was about seven or eight renovations.
• 4:36
  Speaker 2: I was doing all of this at the same time and then I figured out what wholesaling was in the middle of that year, right, and wholesaling brought me another epiphany.
• 4:46
  Speaker 2: It was to be able to really grab some cash at the same time wholesale a contract, which is assigning a contract and then taking this cash and reinvesting it.
• 4:55
  Speaker 2: For me, it was like this is great.
• 4:56
  Speaker 2: I don't have to buy the property, I essentially just have to assign a contract.
• 5:00
  Speaker 2: I took those $62,000 that I generated in July of 2018 and turned them all into 10 rental arbitrage short-term vacation rentals so short-term rentals these are apartments that I leased that year was just a hustle and a grind, and from there I went to scale my portfolio to about 40 doors by the end of 2019.
• 5:25
  Speaker 2: And then from there we transitioned our model from smaller units to homes, and today we personally my wife and I own about $9 million of real estate, and I mean the rest is history.
• 5:39
  Speaker 2: We've been able to make a huge transition and today we're living the lives of our dreams.
• 5:45
  Speaker 1: Wow, that's an amazing story, George.
• 5:48
  Speaker 1: I love the humble beginnings of your story, being in Peru and talking about the issues that you had with the house there, and then where you are today.
• 6:00
  Speaker 1: Let's talk a little bit more about.
• 6:01
  Speaker 1: Subject to financing.
• 6:03
  Speaker 1: So you know, that was actually a concept that you first introduced me to and I find it really interesting, but tell our listeners what that is.
• 6:11
  Speaker 2: Yeah, absolutely so.
• 6:13
  Speaker 2: There's a few ways to purchase properties, right.
• 6:15
  Speaker 2: I mean, you can go and get traditional financing, you can go get investment financing and you can fund properties yourself with cash.
• 6:22
  Speaker 2: But there's this kind of hidden theme behind that's getting popularized today.
• 6:27
  Speaker 2: That's called creative financing.
• 6:29
  Speaker 2: Okay, within creative financing, there are ways to do creative financing.
• 6:33
  Speaker 2: So owner financing is one of them.
• 6:35
  Speaker 2: Right, that's what everybody else thinks is creative financing.
• 6:38
  Speaker 2: But what really the cream of the crop of creative financing is is called subject to right.
• 6:46
  Speaker 2: Subject to truly means that you're taking a property subject to their mortgage.
• 6:50
  Speaker 2: So if you're dealing with a seller or even an agent, right, and you essentially just create a structure where you're taking the deed, so you're taking title to the property and you're leaving the mortgage in place with that seller, right, now they have to agree and you have to position it in a way that they understand it right, and essentially you continue to make the payments directly to the mortgage company.
• 7:16
  Speaker 2: Right, for the most part is directly right.
• 7:19
  Speaker 2: And then now you own the rights, the deed of that property.
• 7:22
  Speaker 2: You take advantage of all the tax benefits that real estate provides.
• 7:27
  Speaker 2: By owning that real estate, the only thing you don't have is just that mortgage in your name.
• 7:31
  Speaker 2: So it doesn't require you to use your credit or credentials to be able to get that.
• 7:36
  Speaker 2: And most of the time when you buy these sub-2 properties they don't require you to put larger down payments.
• 7:42
  Speaker 2: I mean, you're talking about if you do it directly with the seller.
• 7:45
  Speaker 2: You know five, 10% down.
• 7:47
  Speaker 2: I've picked up properties at zero down, several of them, right.
• 7:52
  Speaker 2: So this is when you know some sellers have the urgency to get rid of those properties quicker than later, right?
• 7:59
  Speaker 2: So that's in a nutshell what subject two is.
• 8:04
  Speaker 1: So let's start from the beginning of it.
• 8:06
  Speaker 1: Like, how do you go about sourcing these deals?
• 8:08
  Speaker 1: Maybe you can, but I'm assuming you can't just go to like Zillowcom or Realtorcom and type in there that you want to, you know, buy a property subject to a mortgage.
• 8:17
  Speaker 1: How do you identify these opportunities?
• 8:20
  Speaker 2: Yeah, absolutely, brother.
