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Real Estate Investing School Podcast
253. From Immigrant to 188 Doors with Vitaliy Volpov
01:02:12
Welcome to the Real Estate Investing School Podcast! In this episode, Vitaliy Volpov shares his inspiring journey from immigrating to the U.S. from Belarus at the age of 12 to becoming a successful real estate investor, attorney, and entrepreneur...
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- [00:00]
Vitaly Volpov
My parents had to start at the lowest possible jobs they could start in America, which my mom went cleaning houses for wealthier people and my dad was delivering pizzas at like 40 some odd years old in this tiny beat up Honda. And if I can do it, if I can make it from that starting point, then anyone can make it.
- [00:21]
Joe Jensen
Welcome to the Real Estate Investment School Podcast. I'm your host, Joe Jensen. Our guest today is Vitaly Volpov. Vitaly is originally from Belarus and he immigrated to the US at 12. He's an attorney, a real estate investor, an Entrepreneur, and a YouTube content creator based in the capital region of New York. He's been investing in real Estate since 2011 and currently has over 188 residential rental units in his portfolio. His real estate investing focus is on small multifamily real estate utilizing the house hacking and burst strategies. He's also the host of the Succeed REI podcast. Welcome to the show, man.
- [01:03]
Vitaly Volpov
Thanks so much for having me, Joe. I'm really excited to get into it.
- [01:07]
Joe Jensen
Yeah, this is cool. You've definitely, you've done some really cool things. You've been in the game for quite a while. I mean, man, it sounds like you signed up at the right time. 2011 is a good time to get going with real estate.
- [01:21]
Vitaly Volpov
That's what everybody tells me, I guess. I talked to the old timers that started like 2005 and they went through the 2008 crash and they're like, oh, well, you don't know what crashes are like and all that.
- [01:32]
Joe Jensen
Yeah, I don't know.
- [01:32]
Vitaly Volpov
I would say, I would say, you know, there's some miles on these tires at this point, you know.
- [01:37]
Joe Jensen
Absolutely. For sure, man. Well, that's cool. So, I mean. Yeah. Why don't you tell us a little about your story? So you live in New York yourself then?
- [01:43]
Vitaly Volpov
Yes, yes. So I'm in New York. I don't know how familiar some viewers might be with New York State. Everyone probably thinks, who's not too geographically inclined, that New York City is like the capital, because that's what everybody knows. Yeah, we're probably about two and a half hours from New York City, but we're actually in the capital region of New York, which is kind of like this tri county area where Albany, New York, which is the capital of New York, is located. And so this is kind of the area that I moved and we can get into a little bit of where I came from. But I'm a first generation immigrant, so my family and I moved to this area and I've Been here pretty much the whole time, ever since I moved here when I was 12. So I started investing in real estate here obviously, because it's my backyard.
- [02:30]
Joe Jensen
Yeah. So is that any, is that anywhere near like upstate New York or is that different area?
- [02:34]
Vitaly Volpov
Yeah, so you would call it. Yep, we're, we're squarely in upstate. You know, some people would call Buffalo, New York, upstate, Rochester, New York, Syracuse. Those are, you know, well known cities. But yeah.
- [02:45]
Joe Jensen
Have you ever heard of some of these small towns like Hornell or Cornea or any of those?
- [02:50]
Vitaly Volpov
Yeah, actually my wife went to college in Ithaca, New York, which Cornell, Cornell University is right there. And yeah, I'm definitely, definitely familiar with those. Yeah.
- [03:04]
Joe Jensen
So there's this little, little town called Hornell in upstate New York that I actually have quite a bit of real estate in. It's like the tiny little random. But New York's a funny place, man.
- [03:16]
Vitaly Volpov
Man.
- [03:17]
Joe Jensen
You can get some deals still like in upstate New York. I'm excited to hear your journey though. So, so you, how, how does, you know, how, how does it happen? You know, you, you're an immigrant family. You come when you're 12 years old. Was your parents into real estate or where did you get that on your timeline?
- [03:35]
Vitaly Volpov
Yeah, sure. So my parents don't. Still don't have any clue about real estate. I, I didn't, certainly didn't get it from them. So we came as, I guess refugees, technically speaking, from former, one of the former Soviet Union republics. It's been in the news recently. It's next to Ukraine, it's next to Russia. They border, you know, it borders both of those countries. It's, it's, it's a country that is probably, if you're thinking of the old Soviet, you know, guard. And who were the different republics? It was these three, definitely the, Russia is the main. And then you got the Ukraine, which is bigger than Belarus, and then you got Belarus. So those are like the three main ones and it was all Russian speaking there, but each of them has its own dialect. So Ukraine obviously has its own dialect. Belarus has its own dialect. So we left in 1995. But my dad's family came to America to actually the same area where I am now in 1991. And so they kind of sponsored us to come. There's this whole, at the time, immigration was different. There were different ways to get here and there was a application process, all that that we went through. And then once we moved here, you basically apply your permanent resident and you apply for a green card and you get the green card. And then over time, after a certain amount of time you get your citizenship. So that's kind of like how we got here. And it's just I'm an only child, so it was my parents and I that came in 1995. Again, you know, just 12 year old kid. Obviously real estate wasn't on the radar at all at that point. It was just all about, you know, assimilating and kind of chasing that American dream that everybody talks about. That was the, that was the main reason for, for coming. My parents sold everything that they owned, kind of brought, brought all of our worldly possessions in our bags and that was, that was our introduction to America. And so yeah, so I just, yeah, I just went to school just like any normal kid would, but I had to learn the language because I didn't speak any English at the time. And you know, over time I went to, went to eighth grade, then high school, then college locally. And it wasn't until I would say maybe halfway through law school I ended up going to law school. Halfway through law school I started thinking about, well, what am I going to do once I graduate? Am I going to buy a place? Am I going to buy rental property? I can't remember who kind of gave me the first seat of that idea, but it was at that time that I acquired it and I started really digging into it. And this was, so this would have been 2009, 2010 timeframe where I started thinking about it and started, you know, I went to the local library. I didn't even buy books at the time, I just, I rented them, I rented a few landlording books, read a few things on that. And then once I, once I graduated and started working as an attorney in 2010, that's when I really started looking. And it took about a year for me to finally buy my first property. And that was my house hack, my first two family house where I lived on one side and rented out the other side.
- [06:46]
Joe Jensen
That's awesome. So you were an attorney before you got into real estate?
- [06:50]
Vitaly Volpov
I was, yeah, yeah, for about a year. I was practicing obviously super green and had quite a few student loans coming out of law school. I think I had something like 130, $140,000 in student loans. And contrary to popular belief, I think a lot of people think if you're a lawyer, you're immediately making six figures anytime, anywhere. Not understanding the differences in markets. You know, obviously New York City, Los Angeles, Washington, D.C. like those are big, big markets where you have large law firms where yes they are paying even then paying associates, first year law school graduates, six figures. But that wasn't certainly not the case in the, in the city of Albany for me. So you know, coming out with $140,000 of student loan debt, it certainly was a daunting task to see how I'm going to pay it off and what am I going to do financially.
