Ep 12: Mentor Call - Tim Murphy Walks Ryan Custodio Through His First Investments

We've talked in past episode about the importance of having a mentor to guide you through the real estate investment game. A good mentor will help you wade through the minefields of doing your first deals. They will help you learn from their mistakes, and pick you up after you've made a few of your own.

Today you are going to hear a mentor call between Tim Murphy and Ryan Custodio. Ryan is a real estate agent out of Lakeville, Minnesota, who has recently done his first investment deal with Tim.

Ryan loves real estate, and knows real estate investing is the key to living life on his terms.

In this call you will hear Ryan's why, and hear Tim mentor Ryan through his early journey in real estate investing.

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In This Episode (timed with Video)….

4:17 Do you need to be an over-charged extrovert to succeed in real estate investing?

5:43 Is there an advantage to being a real estate agent before becoming a real estate investor?

6:28 What was the spark that inspired Ryan into the real estate investing game?

10:45 The importance of having goals in real estate investing, and an example of the kind of goals to have

15:26 The problem with being a long-term real estate agent?

17:08 The importance of reaching out to investors that know the game, and how Ryan did it

21:27 Ryan's first three steps as he took the plunge into the real estate investing world

22:56 When Tim offered Ryan his first chance to get on a deal. Did he do it?

38:25 The first thing Ryan did when he closed on his investment

39:32 The example Ryan set as a Value Driven Investor

Miss an episode? Catch up!

Full Transcript

Tim Murphy (00:00):

All right. So we're back for the value-driven investor podcast. And today I'm super excited because I have an awesome guest for you guys. It's actually a guy who I've helped mentor into the real estate investing game. And it's going to be a really exciting story because we've actually done deals together. And I think it's important as a value driven investor and especially a real estate investor. When you're getting started to have someone in your corner, that's actually done what you're trying to do. Um, and you know, in the podcast before in episodes, before we talked about a mentor and at the end of the day, you know, you can have a coach and you can pay somebody to, to help you do things and, and to guide you in the right direction. But mentorship, mentorship is way more than coaching. Mentorship is when someone like myself decides that, you know what, it's time to give back because I've gotten this far in the game and I got to help somebody else get in the game because I wouldn't be here.

Tim Murphy (00:58):

If someone didn't help me get out of that plane, jump out of that plane, like we talked about and, and take a chance. And so today I'm going to have Ryan custodial on, uh, and we're going to talk about how he and I have been working together and the deals and the things that he's doing right now. So Ryan, how you doing, buddy? Good. How are you? Good man. Thanks a lot for coming on the show. I'm really excited to talk about our, uh, journey together. It's been pretty cool over the what, what has it been like 18 months, 12 months?

Ryan Custodio (01:33):

Uh, yeah, it's been coming up on two years. Um, yeah, no, it's been good, but yeah, it's exciting journeys. I think. Um, we've done some cool, powerful stuff and excited to move forward

Tim Murphy (01:42):

And I'm excited for you and I'm excited for us cause I think there's cool things, uh, in the future. So let's start off, man. You know, real estate is something that you don't really like. You're not born to say, well, unless you have a dad maybe, or family or something like that. That's in the real estate game. Sure. You might end up in the real estate game. Are we thinking about it as a young person? But for me, I know for me, I don't know about for you, but I didn't have anybody in my life that was in real estate. And there was a certain moment in my life where I real estate just kind of came into my life. And there was a spark. What was the spark for you? Um,

Ryan Custodio (02:19):

So many things. Um, my, my family had invested in some properties, uh, years ago. So I did come into, uh, just getting a little bit of a touch of it there and then had, um, close friend that was doing real estate for years. And um, and so I got to see some of that as he, as to do properties, which was really cool to see. And then my mother-in-law, she has a property management company, so I got to touch base on some of that as well. And, um, just all the focus of it and helping people and, uh, just was charged up about it.

Tim Murphy (02:48):

What, like, were you when you first got that spark of real estate? I mean, was it like a ten-year old, were you 20? What was it?

Ryan Custodio (02:56):

Um, I would say early twenties. Yeah. When I saw, um, you know, just people that knew their agents and, you know, doing the deals and work for themselves and obviously highs and lows, but, uh, it was just exciting to see as they took people through this journey of, you know, wanting home ownership, uh, and helping them change their lives. And I thought it was awesome. So yeah, I would say early twenties.

Tim Murphy (03:19):

So what was your, when you were in that mindset of like, man, I see these other people being successful in real estate and helping people in real estate. What was it that you wanted to do to get started in real estate? What was your first step?

