Oct 30, 2022
Ricky Grand is the co-founder of Grand Real Estate Investments, an Oregon-based company that invests in single-family and multifamily. He joins us today to explain what a hybrid investor is and what strategies they utilized to scale their business in 4 years. He also shares his journey and his passion for real estate, and what they are doing to stay competitive and offset risk.
[00:01 - 05:25] The Business You’re In Versus The Business You Want To Be In
- Ricky on deciding to change his career and joining his brother to form a real estate investment company
- Since 2017, they have acquired 24 units of their own and are looking to move into syndication and development.
- They want to do something that's a little bigger and bring people in to invest with them
- He discusses the assets they are currently focusing on
[05:26 - 11:31] What Makes A Hybrid Investor
- Their secret is their exit strategies
- Being an expert in figuring out how to profit on a project and how not to lose a lead that's come through the system
- They always try to find value even with “throwaway” deals
- Ricky’s advice: Take your time and make sure you are putting out a superior product
- He breaks down why they didn’t do traditional financing
[11:32 - 16:50] The Importance of Being Conservative
- Ricky talks about their current assets and they do their marketing
- Looking at any deal that comes across his desk and see and looking at the merits
- Take calculated risks
- Don’t sit on the sidelines because there’s always opportunity, especially in a down market
[16:50 -17:59] Closing Segment
- Reach out to Ricky!
- Links Below
- Final Words
Tweetable Quotes
“I think a lot of people want to go from A to Z without all the work that goes in between.” - Ricky Grand
“We acquired a skill set over time and built a network over time, whether it's our partners or a clientele that we can tap into.” - Ricky Grand
“Do we spend more money? Certainly. Do we make less in profit? Yes. But I would rather take the Ferrari approach than the Walmart approach.” - Ricky Grand
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Connect with Ricky at GrandBros.com and email him at ricky@grandrei.com.
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Want to read the full show notes of the episode? Check it out below:
[00:00:00] Ricky Grand: I remember looking at my brother, I go, Man, I don't know what's going to happen, but we're either, you know, here we go again. It's either going to be a next step or we're, you know, going under and have to restart and it panned out. So when people are fearful, I think it's the Warren Buffett thing, when people are fearful, you know, be greedy when they're greedy, be fearful. And so I see a lot of fear out there. And so people ask me, I'm like, No, we're full steam ahead. I'm just being conservative and not just taking any deal.
[00:00:36] Sam Wilson: Ricky Grand is a hybrid real estate investor with a background in portfolio management and a degree in finance. Ricky, welcome to the show.
[00:00:43] Ricky Grand: Thanks, Sam. Thanks for having me.
[00:00:45] Sam Wilson: Absolutely. Ricky, there are three questions I ask every guest who comes on the show: in 90 seconds or less, can you tell me where did you start? Where are you now, and how did you get there?
[00:00:52] Ricky Grand: Yeah, sure thing. S 2016, I was actually working as an investment manager, portfolio management as you mentioned. We managed retirement accounts for pensions, endowments, insurance companies, organizations such as those. But in 2016, they were going through some changes. I just had my second daughter. I was tired of working these, you know, 60 plus hour weeks and needed to change myself. So I joined my brother and we formed Grand Real Estate Investments 2017, started as just real estate brokers. He'd been doing it for a while. And I brought the investment side with me, so I was working with investors. I hadn't even thought about doing it for myself, had a handful of those guys and there was one in particular who became a mentor of mine. Our kids actually went to school together. And so, you know, he kind of took me under his wing. I already had the background and I hustled for that guy. And I think we did probably 20 deals over two years that I had found for him. And I learned a bunch along the way. And then end of 2017, my brother and I, we were sitting down talking one day and he was like, Why aren't we doing this for ourselves? You know, we'd been doing all the due diligence, you know, organize even work at times and figuring out market rent, stuff like that. So we had all the skill set. So 2019 January 1, we basically reformed our company and had the conversation where we're like, This is it. We're either going to make it as investors or we're going to be filing for bankruptcy in a year or so. Fast forward a few years and we have 24 units of our own, and as we kind of went through those, that four-year period, we picked up different, you know, skill sets along the way. We started as, you know, we're just going to buy and hold. And then we stumbled into a flip when we couldn't get finance for a manufactured home. So we flipped that and made money and then we're like, Well, let's flip some more properties and then stumbled into wholesaling and wholetailing and then even some Airbnb stuff. So that's kind of where where we're at and, you know, where we're going is looking to level up. We're renovating a 17 unit apartment complex right now, and then looking to do some development, some more apartments. And I'd really like to move towards syndication. So shout out to, you know, Gene Trowbridge. I think that's how you pronounce it. But I bought his book so that I could you know, learn a little bit more from that guy. And I have some call scheduled with some people just to pick their brains a little bit.