- [07:42]
Joe Jensen
That's cool. So you, you go and you, you get into real estate. How long did it take from your first deal to like getting into the multi family stuff? What was the transition there?
- [07:52]
Vitaly Volpov
Yeah, so for me I, I really took baby steps to start. I, I think it was a big leap. Again, no one in my family ever bought real estate, didn't know anything about real estate investment properties, anything like that. And also I didn't, I wasn't handy. I knew hardly anything at all. And so that's a scary thing to start. And I know a lot of listeners, if anyone's thinking about it, they're new and they're considering how do I get into this? This sounds exciting. This is a good way to build wealth. You have to overcome that initial fear and kind of as one of my mentors on YouTube says, Punch fear in the face and just start going at it. And so that's kind of what I did. And it was all trial by fire. I learned as I went. I remember, I think YouTube was already a thing at the time and so I started looking at YouTube videos and okay, how do I fix this plumbing leak or how do I replace a sink and you know, what's, what are the tips for painting an apartment like those types of things. So yeah, it was me and my girlfriend was now my wife. My girlfriend at the time we kind of, you know started, started on that journey. And so yeah it took, so 2011 was the first two family house which was, which is a house hack. And then it took another two years for me to save up another down payment and I, so yeah, it's side note too. So I used obviously owner occupied financing for the first one where it was more advantageous because I didn't have to put 20 or 25% down. And I think I only did 10% at the time and then, but the next one I ended up doing was was non owner occupied investor loan. And that was I think was 25% that I had to save up. And you know it was a challenge two years but it, but it, you know it worked out because I didn't have living expenses. My, my tenants were at my house act were Paying for my living there basically almost covered everything. The only thing I had to pay for were obviously like taxes and insurance and upkeep on the property, but they were covering the entire mortgage, which was big. So I was able to save on that end. But yeah, so I ended up saving 25% and I bought two really old and crappy looking houses together. They were being sold by the same owner and they were on two separate lots, but right adjacent to each other. And one was like a tiny little cottage and the other one was another two family house, but much more, much older than the one that I bought initially, the one that I was house hacking. And I didn't know what I was getting into at that. At that point I thought, okay, now I'm experienced. I got two years in with my house hack I can do. And had an inspector go in and inspector walk through the property with me. Comes out and he's let me pull you aside. Come here. He goes, are you sure you want to buy this? And I go, what do you mean? What's the problem? Well, you know, everything we talked about, he goes, you got, you got foundation issues. These furnaces are like 60 years old. I don't know what's going on with the back porch. It's missing storm windows. There's water getting behind the siding. I can't guarantee you anything about the roof on the cottage. I'm like, oh no, it's all right, I got it. I. It. No, let's, let's move forward. And so, you know, long story short, that was a. One of the make or break deals was the second deal that I bought, which is those three units. And man, I had to. I really went through some stuff for, for another year or two after I bought it. It was constant rehabs. I sunk probably another, I don't know, $50,000 into, into that deal. In addition to the down payment, which I think down pay it was, it was an inexpensive deal. I think I paid a total of like 107 or 114,000, something like that for both of those properties, which in today, today probably people think is crazy, but, but I ended up, you know, putting. I had probably was in it for 70 or $80,000 by the time the rehab was done a year later. So yeah, that was, that was crazy.
- [11:51]
Joe Jensen
Is that where you started learning about the, the burst stuff where like, oh, well, now I've done this, I can go refinance, get right back out and still hold on to the asset?
- [12:00]
Vitaly Volpov
Yeah, I didn't know that. I didn't know the acronym at the time. Maybe it wasn't even in existence because I don't think Brandon Turner had coined it yet at that point. But that's exactly what I did. And the cool thing about that deal that kind of turned it from a huge money pit and a huge mistake to actually coming out on top and being positive was that I had the foresight to separate because they were, again, it was the same owner, right? But it was two parcels that were adjacent to each other and they had separate tax lots, so they actually could be sold separately. They didn't have to go on the same deed and they didn't have to go on the same mortgage. So the owner wanted 107, $108,000 for both. And I said, okay, how about I give you 1,000 for the cottage, right? Just a thousand bucks. And I'll finance, as long as the appraisal comes in, I'll finance the purchase of the two family house and we'll buy them separately into deeds. And that's exactly what we did. So that allowed me, once the rehab was done, I was able to refinance both of them on separate loans and pull money out. And I paid myself back for everything that I had in it, pretty much. And that saved the deal for me. And I was. Because the property was now renovated, I did some things with adding bedrooms, which is again, one of those things you talk about value add. That was one of the things I started doing. Again, not knowing that that's what it was called or any of that stuff. Just, it just made sense to do it. And that saved that deal and that allowed me to, okay, now I can go to the next step a couple years later. And that, that was the slow, very slow snowball process for me in acquiring real estate.
- [13:37]
Joe Jensen
I like how it was like, you, you didn't know all the tricks yet, but it's like I just for the listeners, it's like trust in your, your brain, trust in your, you know, your gut. Like, if you think about something, if you sit there, go, how can I make this work? Like, you'll come up with these solutions. That's the thing. It's like people were doing all of this well before Biggerpockets had branded it and coined it and it was all over YouTube. It's like people were always doing this stuff. We just didn't know what it was called, you know what I mean? And, and I think people need to have more kind of that figure it out. Like, think about it long enough and you'll come up with a solution. Because in a world where every answer is at our fingertips, a lot of times we just kind of default to that. And, and we, I don't think we really have faith in ourselves and, and can realize how much we can figure out our own. You maybe figure out an out of the box idea that nobody has thought of, you know, but if no one told you, then you're like, scared to do it. But anyway, I just think it's really cool that you're able to figure all that out just by like, okay, what do I do here? I need to solve the problem. Let's go.
- [14:43]
Vitaly Volpov
You know, and the truth of the matter is I think that almost anyone in almost any real estate situation can do that. And I think a lot of people just shut their brains off and they throw up their hands or they give up or quit. Like, this stuff happens to everyone. Like, no one's perfect. Especially if you're starting out from scratch. You didn't have partners or relatives who are already kind of bringing you into it. You're going to hit these, you know, there's these, these problems and these walls, and you have to overcome them and you have to be creative and figure out what's the way. And this is actually bringing back to Brandon Turner again, because he was actually a huge inspiration for me and biggerpockets was. But it's not, it's not saying I can't do something. It's asking the question of how can I do something? And that was exactly what it was for me in that case. I mean, every disaster you can think of that you could have in the property happened in that property. I. I found out that there were powder post beetles chewing through the posts and the joists in the basement. Yeah. And I had to like, okay, what am I going to do? And I had to go get a bunch of quotes and meet with all these contractors. And some of them were quoting me, like, ridiculous prices. And I eventually found someone that was somewhat reasonable, you know, poured new new footings, added lolly columns, like, shored the place up. And, and there were many of those, those things that came along, came up along the way. A lot of investors, and I deal with a lot of them both in, in my, my own podcasting and YouTube channel, but also with the real estate brokerage that I, I'm a part owner of, where we help brand new investors buy properties, but we see that all the time. People hit this wall and they just shut down and they're not able to even give themselves a chance to succeed. And I think that's one of the biggest problems why so many investors end up failing or they don't go much further than the first property.
