Today on Unstoppable Real Estate Investing Wealth we are joined by Allon Avgi. Founder and CEO of AVGI, a multi-million dollar Real Estate acquisition, development and holdings company Founded by Allon in 2017. Allon Avgi has come from extremely humble beginnings and has built a cash flowing empire through years of trial and error, learning, and strategic partnerships. Allon is also a published author and the host of the Talk Shop Podcast. Allon started AVGI at 21 years old when he acquired his first real estate investment. Allon Avgi has since developed a diverse real estate holdings company that has reached $70,000,000 in AUM within only 4 years using his own capital and that of a select few individuals. As he starts to open the firm’s investments to outside capital and build strategic partnerships, he has ambitiously set a target to acquire and manage a $1 billion real estate portfolio over the next 5 years. Allon constantly talks about creating value for other people who deeply desire it. With that being said, Allon has done many joint venture deals with local operators who provide a competitive advantage, put in the work and bring new opportunities to AVGI. Outside of joint ventures, AVGI has a diverse Real Estate Fund being released in the near future that will open the door for new investments from people across the world. This fund will give every investor the opportunity to be a part of a young, fast growing, conservative long term driven Real Property Fund with outstanding returns. Allon has set an ambitious goal of hitting $1,000,000,000 worth of holdings by the time he is 30 years old. At the time of writing this Allon is 26 years old and is doing everything in his power to achieve his goals. In the near future Allon plans on writing more books, growing his media presence, traveling to more incredible places and expanding AVGI into more markets across America, and one day, the world. Listen in to how Allon is changing the game and building generational wealth. Learn more about Allon at https://www.instagram.com/allonavgi/ or https://avgi.com/ And after that head on over to... https://easysell411.com https://billyalvaro.com https://billyssecrets.com Who knows maybe you will be our next partner? To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
Today on Unstoppable Real Estate Investing Wealth we are joined by Allon Avgi.
Founder and CEO of AVGI, a multi-million dollar Real Estate acquisition, development and holdings company Founded by Allon in 2017. Allon Avgi has come from extremely humble beginnings and has built a cash flowing empire through years of trial and error, learning, and strategic partnerships. Allon is also a published author and the host of the Talk Shop Podcast.
Allon started AVGI at 21 years old when he acquired his first real estate investment.
Allon Avgi has since developed a diverse real estate holdings company that has reached $70,000,000 in AUM within only 4 years using his own capital and that of a select few individuals. As he starts to open the firm’s investments to outside capital and build strategic partnerships, he has ambitiously set a target to acquire and manage a $1 billion real estate portfolio over the next 5 years.
Allon constantly talks about creating value for other people who deeply desire it. With that being said, Allon has done many joint venture deals with local operators who provide a competitive advantage, put in the work and bring new opportunities to AVGI. Outside of joint ventures, AVGI has a diverse Real Estate Fund being released in the near future that will open the door for new investments from people across the world. This fund will give every investor the opportunity to be a part of a young, fast growing, conservative long term driven Real Property Fund with outstanding returns. Allon has set an ambitious goal of hitting $1,000,000,000 worth of holdings by the time he is 30 years old. At the time of writing this Allon is 26 years old and is doing everything in his power to achieve his goals. In the near future Allon plans on writing more books, growing his media presence, traveling to more incredible places and expanding AVGI into more markets across America, and one day, the world.
Listen in to how Allon is changing the game and building generational wealth.
Learn more about Allon at https://www.instagram.com/allonavgi/ or https://avgi.com/
And after that head on over to...
Who knows maybe you will be our next partner?
To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
SUMMARY KEYWORDS
deals, people, equity, properties, money, capital, fees, market, point, company, big, real estate, business, analysts, partners, years, raise, broker, underwriting, buy
SPEAKERS
Billy, Allon
Billy 00:06
Give it a shot Welcome to unstoppable real estate investing well my name is Billy Alvaro, aka the unstoppable BA, former billion dollar mortgage banker, gone bankrupt, turn professional real estate investor, where each week you'll learn the tools, strategies, systems and secrets myself and other highly successful real estate investing entrepreneurs use to start, grow and scale their businesses creating massive profits and how you can too, and we'll teach you how to put those profits to work. So you no longer have to get ready to finally experience financial freedom and generational wealth now let's get started. What is going on everybody? Welcome back to the episode of unstoppable Rei wealth. I am your host, the unstoppable BA bringing it to you live again with another episode today I have the pleasure of interviewing a young when I say young this boy is 26 years old, but he's wealthy and he is as smart as people can get your an old soul stuck in a young body, my friend I'm going to introduce to you everybody, Allon Avgi. What's going on buddy?
