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Global Investors Podcast
GI54: Leveraging Technology to Scale Your Real Estate Business with Nick Baldo
July 1, 2020
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Nick quit his six-figure full-time job at IBM in 2014 to pursue real estate investing full-time. Nick has wholesaled, rehabbed, managed rental units and built a high-end home remodeling business. He focuses on leveraging technology and business processes to grow and scale.

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Transcript:

Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast. I’m your host Charles Carrillo. Today we have Nick Baldo. Nick quit a six figure job at IBM in 2014 topursue real estate investing full time. Nick has wholesale rehab manage rental units and built a high end home remodeling business. He focuses on leveraging technology and business processes to grow and scale. So thanks so much for being on the show, Nick. Yeah, it’s great to be here. Thanks for having me. So I touched a little bit on your Al your prior career with IBM, but can you give us your background before starting to invest in real estate? Yeah, yeah. So I came out of undergrad business school and went right into consulting at IBM global business services and right into it, you know, like right into the boardroom with a team of consultants. And that was kind of an eyeopening experience, learned a ton and really dove into these, you know, fortune 100 companies learning about their processes and learning about their pain points and finding ways to fix those processes typically with software.

Nick:
So that’s what I was doing as a full time corporate employee traveling around traveled a lot, really to, to these various different clients and learning about their businesses and then with my team, helping them fix them and make recommendations on that. So from the start, I was really into the technology of these businesses, the processes and understanding pain points. So that’s what I was doing before I dove into real estate. And why did you choose real estate as an investment vehicle? Yeah. Great, great question. I knew I wanted to explore avenues outside of the corporate world, but bureaucracy just wasn’t really, for me and real estate seemed really tangible and easy for me to get my head around when it came to doing the analysis and understanding beforehand hedging a little bit, your risk, just you can do so much as far as running the numbers.

Charles:
Of course that’s not the whole story, but it gave me a real level of comfort that I could do a lot of work ahead of time and experiment with the different strategies. And that’s what I did. I started flipping kind of on the side while I was still in the corporate job. And, you know, that kind of evolved from there. Yeah. Having a tangible product, which is much different from coming from the technology technology industry technology sector. So that’s, that’s awesome. How did, how did you start, when did you, how did you start? You’ve done a lot of things in real estate. So what were your first couple of real estate investments? Yeah, first couple of deals were, were just buy, renovate, sell flips. And the biggest hurdle was, was finding funding just often that, you know, not you know, not having any connections, not having any kind of track record at all. We were able to find kind of a, an angel hard money investor to do our first few deals. And that those were all done, you know relatively lower end markets, low risk, low return, honestly as well. But it really, I, you know, it was so great just to do a deal end, to end to get that experience, then do the next one, get that experience and then kind of start leveling up a little bit and then, you know, branching out into the various other, other tracks.

Nick:
What issues did you have while working at your W2 and then kind of managing or starting to, to manage and build this real estate business?

Charles:
Yeah, I mean, so like, I, it was an interesting job as in, I traveled typically like Monday through Wednesday, Monday through Thursday, and then I was work from home and I got really good at being really efficient with my job and getting stuff done really quickly doing the full work, but getting things done quickly. So I was able to kind of do the part-time moonlighting thing, but of course I wasn’t able to really dive in fully, like we were, we’re kind of just chipping away. And I say, we, I had a business partner who was a carpenter, so he was managing the actual renovation part. I was able to run numbers and, you know, start to market the deal and all that stuff that we can kind of do virtually. But the hardest part about it was just having your foot in two camps and then feeling like you’re not doing either of them to the full ability. So it was a little bit tough for those few years where you’re, you’re just not sure where you should be focusing and prioritizing.