• 8:21
  Speaker 2: There's a couple ways, right?
• 8:22
  Speaker 2: So if you exactly know that you want to go after a direct-to-seller type of deals, which is properties on the market, that, because of just transitions on a lot of these single family markets, right, they're going to be out there and they can't be sold.
• 8:51
  Speaker 2: So if you understand what is that perfect point where you can make that offer, you can negotiate that also with the agent.
• 8:59
  Speaker 2: Now, the agent has to first understand it, so you have to be have some sort of knowledge at least I would say medium knowledge you know, to be able to explain this to the agent and sort of position the offer in a way that they can explain it to their clients.
• 9:18
  Speaker 2: You've got direct to agent from yourself or your agent, right.
• 9:24
  Speaker 2: And then there's a couple other websites and I love to share them.
• 9:31
  Speaker 2: Right, we use some.
• 9:31
  Speaker 2: I mean, we do put some offers from Zillow on some properties that are 90 days and above, right.
• 9:36
  Speaker 2: And then we also use websites like InvestorLift.
• 9:40
  Speaker 2: Investorlift has created a category now that's subject to, so you can literally filter in there.
• 9:46
  Speaker 2: And InvestorLift is an off-market platform for SFRs, right.
• 9:51
  Speaker 1: So InvestorLift gives you the category and there's not that many of them out there.
• 9:57
  Speaker 2: But that's one way, another way to acquire them, and sometimes I mean, we get referrals right from, you know, from different people, and that makes it easier because they come referred Like right now we're negotiating a sub two of a beautiful, gorgeous property, you know, and it's really easy.
• 10:17
  Speaker 2: If they understand it if the seller understands it and they know what it is.
• 10:22
  Speaker 2: It's so much easier.
• 10:23
  Speaker 2: If the seller is not sophisticated at all, it's more difficult unless they are in some kind of situation that they need to get out of quickly.
• 10:33
  Speaker 1: Yeah.
• 10:33
  Speaker 1: So, George, you've scaled your own personal portfolio using this creative financing technique.
• 10:42
  Speaker 1: Talk to me a little bit about your fund.
• 10:44
  Speaker 1: Is that something you can share with us?
• 10:47
  Speaker 2: Yeah, absolutely Absolutely.
• 10:48
  Speaker 2: So our fund is an accredited investor fund and we've positioned the fund to be able to acquire a lot of these properties.
• 10:57
  Speaker 2: So we've built an internal in-house acquisition process where we are coming in and giving offers to hundreds of property owners.
• 11:07
  Speaker 2: So that's the right to seller.
• 11:09
  Speaker 2: But the fund is a short-term vacation rental fund.
• 11:13
  Speaker 2: Right, focus on lifestyle assets and higher cash flowing assets.
• 11:19
  Speaker 2: So, instead of going after the regular, normal, you know, medium-sized properties properties, we go a little bit higher end, not not luxury, but we go just median and up.
• 11:29
  Speaker 2: So anywhere between three hundred four hundred thousand dollars to about, you know, eight hundred thousand dollar price points.
• 11:35
  Speaker 2: So we want to stick right there in that five to six hundred, depending what the median price is in each market.
• 11:42
  Speaker 2: And, yeah, our fund is essentially executing right now our first short-term rental portfolio.
• 11:49
  Speaker 2: So we are in the process of acquiring.
• 11:52
  Speaker 2: So it should be by the time this recording comes out, I'm sure we'll have that locked up, but we're acquiring a 18 property portfolio in St Louis.
• 12:02
  Speaker 2: Now this portfolio is a creative finance structure deal where the owner is going to sell or finance us all of the entire portfolio, right?
• 12:14
  Speaker 2: So this is not a sub two, this is an owner finance, so we still have to come up with about 25% down right, but this is probably one of the perfect examples of creative finance, right?
• 12:26
  Speaker 2: So?
• 12:27
  Speaker 2: seller finance interest only from the seller and into the portfolio.
• 12:32
  Speaker 2: We're converting these properties, enhancing the amenities to get them to cash flow right, um at a higher than normal level and these are all going to be short-term rentals is.
