Andrew Schultz (00:00:01):
Hi, everyone. Welcome back to Rent Prep for Landlords. This is part of our interview series. I’m Andrew Schultz, community manager here at Rent Prep. I’m also a real estate broker in the state of New York with over 14 years of experience in the investment property and investment property and property management industries. Today I am joined by a very special guest. Super excited to have him on the show today. Vital Vol is a real estate investor. He’s a real estate broker. He’s also a real estate attorney. And he’s, I’ve worn so many hats over the course of the years. That is just great to have him on the show. Vital. Thank you so much for joining us. Why don’t you do me a favor, tell us a little bit about yourself.
Vitaliy Volpov (00:00:40):
Thanks for so much for having me on, Andrew. I’m really excited to be here as well. This has been a long time coming. I know we’ve been talking about this for a while, and I’m glad to be here on the Ren Prep podcast. And yeah, as you said, I am a real estate investor, first and foremost. Primarily, I currently own 124 rental units in upstate New York, near the capital of New York, in Albany. I am also a part owner of a real estate brokerage where we specialize in representing investor clients. And we currently have over 30 real estate agents on our team. And we also run a property management company just as you do. We do it in our local area in in and around Albany, New York. So we’ve got our hands in a lot of different things. And as you mentioned, I am a licensed attorney in New York. I am no longer practicing full-time. I am, I would say, very part-time at this point, and I’m sure we’ll get into a little bit of why that happened and, and where, where my career took me. So
Andrew Schultz (00:01:42):
Yeah, as I started out there, man, of many hats, I mean, you said it all, property management, real estate, from the investment side, from the brokerage side, from the law side, there’s, there’s a lot of different aspects of, of the real estate world that you’ve been involved in and that you can touch on here today. So where did you start off? What was kind of the catalyst that got the whole ball rolling?
Vitaliy Volpov (00:02:04):
Yeah, I, so I, I’m loath to take it too far back, but I think it’s kind of, it’s relevant to the whole discussion. So I’m a first generation immigrant. I came to this country with my parents when I was 12. It was just, you know, we sold everything we had. My parents didn’t have a ton of money. We basically came to this country, started from the bottom. We didn’t speak any English. The jobs and careers that my parents had didn’t translate here. So really literally had to start from the bottom in America. And so for us, you know, in, in, if, you know, if your viewers and listeners know anything about the immigrant communities, those people that come here are typically very motivated to build a new life for themselves because they’re leaving something that was probably some kind of a hardship where they came from.
Vitaliy Volpov (00:02:50):
This was the case for us as well. You know, we weren’t very wealthy there and we certainly weren’t wealthy here at all. You know, had to start with just basics. Like my parents had to my dad, once he got his driver’s license, once he learned enough English to actually do something here for as a job, he bought a beat up Honda and started delivering pizzas in one of the local towns here where we live. And that was his sort of introduction to America. And on the flip side for my mom, you know, she couldn’t get a job, regular job for a long time, so she was just cleaning houses and doing things like that. And for me, you know, just watching them going through what they went through to bring me here and to give me the opportunities that this country provides to all of us, that was very inspiring.
Vitaliy Volpov (00:03:34):
And so that kind of was the catalyst for me wanting to do something more on something better with myself and with my, my life and career. And so, long story short, I meandered through, ended up getting into, you know, I, I did well in college. I learned English, I did well in college. I went to law school, graduated local law school here in Albany, New York, and started working as an attorney. With that said, you know, I don’t know if your viewers or listeners know much about how, what it takes, what’s involved with being an attorney. I’m sure most people are probably all they know about it is their small interactions with maybe someone did a real estate closing for them, or there’s a, a divorce or something along those lines. And then the rest of it is just, you know, tv, what you see in shows and in movies.
Vitaliy Volpov (00:04:18):
And you think that Right, right. Glorified profession where you’re making a ton of money, you know, it’s all high, high powered boardroom type of stuff. And the reality of it really isn’t that at all. Most of what’s involved with being an attorney is very mundane. And, and it is a lot of work. You know, it’s a ton of hours that you’re putting in. You’re, you’re usually sitting at a desk 90% of the time you’re not even in the courtroom because you’re preparing briefs, preparing documents, you’re doing research, all of that stuff. So I was doing that coming outta law school in 2010. You know, I basically went straight to soon as I graduated, probably a few months, I had a break over the summer, took the bar past the bar, and started working as a lawyer mm-hmm. . And I was putting in, you know, 50, 60 hours a week on the regular.
Vitaliy Volpov (00:05:05):
And it, in terms of work-life balance, you know, it’s, it’s really not something that’s a, it’s a necessarily a healthy work-life balance for somebody long-term. And so, pretty quickly I knew that I wanted to do something else and, you know, invest the money that I was making, and I wasn’t making even that much at the time relative to the student loans that I had. I came outta law school with like 130,000 in student loans and, you know, relative to what other professions were making. So, you know, when people talk about like, comparing doctors and lawyers mm-hmm. , I will tell you, doctors make a lot more money than lawyers on, on average, so mm-hmm. , so, you know, average doctor probably makes three times what an average lawyer makes in the small market. If you’re in New York City or if you’re in Chicago, you’re in LA in these types of markets and you’re an attorney there, sure, maybe you’re making a lot more money.
Vitaliy Volpov (00:05:53):
But that wasn’t the case for me. And what really, you know, got me started and going on, on this path is that I, I didn’t want to continue putting in the hours and kind of feeling like I’m spinning my wheels. And so in 2011, about a year after I started as an attorney, I started looking for a, an investment property, a rental property where I could move into it, house hack it, and have a tenant on the other side, but also kind of offset my living expenses and possibly check that out and see does it make sense for me? Is Landlording and being a real estate investor, is that something that I would even succeed at? Mm-Hmm. , it actually, and it ended up working out pretty well, I’ll say.
Andrew Schultz (00:06:37):
Yeah. Well, and you mentioned that your first deal was a house hack. Was it like a traditional house hack where it’s a single family and you’re renting out three other bedrooms and living in one? Or was it a, like a duplex where you were living in one side and renting the other?
Vitaliy Volpov (00:06:49):
Yeah, so it was a duplex and mm-hmm. . I was specifically looking for a multi-family because mm-hmm. , you’re right, that a traditional house hack would be renting out rooms inside of a single family home. To me, that was never that appealing. I was in a relationship already at the time with my girlfriend at the time was not my wife. We wanted privacy. You know, that’s one of the biggest things with regard to house hacking. You wanna have your own space. And to me, I always felt like it made more sense to have a multi-unit property, to own a multi-unit property and live in one of those units and rent out the other ones when it came to house hacking versus having roommates or having, you know, Airbnb strangers coming in at various points of your ownership. So mm-hmm. , if that makes sense to you.
Vitaliy Volpov (00:07:34):
Like, I just thought that that would be a better way to go. And I mm-hmm. , you know, whenever I talk to new investors, I think it really depends on where you are in life, and if you have a family or if you have a girlfriend, or if you have, you know, a spouse, it probably makes sense to not have to share personal space, you know, kitchens, living rooms with others and have your own space, versus if you’re in college or just outta college and you have a bunch of roommates and friends and they want to chip in, or they, they’ll pay you rent and they’ll live in your house with you. Well, that’s a different story. So I think it really depends on who you are and where, what stage of life you are in.
Andrew Schultz (00:08:09):
Well, and I think that, I think that the way that you did it with a, a du was it a duplex or a triplex
Vitaliy Volpov (00:08:14):
Two family? Yes. Side by side two family. Yeah.
Andrew Schultz (00:08:16):
That’s honestly one of the biggest recommendations that I have for first time home buyers when they’re getting ready to buy a home is buy a duplex, live in one unit, rent the other unit out. So it pays most, if not all of your mortgage, and then some, because at the end of the day, it’s taking an expense off of your plate while still helping you build equity, while still helping you get established, have your own place, things of that nature. And it’s so easy to buy a multi-family, a two to four unit multi-family here in the western New York region, at least that it, it’s almost a no-brainer for anybody looking to get into real estate investing at any level. So it’s interesting that you went with a, with a duplex versus the more, more traditional, what we hear whenever you hear house hack, it’s, it’s always oh, I live in one bedroom and I have 17 people living in the other bedrooms around me.
Andrew Schultz (00:09:04):
So obviously the, the house hack was your, your first deal, if you will. When did you realize that it was time to leave the law firm? When did you realize that it was time to kind of move away from practicing law full time? We had a conversation offline where you were telling me about like, the number of billable hours and things of that nature. Yeah. When did you realize that it was time to say, all right, enough is enough of this, I don’t need to practice law on a day by day basis, because I’ve reached a point now where I am able to move forward without that? Yeah,
Vitaliy Volpov (00:09:33):
So it, there’s, it’s a bit of a journey. So there, it wasn’t an overnight thing for sure. And I think there really, there are two inflection points for me that if I look back and reflect on it, that I can talk about, that I can tell you about. So I’ll tell you a quick story. So my second year as an associate at this law firm, so I graduated at top of my class. I did really well in law school. I ended up going to a fairly large firm for our local area size-wise. So we have mm-hmm. , I think 70 plus attorneys, another a hundred staff. So it’s a pretty decent size firm. So it’s not anything small. It’s also not anything huge. Like, again, big markets, New York City, you know, you got Skadden Arps or you have, you know, some of these other large firms where we have thousands of attorneys.