Nick:
Yeah, no for sure. It’s, I mean, it’s it’s great that you had a team which w which we’ll get into in a second here. I want to learn more about how you have that, but so you’re the analytical numbers person

Charles:
For your groups. Yeah, yeah, for sure. The numbers, and then, you know, what I really had a passion for, and this was mostly after I left IBM, but to take kind of what I was learning in that consulting and what I was doing for those other businesses and to do it for my smaller real estate business, where, when it comes to the processes and the checklists and the accountability and the technology. So yes, certainly on the analytics. And then I was also focused on the operations as a whole and finding out how can we build this thing into a system that can then scale.

Nick:
Right. Right. Okay. So you operate a couple of different renovation businesses, and you hold multifamily properties. What is your primary focus in regards to your real estate business as a whole?

Charles:
Where do you focus your time? Right. So so for one, my focus has turned into really the education and the teaching and the coaching, which is what income digs it is teaching other businesses, how to use technology, how to build their processes. However, we, you know, our focus when it comes to real estate or real estate type business, it’s really that high end residential remodeling. So we still hold some rentals and we’ll still buy here and there, but really we are driving hard at this high end remodeling. So we’re trying to take, I mean, one of the things we have frustrated with when we were flipping is we’re hiring GCs and you get that, you know, the guy with the pencil and the pad of paper, and I’m not calling you back in communications awful. And we were getting fed up with it ourselves as customers. And we had people asking us, can you do renovations on our house? So we took our skills and we are like into a new market where it’s these customers who are just really sick of that old school kind of contractor. They want technology, they want high end work. They want communication, they want transparency. And so that’s what we’re delivering. And that’s, you know, beyond income digs in the coaching, that’s really kind of the other main focus.

Nick:
Yeah. That’s funny you say that because years back when I started flipping houses and it wasn’t the problem of the money or finding the deals, really, it was the issue with the contractors and getting good contractors because you’d have the pricing would be all over the board. You couldn’t negotiate, you know, you couldn’t estimate correctly and then not them not showing up. So you’d have to be there to make sure they showed up and doesn’t really matter licensed, or if they were a handyman or whatever it was, it was across the board, the problem. And then whenever I talked to people that were in that same situation, they always say, they’re always worried about getting ahead, you know, financially with the job, with the GC. And it’s something where a new investor must be like, terrified of, did I pay him too much? Did he finish that bathroom? He’s going to the kitchen now that I pay him. And it’s like, it’s just a mess. And I mean, if you’re the property owner, it’s like a full time job almost for you to manage this. Guy’s G you know, GC, which is why you’re paying him additional, or you’d go and get all the subcontractors yourself, you know? Yeah.

Charles:
A little bit. Yeah. And there’s so many different trades that are involved in a, in a flip, in a renovation. They’re everything is done a little bit differently. So to come up to speed with that is certainly one of the big challenges to flipping. And so yeah, if you have a good GC, great, but you know, those are hard to come by and is that TC teaching you so that, like, let’s say that GC leaves, how are you going to pull all those subs together yourself when needed? So it’s certainly an area where you kind of some, I think a lot of people skip over it when you’re thinking about starting. And it’s like, okay, I analyze it, found the money. Great. I found the property. Great. I’ll just rehab it. That’s a really tough part. And it’s probably, at least it wasn’t our experience. Those are the numbers where at least starting out, you don’t, you’re not as sure about as you do it, you’re going to really start to hone in those estimating skills and get closer on your numbers there, but you need that experience to gain that accuracy.

Nick:
Yeah. So one thing is, since you probably have a lot more in depth projects with high end remodeling versus a traditional, probably home flipper, how do you manage simultaneous projects and how are you, like what kind of systems do you have in place

Charles:
To do that? Great, great question. And that’s where, you know, we, we went on this high end remodeling and it was a completely different app because instead of having like, here’s the toilet, I buy it every single time. Right. Here’s the cabinets I buy every single time here. Every project’s different and our customers are really specific. They want, you know, really custom stuff. So to that point, that question you just asked, it’s all about having systems in place. So specifically for that business, I use builder trends to have my proper projects in one place at a place where my team can access. My customer can access as well. For one, we have the schedule, that’s probably the, the core part of that. And everything is linked together with resource planning. So that means that every single task on that project, we have either somebody from our team or a subcontractor who is assigned to it.