- [16:32]
Joe Jensen
Yeah. I think if people could just, like, have the confidence to go, hey, I'll figure it out, and I'm gonna learn everything I can. I'm gonna do all I can. But it. But if I'm. Whatever. I can't figure out whatever. I don't know now, like, have the belief that you. You can figure it out. If you can be the person that figures things out, you can do anything. You know what I mean? Especially with the resources we have. You know what I mean? It's, like, now, yeah, it's. It's crazy. But if you don't have that belief and you default to like, oh, this is out of my pay grade or above my head, you're just dead in the water. Right. Right there. You know what I mean? And. And it's funny because, yeah, if you sit there, go, I need more cash flow from this. You know, this thing's not working. Like, right. Maybe I could. If I could. Well, if there's another room, then. Then I could rent it for more. Like, well, could I put a room. You know? And then it's like, you go do the things, you know, you can figure this out.
- [17:27]
Vitaly Volpov
Yeah.
- [17:27]
Joe Jensen
But so many people, they just like, if it's not cookie cutter, if it's not all spelled out, if it wasn't in the book, then. Then they. They freeze. And it's easy to do for all of us, you know, but it's like, there's. There's always solutions. And it's funny because you mentioned, like, man, you had a nightmare of a property. I mean so much. You know, when you talk foundation issues, soon as you mention foundation, I think people are terrified. Right.
- [17:51]
Vitaly Volpov
Yeah.
- [17:52]
Joe Jensen
At first you had mentioned you got this deal, like, how did you get a loan on just the one house? And they went for free. Like, he must have given you this. It shouldn't have appraised for enough is what I was thinking, you know? But now the home, I'm like, no wonder he was ready to just get rid of it for pennies on the dollar.
- [18:08]
Vitaly Volpov
The backstory. Exactly. So the backstory is that this property sat on the market. Now, mind you, this is 2013, so things are slow at that time. The market is not hot like it has been the last five years. So properties are sitting. This is a tired landlord represented by a very sneaky local real estate agent, and they hadn't listed. I looked at the history of it. Right. It had listed for 169,000, and they kept dropping it. And it was like, I don't. Nine months, a year later, they still haven't sold this. So they were ready to sell. And the reason they hadn't sold it is probably because of those issues that came up. Yeah.
- [18:44]
Joe Jensen
Who wants to touch that?
- [18:46]
Vitaly Volpov
Yeah. And I don't know how, you know, I don't know how the bank agreed to loan on it, but, I mean, it worked out because I ended up actually selling that two family. I still have the cottage, but I sold the two family for another. I think it was 35 or $40,000 profit a few years later. So, in any case, the point of that story was that the reason why it was such a low deal is because of all those problems, because it sat in the market. And I knew that kind of. But I didn't know the extent of it. And so, you know, went in negotiating. I actually got it down to that. What, what I did. But again, I needed to get it down to that in order to make it work.
- [19:20]
Joe Jensen
You know, it's funny. You're like, why did the bank lend on that? And I, I say a lot of times, I'm like, especially for newbies, I'm like, one of your best ways to do due diligence is, Is the lender. Because lenders want to protect themselves. And.
- [19:31]
Vitaly Volpov
Sure.
- [19:31]
Joe Jensen
So they're gonna. But I found they're a lot better with numbers. Right. The bank is like, they're gonna make sure you have the right numbers, you have the right cash flow, that you have enough, like, down payment, that it. It's in a good enough area. Like, they're good with all these numbers to kind of make sure it's a good asset. And if they're not willing to do it based on the numbers, you probably shouldn't either. But what they don't seem to be very good at is the actual home. Like.
- [19:55]
Vitaly Volpov
Right.
- [19:55]
Joe Jensen
They don't inspect these homes. They don't dive in, which is crazy. Right. Because they're putting the debt on there.
- [20:01]
Vitaly Volpov
Sure.
- [20:02]
Joe Jensen
Their, their due diligence is, Is actually pretty soft. I mean, you could get a loan on a place.
- [20:07]
Vitaly Volpov
Yep.
- [20:08]
Joe Jensen
I've. I mean, I've literally gotten a loan on a place where the walls are caving in, and the bank's just like, yep. Passes their numbers on their spreadsheet.
- [20:18]
Vitaly Volpov
Right.
- [20:18]
Joe Jensen
You know, and I'm like, thanks for the money and I can go fix those walls, you know? But it, It's. It's funny how that goes. But if, if you know what you're doing on both sides, it can work out, right? Oh, I was gonna say, when you're mentioning the foundation issues.
- [20:33]
Vitaly Volpov
Yeah.
- [20:33]
Joe Jensen
Any listeners, if you wanted to find a niche, if you go chase down homes with foundation issues and these beetle issues and the things that just scare people off, but you find the solution, you get it, you run the numbers, you know, it'll work. You find the bright people. Because you ended up having to do all that and you made it work.
- [20:55]
Vitaly Volpov
Yep.
- [20:55]
Joe Jensen
You know, and you didn't know that ahead of time. But I'm just saying, for people right now, it's that still today, with all of our resources, scares off 99% of investors, and you could have a whole niche of just chasing down those scary ones. And I think you could have a whole career off that.
- [21:12]
Vitaly Volpov
Yeah. And it's all about what you said, problem solving. If you can be that person to solve the problem that other people can't, then you have the competitive advantage. And obviously it applies in real estate, but it applies in business in general. But yes, that's exactly what you should be doing. And that applies to other, you know, we can get into it more. But as I grew and I, you know, acquired business partners and I started doing more sophisticated stuff and, and purchasing more units in a single year and all that stuff, the biggest reason we were able to do that is because we were finding problems that either the owner had a problem of some sort, the property had a problem, or the problem was that others didn't see the value in this particular deal that we saw. And we then brought to fruition all those things that. That's where you make your money. You can't. I mean, you can, you can buy stuff on them. Mls, you can pay market value or even more than the market value and then just hold for 30 years and it'll all work out really well. And that's fine, you know, but if you're trying to go quicker and get to that financial freedom and hopefully retirement or whatever, whatever your goals are. Right. Then you got to look for opportunities in solving those problems. Yeah.
- [22:23]
Joe Jensen
So let's talk about bridging into the bigger stuff. So what's the largest unit you've bought? Like the largest unit count up.