Allon 01:30
Whats going on Billy?
Billy 01:31
How you doing, man?
Allon 01:33
Great hell of a ride huh?
Billy 01:35
No doubt, Brother, no doubt. So listen, I want I've known you for a couple of years. And I think we met through Mike Murphy, maybe six years ago, five or six years ago when you first started.
Allon 01:46
Even before then I tried to buy a two family house and you pulled up in your Mercedes back in the day, all these years. And this is like eight years ago. I was like, how am I going to buy my first house? I'm like environment first house. And then you showed up? And I'm like, Who is this guy? He's got a nice car. He's got a cool license plate. Seems like pretty well. And you bought that house. I was like, Fuck, this guy got the house. I wanted that one. Pretty bad. But you got it. That was a long time ago. I don't know if you remember that.
Billy 02:16
I remember, it used to when I first met you. You're you were in your family business. Is that right?
Allon 02:21
Yeah. My parents had a furniture store. And I had an online furniture store. Yeah, I remember. We worked together. But we were separate. Like it was it was my business. But in the same family, family business model furniture.
Billy 02:34
I love it. I love it. So listen, I'm eager to understand how you did what you did over the last like eight years, because I've watched you a lot. I've watched you grow tremendously. I've watched you in the single family space. You've morphed over into the I think the commercial space apartment units mixed use. So let's just let's just go back first. You've been doing this full time for eight years. You got your start? What was your focus point? In the beginning when you first started doing the real estate investments eight years ago?
Allon 03:03
Well, eight years ago, I got into the space. I wanted to be in real estate. But I didn't. I got into I was in tech. I was in E commerce. So I kept launching tech companies. And I didn't touch real estate until five years ago. So I've been actively buying properties for five years now. Got it. You took that first house I wanted. So. But that was awesome. And I was learning from back then, you know, obviously I like to learn I'm a big nerd. Everybody knows that knows me. eager to learn all the time. So five years ago, I decided to focus on a single family house out in Nassau County. I picked up my first house rented it out renovate it, it took hard money to buy that house 12 And two at the time. And I took all the money that I made from it, I pushed it back into that property, pay down the debt as fast as possible. Now I had a house that no mortgage, I didn't know the burr method back then rates were at like six and a half 7% at the time. That's what I was getting quoted. And I did it a couple more times. Those other times I refinanced a couple of those homes at 9% Which is why this interest rate environment doesn't scare me at all I'm accustomed to it already just like you are you've been through cycles and and that just led to the next thing I learned how seller financing works I bought a house from you. I I did some more deals and then I realized houses aren't really for me I want big money stuff. I want to go big and it's all kind of the same. So I went after multifamily and commercial now I primarily buy big projects, mid middle middle market projects not big yet. I am working on two deals right now that are in the $15 million range. So that's a little bit about middle market. Yep, yep. So that was so that was a nice ride and now I just closed on 67 apartments in in Arkansas. I buy housing packages out of state I bought at like 170 apartments in Euston. So I'm repping through the country and in highly desirable areas.
Billy 05:03
Yep. So let's go through because I'm curious on how you made the switch over from the single family model. And what you had to change both mentally and then internally in your organization to go from the single family switch over to going full time into the multifamily and commercial. So what was that like both mentally, and in the business making the switch?
Allon 05:22
Mentally I knew I was there, right? I spoke about this the other day at a speaking event. I'm like, the first the beginning is to figure it out mentality, I'm going to figure this out, I'm going to get started, I'm going to realize how this is done. And then after I figure it out, I'm going to dominate. And that's how I look at everything. Like I want to dominate. You know, I'm not playing to play small, I want to play big. And kind of like you, Billy, I know you like to go big. So hell yeah. Right. So I'm all about going big. And I knew that like, even when I'm doing now, I'm like, this is small, I am small, I want to get big, and how am I going to get there. So I loop in a lot of a lot of operators, a lot of technicians, as some people call them. And they operate the day to day and I trust them, and they're very good at what they do. And they get looped in with equity. So everybody's a part owner of whatever they're involved in. And now I get to focus on going big. And that's what I'm doing mentally. And in the business, the business is different, right, because the operations change a little bit, you know, 200 units isn't the same as a single family house. You need porters, you need onsite staff, you need, you know, third parties, then you have a asset management, property management, and your fees kick in. So it's a little bit different. But the but there's no stopping, you know, like, there's no end, you could scale the single family house business, you know, you've done it,
Billy 06:41
you could scale whatever the hell you put your mind to, I mean, whatever you want to scale, you just have to have the right systems, people and processes in place. And as long as you have the capital behind you, you can scale the shit out of anything. So when you transferred over it, you got into the on the commercial side, you said something interesting, you said your operators, your technicians, your people inside the business, that you're giving them equity in the deals, are you giving them equity in your business or equity in each deal that you bring in to the company? You guys on the right and take down?