Charles:
And we’re able to look at that calendar and filter by, by people so that we can move them around to different projects. So I can see a global view of all my projects and see if, and when my resources, my labor are over allocated, and then we shift things around. So it’s all about having a home for that information, communicating it and updating it in real time, which unfortunately, a lot of contractors, a lot of you know, what we’re used to is, is just in our head, right. This kitchen might take six weeks and we’ll kind of work on it and see how it goes. And something goes wrong. We’ll deal with it. I need to have it, I say on paper, but really in the system so that we can all see it and update as needed.

Nick:
Yeah. So I was, I was, what kind of technology did you take from IBM and from your technology background and that you apply to real estate because what you’re saying now is

Charles:
Very different from traditional real estate investors. Yeah. yeah. Thanks. So so IBM

Nick:
We’re doing high level. It’s called the

Charles:
RP implementation. So enterprise resource planning. So SAP, Oracle, those are really big systems that an organization will implement that software as a whole. And the idea is that that system will, will manage everything within that organization. So SAP and Oracle will not be applicable to a small business or real estate investing. However, what it taught me was that to whatever degree

Nick:
We can have all of this integrated and have one yes,

Charles:
Single source of truth within our business, the better we’re going to be able to scale and stay organized and stay profitable. So what I went to work on within my own business was putting together different pieces of technology so that this organization can run on that platform. So it was less about the specific technology and more about the conceptual ideas of, of building that ERP. So specifically in my business, real estate, really big into Podio. Okay. So building out a Podio system to, to manage our lead in flow, to communicate, to do followups, to manage our tenants, all of that goes in there. Quickbooks for our, our accounting having the two linked together is also really important and really, really difficult, and then build our trend for the residential remodeling and to whatever degree we can limit the number of different technologies. We have huge, huge challenge for small businesses to whatever degree we can limit that typically the better off we’re going to be.

Nick:
And you’re then teaching all of your subs in general and GCs everything about how to use the software. They’re putting it on their mobile. They’re putting in everywhere.

Charles:
Yeah. Easier said than done. For sure. That’s one of the biggest challenges is like we can definitely force compliance within our team. The subs is a different story. The good news is that we’re seeing, you know, a, I think a, a wave of really talented young subcontractors come up, not like there’s a huge, I guess wave might be the wrong word, but there’s a growing need for new plumbers, electricians. And I’m seeing younger tech savvy really excited about technology contractors coming in. And some of them light up when they see it. Unfortunately, there’s going to be subs that just never are going to be interested in that. Now we are kind of weeding them out. We find that typically those are the subs who are poor at communicating anyways, their pricing is inconsistent. So we’re kind of naturally getting toward more subs following and using the software.

Nick:
Yeah, that’s a, that’s definitely, I can think of tons of subs off the top of my head that would, would not be, would not be doing that. They didn’t even want to take checks, let alone put an app on their phone and follow up where they’re going. But so what are some steps that you took for scaling your business that really multiplied your success? What are the main main factors? Yeah.

Charles:
Yeah. a great question. So I think it comes down to understanding and documenting your processes. So whether we’re maybe we’re flipping houses, right. So that is a process and maybe you’d have it in your head, but I think there’s a real value in documenting it and getting it down on paper and then updating it to be what you want to be. So what I mean by that is a process flow. Okay. So if I’m a, if I’m in flipping, I need to Mark it. Right. So what does your marketing effort look like then? The lead comes into your system. What system is that? Maybe it’s a spreadsheet for now and that’s okay, too, right. Just document what it is. Spreadsheet comes in, what do we do? We call the seller back. Are we using a script when they say you know, are we setting up an appointment?