- [22:31]
Vitaly Volpov
Yes. So I have a total of 188 right now. They range from. The smallest is obviously this cottage, this single family, which I hadn't bought any other single families to hold as a rental. The largest is a 21 unit apartment building that a business partner and I Bought this past September.
- [22:48]
Joe Jensen
Okay, cool.
- [22:49]
Vitaly Volpov
Yeah, that one is actually a former. It's beautiful. It's a really large brick building in the kind of downtown Troy area, or not downtown, I guess you could call it called Lansingburg. That's a neighborhood in Troy in our capital region here in New York. And it was converted some years ago before we bought it into apartments. So it was originally a day school of some sort of. And then it was converted into apartments. And that's our largest purchase to date. So then everything. And then we have everything in between. So from 21 units down to three, we have everything. We have all different sizes.
- [23:28]
Joe Jensen
So when you start to get into the bigger stuff, let's say a 10, 20 unit, some people I've talked to, they're nervous about jumping into that because they're like, well, what if my numbers are off? Right? Because if your numbers are off on a single family cottage, you know, that costs you so much, but you can usually figure out a way to finagle. But once you start getting these bigger deals, it's like, dude, if you have 20 units that need new furnaces, you know, or 20 units, or you missed a bug problem, you know, these things can quickly get out of hand. And it's like, how do you make sure that you're. How do you feel confident? How could a newbie who's, you know, going from those duplexes to jump into a multi unit? How do they make sure they don't get burned?
- [24:12]
Vitaly Volpov
Yeah, this is my approach, right. There's many different schools of thought. And I go on YouTube and I see videos with thumbnails where it says 21 year old just bought 50 unit. This 50 unit complex, or this 26 year old bought 100 units in one year. I wouldn't go that route. I wouldn't do it. I didn't do it. So my approach was incremental. So I started with the two family as my house hack. Very safe, nice and steady. Great way to learn. To me, house hacking is by far the best strategy for brand new people, brand new investors.
- [24:49]
Joe Jensen
Sure.
- [24:50]
Vitaly Volpov
Just hands down. And then I. Okay. I said, okay, saved up some money. Now I can put a down payment on another property. I went with conventional bank financing. I didn't do private loans or hard money yet at that point, which maybe I should have, maybe I shouldn't have. I don't know. But again, I went with the three units. I went up by one. Right. So I went from a two to three. Cool. Figured all those problems out. Learned a ton of stuff. Learned about how to manage tenants remotely when you're not living at the property. Learned how all this stuff works, did a couple of evictions by that point. Like the experience is what is important. And obviously learning how to run my numbers. Now I know, okay, this is what my numbers were as a green investor going into the buying this three unit. And then what they really turned out to be, once I really look took in the cost and like, oh, wow, this whole floor had to be taken up. And I should have known that because it was, you know, spongy and rotted and all that stuff. I only budgeted $2,000 for that. End up being like seven. You know, things like that. It's just experience. So from there I then bought a 4 unit. From there, then I bought a 5 unit. And then I started partnering up with people, started acquiring a little bit of a network. Knowing some contractors, knowing maintenance guys like that just starts happening organically by you being in the game and you doing these deals, deal after deal after deal. So I would never tell anyone to go from a two family house hack to a 21 unit. Maybe it'll work out, but a lot of times it probably won't, especially if you're trying to do it by yourself. So that was another one of my biggest, I guess, mistakes or things that I didn't consider is I was doing it all by myself. So the first from 2011 up until 2017, all my investing was done alone. No business partners. I mean, my wife wasn't my partner, but, you know, it's not quite the same. Some people have a spouse that's really involved. My wife was just supportive, but she wasn't necessarily into it like I was. So it was just me. And I would not necessarily recommend that for most people. I think a team is good and maybe you can fill the gaps with just team members who don't have equity in the real estate that you're buying. But for me, it made a world of difference to get a business partner who's 50, 50 partner in the trenches with me and also taking on responsibilities and duties of complimenting myself and things that I couldn't do, he could do and vice versa. And I think that was really important and helped to get to those larger units.
- [27:23]
Joe Jensen
Yeah. So maybe let's dive in a little bit of how did you structure your partnership? Like what, how do you, how do you separate that and. And make sure that it's gonna be a win win for the long haul. Like you said, you're 50, 50, like so you both bring in 50% of the money. Like, why even bring in somebody if you have the same strengths? Or like, how did you structure it?
- [27:45]
Vitaly Volpov
Sure. Great question. I have a lot to say about this. So my, my current business partner is the one that I own pretty much all of my real estate with. Right. But before him, there was another. Another guy, that super nice guy. We were friendly. We used to play in the same basketball league. Got to talking one year and he mentioned that he just bought a six unit in another local city nearby. Like, oh, cool, okay. He has a. He has six units, I have seven units. So he's got some experience. Got to talking about, like, what is it? What are this? What are his strengths? What would he be doing? Because we're chatting about maybe doing something together. And he was all about property management. He was a real estate agent and he was working for a property management company. He said he was really good with tenants. He had some contacts, maybe contractor stuff. I'm like, cool. I was more of like the financials guy and the law, right? Because remember, I was working full time as an attorney at that point. So from all the way from 2011 when I bought my first. Well, 2010 was when I started working as an attorney all the way to the end of 2020, I was working full time. So I was working full time and trying to build this real estate empire. And obviously that comes with its own challenges. So for me, it was okay, I got seven units. But if we're going to buy more together, I'd rather have this guy handle the management stuff and handle the contractors. And he seems to have that experience. Right. So the idea there was to complement each other in that way. I was finding the money at that point. We were starting to look for private investors to fund our deal, the next deal that we would buy together. And so, and I would do, you know, I knew a little bit about taxes, obviously I knew a lot about the law. So, like, those are my strengths. And his strengths were presumably those other things. Well, I didn't know him too well, but as we got into it, it became clear quite quickly that he wasn't as strong with those things as he led me to believe initially. And so come to find out, you know, I leave him, I leave the tenant communications up to him, and then the next thing I know, things are not getting done, people are not being responded back to. And I ask him, well, what's going on? What do you do? Oh, well, I have this VA that's handling everything. Like, dude, what, what do you mean you have A va Handling this like, this was your job. Like, you were supposed to be that guy. So, okay, so what are you doing then? You know, So I was like, okay, I'm doing these things. But you're not. You're outsourcing already outsourcing your job on the first deal that we do, you know, and then another thing that we needed was we needed to find some contractors to do pretty large renovation project at the. At this. At these five units that we bought together. And he had nobody. And I'm like, I thought you were in property management. Aren't you tapping into the resources within the company that he was an employee of the company where you work? Oh, no, no, I can't do that. I don't really. Those guys charge too much. We can't do that. So again, falls back on my shoulders to try to find somebody. So at that point, this is where the moral of the story comes in. You have to be very selective with who your business partner is going to be. And like you said, you really need to make sure that they do complement your strengths and your weaknesses and not just, you know, assuming that things are going to work out. I would definitely not recommend people just going into business with family either. But at the same time, I think you really got to know the person better than I knew. But I knew him. Again, not a. Not a bad guy. He meant well. He wasn't, you know, he didn't cheat, he didn't steal any money or anything like that. It just the. The. His job or his. His skills didn't live up to the hype that he gave me about.