Allon 07:08
Well we just figured this out. So this is this is a great question. And it's a kind of a good exercise to talk about too. So we split up the company into a couple a couple of avenues on the first is we have the the traditional equity of the properties, right? So anybody can get their fees, right? If they find the property, if they raise money, they get a point, let's say that point can be converted into equity. So that's this first starter. That's a kickoff, right, everybody converts their money into equity. Nobody I've seen yet in my company has held off on converting the equity. So that's one, then we go into the actual fee based company where we collect fees, and we have our promote, I have Abdi equities and AVGi holdings, the equity that people get in my company goes to advocate equities, which is where we collect our fees. Those fees are converted into distributions, or we reinvested into projects. Everybody wants to reinvest it, everybody's in the same mindset. I align myself with people that think like me. And because of that, we use that money to buy properties, and everybody gets a proportionate share that they have in app equities in those properties. So a little creative.
Billy 08:16
Is as the equity set up similar to a syndication type play or no, it's Yeah. Okay. So it's, it's a syndication.
Allon 08:27
it's not because it's where we collect our fees.
Billy 08:31
So the syndication company pays your AVGI equity company, the fees or royalties for the deals we're putting together? Correct. Okay, I get it. Yeah, I understand the way you structured it. And so in that company, your people inside your organization salespeople, technicians, operators, PMS, DMS, whatever you want to call them, they have the ability to earn in equity on those deals, depending on what they bring to the table. What they do for you in the business is that we're a mirror.
Allon 08:56
Yeah, it's like a 10 year model. I think this is where we get a little edgy, you know, it's you can earn, you get your you can earn your equity, by your points, if you raise money or if you source deals. Your tenure is your equity and AVGI equities, which is like, oh, Chris has been with me for five years since the day I've started one of one of my main players in the company. I've 25 People now. So Chris has been with me since day one. He's got, you know, a large share of AVGI equities.
Billy 09:27
Is his share contingent upon a vesting schedule. We're over time you actually invest in and then he's hard inside that or is it kicked in right from day one?
Allon 09:36
Well, his is kicked in after five years, you know, and then now we're putting together a vesting schedule for the other people that are newer in the company, but they're giving it their all because everybody's like, why would I work on this prop? Why am I working on this? If I didn't have any fees that I generated to put money in? Right, I have no motivation to do that. So the motivation is Afghan equities, holds interest you hold interest in Afghan equity is so every single deal we do we have an aligned division. And
Billy 10:04
is AVGI equities have the interest in the properties, the percentage ownership in those properties as a general partner,
Allon 10:10
is that how you're doing it? Sometimes Sometimes it gets advisory fees and just the traditional management piece. So no matter what app, the equities is getting paid that way, I keep everybody aligned.
Billy 10:22
Yeah, got it. And so besides AVGI equities, tell me then the other companies that you have aligned, are they do they have any interest in the properties that you're purchasing? Or are you doing deals, raising capital, taking a small percentage, given the rest of the way to, to invest in Poland? Just trying to understand your model?
Allon 10:39
Yeah, well, it's all different. So sometimes we're raising, right, we don't always raise I take down deals myself at this point. I used to not went back when we met because I was poor. Now I'm not poor, you know, so I could buy properties myself. Then on the other side, is whenever we raise money, they get their proportionate share for whatever they handled. Some of them bring in investors, for example, like one of the guys looped in 450,000, and written a raise. So he gets one point of that. And then he put in his own money kids got, like, 30% of the Promote, at this point on the best deal we've done, you know, I've got 20% of that deal. So he's got literally half of my equity the kids got, you know, and he well deserved because he raised majority of the money and he put in all of his bank, his entire bank account, he cleared out
Billy 11:30
the kids betting man, he's betting he's got Oh, man. I love it. I love it. So this is good. I'm getting an understanding of how you do it. Let's let's back up a little bit. Tell me because I know you're a marketer, like me, I know in order to get deals, whether you're in the single family space or in the multifamily space that makes us don't care what it is, it all comes down to deal flow, right? Without deal flow, you got no business you're not making offers, take me through your structure on the deal flow side of how you structured it, how you go about reining in your your deals to analyze what does that look like?