Charles:
Okay, what does that appointment look like? How do we go to contract? How do we close the deal? How do we flip it? I think that in where I started with most, most of my clients is documenting out that process flow is step number one. And again, try to keep it technology agnostic to start, even if we’re just using pencil and paper or we’re using spreadsheets, whatever that is, that’s fine. Understand the process. And then we can identify what part of that process is most painful and try to solve it with technology. As opposed to the other way around a lot of business owners are just going to go on and, and try to, you know, download Podio, download Trello Assan and just play with all the software before really knowing what they’re trying to accomplish with their business. So I think we have to start with the process first.

Nick:
Yeah. That’s so important is document that process. And I do it for everything as well and something I used to never do. And then now I do it from everything, even from the podcast where there’s a checklist of like 20 items of what has to happen once this is done, you know, recording and it’s for everything new investor comes in, someone contacts us for this, or somebody contacts us, they go through like, kind of like a check process, even if it’s very simple, you know what I mean? It’s documented. And then you can just, I think, edited and updated as, as you find out different ways of making it more successful. Right. Making more efficient.

Charles:
Yep. Those checklists. I mean, that’s, we all have them in every, every type of business is going to happen and we do them sometimes we just don’t know. And unfortunately, like the easy thing to do is like, instead of taking the time to document what that checklist is, you just do it and then the next time you just do it, and then you’re just constantly doing those checklists instead of documenting what it is. Because when you document, then you can then think about delegating, automating in, but you need to see what it looks like first. And so it’s kind of a time investment to do that documentation on it.

Nick:
Yeah. Yeah. And I think that’s why a lot of people skip over it and then they’re so busy and they’re like, Oh, I’m ready to hire someone. Well, now you’re spending hours and days. Like, what do I do when this happens? And it’s easier just to keep it and then you can always update it, but it’s just like getting it down there, then just, if you change something, you just, you know, open it up, change it around, then you can send it out to the new people that you have that are assisting with you. You know what I mean? So yeah,

Charles:
Absolutely a standard operating procedure. Right. So exactly. And there’s a real sense of relief and comfort. I find with, with business owners who do this, is just getting it out of your head because a lot of us are really good at doing getting deals or finding financing. We’re really good at some of the stuff. But we just have a little bit of anxiety because we didn’t, we’re not sure how the rest of the team’s going to do it. And so just kind of getting it out of your head and documenting it, even if it’s not perfect. The first time is I think a big stress reliever and helps, you know, as a business owner that you’re ready for that scaling.

Nick:
Yeah. No, for sure. The so you mentioned some of the software that you use and you mentioned another piece of software that I love, which is Trello. And what technology do you commonly suggest to new or existing real estate investors? Like for me, it would be like a CRM and Slack. Right. Very simple stuff to get them off of the spreadsheet and to get them communicating outside of email and phone. Right. Yeah.

Charles:
Yeah. I think if you’re just starting out, like keep it simple, right. Communicating out of email and phones are great. A great concept right there, right in Slack is like the easiest thing in the world to do it’s free for whatever you need for, and now, so that’s, that’s definitely a go to, I also think some kind of task manager, again, we’re just talking about starting out. Okay. So Trello is good. Task project management assignment is also a really good kind of easy one to get started just somewhere to start listing out your stuff. Right. Assigning things to projects, tagging things, creating templates, just start that. Okay. and also lucid chart, or even just Google docs or something is a good way to start drawing out your process flow as well beyond that when it’s time to like really start building out databases Podio is a really good one that is also low cost. I will say that with Podio, there’s kind of a rabbit hole effect with a lot of people starting out and you can do a lot of cool things in it. And sometimes people will lose focus on what’s really important and go down some rabbit holes. But before you get into all of that, I think to your suggestion with Slack, Trello, Asana, those are really easy, low cost, if not free ways to just start to see the benefits of documenting those recurring checklists and tasks.

Nick:
Yeah. A sauna is an awesome, it’s an awesome, very advanced, I mean, you can do so much with it. I think it’s like a step over Trello in regards to project management. So it’s great when you’re doing especially larger renovations or anything where you’re just dragging stuff between and everybody has on their phone and they know, Hey, Charles just moved this or somebody just moved this and then you’re like, okay, that’s being done right now. So yeah, absolutely wonderful.