• 12:43
  Speaker 1: Is that right?
• 12:44
  Speaker 2: Every single one of those 18.
• 12:45
  Speaker 1: I know you talked about enhancing the amenities, but could you go a little bit more in depth?
• 12:50
  Speaker 1: I mean, what kind of what kind of things can a property owner do to take a short-term rental that is barely cash-flowing, or maybe not cash-flowing at all, and turn it into a cash-flowing machine?
• 13:05
  Speaker 2: market right.
• 13:06
  Speaker 2: So now for us, we focus on recession-resistant markets, which in a sense, for us it means that these are markets that have positioned themselves for slow growth during a possible recession, now based on historical data from a last recession.
• 13:35
  Speaker 2: So if we don't go into these types of markets we would essentially look at, like St Louis is not a recession resistant market, just to give you an example, but it is a faster growth market.
• 13:49
  Speaker 2: And as soon as we go as market first, then we pick the property type.
• 13:54
  Speaker 2: So somebody that already has a property, we would tell them, first of all, we look up hey, is this a good market for growth, right?
• 14:02
  Speaker 2: And then we've identified the property.
• 14:05
  Speaker 2: Let's call it.
• 14:06
  Speaker 2: You know, michael has a property in I don't know St Louis, missouri, right?
• 14:16
  Speaker 2: And his property is being rented as a long-term rental and it has a larger backyard.
• 14:17
  Speaker 2: So one of the first things is for us, we want to understand if that property has a larger space to be able to add those amenities.
• 14:25
  Speaker 2: So the lot size right, the lot size with the backyard is one of the components.
• 14:32
  Speaker 2: It doesn't have to be that big, but it needs to have some type of backyard.
• 14:34
  Speaker 2: Why?
• 14:35
  Speaker 2: Because, in the niche that we cater to, we're converting these properties into more of lifestyle assets, positioning them for families to come in and gather backyard amenities such as pools, jacuzzi, hot tubs, covered patios, outdoor kitchens, playgrounds.
• 15:02
  Speaker 2: The larger the backyard, the better our ability to enhance the amenities and create that long-term revenue.
• 15:10
  Speaker 2: But it's all correlated with the market right.
• 15:13
  Speaker 1: So just because it has a large, backyard.
• 15:15
  Speaker 2: That absolutely does not mean that we can make this work.
• 15:18
  Speaker 2: In order for us to do it, first we've got to figure out if the market is right.
• 15:23
  Speaker 2: Now, if the property is located you know, let's call it in a mountain or a coastal area or a city, right, they're all different scenarios, but most of them, the correlation between all of them, are always the amenities.
• 15:38
  Speaker 2: So, in a mountain, it's going to be your views, your decks, right.
• 15:42
  Speaker 2: Your ability to see, to have really cool areas for the families to relax outside of the home, right.
• 15:49
  Speaker 2: So it could be.
• 15:50
  Speaker 2: If there's a deck overseeing a mountain, you want to build something really cool in the entire deck, right?
• 15:56
  Speaker 2: If you're in a coastal, obviously you have number one you have access to the beach.
• 15:59
  Speaker 2: You want to make sure that you also, in addition to the access to the beach, you create something cool within.
• 16:06
  Speaker 2: In a city property, in a metro market, you want to make sure that you deliver what that market desires.
• 16:14
  Speaker 2: So most of the city markets let's call it Houston most of southern markets, are going to be super hot.
• 16:21
  Speaker 2: So the number one amenity in the properties that make the most money, or pool and jacuzzis in the southern markets.
• 16:29
  Speaker 2: Now, in a ski resort.
• 16:31
  Speaker 2: It's not going to be a pool in a hot tub, right, maybe just a hot tub, right.
• 16:35
  Speaker 2: Right, because the hot tub will right.
• 16:37
  Speaker 2: So, but things like that.
• 16:40
  Speaker 2: Right here, like one of our recent projects we just finished, we launched in March, and it's a single family four bedroom with a 1-1 in the back and a 2-1 in the back.
• 16:52
  Speaker 2: So we separated, we converted it into three units.
• 16:55
  Speaker 2: We added a pickable court, large amenity, right.