Vitaliy Volpov (00:10:14):
So it wasn’t anything like that. But the structure of how you get paid at a law firm like mine and the private law firm typically is you get some amount of salary. So you have a set salary, you have a set number of hours that you have to quote unquote bill every single year. And then in addition to that, if you go over and above or you do something exceptional, or maybe you bring in some additional business, you can actually make more money as a bonus. And bonuses given at the end of the year, bonuses are typically discretionary. So regardless of what you do, it’s up to the firm to decide the evaluated holistically and then, and then decide do we wanna give a bonus? And how much, and to who, that type of thing. So probably my second year at the law firm, you know, I was doing really well.
Vitaliy Volpov (00:11:00):
You know, I, I, like I said, I, I had pretty good credentials and I was busting my butt, right? And the firm has a formula, which is kind of like a loose formula. If you go over the minimum threshold of ours by X number of hours, you get equivalent amount of bonus, right? Mm-Hmm. . And the more you go over, the more bonus you in theory would get. And then there’s another formula for if, if I brought my own business, if I had my own clients that paid the firm to represent them, I would get a, you know, small cut of that as part of my bonus. Right? And so I think I worked like, I don’t know, literally 60 hours every single week, didn’t take a vacation mm-hmm. , just, just work workaholic, just to see how, how much can I actually make, you know, the salary was one thing, like what can I do with the bonus?
Vitaliy Volpov (00:11:45):
And at the end of it all, I had this formula we’re coming up on December when bonus, you know, conversations occur and, and the decisions are made. And I had a, a fact that, that it’s gonna be somewhere around like 25,000 based on the number of hours that I built mm-hmm. , I brought in a little bit of business over here. I did the formula, I calculated, I was all excited. And it’s nothing to sneeze out. No. I mean, it’s not anything crazy, but at the same time, when you’re second year outta law school, you’re 30 year outta law school, it’s, it’s pretty significant. Especially with the student loans,
Andrew Schultz (00:12:12):
Especially with 120 500 student loans. Exactly.
Vitaly Volpov (00:12:15):
Exactly. And so, you know, here I am going into the meeting, I’m all excited. We, we come to the meeting, the partner is awesome. Like the partners are all great, we’re, you know, good friends still nothing bad to say about them, but we sit down and we start going over the numbers. You had a good year, you build this much, did this, okay, here’s the bonus that we’re gonna give you. And she basically write, gives me a letter or a check or whatever it was, and I look at it and it’s like seven or $8,000 less than what my calculations were showing, right? Mm-Hmm. . And you know, and she kind of understands that, you know, like it’s less than what I was expecting. And then the answer for essentially unspoken question of why is it lower, is that, well, it is discretionary, number one.
Vitaliy Volpov (00:12:59):
Number two, they look at the whole profitability of the firm. Mm-Hmm. number three, they also want to kind of spread the love a little bit. So even some of the associates that maybe didn’t do as well as me, didn’t have as many billable hours, maybe didn’t bring as much business, they should still get something too. Mm-Hmm. cuz they wanna keep people happy. Right. And that, you know, I should be happy with which I was, because it’s discretionary, again, bonuses are not, not mandatory. You’re not entitled to a bonus if it’s written as a discretionary bonus. And, and so the thing that I realized then, and right then and there, is that I am not in control of how much money I actually make in this job because it’s a job, because I’m working for someone else. I am not working for myself. My income is not directly tied to my results.
Vitaliy Volpov (00:13:48):
My income is based on what my salary is and what the firm deems my results are in relative to everything else that the firm is looking at. Mm-Hmm. . And so at that point, and I was already investing in real estate by then, I think I might have had the duplex, and I think I bought another a two-family and a single family, which we can talk about it if you want, but, so I had a little bit of real estate already going on the side, but that’s when I knew, and I realized, okay, okay, no matter how hard I work, there’s always gonna be some other decision maker as to how much I’m actually gonna make and what my, what the value is of my production. Right. And at that point, I knew that I needed to redouble my efforts and focus on other ways that I can earn an income, reach, financial independence, and it’s not gonna be tied to a job.
Vitaly Volpov (00:14:34):
Mm-Hmm. . And to bring it back for your listeners and everybody listening, so like, regardless of what job you’re in, if you’re working for someone else, you have a cap on what your financial income and earnings are, are gonna be or can possibly be. And it’s very difficult to reach financial independence solely through a job. And traditional thinking is you, you stay in the job 35, 45 years, and then you retire at 65 and that that’s when you have your pension or your, your 401k, and that’s what pays for your retirement. Right. But I didn’t want, I didn’t wanna wait 35, 45 years to get to that point, and I didn’t want to be beholden or relying on someone else, even if they’re awesome people. And it’s a great high paying job, like a, like a corporate law firm. I just didn’t want that. And at that point, that was the first inflection point where mm-hmm. , I said, I’m gonna go ahead, redouble my efforts and I’m gonna pursue this other thing while still meeting my regular obligations at the firm. Mm-Hmm. . So that was
Andrew Schultz (00:15:32):
Probably one. So essentially it was the, it was the dollars for hours thing. That was, you, you kind of realized that at the end of the day, I’m only gonna get to a certain level here no matter what. And that was kind of the, the first straw that broke the camel’s back, if you will mm-hmm. . But it sounds like there was something else on the, on the back end as well. Sure.
Vitaliy Volpov (00:15:50):
Exactly. Yeah. Because well, at the time, you know, anyone who’s investing in real estate knows you’re not gonna retire with five rental units, especially if you just started, so in the beginning of you, you buying, you maybe put down a small down payment, you’re living in one of the, one of the buildings, one of the units. And then at the time, I had a two-family in the, in a single family that I was also renting out as my rental properties. And so I have, what, four income producing units, they’re not gonna replace my law firm salary, you know, anytime soon. Right? Right. So I knew that in order to get to that point, I needed to do more. I needed to do something additional to that and continue growing. And, you know, and that’s what I kind of, the path that I started at that point.
Vitaliy Volpov (00:16:33):
And as I, as time went on, as time passed, so this was probably 2013, 2014 when this happened, the story that I told you about with this bonus, and then it, I wasn’t able to actually retire or quote unquote retire or leave my law firm and replace my income at the law firm through real estate until just around the pandemic time. So 2020 is when the pandemic hit, and that was the second inflection point. So we’ll talk about how I got to scaling and all of that in, in just a little bit. But I think since you’re asking me about what I was thinking, like when did this inflection point happen? When did I make the decision? It was during the pandemic when, you know, in March of 2020, we had panic mm-hmm. Every mm-hmm. , everything got shown. You know, governors all across the country shut down businesses, no one was going to work.
Vitaliy Volpov (00:17:21):
Everyone was sort of in on a holding pattern. My law firm was no different. It was the same thing. The clients kind of clammed up, they stopped. They, they don’t know, they didn’t know what to do. They didn’t know if were, they’re gonna continue with their businesses. So the businesses that the firm was representing couldn’t pay the firm. So the firm paused. And so everyone was remote, no one was in the office. And the amount of work that everybody had at the law firm really dried up and also changed in sort of focus and tone to a government and helping businesses navigate with the different government assistance programs and the bands and the shutdowns and, and getting sick with, with covid and, you know, employees getting sick, those types of things. That’s what the focus was at the, at the firm in terms of legal practice mm-hmm.
Vitaliy Volpov (00:18:06):
And mm-hmm. during that entire time, from March to, I think probably like September, August, September of 2020, I was remote and not in the office. And during this entire time, we had a little bit of a pause, as I’m sure you can, you can attest to in real estate as, as like brokerage and real estate sales agents, and then real estate investing. But then everything went right back to, okay, well, people still wanna invest, they still wanna buy real estate. And that include, while the law firm was kind of on pause for me. And so I was doing much less work, billable hours, much less, much less work for the actual firm during that time. But real estate was booming for us. My, my my business and my business partners business. And so I basically got spoiled almost during that time where things are going great in real estate and I’m not having to do much at, at my law firm.