Charles:
It’s it’s also a possible tool for, you know, just globally for your life. Right. You’re able to kind of set up a workspace for your business or your multiple businesses and then potentially personal. So like I just assigned a task to my wife that we got an order takeout before a video before the weekend, because it gets so busy. Right. So like where I can go one place then, and then say, okay, go to personal, go to business and all that. The other thing I’ll say about definitely a sauna and some of these other task managers as well, is that if you’re thinking about a virtual assistant, a lot of virtual assistants now are getting trained on these programs. And so if you’re already using it, you can bring a virtual assistant in start assigning things and they’re used to it. They’re ready for that for all of that.

Nick:
Yeah. Every time that I will hire a virtual assistant, there’s certain there’s certain tasks or certain things that they have to be technology that they have to be a competent with. And it has to be, we’re talking on Slack. You’ll never talk to me in anything else. And you know, you have to use Trello and you have to use a sauna and these different things. And they’re very similar once you start using them. I mean, travel and sound are pretty similar, but they’re still a little different. So it’s like having that set up from the beginning when you’re hiring that VA, make sure, Hey, do you know Google docs? Do you know Dropbox? Like we’re using all this. And of course, you know, the majority of them do, but it’s just something that you want to like, start that from the beginning. We’re not talking, you won’t be texting me or something like this. It’s all in Slack. There’s the channel, you know what I mean? And kind of get that out front.

Charles:
Yeah. And it’s one of those small things that I think like if you don’t have an in place, a lot of virtual assistant relationships fail quickly. And there’s many reasons for that. I think one of those is that there’s an initial barrier to just getting in the groove of the communication process. And into that point, you know, if we have something set up, this is where tasks go, this is where communication goes. Kind of all you need to know. That’s really helpful. And just giving your virtual assistant relationship a better chance of success.

Nick:
Yeah. It’s also the other thing too, is I think one of the major failing points for VAs is that they’re not trained. So someone says, Oh, I have, you know, I have experienced with whatever it is. And you’re like, okay, great. Let me hire them for that. And then there’s a, well, we have to train them. It doesn’t matter if they have the experience or not. You have to train them on what your process is, how your business is going to be different from the other people they’ve worked with or currently working with. Yeah.

Charles:
Yeah. That’s a great point and a great tool for that. And this would come in conjunction with assigner Trello, right? So if you can, or even just a Google doc, if you can lay out kind of those tasks use a product like a loom, which is a video really quick free video recording, screen, recording software, record yourself, doing the task one minutes, five minutes, whatever that is, it gives you a really quick link. And so when you’re building out that standard operating procedure, you can say, okay, create contracts, right. Maybe that’s the task to do. And then boom, right. There is a link of a video demo of how to do it. And you’re building up that repository of how your business works in the way that you want your stuff done. And there’s nothing better than them actually seeing you do it and talk through it on the video.

Nick:
Yeah, I’ve done it before we use a like, or I’ve used before the OBS off the try, that other one that you’re talking about, but either way, I mean, they’re fantastic. You can just then send them a link and they review it. And then it’s the easiest way of trying to explain 15, 20 minutes. Well, you got to click on this, you don’t see that link. Well, you know, when you gotta do this, so that’s definitely a, a definitely a great way of training anybody, but especially VAs that you’re not sitting next to.

Charles:
Right? Yep. Absolutely.

Nick:
What does your business income digs do?

Charles:
Yeah. So thanks for asking. So we, I, I formed the business. Wasn’t really a business to start, but as I was in, I started going full time and I was kind of solving problems for my own business, where it was building out a Podio system, figuring out how to do QuickBooks for real estate, which I found was a lot harder than doing QuickBooks for other types of businesses. As I was solving my own problems, I started recording these videos and putting them on YouTube and I was getting some really good feedback of, wow, that’s cool. How do you do this? How do you do that? So I would publish new videos and then I’d made income digs is just a place to have a home for all of this. And so I have a lot of free resources available calculators how tos guides, many videos whether it’s Podio plenty on the sauna, plenty on QuickBooks as well.