[00:03:00] Sam Wilson: That's awesome, man. I love that. I mean, so in four years you guys have touched a lot of different parts of the business in the commercial real estate sandbox, but in touching all these different assets and different ways that you can buy and sell and all that, what has become the thesis or I guess the compelling, this is how we're moving forward strategy that you've developed in all of that?
[00:03:24] Ricky Grand: Yeah, so I mean, some of it is, you know, when you've been doing something long enough, you know, you start to look for new things, right? You know, new is always, you know, more interesting, more intriguing. You want to learn. And so, you know, getting into the apartment complex was a great first step. It was 16 units and we're converting it to a 17, so that's been a fun experience. And then we're building a duplex right now that's almost done. So kind of just, you know, naturally moving into some of those new opportunities. Then, you know, I really got to thinking just, you know, where do I want to go from here? We've been doing this is this, you know, what we want to do long term, you know, basically the business I'm in versus the business I want to be in. And so that's kind of what triggered that. And just, you know, wanting to do something that's a little bigger, bring people we know in. I have people asking me all the time, how how can they invest with this? And for the longest time I was like, Well, I don't need any capital. Like, I'm good, you know? And so that kind of got me to thinking, well, maybe there is a way, you know? And I knew, I had known about syndications, and so I was like, Man, now's the time. We've learned a bunch. We have the skill set, you know, we could be a general partner on this thing and pull it off. And so that was kind of, you know, I guess the thesis behind, you know, making that move into the next level and wanting to level up our company so that we could kind of take that next step in the commercial investing.
[00:04:40] Sam Wilson: Absolutely. Is there an asset class that you guys are focusing on?
[00:04:44] Ricky Grand: Probably multi-family, to be honest, just because, you know, we came from the single-family and we've done some, you know, small multi, and now the, yeah, I mean, I call it a mid multi, since, you know, a lot of these ones are a hundred plus units. But another avenue is more of like just a general commercial. We're actually renovating a building right now to turn it into our office. And so, you know, dabbling in that and wanting to kind of move a little more in that direction. Just really kind of be fully submersed investment world, that's where I think my brother and I both get our energy. It excites us. We love it. And you know, I wake up every day like, I stop in for a coffee and they're like, Happy Friday. Just another day to me. I'm like, I love what I do. So every day is just a, you know, another day.
[00:05:25] Sam Wilson: What is a hybrid investor? I know you mentioned that there in your bio and I'm not sure familiar with the term.
[00:05:32] Ricky Grand: Yeah. So I don't know, you know, who coined it or what, but I think a lot of people, even us at the beginning, we're thinking, Oh, real estate, broker and investor, right? You're a hybrid. You can figure out, you know, how to push this property in one direction or the other. But what we kind of, you know, learned along the way is that it, for us, it was more about exit strategies. So, you know, we started as buy and hold. That was going to be our mantra. That's it, right? That was what my mentor did, and that's where I was like, I saw what he was able to accomplish. So why not, you know, don't recreate the wheel, which is let's do that. Well, like I said, we stumbled into flipping a property. I stumbled into wholetailing where the property's financeable, but they just want to get out quickly and they're willing to take a discount. If you just toss it back on the market and let someone finance and buy it. And then even wholesaling. So as I kind of picked up some of these tools along the way, I realized for us, what made us a hybrid investor is our exit strategies. We're experts at figuring out, you know, how to profit on a project, how to not lose that lead that's come through the system. And I mean, 'cause not every deal fits that fix and flip, right? If you only have one box to put it in, you're like, Oh, it doesn't fit. I guess I'll throw it to the side. So I didn't want to throw away those leads. I'm like, Well, maybe there's a different way to make money on these. And so that's where it kind of came from. And it was just probably in the last six months that we really honed in on that. And that really, I think, separates us and makes us kind of like niche, I guess, so to speak.
[00:06:55] Sam Wilson: When you say experts at exit strategy, is there a deal or is there maybe something that comes to mind where you say, this is a unique situation that everybody else passed on, but yet because we could be experts at exit strategies?