- [31:26]
Joe Jensen
A lot of times we want something to be so good that we just kind of, like, hope for it, and we're like, oh, cool. Like, I need someone that's good at all of this. Xyz. And they say they are so perfect. That solves my problem. Let's do it. But it's like the. The truth is, like, we shouldn't look for someone else to solve all of our problems if, like, they're not. They're not qualified. But a lot of times we want to believe because it fixes such a big headache for us. We just want to believe they're qualified. We just want to. We don't vet them out. We don't do the due diligence. We just go, oh, perfect. You're good at that. I don't want to deal with that. Let's roll. Right? But because it just feels so easy to check that box. As entrepreneurs, we just have all these boxes that need to be checked. But a lot of times I've seen that, that, that kind of burns people when it's like, actually you're probably better at it than most people you run into. Yeah.
- [32:21]
Vitaly Volpov
But here's the thing where this comes. How do you structure it and what's the protection? This is the lawyer hat comes out for me here. So going into it, obviously I was still, you know, trust by verify. Be smart about what you're doing. We didn't just sign a deed with our own individual names. We had an agreement which was the operating agreement of our limited liability company. Every single deal that I've ever purchased with a partner has been using a limited liability company. And it works very well for structuring your relationship with this partner, in addition to providing those other benefits of liability protection from exterior sources. So what I did is I drafted a very long and comprehensive operating agreement where we discussed the things that we were supposed to be doing. It listed the duties that he was supposed to be fulfilling and listed the duties that I was supposed to be fulfilling. It listed the authority that we had with regard to purchases or decision making, all those things. And it was written as a 50, 50 where we would, we would vote on things. And you need a majority vote. And obviously when there are only two partners, each of them holding 50%, majority means 100%. Like everyone, both of us has to have to be in agreement in order to make a decision. However, there was the clause in there that talked about his duties and what he was supposed to be doing. And when this came to light, I came to him and I said, hey man, look, we're going to have to restructure this. I'm clearly taking on more work than you are, but you're getting 50% of the value. And I'm also finding us all the money. I found the money. I also actually found the deal. It was a three unit and a two unit. Again, similar situation where they were back to back on adjacent lots. And so I said, okay, so I need to have more of the equity and I need to have control. And so that's when we resigned the operating agreement to 5149. And from there I had the full control. And if he didn't fulfill his obligations, I could just cash him out, buy him out, or force him out. And so that was what I ended up having to do. And that's important. And this is where definitely working with a qualified attorney and making sure your agreement is covering all those issues, potential issues that could come up is done before you buy that first property with a partner. And that's very important. And I, you know, I'm a huge proponent. I know people say, oh, you shouldn't buy things in properties in LLCs because you already have insurance and also because it creates all these additional costs for you. True. Okay, maybe, yes. But especially if you're going to have a partnership, you're going to have a partner, you can't do it without it. So that's what I ended up doing there on that first deal. And of course, we didn't end up doing any other deals together. I ended up partnering with someone who I'm partners with now. And that guy I've known for 15 years before we partnered. Oh, wow. Yes. And he was already doing all the stuff that I am, I was doing separate from me. And we were always just kind of sharing stories, information, and kind of experiences with each other. But he was doing his thing and I was doing my thing. And I knew he was successful at, at that. And he really knew his stuff and he could handle the aspects that he brought to the table. And so I felt pretty confident he had to vet me too. And that was the same, kind of, the same idea. He wanted to make sure that, you know, I'm trustworthy, that I can handle the finances, the books, like, all those things. So that's how that partnership came to be. And it's been very successful. And I credit pretty much all of my success in real estate from that point on to that.
- [36:00]
Joe Jensen
Yeah. So originally with the first partner, it was 50 50, but you're kind of dead in the water. It's hard to make decisions you couldn't. Once you were able to take power, you're able to get a lot more done. But even then you didn't want to repeat the process with that guy. So how did you structure with the new guy? Which has worked out great.
- [36:16]
Vitaly Volpov
Sure. Yeah. So the, the first. So in terms of the written contract, it's still 50. 50.
- [36:23]
Joe Jensen
Okay.
- [36:24]
Vitaly Volpov
However, what, what is there is a. Is it mandatory. It's mandatory arbitration provision in there, which basically means that if we come to a head and there's a complete impasse, which hasn't happened in seven years that we've been. Eight years now, we've been doing business together. If there is something like that, we go to a neutral party selected by. Where there's a process of how that that party would be selected. We would have that person present, you know, the impasse to that person, all the facts and circumstances essentially make arguments and, and Then that person would render a decision for us and it would be binding. It's binding arbitration. And there are certain things inside of the agreement that are kind of small decisions that wouldn't trigger that necessarily, but anything large, like, do we sell a property? Do we buy a property? Say one partner says, oh, I want to buy this. This is an awesome deal. Let's put, we have all this money from private lenders that our LLC has borrowed or has pledged. I want to buy this. And the other partner is completely against and thinks it's a terrible deal. What do you do? You're at impasse at that point. Right. And either partner can take it to that next level and actually essentially blow it up. But with that kind of a nuclear option, obviously at that point, I would imagine that neither partner would want to continue partnering on any future deals. Every deal that I've done, I have a separate LLC created for the particular property that we're buying. So it's essentially a separate agreement for every single one of them. And if there was a falling out like that, obviously we just wouldn't do any new deals and we just resolve whatever we're going to do with the current one and that's it. And then you can even force a sale, a dissolution, dissolving of the partnership. You can back out, essentially. And there are ways to do that. Again, be involving a third party, a neutral of some kind, with binding authority on, on your decision making.
- [38:25]
Joe Jensen
And you're owning the property, the deed is in the LLC's name of the property, and then you each own 50% of the LLC. If a partner, let's say it was going good, but partner just like, hey, I'm kind of done with this. I'd rather be cashed out. Could you just take them off the LLC and give them the money and then you don't have to restructure the loan or the deed and the ownership or anything like that.