Charles:
And then, so I’d say 90% of my resources are completely free, but I also offer coaching and consulting services on there as well. And we also have an online course for real estate accounting. It’s called real estate accounting bootcamp. So how do you use QuickBooks your real estate? So I just, you know, it’s really just an outlet for me where I’m putting out everything that I’ve learned and everything that I’ve done in my own business. And then for those who kind of want to take it to the next level, I’ll do some one on one work consulting coaching or the courses.

Nick:
Yeah. That’s super important because a lot of real estate investors are not tech savvy or they haven’t, they haven’t brought tech into their business, which like in other industries haven’t done. So it’s not too.

Charles:
Yeah. And what I’m finding too is like you know, I I’m really into this stuff and we all kind of go down rabbit holes. I don’t know if you’ve had the experience where it’s like late at night and you find this new software that might be this magic gem. That’s gonna solve all your problems. And a lot of my customers, my clients are doing that and then they’ll kind of get stuck and they’re, they’re spending hours going down all those different paths. And so I do that on my own and I have kind of a good sense of finding what works and what doesn’t for different applications and different businesses. So what is cool about income digs is I’m able to hopefully save some of my customers that time of doing all that exploration. I can understand what their businesses, what they’re trying to do and say, Hey, this software and this kind of process has worked for some of my other clients and it would work for you as well. So you know, unfortunately we can spend hours and hours on the tech stuff. And I just kind of say to my customers, let me do all that. And, and I can share that with you.

Nick:
Yeah, no, like for, I know you’re talking about with finding new software. So it’s something that I only will use software that I have referred to me, like most other things, you know what I mean? And in your life, but it’s a it’s cause you can, there’s so much out there, you put something in, you probably can go back 10, 20, 30 pages on Google and still find software. And I mean that, you don’t even know if it works, you don’t know the pricing, you don’t know anything on it. So

Charles:
Yeah. And you’ll say like, Hey, what’s the harm in scheduling a demo. Okay. So now I got, I schedule all these demos and they’re selling me on why dollar trend or co-construct is a big, you know, they kind of do the same thing, but they’re different. So like spend hours analyzing which one works and with you know, hopefully an hour phone call with me, I’ve used both and I could find out what your, what you need to do within your business and tell you which one works best.

Nick:
Awesome. So how can people learn more about you and your business?

Charles:
Yeah. So income digs.com again, tons of free stuff. So, you know, just go check it out. You can email me directly Nick at [inaudible] dot com. If you have any questions, like if you’re using software that I’ve been talking about or software that I haven’t been talking about, you just email me and say like, Hey, have you use this? What are your thoughts? I love exploring new stuff if I haven’t already done. So yeah. Just email me directly.

Nick:
Okay. Well, I appreciate it. Thank you very much for being on the show and looking forward to connecting with you in the near future. Right? Thanks for having me talk to you soon. Hi guys. It’s Charles from the global investors podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where begin set up

Speaker 4:
A free 30 minute strategy call with [email protected] That’s scheduled charles.com. Thank you.

Speaker 5:
Thank you for listening to the global investor podcast. If you like the show, be sure to subscribe on iTunes or Google play to get new weekly episodes for more resources and receive our newsletter. Please visit global investor podcast.com and don’t forget to join us next week. For another episode, nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure subscription documentation and are subject to all applicable laws. Please consult an appropriate tax, legal real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Harborside partners, inc. Exclusively.

Links and Contact Information Mentioned In The Episode:

About Nick Baldo

Nick quit his six-figure full-time job at IBM in 2014 to pursue real estate investing full-time. Nick has wholesaled, rehabbed, managed rental units and built a high-end home remodeling business. He focuses on leveraging technology and business processes to grow and scale.

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