Allon 12:00
Well, I have two in house analyst. So they analyze every deal that comes in nonstop, right? First is the broker underwriting so we have we have a nice little, a nice little model where it's like a deal comes in the broker does underwriting first I have six I have seven in house people now. On the broker,
Billy 12:19
brokers, these are the brokers working for you getting deals from other possible agents out in the field and then they're underwriting for you do
Allon 12:27
or direct to owner or direct owner. Okay, so they're deal sourcing guys, right? The girls are the sharks, they're scary. The girls so
Billy 12:38
they're like ninjas, the guys don't expect them to be as sharp as they are. They just come in and start whacking shit out.
Allon 12:42
Holy shit. Girls finding deals. I'm like, Where's this coming, bro? I need more equity. I can't keep up. So, so a deal comes in. And then we have broker rough underwriting, so they underwrite the deal first, that way we save time. It's rough, rough underwriting right? The analysts don't need to look at it. I don't need to look at it yet. If they need pointers, me and Luke, one of the analysts and we give our feedback broker a rough underwriting This is a basic model that we put together that's very clear caught that they fill in. Okay, cool. If it passes broker, rough underwriting, it moves on to me or the analysts where we review it quickly and together. If it doesn't pass broker of underwriting, they instantly say hey, this isn't for us. If there's a kicker we're not looking at, let us know there's a land play if there's zoning that we don't know about, let us know. And if and we'll put in a much lower offer to see to gauge the sellers interest. And if there's any feedback then at that point it passes on to my analysts or myself.
Billy 13:43
I love it and you said you have six on the broker side and to do on the roof on the right and then you have two analysts that are full time analyzing deals for you.
Allon 13:51
Yes, seven on the on the rough on seven on the deal sourcing side to full time analyst. But those analysts work for AVGI, they also handle asset management, they handle more than just deals. There's a lot that they do.
Billy 14:04
Yeah, I like it. Let's back up to the broker side. I'm interested on this on this model and how you're doing it. So you have you have your own real estate model your own real estate brokerage company. Yeah. Okay. Is it your own company? Or are you affiliated with another out there?
Allon 14:17
No, it's our company. I'm, I'm, I'm not I'm not going I can't say I'm a partner in it because I that's not where I make my money. I don't collect management thing.
Billy 14:25
You have a management agreement with somebody who has the brokerage and you kind of brought it in and need your company name.
Allon 14:31
Yeah, I carry no, it's their company name. It's a different company. But they don't do outside work. They only do stuff for me. Got it. So they're constantly cold calling their sourcing and all of our markets, they're aggressive and they collect fees from me if the sellers don't pay so they're acting like principles, which gives them their edge. Say that again. I didn't get that. Like they act like principals they act like there would they work for the company, AB you whatever, you know a company and in that is That way I pay them if they don't collect a fee on the backside.
Billy 15:04
So there is no fee in the backside you paid upfront. Yes. How does it uh you paying these guys a salary with a strict no salary just kill what you earn what you eat
Allon 15:14
draws against commission
Billy 15:17
draws against commission. Yeah, when we commissioned looked like in a brokerage like this on these types of deals,
Allon 15:22
one to two points depending on the deal, but for we take down big deals to now. So it's much more appealing like one of the guys, I am getting the contract by tomorrow, we're working on a $15 million deal. So that's a point and a half commission on that deal. Half a point from me, they ended up negotiating a point from the seller in the end, which is huge. That's huge.
Billy 15:46
So they're getting a half a point for you as a buyer's broker buyer's agent. Yeah, they can be a point and a half or a point from the from the seller,
Allon 15:53
a point from the seller half a point for me to a $225,000. Commission. Yeah,
Billy 15:59
that's a sick deal. That's a sick deal for the guy who's out there dialing. Now your brokers they're used to they're not regular salespeople. These are agents that are used to the commercial side, or these residential guys, you can run it over to
Allon 16:12
all of them, except for one was on the residential side. And they all came to join me. No shit. Yeah, all of them.
Billy 16:20
So what was the learning curve for them to go through to look because it's a different animal underwriting commercial sourcing commercial than it is on the on the residential side. So what did that look like, as far as training goes with these guys,
Allon 16:31
it's a different world, you know, like, I don't want to train them, I don't have time to train them. So I tell them upfront, you're learning and you're figuring it out, there's no draw until you know your shit. I'm not giving you a draw on wasting my money for you to just pick up and walk away. So what they do is they basically pick an asset class and they get very good at it. Like the girl that came in, she like hyper focused on a location and an asset class, you know, mixed use endless and northern northern Nassau County. So the girl knows the place better than anybody. She's got three real deals on the table in the last month, in a month. That's crazy.