• 16:58
  Speaker 2: We added a jacuzzi.
• 17:01
  Speaker 2: That was a $22,000 job.
• 17:03
  Speaker 2: In addition to the hot we bought, we put in entirely brand new heating equipment, pool equipment.
• 17:10
  Speaker 2: So now you have pickable court, basketball court, backyard area, seating, right.
• 17:16
  Speaker 2: You have tables, you have a grill, you have a pool, a jacuzzi for families.
• 17:21
  Speaker 2: So somebody is going to be willing to pay that $800, $900, $1,000 a night for us, right?
• 17:27
  Speaker 2: So that's, you know our method.
• 17:32
  Speaker 2: Now, when it comes to finishing, in addition to the structural amenities that I've been talking about, there are also finishes.
• 17:39
  Speaker 2: Okay, the finishes have a lot to do with the interior that I'm talking about.
• 17:45
  Speaker 2: So most of our properties have a theme related to each property.
• 17:50
  Speaker 2: So this property that I'm talking about had a darker theme, and darker themes have, just along there attract a certain clientele, right?
• 17:58
  Speaker 2: So there's families with darker themes, sort of a movie room area, right?
• 18:02
  Speaker 2: And each room has its own enhanced, you know, color palette and just a really cool design wall, and then the design and the furniture and then the fixtures and the lighting fixtures and the plumbing fixtures, furniture, and then the fixtures and the lighting fixtures and the plumbing fixtures all of that matches the theme, right?
• 18:21
  Speaker 2: So if I could describe something, just think about, you know, recently we launched this property that is a water theme, so the walls are lighter blue, the finishes of the light fixtures are a little bit more trendy, lighter colors, right?
• 18:39
  Speaker 2: So everything matches.
• 18:40
  Speaker 2: So that component of functional design, matched with the structural amenities that you added, are the key component.
• 18:48
  Speaker 2: After figuring out if the market's right, if the property is the right property where you can add that value, and then once you enhance it, that's the secret sauce in three steps, right there, gibb.
• 18:59
  Speaker 1: This episode of Go Big with Gibb is brought to you by Irons Equity.
• 19:03
  Speaker 1: At Irons Equity, we specialize in helping investors like you create long-term generational wealth and save money on taxes through recession-resistant real estate investments that create passive income for you and your family.
• 19:16
  Speaker 1: If you want to secure your financial future, go to investwithgibcom to schedule a 30-minute introductory meeting with me.
• 19:23
  Speaker 1: Gib Irons Again, that's investwithgibcom.
• 19:27
  Speaker 1: I love it.
• 19:32
  Speaker 1: I love it.
• 19:32
  Speaker 1: So talk to me about the fund.
• 19:34
  Speaker 1: Like um, I know you said that you're acquiring eight and 18 property portfolio in St Louis.
• 19:40
  Speaker 1: Um, you know, is that going to be all the properties inside of the fund, or what do you envision the total assets of the fund being once it's complete?
• 19:54
  Speaker 2: Yeah, absolutely so.
• 19:55
  Speaker 2: Fund one is a $10 million race right and for this particular portfolio, what we've done is we've secluded the portfolio to have its own returns.
• 20:08
  Speaker 2: So, instead of being a blended, we have the option in our fund to be able to acquire properties with their own returns, their own sell, and we can blend the returns in our larger portfolio right.
• 20:24
  Speaker 1: So this is, since we just launched.
• 20:25
  Speaker 2: This is the first portfolio, so this is going to go in its own bucket.
• 20:29
  Speaker 2: So it is 18 properties all within, I think, about a 40 mile radius of downtown st Louis.
• 20:37
  Speaker 2: There's a mixture of these higher-end properties with some nice condos and then some I think there's even a sixplex, which is not typically our style, our style or avatar, you know.
• 20:50
  Speaker 2: But, um, this is going to be a portfolio that's going to be specifically for the first seed project of the fund, so it won't be the first one.
• 20:59
  Speaker 2: It won't be the last one, right?
• 21:01
  Speaker 2: So, um, then, from there we're gonna, we're gonna create the blended portfolio within the other cells.