Vitaliy Volpov (00:18:56):
And then the law firm said, okay, they’ve lifted some restrictions, like the government, the governors lifted the restrictions, we are gonna go come back to the O office part-time. So they’re expecting associates like myself to come back and work two to three days a week in the office. And I came back and I think it was like the first day I came back, I sat back at my desk and I wiped, wiped off the dust stuff off of it, you know, off the computer, top of everything. Yeah. The keyboard and everything. And I sat there and it was just like, I really don’t want to be here. And it wasn’t just that I didn’t want to be there, it was, I knew that my time and my sort of investment and value and what I could bring to my own business on the side, on the outside of the firm, outside of mm-hmm. ,
Vitaliy Volpov (00:19:40):
The office that I was occupying was so much bigger and greater. And, you know, there are deals that are, that were, we were putting together where I might have spent maybe an hour or two hours total time working on them and making $10,000, $20,000 as a fee, whether it’s, you know, an an assignment of contract, which it’s a wholesale deal or something else, or, or we bought and sold something quickly like a flip. And it was nowhere near commensurate with what I am doing here at the firm. And so I sat there and I basically, for the first few days, I just kept coming into the office and I just, I felt this weight on my shoulders, and I couldn’t figure out why I had this weight on my shoulder. Like, I just felt like de like depressed, almost like heavy, heavy, heavy. And I talked to my wife and I’m like, I think, I think I just don’t wanna be there anymore.
Vitaliy Volpov (00:20:28):
And, and I think it’s time and mm-hmm. , my real estate investments and, and business was producing well enough to definitely equal what I was making at the firm. And, and at that point was probably already exceeding it significantly. And at that point, I didn’t even have, I think maybe I was 50, 60 units okay. At the time. And I basically was just, you know, I went to one of the partners and I told them, Hey, I’m gonna quit. And it was a complete shock, you know? Yeah. Because partners, lawyers, they’re in a certain bubble of their own, and they see even partners who are very successful, and they are some somewhat business people in their own right. Because they’re overseeing a business, or they’re recruiting associates and they’re getting a piece of their profitability, but they’re still workaholics, they’re still working bees where they are still doing the billable hour stuff.
Vitaly Volpov (00:21:17):
They, maybe they’re doing a high level higher level, but they’re still serving their clients who are themselves millionaires, who are themselves owning these businesses. But they’re not these, they’re not business owners. These partners are not business owners themselves. And it was very difficult for people that I talked to at the firm to understand how is it that I’m able to leave being 38 years old at the time, able to just walk away from this lucrative corporate job that mm-hmm. , everyone was coveting, you know, this is one of the best law firms in the area, so any lawyer coming outta law school would love to have my spot at this firm. And, and that was just a shock. And I think they didn’t quite understand. They understand now, I explained everything to them. They didn’t know all the ins and outs of the business, but that was the second inflection point.
Vitaliy Volpov (00:21:59):
And, and they said, okay, no problem. You know, I’m still affiliated with the firm. They switched my role as off council because mm-hmm. , they said, you know, if you’re still gonna keep your law license somewhere else, or keep it as, as a solo, why don’t you just keep it with us? You can have an office and secretary, but you’re not gonna be an employee anymore. You don’t have to do anything you don’t want to do. So that part was awesome and then worked out, but even if they didn’t offer me that, I was ready to go at that point. Mm-Hmm.
Andrew Schultz (00:22:22):
. Yeah. It sounds like you kind of reached a point where you realized that it’s, so you just got to that point, you got the middle of the pandemic sounds like, like mid to late 2020, you just kind of had enough and decided it was time to throw in the towel because the focus just, I, I remember we talked offline, you had given me a number, and I don’t know if you can say it publicly or not, but you had given me a number of hours that you were required to bill out on a yearly basis. Yeah. Do you remember what that number was? Or can you
Vitaliy Volpov (00:22:50):
Say? Sure. Yeah. So it’s not crazy. Again, I, I don’t know how much the audience knows about like what the billable hours are out there, generally in the legal world, but, so like New York City firms, they’ll require associates who work like 2,200. So 2200 billable hours for the year, which is a lot. If you really break that down by week, it’s a lot. It’s
Andrew Schultz (00:23:10):
42 hours. Yeah. 42 a week.
Vitaliy Volpov (00:23:11):
Yeah. But that’s, and I’ll explain sort of what, what goes into this, right? Mm-Hmm. , so at my firm, the billable hour requirement is 1800, 1800 hours mm-hmm. mm-hmm. . So if you break that out into a week, it doesn’t sound that bad, but first you gotta take into account that there’s probably another 30, 25, 30, 30 5% of time in addition to these hours that’s not billable. Absolutely. So we’re just talking about the hours that get submitted on a bill to a client to pay to the law firm for what was worked mm-hmm. . But you’ve got all kinds of administrative meetings, you’ve got all kinds of trainings, you’ve got all kinds of essentially firm related business that’s not billed to a client. So you, even if you’re billing 1800 hours as your minimum, you’re still, you still need to spend a, a significant amount of hours in addition to that to kind of be able to run the business, to be able to do the day-to-day things you need to do. And then again, that’s just a minimum. And if, you know, you’re encouraged and expected to exceed your minimum in order to, you know, a, do a good job for, for the partners and for the clients, but also to get any kind of bonus, so mm-hmm. , if you wanna get a bonus, now you gotta get into 1900, 2000, 2100 hours of billable time. And again, as you’re adding those hours over and above the minimum, you’re also adding the administrative hours that are not billed over and above what those new hours you just added are.
Andrew Schultz (00:24:39):
That makes a lot of sense. I see it even in our property management business. I see it because if we have a, something that we’re doing that’s billable hourly, and you know, for every hour that somebody’s there, you probably have another third of an hour that somebody back at the office is working on administrative, whether it be estimating or billing or you know, the accounting side of that, whatever the case may be, for every hour of actual profitable work that you’re generating there is, you know, work behind it that still needs to be done as well. And I think a lot of people forget that when they think about all of the things that go into it, really any business, not even just exclusive to law or real estate or contracting, it’s any business. You know, every hour that a doctor works is not a billable hour. Every, you know, they have to do charting and stuff too, just the same as anybody else would. Exactly. Exactly. Exactly. So at this point, you’re, you’re, this is basically like mid 2020 at this point. Yep. You’re sitting at around 50, 60 doors, you’ve realized it’s time to walk away from the law firm. How did you scale from that zero to 50 do or 50 door point?
Vitaliy Volpov (00:25:39):
Yeah. Yeah. So as I mentioned, the very first property I bought was using the house hacking strategy. And just to be clear, so everyone knows what that means. Basically, you would purchase a rental property property that has some ability to rent to potential tenants, and you use some part of that property, some a fraction of that property for your own living purposes. So at the same time as you’re able to generate rent income on that property, you’re also able to offset or eliminate your living expenses. So to me, for most average people who are unfamiliar with real estate, first time starting out, maybe thinking about real estate, how can I get into it? House hacking is one of the best ways to go. And the biggest factor of that, which we haven’t talked about yet, is that the financing that you can get from banks for house hacking, for owner occupied properties is so much more favorable and easier to obtain than non-owner occupied rental property financing.
Vitaliy Volpov (00:26:39):
So in my case, I, I put 10% down, but I certainly didn’t have to. Right now you can get an FHA loan for three and a half percent down of, you know, three and a half percent of the purchase price as your down payment, and you’re gonna have to probably cover some closing costs, but you can also build those closing costs in to a seller concession, where essentially it gets rolled into the loan and the purchase price of the property. So it makes it a lot more affordable for average people to get into real estate investing. And the biggest benefit of a house hack for someone who’s brand new like them I was at the time, is if you don’t know anything about managing properties, fixing anything, if you don’t know a thing about how to do leasing or tenant relations or any of that stuff, it’s one of the best ways to practice and to just test the waters.
Vitaly Volpov (00:27:29):
Mm-Hmm. if you’ve never done it. And that was the thing for me. Like I was an attorney, but I was a green attorney, I was very new and I had to learn everything from the ground up. And so I read some books, you know, learned some theory, talked to some people, but until you’re actually doing it, you’re not gonna know. And because I was living next to my tenants and because I also was selected with the location and the type of property I was buying, I was, I had a very positive experience, which w allowed me to, you know, use that as a stepping stone to the next deal and the next deal and the next deal. So like mm-hmm. The area was good. So it attracted good tenants. The tenants were good, so they were taking care of my property as opposed to trashing it and, you know, doing things that would cause more maintenance and repairs.
Vitaliy Volpov (00:28:11):
So I didn’t have as many maintenance and repairs, and because they were living next door, they were also on even higher level of, you know, good behavior when it came to being my tenants. So mm-hmm. , it really was just sort of a very sort of synergistic experience for me. So I thought, okay, I, I can do this again, I can do this, I can go to the next one. And so I saved up some money for a down payment. I, again, used traditional financing for the next three units that I bought mm-hmm. and I, you know, I went to, I went with a non-owner occupied loan for the second purchase. And you know, if, if it’s not something that’s available to you, if you’re as a listener listening to this, you’re thinking about getting into real estate, you can do the house hacking strategy over and over again.
