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May 9, 2022

Ep 176- Financial Real Estate Consulting With Tina Larsson

Ep 176- Financial Real Estate Consulting With Tina Larsson

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Transcript

This show is sponsored by hive mind CRM, it is more than just a CRM. It is a real estate and business mastermind that comes with an all in one CRM, you can have unlimited websites and users, you can call text, RVM, and email all in one user interface, and you can set up custom automations. For any type and multiple businesses. 65% of companies start using a CRM system within the first five years of business. Once implemented, the hive mind will save you on marketing give you more time and make more money. One of our users had his first $100,000 month using our system in June, we want to see you automate and accelerate your business text us at 2109728 t 42. For future meetings. And of course, to get our $1 course on how to make more than six figures on one land deal. You can schedule your free demo today at hive mind CR m.io. Hey, welcome to the show. Today we're here with Tina Larsen, who has been a real estate investor for a long time, but we're going to talk about that and some of her endeavors. One of the first questions I always like asking want to jump right into it is how did you end up in real estate? Because a lot of people sometimes they fall into it that chooses to go to this path as people are born into it, like three generations into real estate. How did you end up in real estate? What's the story? Thank you, Dan, for having Daniel for having me. So first of all, I didn't grow up with this. This was a complete accident. Okay. Yeah. So we bought, we bought an apartment in New York City, in a co op in 2004. Oh, wow. Hmm. And we were not involved at all, we were just passive owners, residents. And then in the financial during the financial crisis in 2008, we got another letter from the co op board saying that they were increasing their maintenance by 5%. For the 10th year in a row, my background is in finance. So I understand how to look at numbers. And when they were telling us that basically, the maintenance was increasing at the rate of expenses. During that time, there was no inflation, so there's no reason for expenses to increase by 5%. For 10 years in a row. So we actually held a coup. Very excited to get a few neighbors involved, we took over the majority of the board. My husband is the board precedent, because in his in my opinion, he's more diplomatic than I am. So so he joined the board, but you can only join one person from each department. I did what I know from finance, from analyzing businesses, I went in to get financial statements for many other buildings. And in doing so I was able to identify what expenses were high or low or normal. And we were able to save the building $340,000 In the first three years. Wow. And what the cap rate, that's probably a good, a good a good a good addition to their, to their value of the property as well. Yeah, is that the so my, my husband is still the board president and they have an increased maintenance for eight out of the last 10 years since since you joined. So the maintenance in this building went from being very high in comparison to all the other buildings who are that are similar in size and shape and etc. And structure to now being on the very low side. So that has really increased the property values for this building and by all the apartments in a building by much more than all the adjacent or similar buildings. Wow. So was it like was it was the maintenance like overtime? Where they overcharging? No, they were just wasting money. They're just wasting money. They weren't being frugal. That's one thing. It's crazy to think about it How have like, some commercial owners understand that all their expenses go into the value of the property. So when people that know what they're doing, they're always trying to limit their expenses because they're always trying to raise the value of the property. And it's crazy that they didn't understand that. But so you're part of the board. Is this like, is this like a New York City Building? But yes, yep. It's a New York City Building in New York City. I believe that there are like 12,000 Co Op and condo buildings. Yeah, so it's to large market for us. And I've never talked to anybody about New York City. I know New York City, like, whenever many people think real estate, they think like single family multifamily, like apartments with that. But like, I've never talked to anybody that's actually owned buildings before, especially buildings like that. So there's 12 coops inside of highways that that operate each sector is that we're hearing? No, so each building, so in multifamily building, it's one guy or gal or consortium or something who owns the building? Yeah. And then they, let's say that it's a 200 unit apartment, or there are 200 apartments. So they have this apartment building. Then they collect rent from the renters. And hopefully that covers all of their expenses of running the building. Yeah, for a co op or condo, it can be exactly the same type building, so a 200 unit apartment building, but they don't operate on a profit moat. So they operate with that the maintenance, which