• 21:07
  Speaker 2: So, yeah, does that make sense?
• 21:09
  Speaker 1: Yeah, I think so.
• 21:10
  Speaker 1: So the $10 million raise are you investing all of that into the St Louis project, or did you only have to raise a certain amount for St Louis and now you're going to earmark the other monies for other opportunities?
• 21:25
  Speaker 2: Yeah, absolutely so.
• 21:27
  Speaker 2: The first portfolio is a $4.1 million raise, so 4.1 out of the 10 will go into this bucket and it is specifically it's a $10 million portfolio.
• 21:39
  Speaker 2: Well, now it's.
• 21:40
  Speaker 2: I think we added additional properties in 11 to 11, $5 million portfolio, so 25% of that would go for the down payment on the capital stack right.
• 21:48
  Speaker 2: Then there is about a million in actual amenities we have to build right, we have to put in over a course of the next 12 months, and then there is about another million and a half in renovations for some of those properties.
• 22:05
  Speaker 2: So you break it down all together, it's about four point.
• 22:09
  Speaker 1: Okay, okay.
• 22:10
  Speaker 1: So as far as your next acquisition, do you have anything in mind or are you able to share with us kind of what you're thinking about?
• 22:22
  Speaker 2: So after we get this one done, this will be the next.
• 22:25
  Speaker 2: It's going to be a job for the whole next quarter, right?
• 22:27
  Speaker 2: So?
• 22:28
  Speaker 2: And it's not going to launch all at once, so we'll be working on it towards or uh throughout the next 12 months.
• 22:34
  Speaker 2: Um.
• 22:35
  Speaker 2: So now, following that, um, we, we've built in this in-house um machine and we're perfecting that to be able to put into offers and and uh, and we're looking at several markets now.
• 22:50
  Speaker 2: I would obviously prefer more portfolios way easier, right, but those only come every once in a while.
• 22:57
  Speaker 2: So, but next we're, we're thinking uh, there's a few markets that are in our mind, um right.
• 23:04
  Speaker 2: So specifically, we have about 10 markets in our radar where we're actively looking and putting offers in and then out of the 10 markets.
• 23:13
  Speaker 2: Obviously we want to.
• 23:14
  Speaker 2: We want to scale one at a time.
• 23:16
  Speaker 1: Yeah, no, I love it.
• 23:17
  Speaker 1: You know, I know that you've got various team members.
• 23:21
  Speaker 1: What is your infrastructure look like for your, for your business?
• 23:26
  Speaker 2: Yeah, absolutely, brother.
• 23:27
  Speaker 2: So there's one main team in the private equity side.
• 23:31
  Speaker 2: Right, it's three of us.
• 23:32
  Speaker 2: Our team consists of myself and I lead the capital markets side.
• 23:39
  Speaker 2: Also, I've done short-term metals for six years.
• 23:42
  Speaker 2: Right, I brought in a business partner about nine months ago maybe a little bit more so, about a year ago to sort of support with the investment side so that we could go out there and scale our business.
• 23:58
  Speaker 2: So we have our partner, trevor, who is handling the investment management of things investment management of things.
• 24:06
  Speaker 2: So he's the one getting out there and finding the properties and building out the systems to be able to acquire at a faster scale.
• 24:14
  Speaker 2: And then we have another lead team member who is running the back end.
• 24:19
  Speaker 2: His name is Wayne.
• 24:20
  Speaker 2: He's our COO and pretty much has extensive experience in building up processes, running back into businesses.
• 24:30
  Speaker 2: So he's going to help us get that off the ground.
• 24:33
  Speaker 2: And then from there we have our external teams.
• 24:35
  Speaker 2: Both Trevor and I operate our own portfolios, and so we're both bringing our forces together to be able to execute the on-the-ground challenges that are going to come up with building our portfolios outside of our own realms.
• 24:57
  Speaker 2: But we have somebody that runs the interior design who is my wife.
• 25:02
  Speaker 2: She has done all the interior design for our properties, and so does Trevor, so we're just combining forces from both of our property management companies to be able to formulate and put together this team.