Billy 17:07
That's insane. And then you're
Allon 17:09
the other guy, like one of the other guys, the resi. Guys, it took him two years to figure it out. But now he's figured it out. He took some side gigs, he made some money on the side. And now he's focused strictly on industrial, but the kids. I mean, the kids got serious industrial deals coming up, we just closed on one. You know, that was like a $2 million deal. So that's a big commission.
Billy 17:30
So these will before we get into the deals, the deal flow, when it comes down to your brokers, I just want to write down notes. So don't forget to ask you that. When it comes down to your brokers, your agents 1099. You pay me to draw what what's the percentage of off market deals that bring it to you verse properties that are on the market? What's the mix?
Allon 17:50
I'd say it's 50/50 At this point But the mark the on market deals. It's like instantly we get them so I just locked up. How big is it? One, two, I just locked up a six unit deal for 100 a door. Whenever you on market deals. Suffolk County. Yeah, that's cheap. That's real cheap. So that's, that was a steal. You know, to us, that's a major homerun. But there's there's some heavy lifting involved. But that doesn't bother me because I have the infrastructure to handle it. And, and these guys are getting their commission on that. So they're happy. But that was an on market deal. So then you can't put any deals on market.
Billy 18:33
This deals people realize this is shit ton of deals on market. If you know what you're looking for, you just have to spend the time to go through and look at a bunch of deals and a bunch of data before you get that one or two that pop.
Allon 18:44
Exactly. I just sent my guys out for nonmarket deal today for eight units. And they're asking like 1.1 If I could you know what they asked and what they're going to get irrelevant if I get them 950 It's not that far off. Sure. Now we're talking about what 120 adore. Are you kidding me?
Billy 19:01
But let's talk let's flip gears for a second. I want to go through your pipeline. So got a good understanding of how you're going to deal sourcing we're gonna get into the tools that you use and a little bit but your dispo so what is your disposition strategy with these assets that are coming in? Are you acting in a broker capacity? Are you taking them all down and keeping them in your portfolio as assets in the management? Are you renovating somebody's and flipping them over? Like what's your structure look like? There?
Allon 19:26
Great question. Great question. I believe in holding on to cash flowing assets for life. I am a difficult difficult person when it comes to selling properties. I almost haven't sold anything. I bought probably 60 properties in the last five years and I've sold for
Billy 19:46
sick
Allon 19:47
so my cash flow is now passing half a million a month. Sick law home button while home flippers are struggling. I'm fucking crushing it on almost 40 I have about a blended average of 40% at Woody in my deals,
Billy 20:01
beautiful. That's a smart, smart one right there. So for the most part, all your deals buy and hold, which then tells me the next piece. You have to be going out and raising massive amounts of money in order to do this many deals, right? Yeah. So cash flow, I shouldn't say cash flow, it's getting the cash from the investors and whether these deals the investment piece. So do you have anybody in your organization that's focusing on that? Or is it you?
Allon 20:29
It's primarily me. And there's two more people. Why is raising money so hard when you're 26 years old, and come from humble beginnings, because you don't have those long standing relationships that your parents have built, or the people that your parents know have built? Right. So I don't have a rich uncle, I don't have long term family connections that could lay me up with millions of dollars, I have to do it all myself, which to me is also a lot of fun. I love it. And hence why I do a lot of social media, because social media builds credibility,
Billy 21:01
no doubt. What's your process then allowed to go out and raise capital at 26 years old? What does that look like?
Allon 21:08
First comes the deal. So to raise money, to raise money at 26 years old, you need an angle, you can't just go up to people and say, Hey, I really want to do this, and I want to learn, they're gonna tell you to, you know, find somewhere else. So I go out there, and I'm like, Look at this sick deal I have that you don't have. And this is how I got it. And I spend 100 grand a month on carrying my people. And you don't need to spend 100 grand a month carrying these people because I do and now you're going to loop in with me in my organization. So I want you part of this, this is how much your returns are going to be. It's a great deal. Let's get started building this together. Boom.
Billy 21:44
You have your conversation, you go through the whole process, you make sure they qualify. They get to know like and trust you before you know what they're investing in the deal. Exactly. I love it. I love it. How when you're raising your capital, and I know every single deal is different. I know what you know, I don't know if you're doing syndications and every deal I don't know if you're giving ownership in the LLC and every deal like what does that process look like when you're raising new capital? Is it solely syndication? Are you doing a mix of everything?