is what is passed on to the owners to those 200 unit owners. Okay, okay. They're, they're supposed to cover all the expenses for the year. So in this particular building, that they expenses when we took over in 2011, were $3 million into total in between, well, this happened to be 170 units, but just for simplicity, so if it's 200 apartments, and you're supposed to cover 3 million in expenses, then every year when the expenses increase, because as you know, expenses increase, but they shouldn't increase by 5% per year, every single year for 10 years in a row. Well, now in the inflationary environment, it's possible that many will. But at the time when we took over and during the financial crisis 2008 I mean, there's no reason for expenses to increase that much. I understand it. No, I understand it. So I'm really glad you explained that because I've never like said I've, I've known about condos, I just didn't understand that part. Like this is a part. Like I love real estate, because there's always new information that I've never heard of. So that's I'm literally ready to explain that. So that is amazing. So you're able, now I get the full picture, you're able to bring those expenses down for the building, which is you're part owner of the building because you are a condo owner. Gotcha, gotcha. Which means you will treat your property more valuable, which means you're more valuable that Yes. And when you buy an apartment, you are basically basing how much you can pay based on the total monthly dues plus your mortgage? Because you have you have to decide on how much can we afford to pay based on your month reduced plus mortgage. So obviously, if you have just the same two apartments, and one the maintenance is $1,000. And next one to maintenance is $2,000. You much you would pay more for the one with $1,000 in maintenance versus to 2000 That is amazing. Okay, so you do this is what you do now, right? You go, you'll go on helping communities lower their expenses. That way they can raise the property value of their units themselves all over New York City now, is that what you're doing now? That's what I'm doing? No, you got it. That's amazing. There's some I love it because I've only been to New York. I've driven through New York once I've been there. I was there for high school trip when I was in high school. So it's kind of it's kind of like I've never actually I don't know, like like there's like different like cities like major cities like that, that do things totally different. It's just it's amazing. It's amazing. The little learn a little bit like that. That's pretty it's a pretty cool insight because I had no idea but those apartment buildings, they are everywhere. So not every place but I mean there are lots of large coops are condos, no matter what they call them. They can call them HOA Co Op or condo. Yes, Cago Los Angeles, Dallas, Miami, and Florida has also the gated communities so very common also in Florida, but also in like West Virginia. They have a lot of HOAs. And those are single family homes that are basically a gated community might not be gated, but similar kind of and those also operate similar to to a co op or condo on the same structure. Only we specialize in apartment buildings not into single family homes. So if you go in and clear somebody's books as far as their expenses wise as far as in the year Yeah, what do you get paid for? What do you get paid on equity? Is Real Estate negotiable? That's a good that's a good answer. But what what do you generally ask for? Yes, for like a finder's fee for lowering their expenses? Are you asking for equity? Like, what do you? What's your? What's your angle here? No. So we work on contingency for the most part, we have two structures depending on where they are in the project. But the our cost saving arrangement is contingency. So they have, let's say that they have three bids on replacing the roof, we will provide them an alternative, and then we'll split the savings. So 5050, we split the savings for our clients? If it's if we reduce how much electricity they use in the basement, or in the hallways, or in a lobby, then we'll split those savings for two years. And after two years, they keep all the savings. That's a that's a good deal. That's a good deal. You're bringing your expertise. Are you doing this nationwide? Are you just doing this in New York City? So we can do it nationwide, but we're only marketing it in New York City. So if a co op board president from Dallas calls us and tells us I have this building, and I wouldn't I've heard about your services, we'll be happy to help them and we can help them. We don't need to be physically in the location, because a lot of the work that we do is paperwork. I mean, it's yes, phone calls and etc. So we don't obviously, if it's right next door to me, I'm gonna go to the building and meet and shake the hands with the Super but I don't really have to. So your sounds like you're like a, like a like a that's not to offend you. But like a couponer. They send the capacitor to go find the cheapest deal and the cheapest rates. That's a very good way of putting it but I prefer to call myself at the McKinsey and Company of multifamily buildings, but it's fine to. I'm glad you said that. Because I've never like I said, I'm