- [38:47]
Vitaly Volpov
So you. So there are a few issues with that. Yes, in theory. Right. The first issue is that banks, commercial lenders that we do business with, and I'm pretty sure it's like that 99% of situations across the country when you have commercial loans, you're providing personal guarantees for the loan. And so a bank would have to take. I mean, if I'm the departing partner, I'd want to be taken off as a guarantor from that loan. If I'm out, if I'm getting out, I don't want to be on that loan, obviously. So in order for that to happen, Then the bank would have to approve it and agree that, okay, we feel confident enough with the ecr, with the lien that we have in the property. And this, the remaining partner being a personal guarantor that will let this other guy basically out. And I've been involved in deal. We actually, my current partner's partner, other partner, exited, and I bought his share in another. In another llc. And we went through the bank, we did a refinance, actually, and the bank allowed that other partner to, you know, remove his personal guarantee. And I. And I stepped in the shoes. So we've done that. So it's definitely possible. But there are those. That's the one wrinkle there. And then the other wrinkle would be obviously, well, what if there's a lot of equity? Where does the money come from? So one option is obviously to have a. To do a refinance if there's enough equity in the property to pay out the share of their departing partner. You could do that as long as you can pull it off with the bank. And the other option might be to bring another partner on, just like the scenario I described to you, where I came on, I had cash and I came in, I paid out the other departing person, and I took over, I stood in the shoes. So those would be the two ways without selling the property for you to dissolve the partnership and for one partner to go his separate way.
- [40:39]
Joe Jensen
And you just file like a change of LLC of who's. Like just. Is that you just change, like the names on the llc?
- [40:48]
Vitaly Volpov
Yes. So it varies state to state as to whether or not you need to disclose names of individual owners of the llc. So, like right now in New York, when I open a new llc, I don't have to list. The state doesn't see the operating agreement. So they don't know who the members are in New York, there are other states that do. And there's other new legislation that's coming down the pike in New York for. It doesn't necessarily go to the Department of State, actually, I'm not sure. It might be the Department of State in New York, but now you have to disclose the names and addresses and even driver's licenses in New York starting in 2026 for All LLC owners. And the federal government had this. The name's escaping me. But President Trump just put a stop to it, paused it, because the Treasury Department was also seeking. There was a deadline coming up, I think it was March 13, for filing and providing that information for all LLC owners across the United States. And that was a law that was passed by Congress and signed by President Biden a couple years ago, and it was in effect now. There was some litigation involved. There were delays and pauses placed on it, but it was just about to be enforced. But now that's been paused, and it sounds like it's going to get killed. And we're not going to have that federal requirement, but we do have that state requirement still. But anyways, to bring it back to. So you don't have to necessarily file a change in New York. What you do need to do is you have to create a new operating agreement. So you amend the operating agreement and then you would substitute. You would say, who's departing, who's coming in, listing the names. And again, whatever other terms you want to change in the operating agreement, that would be changed. But that's a private document right now in New York. You do not have to file that with the Department of State.
- [42:35]
Joe Jensen
Gotcha. Interesting, man. So. So that's awesome, dude. We could talk about stuff forever. There's so many ways to do it. But. So this partnership, I want to kind of finish off on some details on this partnership and we'll go into our final questions. But this partnership, why did this partnership work? What are the strengths? Like, why not just do it on your own? Because that first one kind of went south and you probably could have done it on your own because you ended up doing it on your own anyway and would have saved you a lot of time and money. So why not just do it on your own? Where has been the benefit of this partnership?
- [43:07]
Vitaly Volpov
Sure. Yeah. The biggest benefit of this partnership that I have now is that my current partner did bring in the construction expertise and the contractor contacts. That was huge.
- [43:22]
Joe Jensen
When you're doing rehabs, these burrs, like, that's. That's like a vital intricacy.
- [43:28]
Vitaly Volpov
Yeah, there's no way I would have been able to. I mean, I started building some context. But the prices he was getting on stuff, the, the. The quickness, the. The speed with which stuff could be done, the volume of stuff. We started doing that. We. I just give a quick summary. So, like, starting From, I think 2017 to the present till 20, the end of 2024, we started buying probably between 20 and 30 units per year.
- [43:53]
Joe Jensen
Wow.
- [43:55]
Vitaly Volpov
That kind of sort of ramping up. You really need a team. You really need reliable guys. The biggest. The biggest obstacle, I think, to growth in that. In that way with small multifamily, where it's not just one big apartment complex, but just like dispersed small multifamily a five unit here, a six unit there, a four unit here, and so on and so on is you need reliable full time maintenance guys that can truck, they have their own vehicle, they drive around, they can go pick up materials, they can spend an hour at this property fixing a water leak over here, then they can go over to fix an electrical outlet over there. And then there's another thing over here and they, they're just running around all day long putting out these, fixing these issues that come up, which will always come up. And so if you don't have that, you're really going to be struggling. It's going to be a nightmare. You're going to be extremely stressed. If you're getting into these numbers, you know, you're talking about starting with like 50 units. I think at 50 units you definitely need a guy full time and you can't do it without at least one full time maintenance guy. Whereas contractors that will do a one off rehab for you as you need it, or an apartment turnover, those are a little bit easier to find. There are more of them because they're more episodic. They're just, okay, we're going to spend a week on your, on your job and then I'm going to go help Bob and then I'm going to go help Mike and they'll come back, oh, you have another apartment turnover next month. Cool, I'll do that one. Those are kind of, you know, they're, they're free agents basically and they're Roman, they're, they're doing their own thing, whereas the maintenance guy is just there every single day because you have tenants, tenant issues that come up that you, you know, you need to fix and you definitely don't want to be doing yourself as an owner. I know a lot of people that do have that handyman skill. Right. And they try to do everything themselves and they have 10 units and they can't grow any anywhere beyond that because they're handling every single issue themselves. You know, they're plowing the snow themselves, they're cutting the lawn themselves, they're fixing the leaks themselves. And I just, you know, especially if you have a full time job, and especially in a job like mine where I was an attorney, like I'm not going to run it around to properties doing that. It just wouldn't make sense.
- [46:02]
Joe Jensen
Yeah, one of the best things I did was start buying out of state and then I just couldn't do anything, you know, like I couldn't fix a toilet or repair it. I was like you got. We got to find another way or. Which frees up a lot of your time and bandwidth. And then I realized, like, I could do that for the properties down the road, too. I'm like, wait, I don't have to do it. I'll just outsource all of this.
- [46:22]
Vitaly Volpov
Exactly. Outsource? Yes, outsource everything as much as you can, as long as your profits or your income provides. Allows for it. Yeah.
- [46:30]
Joe Jensen
So the new partnership was awesome because he had all those contacts. You could really rehab these stuff good. So you could refinance them, do the whole birthing. He had. He had been doing it. He was experienced, had all the trusted contacts. Why did he partner with you? Why didn't he just do it on his own?