[00:07:10] Ricky Grand: Yeah. Oh, man. The one that really comes to mind is we had on where, so we're in Eugene, Oregon. We had one in Roseburg, Oregon. The lady's relocating across the country. She's like, She's done. She just wants to get out. And, you know, I talked to her and I was like, Look, you're going to make more money if you take it to the retail market. The thing, it's financable. It only needs a, you know, a couple of things done just to clean it, you know, make it clean. And she's like, I get it. I know, I don't want to do that. I want to just leave. I want to close and leave in two weeks. Well, this thing did need some work. But it's an entry-level home at a price, you know, that not many people can enter at, right? I think a lot of people that I know would look at this and go, Okay, well I need to put, you know, $40,000 into this cosmetic update, so that I can, you know, extract the value out of it. Well, that's true. If you're looking at, you know, you have your internal rate of return or your set profit margin that you want to make, but it's financeable, right? So we buy it with private money. We just go and clean it out, clean it up a little bit, and then put it back on the market. Basically add this, you know, home to the market that not many people, you know, people are searching for, but you know, there weren't many homes, you know, that price point. So being able to put it on the market and say, I'm not going to require a $50,000 profit on a cosmetic flip. But I'll take $30,000 because I didn't have to do anything to it. I just put it on the market because she wanted the speed and convenience. So having that agility and I mean, we have a pretty good private money source, so it made it affordable to do. We weren't getting beat up on points and fees when we closed, so that allowed us to have that profit margin in there, whereas I think some of the hard money people, they've already eaten up three points, you know, and the fees. So that's I think probably the best example.
[00:08:51] Sam Wilson: Got it. No, I think that's great. That's absolutely great. When you look back maybe the last four or five years, what are some things you feel like you've done really well that other people should emulate?
[00:09:02] Ricky Grand: You know, taking our time I think is one of 'em. I think a lot of people want to go from A to Z without all the work that goes in between, right? Like, you know, I want to go into syndications, but I don't have a background in anything investment related. That's a pretty big jump to try to convince people to trust you with their money. Well, we started as brokers. You know, we got into doing some rentals and rehabs and wholesale, so we acquired a skill set, you know, over time and built a network over time, whether it's our partners or a clientele that we can tap into and just kind of built it over time. So I think not being in a rush, you know, having kind of the foresight to plan where you want to go, but then kind of take the steps to get there versus trying to, you know, take one big giant leap to the finish line. I think that's probably one of the biggest things for us. And then putting down a superior product, you know, when we put our houses out, whenever we remodel one because we live in an area that's not huge. It's, you know, a couple hundred thousand people and all the brokers in town pretty much know us anyway. So that was a big thing to us was putting out a superior product. I didn't want people to go into our properties and go, Oh, another Grand Real Estate investment. You know, lipstick on a pig deal. So people compliment us on the quality. Do we spend more money? Certainly. Do we make less in profit? Yes. But I would rather take the Ferrari approach than the Walmart approach.
[00:10:21] Sam Wilson: No. I think that's really, really good. I like that. Let's talk finances there for a little bit. I know you mentioned, you know, that syndication is not, or syndicating properties is not a path you've yet wagged down. What's been your finance, I know you mentioned also private money, but how have you funded your deals up to this point? And then what does that strategy look like going forward?
[00:10:44] Ricky Grand: Yeah. So I mean, we're like every other investor. I think for the most part. You know, we've used a combination of local hard money lenders and a private money, you know, family friend that we got connected with who funds most of our deals now. We haven't done any traditional financing, conventional. That was one thing that my brother and I were like, we don't want to do because we own this business together and it's just complicated. And you have your, you know, you have to deal with your credits, you know, having these your house is on your credit. So we, from the get go, wanted to use institutional money for any of our long-term financing. So I think that's pretty much, you know, the gist of it for us in terms of financing and then kind of going forward. If I find deals in Oregon, then I have all the money I need. If I find deals outside of Oregon, then I'll have to explore making some new connections with some different funding sources to fund some deals.
[00:11:31] Sam Wilson: Let's talk a little bit then about the properties you currently own. You got a 24 unit and you got a 17 unit underway right now. Tell me about those, how you found them, what the plan is, and then do you intend on staying in that kind of smaller multifamily category? Is there opportunity there that other people should be paying attention to?
[00:11:53] Ricky Grand: Yeah, so the 17 unit one is a whole podcast in itself. I would love to talk about that one, man. We called it the Trail of Tears for the longest time, dealing with the city and FEMA. So I actually got that one from a wholesaler. And I had 36 hours, not ideal time to do due diligence. And I want to say this was our, my first attempt at moving into like, bigger properties. But the margin, oh, my God, was so huge that I had to send it to my hard money and my mentor, I was like, What am I missing? Something's wrong. And they both kind of, you know, looked through things and they're like, I think you found, you know, a diamond in the rough. And so, you know, so we took that one on through a wholesaler. Most of our deals come from our own marketing, so we're inbound only. I don't do cold calling. I hate it with a passion. I'm not like the salesy salesman. I'm about building relationships and building trust with people. So, you know, we do marketing so that we have inbound leads come in and then I work with those people. So that's where, you know, I would probably say 95% of our deal flow comes from.
[00:12:54] Sam Wilson: Right. No, that's awesome. You were telling me about the 17 unit and the opportunity you see in that, and then, you know, how you guys took those down. I know you mentioned that that was brought to you with or from a wholesaler, but what's the plan going forward? Are you guys going to continue to buy in that side of asset?
