Making Connections And Recognizing Opportunities In The Real Estate Industry With Zach Coppinger
The real estate industry is broad and is divided up into different specialties. With that, you have a lot to learn to see how it works and strategies you can execute to build your portfolio and succeed in the real estate world. Listen to this episode as our guest, Zach Coppinger, shares valuable insights into building your network and recognizing opportunities in the real estate world. In today’s market and economy, you should know which things you should focus on regarding investments, so Zach gives an overview of what you can do to keep your business moving forward. He also discusses how you can manage labor and material costs. Tune in to learn more about the marketplace and how to attract potential clients. — Watch the episode here Listen to the podcast here Making Connections And Recognizing Opportunities In The Real Estate Industry With Zach Coppinger I am joined by a good friend of mine, Zach Coppinger. Zach, thanks for coming in. I appreciate it. Thanks for having me. Zach, tell the audience a little bit about yourself. I got my start in real estate investing by buying houses for you back in September 2013. It was a while ago. I started buying single-family houses for you. I ended up going out and doing my own thing in 2014 and 2015. I have pretty much stayed in the single-family space since then. I focused on building up a rental portfolio early on. I pivoted in 2018 and 2019 to focus a little bit more on the owner finance and note origination business but still holding those. I simultaneously built the rental and the note business and still trying to stay pretty narrow with those two business strategies. I am proud of you. My wife is more proud of you. Zach, I like to start each week with something we call the Bottom Line Upfront. Just imagine someone riding around in their car. They queue up for the show, get out, get gas, and cannot find it when they get back in. In the Marine Corps, when we brief the generals, they always say, “Do not bury the lead. You lead with the most important thing up front in case you get mortar rounds.” I am going to have you talk to the readers and talk about the things in the market, the economy, and the real estate cycle nowadays that they need to be focused on, thinking about, they need to be doing and avoid. Take two minutes and give them the bottom line upfront. This marketplace now, over the past few years, has allowed investors to get pretty lazy with numbers. You could have overbought the house, over-rehabbed the house or gone over budget, and you are fine if you held it for five months. You ended up appreciating 10% and 15% in that time. It allows investors to get pretty lazy with numbers. You keep winning whenever you go into those scenarios long enough, and you start to feel pretty comfortable. You can just keep doing and repeating it. Getting a grasp on your numbers again, having real ARVs, real rehab budgets with updated pricing with material issues, in our personal business, we have seen materials go up. The contractors have tried not to put their labor up too much because they submit a bid. We push back a little bit and say, “It used to be 30%, 40% less. There is going to be a tail in labor pricing going up as well as the material pricing.” With this marketplace, we are starting to see a bit of a plateau with numbers in most asset classes, as far as pricing and single-family. I would say getting a good grasp on the real ARV, the real rehab, not assuming that the market is going to work you out of that. It is because the market is a little bit unknown. It seems very difficult to predict that it is going to keep moving up at the pace that it has been. Right in line with that, having a little bit of a cushion in case you missed it. There are a lot of sayings out there, “Cash is trash.” You are losing money if it is just sitting in your account. Inflation stated rate might be 7%, 8%. We feel like it is a little bit more. Losing value on that money is just sitting in your account but providing you the platform to not lose your business in case you miss a deal. How much liquidity is enough? It is personal for each person. What we try to do is about 10% of how much money we are borrowing. If we borrow $5 million, we try to keep $500,000 in cash reserves. It is a comfortable position that we found and allows us to float 6 to 8 months of paying out debt service without any money coming in. To sum it up, have a good grasp of your numbers. Do not think that the market is going to get you out of a sticky situation moving forward and maintain a comfortable amount of liquidity. Make sure that a comfortable amount is calculated. Try to have some basis for why you are doing it, whether it is just being able to service debt for a certain amount of time if you have no money coming in, being able to go over on your rehabs and still be able to pay your guys and get rid of the property. The property might sell for a little bit less than you anticipated. There is a lot to unpack. The first question is that you are not new in the business by any measure. Like you said earlier, you got into it around 2013. It has been up. Where do you get the information you need to plan for the unknown? I am a pretty conservative guy by nature. A backstory a little bit. I
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