learning this is 100% new to me, like all this is new to me. So what's the name? What's the correct name again? McKinsey and Company is one of the largest consulting firms in the world. And I think that they're the most famous, they do a lot. So fortune 500 companies, hire them for millions of dollars a year to help them save one to 3%. Wow, to make their bill to make their companies more efficient, efficient. Yeah. And, and that's basically what we do. But we do this for a very, very niche market. That is amazing. I'm sorry, I insulted you by calling you know. I don't know, I don't know what else to call it. What's the exact term that this is called? Cuz I've never heard of this. We're consultants business, we're, I mean, we're basically a business consultant. Business consult. Okay. Yeah. So that is amazing. Like, that is really amazing. I'm not gonna lie, because I love I love real estate, because it kind of opens up to many different things that you never even heard of. And those things were this, this is a whole new niche I've never heard of, so I commend you for doing it. And I commend you for speaking out on it just because no one's even heard of it. I've never even heard of it. I've been doing. I'm not I'm not reading real estate for such a long time, either. But I consider myself to know a lot of things. But I've never even heard of this. This is amazing. That's why these questions are for me, because I'm generally curious, generally curious. Are you you have to have special licenses or training for this are you kind of just understand the twelves and kind of break down all this stuff. And nothing that we do is rocket science. It's just that building apartment buildings. I mean, it's really a very complex organization. Yeah. Yeah, they have the building codes, and then all of the compliance and all of the filings and then they have a property manager and the property manager typically has seven different buildings. How much time do they really have to deal with that one building? So there are just so many, and then you have in New York City we have so the staff who maintains the building in New York City, they're unionized. So it's just really very complex. There's so many moving parts to actually focus on this one thing. Yeah. And then we have, and then we have the board who makes the decision and the board. They have a full time job. They have no idea and not always, some do. But for the most part, they have no idea how to run a building or how a building operates. They have a family, they have hobbies. This is something that they're doing on a volunteer basis. Yep. And they don't really have time. But for it and the only in many cases, the only reason they're running is or wider on their board is because their neighbor said, Oh, you would make a good board member we can find no. Well, why don't you join us? Now it's interesting. It's interesting because like I said, they're their regular everyday people. They're not like their real estate people at all. They have no reason to in the field. So you so how do you how do you how do you market yourself to find board members or board owners that need this facilitation? So I'm guessing you're this is one of the reasons why you're on the podcast. Of course, you're trying to get referrals off of the podcasts and marketing like this. You get all your marketing through word of mouth in most cases. Yes, I do. So both myself and my husband and partner, we are avid networkers we have been networking for many years. We know a lot of people in their city. Yeah. And have you ever read that book with Grant Cardone, the 10x rule? I have not read it. I was a part of a book club that read it. And I'm not I'm not a reader. So I was just Yeah. So the 10x rule, I read it for the first time last year. And I said to me, he was talking about Omnipresence that you need to be everywhere. Yep. My husband always tells me that I'm like crabgrass because I'm everywhere in a nice way. And now I can use Omnipresence as opposed to crabgrass. And I think that both of us who we are, I mean, we're involved in the community in our local community. My husband ran for city council last year, we are we have co founded various neighborhood associations. He's on committee on all of his social club. Things. So we are like, everywhere, and we do regular business networking, too. Yeah. That's a That's amazing. Um, it's kind of it's kind of interesting that you fell into this niche. And now it's like, your full time thing. How long you've been doing this for buildings? So years? Yeah. So we started we founded in 2014. Okay, awesome. And so we started with this building in 2011, from 2011 2014. And then when we had saved $340,000, we were out networking for financial services, profession, you know, how much everybody wants to meet another financial advisor. So I started switching gears, and I said, Whoa, but on the good part, I've saved my building, I help my co website $340,000. And a lot of people they asked me, they said, Oh, can I introduce you to my horse. So that's what we started 2014. And in the beginning, it was word of mouth, and I belong to one BNI group, Mark belong to one BNI group, that we couldn't we, we couldn't reach enough people. But and over the years, we have gotten a bigger and bigger reach. And in 