Ryan Custodio (03:34):

Uh, first step, obviously, you know, when you're a brand new agent, I think, you know, you, uh, you know, trying to find someone to help. I think, uh, that's always the leads. We always a big deal in the beginning. Um, but just getting focused on it and getting driven and, and learning the business. I mean, there's so many things, I mean, even being in it now eight years, you still learn stuff every day and, um, just being humble and trying to help out the best we can. And so

Tim Murphy (03:55):

Your first step was you decided, okay, you know what? I think I'm going to get into being a real estate agent. Yeah.

Ryan Custodio (04:02):

So I, I, uh, joined a small team and, uh, you know, brand new, never done a deal or anything. And just on the outcome, I mean, there's no, it's kind of years ago. I remember being in the office and being scared to talk to other people, or you don't want to bother people, but trying to just figure out the ins and outs of real estate, because there's just so many different avenues. And I just knew that if you don't stay with it, don't give up. You don't keep going and I'll find success. Would

Tim Murphy (04:27):

You consider yourself? Because a lot of people ask me, you know, Murph, you gotta be this extrovert. You have to be this like, go get her. You have to be this guy that's, you know, uh, relentless and, and, you know, uh, fearless, I guess that's the real word that I'm looking for because everybody thinks that a real estate agent just picks up the phone and cold calls and hard sells and, you know, used car salesman. Right. Right. You feel, I mean, are you extroverted or you introverted? Are you a hardcore sales guy? I mean, how do you fit? Cause I think this is really key for people because I think people have limiting beliefs about what kind of personality you need to be to get into real estate. So how do you think you fit that mold?

Ryan Custodio (05:10):

Um, great question. Yeah. I think I'm a little bit of both, you know, uh, extrovert and introvert, but I, I knew what, you know, from the beginning when I was young, I never had a real concern with talking to people. I didn't know. Um, I was never really uncomfortable in group gatherings, which are that you necessarily have to have to be a real estate agent. I mean, I know many successful agents that, you know, they, they really don't like, you know, discussing with other people, but they, they do well in that, in that territory. But it's just finding that, that, uh, the right fit for you. I think everybody's different, but you know, whatever works is, you're going to find it.

Tim Murphy (05:43):

So being a real estate agent, like what do you think is the advantage of having your real estate license, being a real estate agent and then eventually getting into real estate investing? How do you think that helps you or gives you an advantage or maybe it doesn't? Um,

Ryan Custodio (06:00):

So obviously being the licensed agent, you're able to, you know, see deals that are potentially, um, the only, maybe they're not, maybe you have a client who is looking at certain properties or certain areas, and maybe something's not there for them. Um, obviously networking, um, you know, if you happen to have, um, you know, a friend or a family member who might be selling a property, you don't know of, that might be a potential for an investment. Um, but obviously just having those connections, having those relationships, I think helps extremely,

Tim Murphy (06:28):

You know, let's get this party started, man, let's start talking real estate investing. Right. Cause that's what this is really all about. Um, what was that spark that got it started for you? Where, when did you decide, you know what, man, I gotta do real estate investing, like being a real estate agents. Awesome. And everything, but I got to get into the real estate investing game. Like when did that spark, Hey,

Ryan Custodio (06:52):

Uh, so I read the book, rich dad, poor dad. And that changed

Tim Murphy (06:55):

Just look at Mr. Kiyosaki.

Ryan Custodio (06:58):

Yes. Um, no, I read that and I told my wife, like, you gotta read this book and she loved it. And they've since now pass it onto a few others. And I just love the, um, the fundamentals of it, the foundation. And I think within real estate investing, sky's the limit and that's exciting and you can really build something really cool on that.

Tim Murphy (07:21):

So you read the book, how old were you? I love to, I talk to people about like where in their life, you know, because again, some other limiting beliefs that people have is that maybe you're too young or maybe you're too old and I've met all kinds of people that got started in real estate, no matter what age they are, young or old. So where were you? I mean, what age were you, how many years were you a real estate agent once you read that book and kind of decided that,

Ryan Custodio (07:45):

Um, let's see, I read that book. It would be four years ago. Um, so I been an agent for four years and, uh, I didn't find that earlier, but yeah, I read the book and then decided I, I gotta, I gotta, I gotta do this, but it's almost, it's just, you can read the book and have the desire and the passion. Um, I think it's just finding those steps and putting those pieces of the puzzle together to get to your first deal. And that's not always easy. Um, you know, and it's just obviously making connections, asking questions and going from there.

Tim Murphy (08:20):

So tell us, you know, what was the very reason why you wanted to start investing in real estate?