- [46:45]
Vitaly Volpov
Yeah, so he actually, at the time, he had another partner, and they already had quite a few units. In 2017, when we first got together, they already had a bunch of units between the two of them. And they were doing the verse strategy and they were doing the private money with the two of them. What happened on his end is that he wanted. So his other partner said, hey, I got. I got a lot. It's enough. Like, I don't want to do any more. He. His wife was pregnant. There's a baby coming. Like, all that stuff, it was just too much. Too much stress and pressure. And he said, I need to pause. So my business partner, because he's one of those maniacs that wants a thousand units, he's like, oh, well, who else can I partner with? And he came to me. So that's kind of like the immediate reason why he came to me, but the bigger picture for him, and I'm not in his head necessarily on this, but I think it's because it's just. It's just easier as a team. It's. There's just another person to. To collaborate with. When there are hard times and you're in dire straits with something, you've got someone in the trenches who understands what you're going through. You can, you know, you can explain to your wife or your husband as much, as much as you want about what's going on, but they're not really going to feel it and know it unless they're in it with you. Like, they didn't go to that property. They didn't see that apartment that got completely destroyed by a tenant, and they, you know, clogged the toilet on purpose, and there's three inches of water on the floor. Like, they don't feel that. Like, yes, you can tell them that that's what happened. And you're dealing with this right now, but they don't understand it. So having that sort of buddy, that friend, that partner with you who understands fully and is also financially vested in it 100, 100% as much as you, it makes it easier, I think. And that's. That's his biggest reason. And obviously, things like, you know, if. If one of us has to go on vacation, like, who's going to cover it? If you're by yourself, you're really struggling to cover anything while you're. While you're gone. You're essentially kind of not even on vacation, really, because you're still dealing with all the issues. Just. You're just not there, you know? Whereas if you have somebody that you can rely on, in addition to the team now, we have leasing agents now that. That are with our brokerage, but they also do our own apartment rentals. We've got the head of maintenance. He gets stuff done. He coordinates with people. Like there's. There's more of a structure now, but at the core level, it is that reason. It's the other person in the trenches with you that knows what you're going through and it can support you when things get hard and can celebrate with you when things are going really well.
- [49:16]
Joe Jensen
That's awesome, man. Well, that's great. So if people want to follow you or get in touch with you, what's the best way for them to do that?
- [49:22]
Vitaly Volpov
Yeah, the best way is to Find me on YouTube. My YouTube channel is Succeed Rei, and I post. I took a little break. I'm starting to get back into it. Actually have a video coming out today. Yeah, it's. It's 10 mistakes when buying your first house hack. I love. I love talking about house hacking right now because I think there are a lot of people who are much like, much farther or behind me. Basically, you're just starting out and they're looking for some inspiration and seeing how did other people do it. How do you get started more so than people that have 100 units? Like, 100 units is not a very large audience. Right. And those people already have been through all that. You're not going to teach them anything new. Whereas the people that are just coming up, they need that help. So anyway, so I'm focusing on that on the YouTube channel so they can find me there. You can also look for Succeed Rei on Instagram and on Facebook as well. I'm not on there that much. YouTube is really kind of like my main location, where I'm at on Social so they can reach out to me, comment and email me.
- [50:28]
Joe Jensen
Perfect. Awesome. All right, man. Well, we're going to dive into our final four here. This has been awesome. All right, so question number one and final four. If you could send a text bomb to the whole world, you send out a message, everybody's phone's going to go off, they get your text message from you, what's it going to say?
- [50:45]
Vitaly Volpov
If I could send a text bomb to the whole world, I would say, I would say. Can it be a fairly long message? I don't know. Does it have to be short? Is there a character limit on this?
- [50:55]
Joe Jensen
No, character limits. Not Twitter. Go for it.
- [50:57]
Vitaly Volpov
All right, so I would say this. So coming from somebody who, like I said, first generation immigrant, didn't speak English, didn't have any money, My family came here barely anything. We were on food stamps when we first got here. My parents had to start at the lowest possible jobs they could start in America, which my mom went cleaning houses for wealthier people and my dad was delivering pizzas at like 40 some odd years old in this tiny beat up Honda with like rust, rusty wheel wells. And if I can do it, if I can make it from that starting point, then anyone can make it. And so my, my text message to anyone listening would be you, you should have the faith and belief in yourself and that you can achieve whatever you set your mind to. And I truly believe that. I really believe that any single person, as long as they put forth that focused effort and energy into what they want to achieve, whether it's, you know, personal finance goals or it's real estate or it's business or anything else, I think they can do it. I think it can be done. And maybe it sounds cliche, but that's, that's kind of the belief that I've always operated under. I've always been an optimist and my wife will, will say that I'm just crazy sometimes with, with my optimism, but that's just how I feel. And that would be my message to everyone.
- [52:21]
Joe Jensen
I love that man. It really is inspiring. It's like, it's crazy. I could dive into that so much. All right, question number two. What is a book or podcast recommendation, besides ones we're associated with, that you would recommend for the listeners?
- [52:36]
Vitaly Volpov
Yeah, this is another one of those that, going back to the roots and the original, like the OG of, of books. And I'm sure you've heard it a thousand times with all the people you've interviewed, but it's rich dad, poor dad, is my number one for sure. And then in addition to that, I'll supplement it with two other books. And this comes back to my inspiration from Biggerpockets and Brandon Turner. Now, these books are already now 10 years old, I think. I think he put them out in 2015. But it was. It was the book on rental properties. I think maybe I'm butchering the name exactly, but it's a book on rental property investing. Book on rental properties. And then it was. The other one was the book on managing rental properties. I read all three of those books at the time and many, many others as well. But those are like the core ones. Rich dad, Poor dad was like the theory.
- [53:21]
Joe Jensen
It's like the heart and soul philosophy of what we're doing. Yeah, exactly.
- [53:24]
Vitaly Volpov
Yeah. Learning about money, how money works. And then. And then the implementation of it came from those early books by. By Brandon Turner. And that helped me tremendously. That was right when I was just starting to branch out into private money, looking for partners, those types of things. And that was huge. And so, yeah, those would be my three recommendations to people. I actually. They're on my shelf over here behind me. I got a bunch of books over there, but yeah, so, dude.
- [53:49]
Joe Jensen
And I echo that. Like, I did the same thing. I listen. I listened to Rich Dad, Poor dad, and Cash Flow Quadrant. I'd also recommend that one. That one, a lot of times gets left out, but to me, I read them at the same time, so they're like the same. The heart and soul of it. Like to say the philosophy. And then. And then, yeah, and then I just read everything written by bigger pockets and a handful of other ones I could find to get the nitty gritty boring stuff. And everybody loves, like, the conversation like this. If anybody just listened to this, hopefully there was something that sparked an interest. You learned something. You can take it to the next level. But you didn't learn the boring stuff listening to this podcast. You don't learn the boring nitty gritty details. And no one wants to because the podcasts are exciting. YouTube videos are great. You know, the. The videos and whatever. It's like, you got to go read a boring real estate book. And no offense, Brandon, but, like, a lot of them are just boring. Like, here's the nitty gritty. Here's the nitty gritty. This is how it works. But it's like, that's where you're actually going to grow.
- [54:51]
Vitaly Volpov
You know what I mean?
- [54:52]
Joe Jensen
And that gets bypassed so much nowadays, you know? Agreed. But, yeah, I love that I had Very similar experience. Cool. All right, next question. What is the most expensive or interesting mistake. Mistake that you've made in real estate investing?