[00:13:11] Ricky Grand: Oh yeah. So, I mean, I, I don't want to pigeonhole myself and say, Oh, I'm not going to buy, you know, X, Y, Z. I'll look at any deal that comes across my desk and see and, and look at it at its own merits. We are going to do, I think, fewer fix-and-flip projects because obviously, we have a limited amount of time to focus. So in terms of not losing our deal flow is more wholesale deals to other investors. I know a bunch of people that still, you know, want to do fix and flip. So we're going to maybe cherry-pick some of those and then send out the rest to everyone else. And then if I can come across some, some decent small multifamily, you know, and when I say small multi, I'm looking now more like the, you know, 6 to 15 range. And then obviously, you know, for me the unicorn is to start looking at the 50 plus units for doing syndications.
[00:14:01] Sam Wilson: Got it. No, that's really cool. And I guess both of those are just standard apartment complexes, the 24 and the 17 that you have right now?
[00:14:08] Ricky Grand: Well, we have 24 total, so we have 17 there. And then we have, like, three Airbnbs, our office that we're going to rent out part of, and then a couple of rentals in there.
[00:14:18] Sam Wilson: That's really, really cool. I love it. I absolutely love it. When you look to the future, you look at the plans, you say, Okay, hey, this is where we're going. What are some things you feel like you're doing in today's economy to really offset risk for you and potentially future investors?
[00:14:35] Ricky Grand: Yeah. I think, you know, the biggest thing is being conservative. I'm conservative by nature. I worked for value investors, so, you know, being super risky was never my MO. Taking a calculated risk was always how I presented it to people. So I think just underwriting the deal very thoroughly, adding in, you know, a bigger cushion for your contingency and case costs keep going up. That caught us a little bit in the beginning when costs started skyrocketing. And then just being conservative on our ARVs on the on the, you know, the way down because, you know, like I talked to some of these sellers and they're like, Well, you know, it went up. I'm like, Yeah, but it's declining and I got to look six months down the road and six months down the road, you know, this saying could be down 10%. So I'm cutting that out now and not saying, Oh, this is going to be a, you know, $500,000 property. Maybe it's only going to be a $450,000 property. So Just being conservative, I think. But I also, you know, an advice I would have for someone is to don't sit on the sidelines either. There's opportunity. We're in an inflection point, is how I put it. It's an odd spot to be in where sellers haven't quite realized it, but the market has, so we can get caught in the middle, whereas I think a lot of people can get in trouble in that in that spot, but we don't see it that way. We see that there's opportunity and it's definitely coming down the pipe. So, you know, we're gearing up for opportunity and, and more acquisitions because in that down market, I'm not going to run away from it. We didn't run. Like, the pandemic hit, that's when we bought that apartment complex. I remember looking at my brother, I go, Man, I don't know what's going to happen. But we're either, you know, here we go again. It's either going to be the next step or, you know, we're going under and have to restart and it panned out. So when people are fearful, I think it's the Warren Buffett thing, when people are fearful, you know, be greedy when they're greedy, be fearful. And so I see a lot of fear out there. And so people ask me, I'm like, No, we're full steam ahead. I'm just being conservative and not just taking any deal.
[00:16:23] Sam Wilson: Right. I love it. I love it. Ricky, thank you for taking the time to come on the show today. I certainly appreciate it. You've shared with us so many helpful things. I love to hear your journey going from broker to investor, your experience in the corporate world before that, working for the value. What'd you call the value? What, How'd you put that? It was a value...
[00:16:40] Ricky Grand: Value investor. So I think, I guess, you know, you have gross stocks, which are like the tech stocks, and then you have value, which is finding, you know, the more mature companies that the market is, you know, undervaluing.
[00:16:50] Sam Wilson: Got it. No, I love that. Absolutely love it. If our listeners want to get in touch with you and learn more about you, what is the best way to do that?
[00:16:56] Ricky Grand: I mean, the best way is to probably check out, you know, go to our website, grandbros.com, that has all of our, all the information to get ahold of us. Get in touch. You can also email me ricky@grandrei.com. I'm always happy to chat with people. I talk with new investors all the time, you know, some, anyone who wants to reach out, I would love to chat. Don't be bashful. I know it's scary. Even when I reach out to people and I'm like, Oh, my God, what are they going to think? So, you know, anyone, reach out.
[00:17:22] Sam Wilson: Absolutely. Love it. Thank you Ricky so much. We'll make sure we include all of those links in contact info there in the show notes as well. But I appreciate you coming on today. Thank you so much.
[00:17:31] Ricky Grand: Sam, thank you for having me. I appreciate it.