• 25:14
  Speaker 2: So, as we execute, it's a combination of both of our teams, who have already been doing this for many, many years executing the staging, the design, the amenity, additions, right, and then the launching the properties and then even managing the properties as well.
• 25:33
  Speaker 2: So we already, between both of us right now, over 50 short-term vacation rentals across 13 different cities in seven different states under our belts.
• 25:44
  Speaker 1: Talk to me a little bit about why short-term rentals, you know, like of all the different asset classes that you could invest in.
• 25:52
  Speaker 1: What does it look like for a passive investor that invests with Empress Capital without getting too much into the weeds?
• 26:01
  Speaker 1: Just high level?
• 26:02
  Speaker 2: Yeah, yeah, of course, of course.
• 26:03
  Speaker 2: Well, to start off, gabe, thanks for asking that question.
• 26:07
  Speaker 2: Of course, of course.
• 26:08
  Speaker 2: Well, to start off, gib, thanks for asking that question.
• 26:09
  Speaker 2: So the why really started from a need.
• 26:12
  Speaker 2: Okay, when I started my real estate business, I was transitioning from a huge loss, right.
• 26:19
  Speaker 2: So for me the dream was always real estate.
• 26:21
  Speaker 2: The vehicle was real estate, right.
• 26:23
  Speaker 2: The end goal was financial freedom, take care of the family right.
• 26:29
  Speaker 2: The goal wasn't lifestyle yet.
• 26:31
  Speaker 2: But when we started it was like, okay, I need cash flow, I need I was wholesaling right.
• 26:38
  Speaker 2: So any real estate professional out there that does you know brokering or real estate agents, or even like fixing flippers, right?
• 26:50
  Speaker 2: Or wholesalers or anybody even doing you know commercial real estate One?
• 26:56
  Speaker 2: of the hardest things when you even when you've been in the business for a long time right even capital racers.
• 27:01
  Speaker 2: It's like we build these machines that create up front very little cash flow right, so very little consistency right Now it is predictable, right.
• 27:13
  Speaker 2: So for us it was like okay, how do we create a business that would have predictability, cash flow and consistency?
• 27:22
  Speaker 2: Well, the consistency would be of the cash flow.
• 27:24
  Speaker 2: The consistency would be of the cash flow.
• 27:29
  Speaker 2: So that has transitioned into okay, how do we take this consistency and that great cash flow into an even greater cash flow?
• 27:33
  Speaker 2: By converting these properties or these portfolios right into higher yielding portfolios.
• 27:42
  Speaker 2: So the end goal of that, and how we market this, it's lifestyle's lifestyle properties, right?
• 27:47
  Speaker 2: So now that has become our mission.
• 27:50
  Speaker 2: Right, we are born.
• 27:53
  Speaker 2: We were born to create lifestyle assets and cash flow and generate cash flow right through vacation rentals.
• 28:01
  Speaker 2: So lifestyle financial freedom is the ultimate goal today for our partners and investors.
• 28:08
  Speaker 1: Rather, than like hey, I want a little predictability.
• 28:09
  Speaker 2: I want an additional 5K a month, right, so it's like hey, come enjoy the properties, right?
• 28:15
  Speaker 2: In addition to the cash flow, we offer to all of our partners right, the ability for them to be able to visit these properties at any time they want, for a discounted rate of 25 to 30% right, so now they have access to all these properties at any time they want, for a discounted rate of 25 to 30%.
• 28:30
  Speaker 1: So now they have access to all these properties and then they're going to.
• 28:31
  Speaker 2: That's predictable, right, that they're going to understand that, hey, if I travel to St Louis, if I go to Texas, if I go to Arizona, if I go to Lake Powell, if I go to San Padre, I'll have these properties If I ever need to stay in these.
• 28:44
  Speaker 2: Or I mean, some people just love going on vacations.
• 28:47
  Speaker 2: If you need to stay in these, or I mean some people just love going on vacations.
• 28:50
  Speaker 2: If, if you had access to a bunch of properties, you probably would visit those places at some point, right?
• 28:52
  Speaker 2: Instead of paying full price into some different areas, right?
• 28:56
  Speaker 2: yeah, so um, and then, yeah, I mean we've created this with with the end in mind to be able to do that right.