Vitaliy Volpov (00:28:55):
Mm-Hmm. , there are certain limits and certain things you have to navigate when it comes to financing. But if I didn’t have enough money, let’s say I think I had saved up 25% for a down payment for the next property over the course of two years after I bought the first one. So I think I saved maybe $50,000 altogether, $60,000 ahead of pot of money that could cover the down payment and some repair costs and closing costs. I had enough to do that as a non-owner occupied loan, but even if I didn’t have that, I could’ve gone and found another house hack mm-hmm. , and maybe this time I would’ve gone with an FHA loan and only had put three and a half percent down. And I could have scaled that way, at least to a certain degree. I might have been able to buy 3, 4, 5 deals like that over the next five to 10 years, which in a lot of of cases still sets you up very nicely for options in the future.
Vitaliy Volpov (00:29:46):
Mm-Hmm. , whether you end up staying at your job, switch a job, whether you do something part-time because you have that cushion from rental income coming in, you’re able to give yourself an opportunity for financial freedom and options. But in my case, I went with non-owner occupied, occupied financing. I did that two more times. So in the span of I think four or five years, I went from zero units to seven. And then I started getting into some of the more sophisticated approaches where I started partnering with a business partner as opposed to buying everything myself. I started using an L c to hold my entity or to hold my properties as opposed to keeping them in my own name. And the biggest thing that allowed me to really scale was to start using private financing and started following the birth strategy, which was the buy, rehab, rat refinance, repeat strategy. Mm-Hmm.
Andrew Schultz (00:30:39):
, I think a couple things that are, it’s important to mention on those F HHA loans, those owner-occupied f HHA loans, you can get an F HHA loan. If you want to do a traditional house hack the single family route, you can certainly do that. But F H A will is it’s, I think it’s either four or five units, four up four units, up to four units on an fha, which when you’re looking at a situation like what you’re looking at, where you’re going to house hack and live in one unit and then rent the other units out, you might as well try to maximize that benefit if you can afford it. And with an FHA putting only three and a half percent down, it gives you a lot more wiggle room to try to go out there and find maybe a property that’s at a higher value, but with a lower down payment because you’re only going in at that three and a half percent down if you can get a couple of extra units under the same roof. That’s really the, the ultimate is being able to max out an FHA loan with four units, three of which are cash flowing, and one of which you’re living in, which is basically at that point, I would hope you’re living rent free.
Vitaliy Volpov (00:31:34):
Exactly. Oh yeah. You should definitely be able to live rent free, unless you’re in a very, very expensive market if you have a four unit property that you’re occupying one unit and renting out the other three. Definitely.
Andrew Schultz (00:31:46):
So at this point, when did you move from the traditional financing traditional bank route financing to going into either like private lending or whatever the case may be?
Vitaliy Volpov (00:31:54):
Yeah, so as I was going, and so I, I got up to seven units through bank financing. And what I realized about that as I was kind of looking at my sort of track history at that point and approach is that it was taking me a really long time. So I think I had an average of about a year and a half between each purchase of, of these properties that I was buying. And I wanted to go a little bit faster because again, you know, still working a ton of hours at the firm, still doing all of that, but already on the track and thinking in my head that I don’t really want to continue doing this because it’s, you know, the, the work-life balance was really poor. So I decided and started looking around talking to people and, you know, one of the sites, I’m sure you’re familiar, your, your audience probably has heard of as bigger pockets.
Vitaliy Volpov (00:32:39):
And of course they were talking about the bur strategy on bigger pockets. And I think Brandon Turner, one of the, one of the original sort of founders or early on adopters of bigger pockets, he’s the one that kind of championed that term. And once I started looking into like, what’s involved with that, you can definitely do the birth strategy using bank financing, but it’s even better and even quicker and even more accelerated if you use private financing, private lenders. And at the same time, I also came across a friend of mine, or, you know, we, we weren’t closely related or closely associated at the time, but we started talking at one point and he said, oh yeah, I’m in real estate. I have a six unit property here in Schenectady, which is one of our local, local cities here. And I said, oh, okay. I, I have seven units myself.
Vitaly Volpov (00:33:29):
You want to maybe buy something together. And so it was two things happening at the same time. It was me partnering up with a friend of mine and at the same time considering this bur strategy and using private financing to achieve it. And so we kind of put those two things together where, you know, a partnership allows you to kind of do more mm-hmm. , your partner can take on things that you can’t maybe in the moment or in general because they have different skillsets than you and you can compliment each other. And at the same time also borrow private financing, private money from private individuals for buying deals more quickly and coming to the table with a cash offer, quote unquote. So just to give a for instance, basically the way private financing and the birth strategy would work is, let’s say you’re looking at a five unit apartment building or five combined units and this mm-hmm. ,
Vitaliy Volpov (00:34:25):
This was my next deal, which is exactly what we did. And normally you’d have to go to commercial lender and it would have to be at least a 20% down type of a p type of a deal and type of financing. And you know, you could go that route. But in our case, what helped a lot is we had, I befriended and ended up talking to and making con a connection with a friend of one of the partners in the law firm who had some money, who was interested in investing that money. And then I had a relative who also was interested in making their money, you know, putting their money to work and making a higher interest rate return than they would get from a savings account or even the stock market. And so we were able to kind of pull that money together and go to the seller and say, Hey, we’re gonna offer you a cash offer.
Vitaliy Volpov (00:35:09):
We’re gonna waive a financing contingency so a property doesn’t need to go through an appraisal and it doesn’t need to go through the red tape that would be involved with the bank. And as soon as title comes in, we can close on this property at this, at this price. Mm-Hmm. and the seller was receptive to that, and that en enabled us to get a little bit of a discount on the purchase price because mm-hmm. , you know, cash financing cash is king, you know, and so even though it wasn’t true cash, it wasn’t our cash, it was our, our private lender’s cash, we were able to get that deal under contract, purchase it, and kind of, you know, start, start the process. And what we did then is we renovated it, we raised the rents, we put in new tenants, and then after a year or so, we went to a commercial lender at that point and we refinanced it at mm-hmm. 80%, or I think it was 85% at the time loan to value, where we were able to pull all of our private lenders money back out, repay our private lenders, have permanent financing on this building that was at a much lower interest rate and also amortizing as opposed to an interest only loan. Mm-Hmm. and not have any of our own money invested in it and still have equity and still cash flow. So once,
Andrew Schultz (00:36:20):
Hang on one second. I wanna, I wanna unwrap that real quick because you were able to, in one year’s time, you were able to take the building. We’ll say it was worth, I’ll use Buffalo numbers, we’ll say it was worth a hundred thousand dollars. Yes. You put money into it, rehabbed it out. We’ll say the rehab cost you 50. Yep. This building is now worth 200.
Vitaliy Volpov (00:36:40):
Andrew Schultz (00:36:41):
You were able to refinance it after the first year, pay off your private money guy for his a hundred cuz you were just paying interest on that loan. Yep. You were able to pay off all of the rehab costs, the 50,000, and you were able to refinance it at 80% loan to value. So essentially at that point you were able to pull another, if my math is right, 80% loan to value would be what, one 60 on a $200,000 200 times 0.8. Yeah. One 60. So there’s an extra 10 grand there money that you could pull out. And that’s tax-free money by the way Correct. To put back in your pocket to essentially pay you guys back for whatever you had for a down payment on the initial purchase.
Vitaliy Volpov (00:37:19):
Right, right. And that’s exactly right. And, and the numbers were slightly higher than that on all, all ends of it, but it was very, very much exactly what happened. And like I said, we didn’t have any of our own money invested in the property. We did the rehab with a, with private money, we did the purchase price with private money, and there was a little bit of a cushion over and above what the private money totaled out to be from from the proceeds of the commercial loan that we were able to sort of pay ourselves a little bit extra over and above. Mm-Hmm. knowing also keeping in mind that the appraised value was even higher, obviously at a a hundred percent, a hundred percent of appraised value still gave us a equity cushion in the property. Mm-Hmm. . And once this process sort of worked out for us, and once I saw it in practice, not just on bigger pockets and hearing about it and kind of theorizing about it, that’s when it was like, wow, you know, we can really scale this, we can really take this to another level and mm-hmm. ,
Vitaliy Volpov (00:38:16):
As long as you can find additional or good private money lenders with sufficient cash to, to lend to you, you can probably do more than one deal at a time, which is what I’m doing now. And that way you can do several deals a year. And, you know, nowadays I, I’m adding probably 20 to 30 units to my portfolio every single year for the last three or four years that I’ve been doing mm-hmm. like this, this type of scaling. And so that is really, that was the real reason of, and, and the real catalyst for being able to take the portfolio from seven units in 2015 to, it’s gonna be almost 150 units in the next month or so.
Andrew Schultz (00:38:58):
That was the gas on the fire, basically the MER method and being able to find that private financing.
Vitaliy Volpov (00:39:03):
Exactly. Yeah. Mm-Hmm. . So, and that’s, that’s what we’ve done. Yeah.