Allon 22:09
Everything's a mix, which bothers me because I don't have a clear cut model. So that bothers me a little bit, because it's I think it's hindering my scale. But what can you do, I have some people laying me up with $10 million in equity. So they don't want to take down deals with other partners, actually, they're opposed to it 100% against doing partnership based deals, they don't want to be strictly LPS with other people, if they want to put in their word that they can put in their word. And because of that, they've taken down massive deals with me, I've, I've now have two guys that have with me north of $5 million each each, you know, each group, and they just they want to say if they want to say. So that's what they get when they lay up that kind of capital. Alright,
Billy 22:51
so let's talk about a guy that he's putting up $5 million over a few different properties. Yeah, who is his? Is he an LP? Or is he a GP? With you? Does he?
Allon 22:59
At this point, it's we're both on operating agreements, we're both GPS, there is no LP GP structure.
Billy 23:06
Has it hurt you at all in regards to I think the property should be run this way. I don't agree with how you're doing the p&l I don't think you should do to capital expenses, like this is any been any issue like that, because that could be a sticking point. If they have the capital on their on their as a GP and they tried to, I guess, overlay what they think is the right way to do it. Unless they're experts in the field, you're utilizing them as you know, utilizing them as mentors to do something that's a completely different story.
Allon 23:31
Believe it or not, none of them are in real estate. So they definitely can guide me in real estate. They did. They definitely can guide me and other things in life, which they have. I've never had an issue. And let me tell you why. Because I'm very easy to deal with with Capital Partners. If they don't like something, if they have an issue, now that I'm doing well, I can just offer them a bio. And that's what I do if there's a problem. I just say, Hey, do you want your money back? And sometimes they say most of the time, they say no, 95% of the time, they've said no, maybe this has happened on five occasions. And one time somebody said yes. And that's it. He's got a got his money back. It's done. It's over, you know, and he's happy because he's like, Okay, I didn't like this deal as much as I thought I would, that's fine. Now it falls on a loan, it doesn't fall on ex partner, you know, and they got their money back and they don't lose because you don't lose and you typically don't lose in rentals ever, you know, so they know they're not going to get hurt. It's very difficult to explain to somebody that they're not going to get hurt because they're used to taking huge ups and downs in the stock market. But once they figure that out that you're the right capital partner for them, they're comfortable, it doesn't bother.
Billy 24:40
So let's let's focus on the guys who put in $5 million multiple deals.
Allon 24:45
Yeah, I mean, I've one guy's got 10 million with me he's in like, eight deals. Okay,
Billy 24:51
so let's focus on that guy. That guy with 10 million he has a lot of trust in you obviously because he's putting in you know, eight figures inside these properties that you putting out what is is what is the structure look like with him in regards to his prep? If there is one, his you know, equity splits in the back end like what is this whole thing like when you set them up,
Allon 25:10
it started as a 7% prep and 50/50 returns thereafter where 50/50 split. Got it, that's typically unusual and the GPL P structure, but these were bombshell deals, you know. So this is also when I got started, he caught me early on. So he got very, very good deals, I charged zero fees, and he got a 7% pref. Once we started doing big reef eyes and a couple of tenders and a 1031. He said, I learned I want to see your money in here too. I said no problem. But then you don't get your breath. He said no problem. charge fees. So you could carry your company, no. prayeth. And we're 50/50 on the upside. And that's what we did.
Billy 25:50
That's a great deal. Great deal for both these.
Allon 25:52
I agree.
Billy 25:54
Yeah, that's a fair deal across the board. And it's fair that he's giving you the fees up front to get to carry the company. So you can carry your overhead and do your marketing until you shit you have to
Allon 26:02
do I was transparent. I told the guy, I don't know what to tell you. I have, you know, at this point, I have four employees, they cost me whatever amount 20,000 a month, let's say that's probably inaccurate. But let's say 20,000 a month. I'm like, how am I going to pay these people? When I'm putting all my money back into the deals he's like, Well, now is when you have to charge fees. And he was accepting of it. But the guy's made me $20 million on me already. So they trust me, they love me. They know me at this point. It's game over together, you know, their only real estate resource they pulled out of everybody else and they're strictly with me.
Billy 26:35
What? How did you go about meeting, you know, to see who it is? How do you go about meeting that person at 26 years old? What was your process?
Allon 26:41
These no process? No, nothing just running into people and trying to convert every person I meet into a potential partner. That's what I call them partners, because they're not a client. They're my partners. You know, I'm basically marrying these people.