- [55:11]
Vitaly Volpov
So I guess I have two. Real quick. I'm not going to go too, too long on these, but the first one was the one I told you about, where it was the two family and the single family together that was the most expensive at the time and the scariest because I had the least amount of experience, knowledge, and confidence. And so that one was just like, you know, I'm standing at the. At the abyss and looking down like, I'm just about to fail. This is going to be such a failure. And I remember how many it had. Yeah, yeah, yeah, exactly right. And I remember my cousin who, who's a little bit dabbled in real estate. He. He had. I think he has two rental properties. He came over. He's a little bit older than me, but he came over and you see it during renovations and rehab. And I was there doing work myself, along with a few contractors. And he comes over and does a walk through. It doesn't say much. He's this really gruff, like, burly Russian guy, right, with the thick Russian accent. And. And he goes, okay, Vitaly, this is good, because you have very tall ceilings, very high to hang yourself.
- [56:16]
Joe Jensen
It's great.
- [56:17]
Vitaly Volpov
Thanks, man. Yeah, thanks a lot. Thanks for coming over. So it was that kind of sentiment I was getting from. From my family. Like, my. My wife, my girlfriend at the time was coming over, shaking her head like, I can't believe you're doing this. I can't believe you bought this thing. Like, what are you gonna do? You know, like, stuff was just going wrong so much. And, you know, I remember there are times where Friday night we'd be invited to my wife's family to. For dinner and stuff. And I get a phone call and there was another flood in that basement because there's just a stream coming through there, and the sump pump was missing or whatever it was or whatever plumbing issue. And I would. I'd have to leave the. Leave the kitchen table and go head over to the property with the plumber that. To help them out and pump this stuff out anyways, so that was a big one. Again, it's good. It's good to. To kind of work through it and overcome at the time was. It was scary. And then another one. More recently, we had a. We started a renovation project that ended up getting shut down. The city initially gave us an approval, and then the city engineer came in and they found, like, oh, no, you Guys, can't we. This, this, you need this, all these extra things in order for it to comply with our codes. And we're not going to, we're not going to budge on it. So we'd already sunk some money into it and the idea was to burr to create add value and then bur it out. And so we were probably $100,000 deep into, into this deal in terms of renovations that we then had to stop and it just left unfinished. Luckily for us, the space that they were being done in was isolated, was separate from the rest of the property. And we were still able to go to the bank and still complete a refinance. And we just made it to get all the money back out that we had that we had put into it. So we didn't lose any money in the end. But it sucked because we didn't have to sink that hundred thousand dollars into the huge rehab project. Had we known that it was going to end up working out like that. And they told us, you know, you can get architects and maybe if they can come up with this alternative and maybe if you want to add an elevator or all this stuff, like at that point it's just, you're throwing good money after bad. And we just abandoned it and we just said we're going to take the hit on it and walk away, move on, move on to one of the other projects. But that happens. And that's another lesson for anyone listening out there. Even if you've been doing this for 13 years, you could still run into an issue like that and it could be a loss. You just got to be able to absorb it and not take on too much risk.
- [58:47]
Joe Jensen
So why did they give an approval and then change the approval? Was that a missed thing on your change or.
- [58:53]
Vitaly Volpov
There was a change in leadership at the city, in the, what do you call it, the building department. The building head changed over and the initial one was very much pro development and pro, like, oh, kind of like giving, giving the pass. Like, oh, yeah. They didn't send their engineer from the city. They just sent one of the code guys and they looked, well, look, looks fine to us. And then. And then moved on. And then I don't know exactly what, what prompted them to come back and reassess. And then they reassessed and said, oh no, we, yeah, we're going to need you guys to do this extra stuff in order. I think we.
- [59:32]
Joe Jensen
Even though they'd already given you a full written. Go ahead approval or were they just kind of giving you like a thumbs up and you.
- [59:38]
Vitaly Volpov
Thumbs up. Yeah, and that's right. It was a thumbs up. We didn't at that time. So there's multiple stages for planning board meetings. So we went through the first stage. Then there was, you know, the. Yeah, there was the initial inspections or walkthroughs and then additional ones happened afterwards. And so I mean, it happens.
- [59:57]
Joe Jensen
So the mistake that someone could learn from not to like dig in and put salt. Yeah, yeah. Is technically, if you guys hadn't ran so hard off a thumbs up but waited for.
- [60:07]
Vitaly Volpov
Exactly.
- [60:07]
Joe Jensen
Full on approval.
- [60:08]
Vitaly Volpov
Exactly.
- [60:09]
Joe Jensen
You would have been more secure.
- [60:10]
Vitaly Volpov
That's correct.
- [60:11]
Joe Jensen
That's just for the listeners. Like, oh, hey, how can we avoid, you know, learn from vitality and pay for my mistakes.
- [60:18]
Vitaly Volpov
This was a little bit of our just overconfidence and kind of hubris, I guess you could say, because we've been through so many and we've done this. So it was like autopilot. That's where you get into trouble. You never want to be on autopilot in any real estate transaction or rehab project you ever do. You gotta, you gotta dot your I's across your T's. You can't get lazy, you can't just get complacent. And that was, that was the problem.
- [60:40]
Joe Jensen
You know, And I think that's so true. I think about fear, you know, I know a lot of people. You even mentioned punch fear in the face. A lot of people talk about fear to me. I like to look at this, fear is my friend. And I'm like, fear keeps you alive at the beginning. You're like, oh, what about this? And so you're so careful. Once people get too comfortable, they don't have that fear anymore. And that's where mistakes happen. You know what I mean? I, I rock climb. Not like I'm not like a professional thing, but I enjoy rock climbing. But I see that happen a lot with the guys who get really, really good. Then they start to cut a little corner and they forget little things. And there's just an incident where a professional got dropped and she broke her spine and stuff. And, and it was just all these stupid little mistakes because the guy belaying her holding the rope at the base broke a hundred rules because he's been doing it a million times. He's just like, whatever, I've got this.
- [61:31]
Vitaly Volpov
Yeah.
- [61:31]
Joe Jensen
And, and it's like you need a little bit of fear in you to like keep you on point sometimes. It keeps you alive.
- [61:37]
Vitaly Volpov
So, yeah, human nature, I think that's. That happens to everyone.
- [61:40]
Joe Jensen
Yeah, that's interesting, man. All right, well, last one that will let you go. What is one word or short phrase to encapsulate why you love real estate investing?
- [61:50]
Vitaly Volpov
Financial freedom.
- [61:51]
Joe Jensen
Love it.
- [61:51]
Vitaly Volpov
That'd be my phrase.
- [61:53]
Joe Jensen
Nailed it. Well, this has been great. Thanks so much for being on the show. We really appreciate your time, man.
- [61:58]
Vitaly Volpov
Thanks so much. Yeah, it was a pleasure.
- [62:00]
Joe Jensen
This is Joe Jensen signing off for the Real Estate Investing School podcast, reminding you you don't have to do it all on your own.