2019, it really started taking off, and that's when it became our primary business. That's amazing. It's amazing. I've never heard this, I'm still I'm still amazed at this. And there were heard of this. This is so cool. So now you're mostly doing this in New York, you're networking with a lot of people. You're working on a book. I'm working on a book, working on a book. That's amazing. So now you're doing outreach through podcasts, you're working on a book, you're doing a lot of stuff just to find more clientele, and you're doing the right things, you're doing the right thing. So I commend you towards that. And thank you. So eight years, eight years in the business, you kind of fell into it after doing your first property. And you're doing like the week of pay to your you're splitting, you're splitting the savings. It's a good model, because you're providing a lot of service. Definitely. And like I said, if people don't understand real estate, it's when you do property management. And when you own buildings, it's a whole nother business once you get to a certain amount of units. And you have to have a whole staff and people in place in order to handle certain things in the business because it's just too big and massive. You cannot be a sole you cannot be a solopreneur handling multi units, or too many units, I guess to say there's usually Yeah, and I mean, you have to constantly have one concentration and are constant. So the property managers they deal with the books and the complaints. I always tell people, they said, oh, you should be a property manager. I'm like, we don't like complaints. We're not taking we're not going to do property. We take no complaints. We only help them save very, very focused what we do I mean we review their financials, we go through all They're line items, we compare it to a benchmark with hundreds of line items of hundreds of buildings. And then we find which ones are high, low and normal. And the ones that are high, we look at them and then we try to figure out why is it high? Is because the electricity because the lights light fixtures are on 24/7? Or is it because there's something wrong? Or is it because we need to install some kind of motion sensor of the water lines? Or is it because of something else? So one of the one of things I'm really glad you mentioned that too, because I listed a lot of commercial stuff. And I talked about like hardening hardening the unit. So they might put in and LEDs and motion sensors is another great thing to lower costs. What are some others like simple things that can do to lower their costs as far as like, I don't want to give away the whole game. But some things like harden the unit that way they can lower the cost in general as far as water and electric usage. Yeah, so well, so when it comes to water, there are many so inside apartments, there are many ways to make it more efficient. So replacing the toilet with a lower a smaller water tank. And nowadays, remember, and I mean the toilets uses the bathroom uses the most water in an apartment. But the toilet uses the most of in most cases. Gotcha. Yeah. So the toilet. You wouldn't know how many times where you wouldn't believe how many times people say Oh, but I hate those small toilet tanks. They they are not I have to flush twice. Nowadays, they make them vacuum Assist is now and in New York City. For a lot of old buildings. We see toilet tanks that are like five gallons for one toilet. So you flush once you use five gallons. Today's new toilets are point eight gallons. So if you take it from five years 2.1 per time you flush it. I mean, that's a huge difference. Yes, it was a 80% decrease right there just in water usage per flush. Yeah, that could be that could be huge on your bill, depending on how many units you have. Another and even if so, the more recent I would say like I think that the current standard is 1.28. But a few years ago, that standard was 1.7 or seven, eight maybe. So if you take it from 1.72 point dates, you're it's 50%. So even if you don't have a toilet that is that dated, you can still save. And another thing is that these new toilets, they're flapper less, according to the EPA, nationwide 6% of wall water use is leaks. And a lot of and a lot of lot water leaks come from the flapper not being replaced as often as you need to replace it. I believe that I had I had a water slab leak in my house. And it was dreadful to my my water bill at my house and I'm just like I believe that it was like it was like 3x of what it should be was crazy. But yeah, what leaks, leaks, leaks, leaks, makes leaks. So I heard at least I listen, I listen to multifamily stuff all the time apartments. One of the apartments owner, one apartment zone, I was listed as podcasts. And he said that he does six month reviews on properties, just to make sure there are leaks because most times tenants won't even tell them that there's leaks that they won't even address. So part of their part of in their lease agreement is they'll check in every six months to check leaks specifically just because that's one big thing that always eats at them. And they're always checking it. So leaks 100% will agree with you on that I've heard and I understand that. And now this is new in New York City and I'm sure it's I mean the water boards