Billy 26:56
They use the same word. It's your partners with them. Yeah, it's smart. It's a good way to do business because they feel like you guys are one of the same pitch.
Allon 27:06
Yeah, and we are we are. And they're carry they carry. They carried me in the beginning these types of people. So I had, I have five capital partners like that before I went out and raised from many different people. They carry me on everything. Sadly, one passed away. He was my he was one of the biggest Capital Partners, he passed away very sad. The other one tapped out on his deals. He's tapped out as we refi he rolls it all back in no problem. That's awesome. That's a couple million in equity. The other two are group. They're together. And they are massive. They're my biggest Capital Partners. But they're also tapped out because they're building a massive factory for their business. So that was very unfortunate, because we're just crushing it together. And that was a hard conversation. But that's fine. It makes total sense. And then two years from now, when their factories done, they're gonna go even harder with me. And the last person, he's tapped out because he built a $10 million house cash. Yeah, crazy. So all my partners, my big capital partners are tapped. And then at that point, I realized, Okay, I just constrained myself, I made a mistake. I should have been reaching out to a lot of people and raising 20s and 50s. You know, $20,000 checks, $50,000 checks. I have a bank of people like Grant Cardone has five strong Capital Partners. I learned my lesson. And now I'm following that path.
Billy 28:29
Smart, bro. Very smart. Tell me front end some of the tools that you guys utilize on your, on your deal finding process. What what software? are you leveraging, to source deals to analyze deals to underwrite deals? What does that look like?
Allon 28:43
For analyzing deals we use Google Sheets? Yep. Simple, right? Simple. I mean, I have a beautiful model put together like we've spent years on these models. And I've hired a super high level people to work on my models. So my models are top top tier, I give away one of them for free, too. So people can get them for free. And that and they send it to me all the time alone. Check out this deal. What do you think I briefly look at it guys. Yes, no, this is what you should change. And that gives me also a ton of credibility. Those people put $20,000 with me left and right. Yep. So I have a Google Sheet. It goes into our Google Drive, Google Drive, I spend a lot of money on I have the highest premium package over there, because it's where we keep everything and every deal gets its own section that links over to my copper CRM.
Billy 29:31
What is it called? Copper copper. Is that is that specific for Capital Partners? Is that specific for deal? Syndication deal flow? Or is that just like a real estate type? CRM, I've never heard of it.
Allon 29:44
It's not a real estate CRM, it's deals and workflows. So I use it for both prospecting investors and for prospecting off market deals and tracking on market deals. So it hammers down all three, all three Basic pipelines that I need go. And I've switched to CRMs. I crazy, I used the one that you told me about a long time ago with Podio
Billy 30:10
Podio, we're going to be switching from Podio to Salesforce, but not, not in the next two years, it's a it's a big process to move over. And I really honestly don't have the the time right now to spend because you need a staff to do that. And it's, it's an undertaking, and unless you're just not ready to put in that time, effort and money, the capital expensive, that's get that transferred over.
Allon 30:28
But you found a lot of success with Podio.
Billy 30:32
It has its quirks, it has its issues, but for me with the space that I'm in, it works. And it's my full operating since with the exception of QuickBooks for the overall p&l And you know, your your your financials, this system does everything. We got build a trend for the construction side of the business, which I absolutely love. Wow. Yeah, build a trend crushes it. But Podio is it serves our needs from marketing to the sales piece to operations to post close to the rehabbing side doesn't talk reveal the trend. But there's a little bit of connections there. It's a it's a pretty good system.
Allon 31:04
Builder trend I was on that till we joined at the same time, I couldn't get my guys to adapt to it at all. And that probably because I'm not, I'm not flipping property. So my liquidity events aren't there. You know, with my properties, I have to cut costs where it can it's not like I have high level foremen involved there their construction form. And they it's very difficult to get them to adapt to software. So I struggled with builder trend.
Billy 31:30
It's the only way I found that I can keep track of what's going on because now I'm doing flips in and buying holds in four different states. And so without build a trend, I wouldn't be blind as to what's going on. I have construction meetings every Monday and Tuesday in the morning from 830 to about 10 o'clock. And we have a pretty decent sized pipeline that we're renovating. It takes time to go through. But nightly I just look it takes me 10 minutes, I kind of see what the updates are nobody's updating, I have a VA that automatically sends out text messages, yo update your files, make sure we get the pitches and make sure we get a daily update the video whatever is going on. And without that alarm, I'd be I'd be lost, I wouldn't be able to do what I'm doing at Scalloway upscaling.