Andrew Schultz (00:39:07):
Nice. So at that point, you know, at the point that you’re at now you’re at a, what did you say, 124 doors. You’ve got the crosshairs on like 150 by the end of this year, probably by the middle of this year, by the sounds of things. Yes. When you were scaling up, how did you go about finding your deals? Were you pulling ’em from the mls? Were people starting to bring deals your way? And, and I guess the other question I should ask is, what’s the average size in number of doors? Do you have a lot of stuff that’s onesie twosies, or is it 10, 20, 30 units at a time?
Vitaliy Volpov (00:39:37):
Yes. So let me take these questions one at a time. So mm-hmm. as far as finding deals. So I started out exclusively on the m l s back, back in 2011, 13, 14, 15. That was all m l s at that time. It was still possible and it, you could still find decent deals on the m l s. The competition wasn’t as high because people were still reeling a little bit. Investors were reeling from, you know, the crash of 2009 and things were sort of still a little shaky. Lenders were still a little tight with their lending practices because everyone was still kind of cautious. So there weren’t, there wasn’t as much competition and there were still good deals to be found. The further along we went and the, the, so the closer to the present we got, the harder it was to find anything worth buying on the mls.
Vitaliy Volpov (00:40:25):
Mm-Hmm. , I would say out of all of my recent properties, I think maybe two or three from, from 2017 to the present have been on the mls. Wow. Almost all of the other ones have been off market. And so when it comes to off market, there are a few different ways that we’ve been able to source deals the way they, the ways that they’ve come to us. So one of them, once we got big enough, and once we were kind of had our kind of hands in a lot of different cookie jars where it’s brokerage, the property management company and the wholesaling business. We knew a lot of people and we had several different agents on our team. So we had a huge network of people where deals were kind of coming into us, people were calling us or someone was emailing someone and saying, Hey, there’s this deal.
Vitaliy Volpov (00:41:09):
Do you wanna check it out? Do you wanna check it out? So once we got to scale, it was certainly, it certainly has become more of like a word of mouth type of thing. But originally, you know, it was all the strategies that you hear about on bigger pockets. You know, we would drive for dollars, we would pound the pavement, we would check, you know, look for evictions, for landlords who are tired, landlords who are looking to get out. And it’s all about like reaching out to people and to, to owners, sellers, potential sellers, and talking to them about, Hey, do you wanna sell? Is this the right time? Would, would you sell for the right price? And then it’s like, oh, well I don’t know, like, what’s the right price? Well, let’s talk, let’s look at your building. Let’s do a walkthrough and build some rapport with them and get them to like you and get them, you know, obviously liking is only gonna go so far.
Vitaliy Volpov (00:41:58):
You obviously going to have to give them some kind of value that they wanna take. Mm-Hmm. , you know, some, some offer that you give them that they don’t, they don’t wanna refuse. But those things can, can happen if you have access to these sellers directly. If you’re going through the l s, you’re, you have too many buffers. You’re dealing with an agent, maybe there are attorneys involved, all that stuff. Whereas if you’re talking to, you know, day-to-day, if you’re talking to regular people about their business, about their rental properties, about what they got going on and why they may be interested in selling, why it might be the right time for them, you might be able to get a better deal or a deal that otherwise wouldn’t be on the MLS because the seller wasn’t thinking about putting it on the ML s mm-hmm. . And so that has been one of the best ways, you know, those personal interactions, those personal conversations with sellers directly of obtaining these deals in terms of size for what we’re targeting.
Vitaliy Volpov (00:42:51):
So when I started O out, I obviously started with a two family. I did mix in a single family as part of a, my, my one of my deals. But from there I kind of was looking at definitely three units are larger and mostly four units are larger. And in terms of how high we’ve gone, how high we’re willing to go, I think, you know, we’ve gone to 10, 12 units, but we’re willing to go now to probably 2030, although we don’t necessarily wanna go too big and too large with a single mm-hmm. , you know, like a single purchase.
Andrew Schultz (00:43:30):
I think it’s interesting to see, like, I think everybody reaches a point in their investing business just like you did, where they realize, all right, I’m up against because you, there’s only so many mortgages you could put on your credit report and things of that nature. Everybody kind of runs up against that exact same wall that you ran up into. And I think most people have to get creative at that point. Some people just do the portfolio loan, put everything under one big blanket loan and clear off my credit and other people go the bur route with private financing like you did. And there’s a lot of different ways to grow and scale in real estate. It’s just about finding the method that works best for, for you, your investment strategy, the lifestyle that you want to build, things of that nature. And I think it’s interesting to see how different people decide to, to scale their businesses.
Andrew Schultz (00:44:14):
And talking about scaling a little bit here, kind of shifting away from the real estate investing cuz you’re not just a real estate investor. We’ve only talked about two of your hats so far, right? <Laugh>, obviously you’re an attorney. Yeah. You’re a real estate investor. You also own a real estate brokerage, a property management company. Where did those kind of factor in? When did that come into the picture? Maybe a few minutes on that. Not a, not a real in-depth thing. We could literally go for two or three more, two or three more interviews just on that stuff I think. I know, but where did that come from all of a sudden
Vitaliy Volpov (00:44:46):
To Yeah, there’s definitely a to there. Well, so definitely property management was more of, you know, kind of an offshoot off of the other stuff because once you get to the scale you can’t do it yourself. That’s one of the things that I think is important to emphasize to people that you can’t be a one man show or one woman show no matter what. If you, if you get beyond maybe three or four properties, it’s just becomes impossible. Your quality of life is gonna suffer. You’re gonna be in the same position you were. You know, if I’m talking about quality of life at a law firm, yeah. Well now you’re just doing the same thing except you’re running ragged doing everything for all of your rental properties. Even though, even though you don’t even have that many, you, you need to be able to leverage and outsource the work.
Vitaly Volpov (00:45:27):
So for us it meant that we had to have a maintenance crew, we had to have leasing agents that will actually do the apartment leasing. You know, we had to have contractors for when we’re doing our rehabs for the bur strategy. All that stuff kind of lends itself to, okay, well now that we figured this out for ourselves, we can offer this service on a unlimited scale to others in our area. And because we had the brokerage going at the same time, we were able to, you know, if a deal doesn’t make sense for us to buy, what can, what else can we do with it? Oh, we can give it to one of our agents to list or maybe we’re gonna go the wholesaling route and you know, get it under contract because one of our agents has a buyer. We have a buyer that will pay a higher price then what we’re willing to pay.
Vitaliy Volpov (00:46:09):
And so that allows you to make, make money in multiple different ways. So it was all about having multiple streams of income and ability to, you know, not to be morbid skin a cat in multiple different ways. Right, right. You know what I mean? So mm-hmm. , as long as you have a lot of options, the more options you have, the easier your business is gonna thrive and the easier it will be for you to make money. So that was the reason why we have the brokerage and why we have the property management company and now they’re all on their own, very much legitimate standalones. Like they could certainly standalone and provide sufficient income, you know, for whatever you wanna do. Even, even potentially for financial freedom just on, on those merits alone. Mm-Hmm.
Andrew Schultz (00:46:48):
, that’s interesting because we were talking a little bit, I don’t remember if we were online or offline, but we were talking about like property management companies that, for instance, being a, a platform for other jump offs. You know, like you had said here in New York, I think it probably, I think you probably set it up the correct way. You’re an attorney, you would know this, but you have to have a licensed broker, or you have to be a licensed broker or a licensed agent operating under a licensed brokerage in order to manage property for someone else. So I’m assuming it was probably the, the brokerage first followed by the property management company. And then from there, the property management company. Now you’ve got a contracting arm, now I’ve got a cleaning company, now I’ve got a, a landscaping company or whatever. It’s very easy once you start seeing that financial success in one area of your life to start applying those same methods to other areas of your life.
Andrew Schultz (00:47:38):
And really, real estate is one of those things, again, especially in the property management industries where, I don’t know, a single real estate agent that doesn’t have a need for all of the services that we’ve talked about, property management, contracting, landscaping, blah, blah, blah, blah, blah. The more of those hats that you can wear or the more of those businesses that you can not necessarily operate, but at least be the owner of and have good quality people to operate, it just makes it that much easier for you to insource as many things as possible, I would think.
Vitaliy Volpov (00:48:06):
Absolutely. I agree. And, and that’s what it’s all about. You, you’re synergizing what you’re doing. Mm-Hmm. . So as long as what you’re doing, if you are, if you’re involved in multiple ventures, as long as they’re all kind of in the same general niche and the same general kind of direction, and they’re moving in the same direction, I think it’s worthwhile. As long as you, you know, you can handle it all to pursue them because they will compliment each other along the way.