are very different depart depending on where it is. So I mean it's a very local, but in New York City, they just updated their RAM, water board DEP whatever it's called. Policy and Department of Energy and preservation maybe it's a New York waterboard. Yeah. Now you can actually log into your online account and set up alerts and use you can set it up to get an email alert or a text alert whenever your water use is X percent and you can set it up in a different eyeballs more than it normally is. And you can set it to compare to last week at the same day or you can so there are a lot of they're trying to improve it. Yeah, it's it mean, it's always good insights that you never would think about it. But it's one of those things where you can save hundreds and hundreds of dollars a year, depending on the units 1000s a year, which is huge, huge on your on your cap on your cap rate, and NOI and all that stuff. Huge. That's that's. So what's the top tip you can give for HOA boards? As far as if you're looking for stuff like this, for HOA boards is to call me? Can I say that? So that we can help them because they don't know where to start. And each building is very different. There are a few areas where we most commonly can always save them money. And that is to reduce the heating water and electricity use. We don't produce how much they pay for heating water or electricity. We reduce how much they use. There are other energy auditors who might work on either they sell one product. So if let's say that we have a list of 50 different products, and recommendations that we can make and rollout, we sometimes hear the boards that hire this energy auditor Oh no, we just worked with an energy auditor. And then when we looked them up, it turns out that that energy auditors sells one particular system. And all of these other things that we can do for the building. They don't do but the board thinks that they hired energy consultant. So therefore everything has been taken care of. They've done everything they can, but that's not the case. So we take a very holistic approach. So that's one area, but then we have a lot of one offs. We have we just reduced for one building. Their water meter had not been had been metal functioning since 2014. So we just got them a refund of $250,000. Wow. Another building they were paying $24,000 a year in exterminating service, but you don't know is that high low? I mean, it was a large building, you don't know is that high? Low? What is that? Right? And when we looked at our comparison, we said they should probably be paying 4000. But that's a one off. It's not something that happens. So we really need to look at all the different angles to figure out where the savings are. We had a we had advanced building where they paid for 20 phone lines and 12 of them. Were actually not in service. And when we call Verizon they say they have never been in service. Oh man. That's an easy one. Yes, but it's a one off, it's not going to be doesn't happen very often. So it's yeah, that's the beauty of your, your unbiased. People might have a bias where like, they're pushing their product or service on them, which is their own prerogative, but they're not they're they're biased to their own nature, because their salesmen typically their salesmen will call them what are their salesmen. So you are unbiased, and you're just trying to save as much money as possible because for you, that's pretty benefit. All the savings you provide, you get a portion of that so it's to your benefit as well. And that's what we tell people all the time we tell clients all the time or a co op worse we say listen, we're the only vendor who you will ever hire who actually want to pay less all the other ones what you're right yeah that's so we're gonna put your website here the Folsom group nationwide can help out different different legs it's a good thing that you're doing I hope you much business down the future just because this is something that's needed and like I said, not everybody's playing to the needs of the actual owners themselves. And I commend you for doing that because not everybody does that. Like I said mostly don't even care don't even know about it. I mean know about it. So it's one of those things where you're providing you're providing a service it's a niche service that's definitely needed and required around the US and I hope I hope you got it you gotta you gotta do more business in the city because I think your your niche is more towards the major cities like New York, Miami, Chicago, that's all going to be your playground so you really got to you really got to network in those areas. Because that I mean, I see I see you as like limitless potential honestly. Because honestly, if you if you go into like you have a you have the ability to use this skill to take to other countries to honestly if you wanted to go that far Yeah, that yes, we do. And when one of the property managers that there's a new property management firm in New York City, okay. And the owner, he has a very technology driven service, and it's it's looking very robust. And so he and I have been, we've been talking somehow they found me. And I said, So how did you end up doing this? And so he's from Tel Aviv. He said, I was to co condo board precedents in Tel Aviv. He said, It