• 29:04
  Speaker 2: So, um, what short-term metals offers is different from other asset classes, that's there's more consistency in on the cash on cash.
• 29:13
  Speaker 2: So, on a consistent basis, we pay our investors anywhere between nine to 13 percent cash on cash, right?
• 29:20
  Speaker 2: So it just depends on the deal, it depends on the fund.
• 29:22
  Speaker 2: This particular fund, including the st Louis portfolio, is somewhere between nine to eleven percent cash on cash, right, which is, if somebody invests $100K, they get 9% to 10% of that per year, right?
• 29:35
  Speaker 2: That's the translation of cash on cash to somebody that doesn't understand that number.
• 29:53
  Speaker 2: Right?
• 29:53
  Speaker 2: Our IRRs are anywhere between 18, 19 on the low end to about 24, 25 on the high end, just depends where.
• 29:58
  Speaker 2: But that is not very, that's very common for us in our niche.
• 30:01
  Speaker 2: Now, that's not every type of short-term rentals, it's just specifically on these a little bit more high-end lifestyle type of properties bigger properties the smaller ones are much more difficult and even bigger homes without the amenities, they're not going to cash flow, right?
• 30:19
  Speaker 2: So if you don't specifically understand how to build them based on metrics and based on what the market wants, right the amenities that the market wants, then it's hard to cash flow in today's economy because of the saturation that has occurred, with everybody trying to get into short-term rentals.
• 30:38
  Speaker 2: So we've essentially created a niche of our own, so we're very niche-oriented.
• 30:45
  Speaker 2: And when we go into these markets and we create these niche oriented so, and when we go into these markets and we create these beautiful, unique properties, what happens is we're not competing against everybody else.
• 30:54
  Speaker 2: That's all we can charge a thousand, 800, $900 a night, because we don't have competition.
• 31:00
  Speaker 2: Now, there is competition, but if you create your own unique property, that's.
• 31:05
  Speaker 2: There's nothing else out there.
• 31:06
  Speaker 2: Imagine you're creating a little niche in that market.
• 31:09
  Speaker 2: And because the short-term vacation rental industry is a fragmented industry, right, that allows us to go and win in different markets without having to just surrender to some big apple or some big dog out there, right, so we can create our wins as we go.
• 31:30
  Speaker 1: Yeah, that's fantastic, George.
• 31:32
  Speaker 1: I love what you're doing with your fund and I have had a very similar experience.
• 31:39
  Speaker 1: I invested in a bunch of long-term rentals and I own a lot of long-term rental properties and it's interesting because there was very little cash flow that came from those long-term rentals.
• 31:50
  Speaker 1: And then I tried short-term rentals and the cash flow was just unbelievably higher.
• 31:56
  Speaker 1: It's amazing that a lot of folks don't know that right, If you haven't done both, you may not understand it, but short-term rentals is one of the best cash flowing assets that there is 100%.
• 32:11
  Speaker 2: The only caveat with that is that a lot of landlords out there, long-term rent operators here's what they've done They've turned their regular properties over long-term rentals.
• 32:21
  Speaker 2: They didn't really understand that.
• 32:23
  Speaker 2: Hey, I needed to do X, y, z for it to really be like a three to five X.
• 32:28
  Speaker 2: They just turned their long-term rental properties, they staged them, they put nice furniture in them and this is millions of them, right, hundreds and thousands of people in the United States have done this.
• 32:38
  Speaker 2: There's only a few professionals in the industry, right, like true professionals, so, and they thought that they could cash flow.
• 32:47
  Speaker 2: So what happened?
• 32:47
  Speaker 2: 2019, 2018, 2018, those properties with these landlords, they cash flow.
• 32:53
  Speaker 2: That was great.
• 32:54
  Speaker 2: Right, they were making two, three, four times their.
• 32:56
  Speaker 2: You know their PITIs and, great, you know great ratios on their purchase prices.
• 33:02
  Speaker 2: And that was good.
• 33:03
  Speaker 2: But when COVID happened, it's a huge transition.