Andrew Schultz (00:48:30):
Mm-Hmm. . Well, and that kind of leads me into my, my next question, which is, who are the top five people in your Rolodex? And I think that this is an interesting one for you specifically, because when you think about the real estate team that everybody talks about, it’s your real estate agent, your attorney, your contractor, your home inspector, your banker, and you have some of those hats. You already wear some of those hats, right? Like, I don’t know if you do your own real estate closings or not. I would assume that they probably at least run them through the firm that your, that your license hangs with. You have a brokerage, you have a property management company. I don’t think you have a contracting company. Maybe you have a few maintenance guys in-house or something like that, but mm-hmm. . Yeah. When, when you already have some of these things in place internally, who are the five people or the three people, or the two people who are at the top of your Rolodex, if you will.
Vitaliy Volpov (00:49:22):
Yeah. So I think the answer might surprise you a little bit. So I think it’s actually important to have a separation between your role in a business as a business owner and some of the hats that you might also wear and have. So I am an attorney and I could do our own closings and I could do our own evictions and any other sort of outward facing legal work. Mm-Hmm. , but don’t. And one of the main reasons I don’t, well, one reason is I’m busy as it is, and I don’t need to do the billable hourly work that I just left my law firm. Right. I didn’t want to continue doing. But the other reason is that you don’t have the clarity of perspective. So when we’re dealing with a potential large deal, you know, multi-family apartment complex, and they’re mo moving parts, and my business partner and I love the love the building, we think that there’s a ton of potential.
Vitaliy Volpov (00:50:18):
We just walk through it and, you know, we’re very much invested in wanting to buy it, right? And then we do an inspection on it and something comes back like maybe there’s a ton of asbestos in the basement, let’s say, right? Mm-Hmm. the human nature. And the tendency is to just say, ah, let’s just gloss over it. Like, we’ll, we’ll push through it. We’ll, we’ll sort of skip and cut corners with not wanting to negotiate or not wanting to, we still love the building, so we’ll deal with it ourselves. We don’t wanna put it on the seller to do something about it, if you know what I’m saying. Mm-Hmm. , we don’t want the, you know, we we’re just gonna go with it because we are so invested. Maybe we put a down payment down. Maybe we spent money on an inspection, right. We paid an inspector to do an inspection, and now we’re vested, we have a vested interest in it. You’re
Andrew Schultz (00:51:05):
Not, maybe this is the first good deal you’ve seen in six months. Correct. Like, exactly. And stuff like that happens too. When the market is slow, sometimes any deal looks like a good deal.
Vitaliy Volpov (00:51:15):
Exactly. And when that happens, you’re not thinking clearly and you’re not being, you’re not doing yourself and your own business a service by, by being in that position if you’re also the supposed to be the independent advisor. So that’s why when we do our deals, I have, there are a couple of attorneys that are in my, so to speak, virtual Rolodex that we work every single time with, and they’re the ones that do everything A to Z when it comes to closing a rental property deal and also negotiating with the other attorney and doing all that stuff. So I think it’s important. I think separation is important regardless of what your expertise might be. Now, because I have that expertise, I have the sort of the inside knowledge and the track inside track of how it should go and what I can say, what we can and can’t do.
Vitaliy Volpov (00:52:00):
So I have that sort of knowledge and, but I’m still going to another second pair of eyes to kind of give me that sort of clarity that I’m, that I’m lacking. So for in terms of people, one, yes. Attorneys and actually several of them two definitely, you know, contractors are extremely important. We do have them quote unquote in-house. So we have contractors that work for us all the time. But I would still put them on that list. Like if you’re trying to build a list for yourself and you’re trying to see, okay, who do I need on my team? You definitely need a contractor. Or at least you need more than one. You actually need a few different contractors. I
Andrew Schultz (00:52:39):
Think a general and subspecialist. Yeah,
Vitaliy Volpov (00:52:41):
Exactly. A distinction needs to be made, especially for rental property owners between a maintenance worker, someone who can handle the day-to-day maintenance, and a contractor or a contractor crew. They can do your rehabs and turnovers and actually like, you know, upgrades to, to apartments and, and buildings. So one is maintenance, one is upgrades. And I ha we have both and we have several of, of each bec because of the scale that we’re o we’re in definitely insurance broker, it’s extremely important to have really good insurance. We have, I, I own all my real estate and separate LLCs. Llcs are good. I’m all four separating and, and kind of having the liability separation, but there’s still no substitute for having really good insurance. So you need to have a good insurance broker. We have have two of ’em. The, again, because of the scale, we, we go to this one, he’ll give us a price, we’ll go to that one.
Vitaliy Volpov (00:53:29):
He’ll give us a price. Sometimes we’ll go with one guy, sometimes we’ll go with the other one. And then in addition to the ones that I’ve already mentioned, you obviously need, I think you need a real estate agent to source deals for you and to help you find deals, especially if they’re plugged into the market and they’re the type of agent that has the investor mindset and hopefully they’re an investor themselves. Mm-Hmm. . So in our case, yes, that’s all in-house because we have a team of agents like that. And you know, obviously we’re real estate brokers ourselves, but I think it’s extremely important to have that person in your Rolodex and be able to talk to them and bounce ideas off of them and also possibly find you really good deals. Quick plug, my brokerage is called Serenity Real Estate Team. We’re out of Albany, New York.
Vitaly Volpov (00:54:15):
If you guys are looking in Albany, if anyone’s listening, watching and you wanna try to buy something in our, around the capital region you know, I’ll, maybe Andrew can share my information and we put it in, in description of this video. Absolutely. Or the comments and, and you guys can reach out. And then the final person on the list that I would say you want to have is a banker or a mortgage broker. And again, we have several, we work with a, a lot of different banks and credit unions and commercial mortgage departments. We need to have an in and align to them that can help you if you’re doing the birth strategy to help you get the refinances done and get the maximum out of your properties that you need to get. Or if you’re not going with the tradi, you know, with the, with the burr with private money, but you wanna use bank financing, you need to have someone like that as well. So those are my five. And I would definitely say that’s, that’s what everyone should be aspiring to have.
Andrew Schultz (00:55:05):
I think that’s a pretty good list. I mean, it’s pretty, pretty standard. It’s the same list that we talk about pretty much anytime you talk about having, you know, who’s your real estate dream team. But I think that you hit on a couple of really important points there. And that’s having multiples in the same position when you’re talking about insurance. It’s good to get quotes from multiple places when you’re talking about real estate agents. It’s good to be working with more than one agent because everybody has different networks. What this guy finds this lady may not find in vice versa. There’s a lot of different agents out there with different networks and different levels of expertise. And I think that it’s important to me mention that if you are gonna work with an agent, they need to understand the investment world. It can’t be somebody that only does single family residential, where they’re more concerned with the color of the paint and where the curtains, how the load.
Andrew Schultz (00:55:47):
Exactly. Exactly. Then, then you know how old the boiler is and whether this thing has a roof on it or not. So that’s something that’s worth noting as well. I wanna kind of change change paths here a little bit. We’ve got a few minutes left and I wanted to kind of talk to you a little bit more on the abstract topics, if you will. Sure. starting with this question, and I think this is an interesting one cuz I think I have an idea of where you’re gonna go with it. I’m not sure, but I think I have a pretty good idea. What is something that you think is going to blindside landlords in the next 12 months? Or what is something that you see new investors get blindsided by on a regular basis that could easily be avoided?
Vitaliy Volpov (00:56:23):
Yeah. So with regard to landlords in the next 12 months, I think the regulation, that’s one of the biggest sort of looming clouds over the landlord and real estate rental property industry in America. I think it’s probably more so a concern in some states like ours, like New York, California, and a few other states than others. But as you and I spoke on my podcast last week, we, the Biden administration is currently pushing a tenant’s bill of rights and they have, they essentially gave a mandate to several key federal agencies to investigate and come up with restrictions as I would refer to them on the real estate industry. And it’s definitely something that all landlords need to be aware of and need to stay up on and, and sort of understand and prepare for and pivot if necessary. We don’t have anything concrete right now and nothing’s been sort of decided.
Vitaliy Volpov (00:57:23):
Nothing’s official. Nothing is a law which you have to comply with right now, but it’s certainly something that has been brewing and on the horizon. And as you know, since the pandemic we’ve had, you know, across the country there have been many eviction moratoria and also rental assistance programs, which also double as eviction moratoriums for those that apply for tenants that apply mm-hmm. , they can’t be evicted in many cases. So that’s still going on in New York. The, the, the rental assistance issue is still occurring, it’s still ongoing. Our governors have continued to revive it and continue to keep that in place. So that is still an issue for a lot of landlords. But it globally, you’re sure. Nationally, I think it’s definitely sort of what’s gonna be the federal policy on this is the federal government through various agencies planning to get into regulating rental properties in real estate industry, which they really haven’t done up until now. Haven’t talked about it, but they’re the headwinds are there. It has definitely been several years coming. The voices on the advocacy side are definitely getting louder for various tenant advocacy groups. So I, I definitely see that as a potential concern in the near future.