is equally bad there as it is here. It is completely backward and all fashion and convoluted and mismanaged. And that's one he decided to start his firm in New York. Wow. Why he chose here as opposed to Tel Aviv? I'm not sure. But Allah has given us to oversee him. It's the land of opportunity for sure. It's something you're looking for is like Hoa, like firms like that, can you you work directly with Hoa, and then they work with the lenders, or we've we've worked with the board? Because the property managers, they don't want us there. Yes, so we remove some of the extras that they get, if you will. And And also, if you think about it, you know how I don't know if you've ever worked for a large corporation, and then the CEO decides that he's going to bring in a business consultant to see if they can find some efficiencies. And all of these CEO and CFO, they get all nervous, they think that they're going to get fired. And that's kind of how property managers, they don't really understand what we do, and they don't really get what we do. And they that creates uncertainty, and they prefer that we're not there. There's something they don't understand. I think whatever you don't understand people are afraid of me. Yes. Very true. They just they just don't understand it. And yeah, I don't know, I don't think it'd be a benefit to everybody. Because in my opinion, like if the property manager makes the owner more money, that's always a plus. And if you're the person that facilitate that, you'd be in a better position yourself, just because you in turn brought service savings and profitability to their customer. Yes, but at the same time, they don't make more money because of it. Right. So when it comes to water, it doesn't matter to them. Yeah. Because it's not like they make any money from here or that. So if the building pays 100,000 a year in for water or 50,000. This it really matter to them, it doesn't really matter, right? Yeah, their job is to keep it keep occupied. Yes. But for them to figure out that they are paying that the building is paying too much. It takes a lot of time and effort. So if they don't have the expertise, and to figure out and then take care of it, I'm sure that they could. But it's time where they're not going to make any extra money from it. So what's the incentive? 100% 100%? Yeah, I get it. I get it. It's hard to it's hard to provide something that they don't perceive as value. Yeah. Yeah. And I mean, if they're not, if they're not at risk of being replaced, if the board says, we're thinking about firing you on hiring someone else, then maybe they will change. I mean, maybe, I don't know. I mean, they're, they have a pretty full hand with taking care of problems and complaints and bookkeeping and regulation. And, you know, so I'm not trying to defend them. But they're because yes, it is. Yeah, they have their own uphill battle. They created an opportunity for us to create a new market. And I commend you for noticing that and jumping in and getting in on that because this is, it's amazing. It's amazing. I enjoy your niche. I like talking to people that do different things. And this is this is a perfect example for the episode. What is a quote that is yours or somebody else's that you resonate with? It quotes that Well, I don't I do have one quote myself, but I can't remember it. I broke it down a long time ago, because I've wanted to have my own but I He, one of them in one of my favorite quotes is Winston Churchill. Never, never, never give up. That's it. That's it. That's it. It's an amazing story. Amazing story. I wish you I wish you well which must business. Go check her out the Folsom group.com and check her out. It's amazing. We appreciate your time I think is a great episode I learned a lot. I learned a lot. I appreciate your time and wish you well oh she was well in the future. Thank you so much Daniel. And thank you so much for your time and for having me and for inviting me. The show is sponsored by the list guys. Do you need more leads in your local or virtual market? One intense small businesses don't invest in any kind of marketing the list guys have over 35 plus list types to choose from and you can mix and match any list or criteria. We also use to skip trace lists and provide up to seven numbers and email addresses every list you purchase will be scrubbed against previous purchases the list guys are here to save you time. Contact the list guys today at www dot one this guy's dot com. That's www dot the number one list guys.com This has been there's been a great episode please check it out on all platforms. Thank you This has been there's been a great episode please check it out on all platforms. Thank you Tina I put the thing and it went away and I'm like I will edit that out. Thank you

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Tina Larsson

CEO

Tina Larsson is the co-founder and owner of The Folson Group, the premier coop and condo cost consultant who helps NYC coop and condo owners and apartment building owners increase their property values. The company is a business consultant and a disruptor in the residential real estate world. Tina holds a LEED Green Associate designation and is on a mission to make NYC greener, more sustainable and more affordable one building at a time.