• 33:06
  Speaker 2: Yeah, okay, covid brought the era where, you know, everybody realized that, okay, there are vacation rentals, there are homes that I can book on this app right, because everybody was at home.
• 33:22
  Speaker 2: So Airbnb exploded.
• 33:23
  Speaker 2: After that, march drop like 2021 was a huge year for the vacation rental industry.
• 33:28
  Speaker 2: It was the biggest year ever.
• 33:30
  Speaker 2: You probably know this because you have some right.
• 33:32
  Speaker 2: And then everybody and their mother right.
• 33:35
  Speaker 2: Everybody and their mother and their grandma and their uncle and their cousins went and thought they could do short-term rentals, so they went and saturated the market.
• 33:43
  Speaker 2: So now, those same properties that cashed in 2019, 2018, 2020, and even 2021, they don't work anymore.
• 33:51
  Speaker 2: So you have to be super specific, be a real professional, to go in and convert them right.
• 33:57
  Speaker 2: But now, if you get them right, then they'll cashflow forever, right?
• 34:01
  Speaker 2: So I would say there are less properties that are winning today, you know, than there were before.
• 34:09
  Speaker 2: Right, and there's two reasons for that.
• 34:13
  Speaker 2: There's two main reasons.
• 34:15
  Speaker 2: Right, it's your real estate prices have skyrocketed between 20% to 40% all over the US.
• 34:20
  Speaker 2: Number one.
• 34:20
  Speaker 2: And number two is the interest rates have doubled what they were even before COVID.
• 34:25
  Speaker 2: They were like 4% or 5%.
• 34:27
  Speaker 2: So those are the two main factors why a lot of the short-term dollars don't cash flow.
• 34:34
  Speaker 2: Now, when we go back to those days which I don't know when that's going to be then we'll see a lot more.
• 34:40
  Speaker 2: So it's a supply versus demand versus economic factors that are changing the market for us today.
• 34:48
  Speaker 2: So you have to be so much more intentional.
• 34:50
  Speaker 1: Yeah, I totally agree with that.
• 34:52
  Speaker 1: There's a lot of people out there with short-term rentals right now that are struggling, and it's because they don't know what they're doing right and the market's so saturated and you really have to do stuff to set yourself apart.
• 35:04
  Speaker 1: Today, like if you want to be a successful STR, you've got to do things differently.
• 35:10
  Speaker 1: And if for folks like you that know that, you know you're going to make a ton of money, but for folks that don't understand those nuances, you know it's not as simple as it used to be, where you just bought a property, you put it up on Airbnb and Vrbo and you made money, it's no longer like that.
• 35:30
  Speaker 1: Now you've really got to hustle and do things to distinguish yourself from the competition.
• 35:35
  Speaker 2: Absolutely, but even despite of that it's still the single most profitable in my opinion, especially if you add creative financing into the picture, you can profit tremendous amounts and the majority of the markets if you're strategic about it.
• 36:01
  Speaker 1: Absolutely, george.
• 36:02
  Speaker 1: Look, it's been a blast having you on the podcast.
• 36:03
  Speaker 1: For anybody that's been listening, that wants to reach out to you, what's the best way for them to connect with you.
• 36:07
  Speaker 2: Yeah, absolutely.
• 36:07
  Speaker 2: My personal website is georgesalis360.com, right?
• 36:13
  Speaker 2: So I've got all my socials in there and you can find anything of me in there a bunch of cool videos and some free resources that I'd love to give away to someone checking us out.
• 36:26
  Speaker 1: Absolutely.
• 36:27
  Speaker 1: Folks, reach out to George if you're interested in short-term rentals, creative financing.
• 36:32
  Speaker 1: He's the guy to talk to George.
• 36:34
  Speaker 1: It's been a pleasure.
• 36:35
  Speaker 1: Thank you for coming on.
• 36:37
  Speaker 2: Gib, thank you, it's been an honor.
• 36:38
  Speaker 2: Thank you, sir.
• 36:44
  Speaker 1: Thank you for listening to this episode of Go Big with Gib.
• 36:46
  Speaker 1: If you haven't already, go follow us on social media at Gibb Irons.
• 36:51
  Speaker 1: We'll see you next time.