Andrew Schultz (00:58:33):
It’s interesting that you brought specifically some of the Covid restrictions up. I have a press release that I had pulled up from a couple days ago. I’m not sure if you had seen that. The there’s a representative out of Georgia that’s pushing back against the, he reintroduced the RESPECT State Housing Laws Act, which is essentially them trying to get some repeal on the covid restrictions with regards to like the 30 day notices and things of that nature. Mm-Hmm. . So we are starting to see some pushback on the, the Biden tenant bill of rights. That has been, and again, like you said, it’s just a document that’s been published and that’s as far as it’s gone. It’s not law or anything of that nature, but you can kind of see the writing on the wall and you can see that there’s going to be more and more legislation coming down the pipeline that’s going to have an impact on how housing providers run their businesses going forward.
Vitaliy Volpov (00:59:18):
Exactly, yeah. And I, I think it’s just in the sort of the name of the game, unfortunately. And in terms of affecting change, if you’re, if you’re a rental property owner, I think the best thing you can do, what’s in your power is to certainly, you know, speak up and also use your voting power when it comes to selecting officials that are in charge. Mm-Hmm. . So I think that’s important. I think the sort of the grassroots organizations on the other side are very vocal and very forceful with their agenda and pushing that, and I think the, you know, landlords and rental property owners and investors need to do the same.
Andrew Schultz (00:59:55):
Well, and it’s, I think you’re right. I think that a lot of investors buy one or two properties and don’t really stay up on the laws until it’s time to go to lease an apartment another time or something like that. Yeah. And it’s tough to stay up to date on the laws because this stuff shifts very, very rapidly. I mean, we talk about H S T P A here in New York, the Housing Stability and Tenant Protection Act from 2019. They basically passed that on a Friday and said, all right, well all of this goes into effect immediately, so deal with it. And it was a 75 page piece of legislation that you had to sift through and figure out, okay, I closed my business on Friday at 5:00 PM I reopened the doors Monday at 9:00 AM how do I have to operate between then and now? What’s changed? So I think that, I think it’s definitely relevant for every landlord and every housing provider to stay current on what the laws are in their area.
Vitaliy Volpov (01:00:40):
Andrew Schultz (01:00:42):
How do you see the role of the landlord changing over the course of the next decade?
Vitaliy Volpov (01:00:47):
So I think with that, I mean it, I think it does relate back to what we just talked about a little bit. There are a few other things that I can think of, but obviously the regulatory landscape in the legal landscape is gonna play a major role. It just depends on which way the, sort of the politics of it are gonna go. Whether it’s gonna sort of shift back and swing back like a pendulum or if it’s gonna continue kind of moving toward this you know, restrictive approach. So I, I think it, no one has a crystal ball, so I can’t say obviously, but I think that we’re probably gonna see more restrictions statewide and nationwide. And then in general, the other big trend I think that’s important to keep an eye on is definitely technology. Mm-Hmm. . I think that, you know, with the rise of artificial intelligence and use of it in various aspects of industries and, you know, the kind of the online wor world and the video and the spoken word world, I think it’s something to watch for because it’s gonna, you know, we’re gonna continue evolving and, and developing new technologies that I think are gonna start disrupting or, you know, supplementing or assisting the real estate industry.
Vitaliy Volpov (01:01:55):
I don’t, I don’t know exactly where it’s gonna lead, but you know, we’re, we’re not, I think if we’re talking about automating buying and selling process, right? Mm-Hmm. , I think that’s gonna be harder, you know, with regards to like the iy, you know, it’s something that you mentioned to me offline that, you know, what do I think about that? Is there gonna be a con, is there a concern that they can take over and eliminate real estate agents and maybe make it a very transactional experience where you can just go online and see a house, click a button, boom, I’m the owner of that house very similar to, you know, buying a stock or something like that. Mm-Hmm. , I don’t think that that is very likely, at least for a while, at least until the artificial intelligence technology really catches up and is able to provide that kind of a unique, you know, overview and review of, of what the asset is.
Vitaliy Volpov (01:02:45):
But specifically because each property is unique, even if it was the same builder using the same blueprints, building a house next door to another house, there’s still gonna be two unique pieces of, of land and parcels and properties. And for that reason, I don’t ever see it being as easy to buy real estate and sell real estate as it is to buy stocks or buy any other commodity electronically where you can just do it online. I think you’re gonna need personal interactions because especially we’re just talking about residential real estate, where people are gonna be using that real estate to live in. I don’t see it ever being that transactional. I think that human touch will always need to be there. And we’re a long way away based on the housing stock that we have, the owner demographics that we have, we have a lot of older owners, but we also have owners, you know, in their forties and fifties that are kind of, you know, they’re staying put, they’re sit, they’re sitting on their rental properties, they’re, they’re, they’re happy with how things are going. So I don’t see it shifting that dramatically, at least for another 20, 30 years.
Andrew Schultz (01:03:48):
Yeah. And it’s interesting when you talk about AI specifically, I think that there’s a large market for AI in an area that nobody I don’t think has thought about yet, and that’s maintenance. If you can put somebody into an AI chat script or an AI phone system or something like that, that can walk you through, I need to troubleshoot. I have a, a breaker that needs to be reset. Yes. Okay. Well, we’re gonna walk you through this using AI how to, how to reset a breaker or, okay, we’re gonna get you to a certain stage and then refer you to a YouTube video or Right. Get you to a certain stage. And did that resolve the problem? No. Okay. We’re gonna connect you with a live human. Yeah. I think that that’s something that would be achievable on a large scale, and I think that that’s something that, I mean, pretty much every property management company would be interested in at least, because if we could eliminate, if you can eliminate one service call for a non-issue in a month, like that’s, that’s money saved right off the bench. Yeah. Agreed. And the more times you can do that, the more, the more maintenance calls you can reduce by somebody being able to turn a breaker off and back on again themselves versus sending out a maintenance technician. Yeah. That could actually be very cost effective in the long run.
Vitaliy Volpov (01:04:54):
Andrew Schultz (01:04:56):
Yeah. So I think that that’s something I hope for myself for, for no other reason than for myself. I hope that that’s something that happens. Maybe I should be the one to create it. I don’t know.
Vitaliy Volpov (01:05:05):
You, you might, you might want to. Yeah. No, I think it will. I I
Andrew Schultz (01:05:07):
Think I just gave away a multimillion dollar idea. <Laugh>. There you go. That’s
Vitaly Volpov (01:05:11):
Andrew Schultz (01:05:14):
All right. I do have one more question for you here. We’re getting close to the end, but what is one of the biggest curve balls that you’ve faced thus far in any part of your career? Whether it be law or real estate investing or starting a brokerage, starting a management company? And did you hit it out of the ballpark or did you strike out?
Vitaliy Volpov (01:05:31):
So I guess I’ll, I’ll sort of go back to the close to the beginning. I, I did have a pretty big curve ball. This is when I was brand new investor. I was very green, and this was the very next deal after the duplex that I to talked about earlier. Mm-Hmm. , I went into it, it was, it’s in the kind of a c plus C minus type of a area in my, in my local area here. So it’s not the nicest area. The tenant base isn’t the greatest. And the property itself, it was a two-family and a single family kind of on two lots adjacent to each other. And I was so gung-ho because I, I was coming off of this really positive experience with this duplex that I’m definitely doing this, and this is right after, you know, get into this bonus situation. Like, I’m gonna make it, I’m gonna make sure that I’m not beholden to someone else.
Vitaliy Volpov (01:06:20):
So I’m really gung ho about buying a, a new property. And so this, this property’s on the ml s it sat there for a while, they’ve reduced the price a bunch. And I came in, I represented myself again, I didn’t have a agent on my side at that for that deal. I thought I knew enough already negotiated the deal myself. I bought it for a very reasonable price. It’s a three unit basically three units for $107,000. And I also even got a two and a half percent commission to myself because, you know, that was, it was on the mls. Nice. It was awesome. Right. So I’m in it for like 105, something like that, whatever it was, 104. And, and then I get into the problem and, you know, people, I did an inspection, inspection return before I purchased the property inspection, returned a bunch of issues.