Allon 32:07
How many deals are you doing right now?
Billy 32:09
We have under construction between New York, Long Island between New York, New Jersey, Pennsylvania and Ohio, we have 56 that are under construction. Wow. In phase or another? Yeah, we have, we have a pipeline of about just under 90 things about 87 that are in the pipeline to close that will bring it in. And then every month you know what pop and wholesale deals will pop and some quick renovations, some some quick flips that we're doing. But I'm getting into the space that you're in, like I'm waiting, I think I probably have another solid year, because I'm not going to I'm not going to dismantle this business. This is a highly profitable, seven figures plus plus plus net profit, I got a 42% net profit margin, we should do this year, a little over $5 million on that piece. It's just a cash cow. So I don't want to I don't want to take that and dismantle it and have to start the commercial side. So my vision, I gotta find the right CEO, bring him in, give him a piece of the action have him really substitute for me. So I could use my brainpower and go out and build this holdings. I think within nine years, I can get a billion dollars in the management like this. If I focus and I dedicate my time to building out that part of the business, it's the same thing. It's just a couple of more zeros and there's a couple of different nuances with how you underwrite how you saw us how you raise the capital, but it's the it's the cement, real estate's real estate, it's just you have to, like you said about your girls in the beginning, your girls and guys, they have to become really aware of the market going into the niches they're going after to understand how to underwrite once they get that piece done, they're going to be an animal in the business.
Allon 33:43
I don't think you can I think I know you can get there right? You understand the processes and the system side, the biggest challenge that people that are getting into it or are already into it like yourself are is the management side when when it gets kicked off? It seems like that's the biggest struggle for people because you need that boots on the ground that people you could trust especially with collections. So that took me the longest to put together I don't know what you're facing.
Billy 34:07
So that's actually a good question. Because we have properties in Ohio we have properties in PA that we have boots on the ground local to the area, I'm paying these guys 8% management fee to collect so far no issues, thank God. But what is your process? Is this you have local boots on the ground that you have a management company or is it your people that are doing it? Virtually?
Allon 34:26
I do a hybrid about I have. I have boots on the ground, always. Always I hire a third party management company that comes highly referred from other big players that I know in that space. That's how I go into new markets. I don't say Oh, Austin, Texas is hot. I'm going to Austin. I go okay, I have people that are very active in Houston. Who can they connect me to? To connect me I go out there. We do a lot of market studies. We source deals like crazy and then we pick and then we tackle it. Yeah, at that point, everything goes smooth. So now I'm like in a place where my Arkansas I used to My St. Louis, and my Long Island property management is so well put together. That's my report. Yeah. Now in in, in Cleveland, I had deals in Memphis, I had deals in Detroit, I had deals, all three of them, I couldn't get my boots down. So I, I caught it quick, because I have four strong markets that I can grow into multi 1000 units. Why am I on a hyper focus on that?
Billy 35:23
100%? You mentioned about market studies, what are you doing? And whose role is it in your organization to go in? And when you're looking to go into a new market? whose role is it? And what are they looking at? Because I know this is a question a lot of people gonna be asking.
Allon 35:36
It's my director of acquisitions. So whenever we go into a new market, I decide on the new markets we go into, at that point, I send my my director of acquisitions and my analyst, one analyst to do market studies, scout out the market, make sure everything looks good. And then we tackle properties. They're on their guidance.
Billy 35:57
I love it. Bro. This says Ben, you know what I love about this interview? Like we're hiring fucking knowledge, bro. Like, I'm asking you, you're spitting out a lot of love for you, man. You've been watching over the last eight years you are growing at hyperspeed love what you're doing love everything you're doing. If people want to get in touch with you, how do they get in touch online?
Allon 36:19
My Instagram is the best place to reach out to me at alone again, I'll probably be dropped in here. I respond every day. So that's the best place and Billy, you're the man Billy.
Billy 36:32
I appreciate that. Brother. It has been a pleasure. I know. We had a couple issues a few months back we were supposed to get together. I'm glad we finally connected. Good to see you again. It's been a long time since we've seen face to face even though we're on video. It's been a while
Allon 36:44
you moved. You moved to the dark side belly.
Billy 36:48
I come out when I'm gonna when I go out the moment and Watson because they have properties out there. So when I'm out there, I'll give you some lead time. I know you're just as busy as I am. Maybe we'll grab lunch or dinner or something. Touch base and I'm here. That's for sure bro. Stay on. I'll see you thanks again brother.