Vitaly Volpov (01:07:04):
And I was just saying, no, no, no, no. I’ll, I’ll handle it. I got a, you know, nice amount of money set aside for renovations, this is gonna be great. So I get into this deal and I, the, there’s up and down two family, the first floor tenant left before I bought it, which was great. So I can start the renovations there. And then the two tenants ups one tenant upstairs and one tenant and a single family house out back are still in the units and paying me rent. So, awesome. Mm-Hmm. , that’s great. And I get into the renovations, and I have a buddy of mine, he is got a couple construction guys. They start taking down, you know, doing demo, and they’re like, dude, the Joyce are rotted, like, literally like crumbling on themselves, like just, oh, no. Powder, powder post needles apparently got into them mm-hmm. ,
Vitaliy Volpov (01:07:49):
And they’re just mm-hmm. , they’re just falling up. I’m like, oh, okay. All right. Well, what do we have to do? Well, you gotta, you gotta, you know, run all new joists here. Okay. Then they get into, oh, this beam right here, this main, one of the two main beams in the property that’s also rotted out. You’re gonna need to figure something out. So I get a foundation company to come in. They quote me like a grand eight and a half thousand. Mm-Hmm. . All right, go ahead, do that then. That’s not bad, actually. Something else. Yeah, something else happens. Oh the furnaces are extremely old and they need to be, you know, replaced or whatever, and then whole ducting needs to be done. Okay. Oh, then we have ru roof leaks upstairs. So I’m like, okay, I got that. Then, then we’ve got these windows are really shoddy and, and, and, you know, leaking, you need to fix that.
Vitaliy Volpov (01:08:30):
And like one thing after the other, after the other with these properties and mm-hmm. , same thing happens. And, and the, the property next door, the single family house that came with this, she’s having issues there. So I’m just spending money left and right as I, as I’m doing this, and I’m spending my own time over there. I’m, you know, doing some of the painting. I’m helping the contractor guys and everything. We get everything done. I get it rented, everything’s good. And I get, I think it was like middle of the winter, I get a call, Hey, the furnaces aren’t working, and the hot water tanks, we don’t have hot water. I’m like, what the hell is going on? I go, look, the property would flood. Yeah. Every time there are serious strong rains or snow melts, like it was really warm weather at that point, and there’s like a, maybe a foot of water in the basement and it flooded out.
Vitaly Volpov (01:09:18):
And kind of, you know, anytime it floods a, a boiler or a hot water tank or a furnace, you, you can’t use it until you get the water out and dry it every dry everything out. Right. So I’m, I’m going back and forth. I used to, I used to start calling my, I started calling myself Superman at that point, because I go into work as Clark Kent wearing my suit, right? And, and then when I needed to go over to this property to deal with these issues, I’d have to change into like overalls or I’d change into like some dirty clothes and boots to get into like these crappy base, this crappy basement to fix these issues mm-hmm. or meet contractors to fix these issues. And I used to do that back and forth, back and forth. And, you know, at that point with that type of experience that I was having, I think most people would probably just say, what the hell am I doing?
Vitaliy Volpov (01:10:01):
Like, I gotta, right. I’m, I’m a lawyer, I’m highly paid. I got a great career. Why am I doing this? Why am I going out of my way to go to this house to go deal with this issue over here where I could just wash my hands of it, do my thing, white collar tie chill. Mm-Hmm. . And I didn’t, because of what I said in the beginning, because I had a mission, I had a goal, and I had an objective. And I said to myself, I don’t care what happens with this property. I don’t care what I need to do. I’m gonna do it to make sure that I don’t fail and to make sure that I reach my goal. And so long story short, we were able to overcome the actual maintenance or con contracting issue. I was able to, to do that.
Vitaliy Volpov (01:10:44):
I was creative enough when I bought the building that I bought the two buildings on two different lots. So I paid, I split the price. So even though it was a total of 105,000, I paid a thousand dollars for the single family. And I paid the remainder, financed the remainder with the bank. So I had the single family property free and clear. So I was smart enough to do that ahead of time. Nice. And then I was able to do some refinancing, get all my money back out still of this property after I did the, all the renovations. And they essentially did a burr out of it and and was able to pay off some of my student loans with the proceeds from the loan. And then a few years later, I sold the two family for another probably 30 or $40,000 profit. And so the only thing I have remaining is that single family, which has been kind of self, self-running itself with the tenant taking care of everything since then. So mm-hmm. , I took a negative, which could have been a very much a, a negative, a career and a negative where most people probably have just quit and given up and said, nah, you know what? Too much work, too much hardship. I don’t need this. And would’ve walked away. And, and I said, no, I’m not gonna let that happen. And, and I kept going and, and it worked out
Andrew Schultz (01:11:46):
Well. And I think it’s important to, to note that you’re exactly right when you say that, that is probably like for most people, if they’re getting into real estate investing, and this is the first thing that happens to them, second thing that happens to them, they’re gone. They’re getting right out of this industry. And most people don’t understand that all of the success that you want is just on the other side of your comfort zone. And when you’re dealing with situations like, I mean, you don’t know the inside of a furnace, you’re an attorney, right? Like, it’s not like you, you’re basically standing there waiting for somebody to show up, but you pushed through, you persevered, you had the gumption to keep moving forward every single day. Gotta get up, gotta get out of bed, gotta keep pushing forward. And that’s what makes, that’s what makes us successful as investors and as entrepreneurs, is that drive. And I think that that’s something that’s key for everybody out there to remember is especially when you’re getting kicked, when you’re down, that’s when you really have to stand up and push through. And I think that that’s literally the reason that you’re at 120 something doors with 150 in the crosshairs today.
Vitaliy Volpov (01:12:48):
Andrew Schultz (01:12:48):
Yes. So now that we know that you have 150 in the crosshairs, what’s next for you? What hat are you putting on next?
Vitaliy Volpov (01:12:55):
Yeah, so for me, as we’ve talked offline, it’s not about scaling infinitely. I don’t wanna do that. It’s definitely not a thousand units. I’m not trying to be a Grand Cardone or anything like that. I think that, you know, I’m reaching the comfort level of where I want to be. I am a very driven person, so I do kind of take on challenges, and I like new challenges all the time. So my next thing, my new thing is once I, once all this, my businesses are stable and kind of can run themselves. I, I would really, and I’m pushing for it now, is, is getting into more of the education space. And I, I wanna give back to people that, you know, maybe are starting out, maybe are earlier on in their journeys than I am currently. And show them and tell them what my experiences were and how did I do this, and you know, what to do and what not to do.
Vitaliy Volpov (01:13:40):
And try to learn from the mistakes that I made along the way and not make those same mistakes and go further and faster than I did. And so I have a YouTube channel where it’s called Succeed, r e i, you can get, you guys can find it right on YouTube. You can just type that in where I basically share my experience. I talk about various real estate investing strategies, various different aspects of the real estate industry, whether it’s from a legal perspective or just an investor perspective. So, you know, anyone’s interesting listening, watching this, check that out. But that’s my next thing definitely to kind of stabilize, stabilize what I’ve got going on in terms of my investments, and also get in and give back to others who are coming up in the real estate industry
Andrew Schultz (01:14:19):
Now. And it’s, it’s well done. Like your entire YouTube channel is very well done. Your video quality is very, very high. The topics that you cover are always relevant. It’s a good channel. I’m a subscriber. I recommend that anybody who’s listening hops on and subscribes as well, I believe it’s youtube.com/success. Rei,
Vitaliy Volpov (01:14:37):
Succeed, succeed, succeed.
Andrew Schultz (01:14:39):
Rei r Rei. Mm-Hmm. . Yeah. And we’ll definitely make sure that gets included in the, in the video comments as well. Thank you so much for coming out and, and being on the show today. It’s been an excellent, excellent interview. It’s, it’s interesting to pick the brain of somebody who’s done so much in such a small span of time. Other than the YouTube channel, where could people find you?
Vitaliy Volpov (01:15:00):
They can also find me on Instagram. You can find me there, succeed, underscore r e i and Facebook, same thing. Try to keep it consistent all across all different platforms. And then also our, my brokerage. So it’s, it’s Serenity real Estate five eighteen.com, which is the website for our real estate brokerage. You guys can find me there. If you have any interests or are looking to possibly invest in the Albany region in New York, feel free to reach out to me there. And yeah. And happy to help in any way that I can.
Andrew Schultz (01:15:33):
Awesome. I appreciate that so much. Well, we are pretty much here at the end of the show. I do want to put a little disclaimer here at the end, since obviously we have been speaking with an attorney, it’s worth mentioning that anything you’ve heard in today’s episode is not legal advice. Please speak with the people in your team. Speak with the people that understand your unique situation, whether it be your attorney, your financial advisor, your real estate broker, your property manager, whoever it is that you need to speak to, speak to your local trusted team that understands your unique situation before you listen to anything that a couple of guys on a, on a video said. Again, vital, thank you so much for being with me today. Anything else that you want to mention on the way out?
Vitaliy Volpov (01:16:11):
No, Andrew, thanks so much. It, just appreciate it. And I, you know, I love the REM prep community and hopefully we can stay in touch.
Andrew Schultz (01:16:17):
Oh, you know what we should probably mention, we mentioned briefly earlier, I was actually on your podcast as well. Yes. That video I don’t believe is live yet as we’re recording, but probably will be live by the time this goes up. So Yes. I would say, yeah, I would say sometime within the next couple weeks maybe. Yes. And that’ll be on the, on your YouTube page, correct? Yes. Awesome. Thank you so much.
Vitaliy Volpov (01:16:41):
Great. Thanks again, Andrew. I appreciate it.