Ryan Custodio (08:28):

Well, I think there can be a good return. You know, I know that there can be ups and downs, but essentially, um, several things, um, the return on investment, helping others and, uh, also with real estate sales, um, I think it's another piece to help supplement income, almost like a secondary, um, it's obviously within real estate. So it just felt like a really good fit.

Tim Murphy (08:51):

So when you say it can supplement your income, cause I totally agree with that. That was one of the things when I, I got into real estate period because I wanted to get into real estate investing. And that was because of a retire, young retire, rich Robert Kiyosaki book. We're going to talk about, you know, he had a big influence in a lot of people's lives when it came to real estate investing. So I'm on the same wavelength with you when, uh, when it comes to opportunity, I got into real estate because I wanted to be a real estate investor. I got my license because I was broke in my dad's basement. And I was like, well, how do I invest in anything if I have no money? Um, and so I was like, well, let's get into the real estate game by being a real estate agent.

Tim Murphy (09:30):

And so maybe a little bit different than, uh, than your thinking to get started. But you know, at the end of the day, like what was it for you? Were you looking for the cashflow where you're looking to buy a rental property and then get cashflow on? Are you looking to get, stay in single family, residential where you looking to flip a house? Were you looking to do a wholesale deal? I mean, what was it that was intriguing or was going to be that avenue or that thing that you wanted to get out of real estate investing? Cool,

Ryan Custodio (10:02):

Great question. Uh, and a lot of those that you just mentioned, um, everything from, you know, turning a property unit flip to creating a portfolio for rental properties, um, you know, obviously done a flip one. We did and then, uh, doing all, doing the flip right now and wanting to create that rental portfolio. Um, and I'd love to have, uh, 10 doors within five years. That would be great. Um, but again, you know, just being able to have, um, you know, those investments, I think a, you know, long-term run, I even think about, you know, be great to be able to have a portfolio to hand down to my son someday. And that that's exciting to me, but also to, to be able to again, and just help, help people

Tim Murphy (10:45):

Fantastic. That you have a goal of 10 doors in the next five years, I believe you said, was that what you said? Yeah. 10 doors in the next five years. So let's talk about that a little bit. You have a goal of 10 doors and a five years. And I think that that's huge when you get into the real estate game, because if you don't have a goal, if you don't have something you're going after, you really don't know if you're getting there. Right. And so your 10 doors in five years, what let's, let's talk about that. What is that going to do for you being a real estate agent? Because obviously I'm a real estate agent. That's how I got into the game. And I know what you're thinking because real estate agent income is ebbs and flows. It's like riding a roller coaster, uh, and no matter how much you're making, you can never make enough.

Tim Murphy (11:30):

So the roller coaster is always going to be there. You might not have to worry if you're going to make any money. Like you're not going to get any money selling houses, but you don't know if you're going to make, you know, a hundred thousand dollars, you're going to make $300,000. And that's a crazy ride to be on, um, especially in a cyclical market like Minnesota, where you and I are at where you have winter and summer and four seasons. So I totally get that roller. What though, when you have 10 properties, uh, in five years, like what does that give you? What, what kind of peace of mind, or what does that give you when you mix that with your real estate sales career? So it's

Ryan Custodio (12:07):

Just that peace of mind or a little bit, you know, and I know there's going to be stresses with having rental properties, um, um, dealing with tenants, you know, helping them, uh, maintenance on the properties, but being able to scale your numbers so that you're able to see, okay, if I've got X amount of dollars coming in, it's just gonna help out. Just as you said, real estate sales, you can have some phenomenal months and then there's months too, that can be a little bit slower. Um, depending, especially I would say in Minnesota, we have seasonality here at Sierra spring. Market's the strongest, but as it comes in to the holidays and winter time, you know, it can slow down. So having that is just, I think, a great attribute to, you know, peace of mind having, having some, um, you know, solid income coming in on those.

Ryan Custodio (12:48):

And again, they're still, they're obviously appreciating, um, for the most part, um, you know, but you know, just that whole philosophy of know, helping someone have a place to live, but at the same time, know they're paying down the mortgage and, you know, in the end you've got a property that you can do what you wish then is, you know, like you talked about retirement. I mean, I think that could be great having a portfolio for that. Um, and I do investments and stuff with stocks as well, but I just feel I'm passionate about real estate and just feel it that's a great spot to invest my money so

Tim Murphy (13:18):

Well, and that's, you know, that's one thing that I talked to a lot of real estate agents about and what I'm, uh, one of the reasons why I wanted to launch value to an investor is that I feel like real estate agents are amazing at real estate, but they don't ever invest in it. I mean, so many countless people, the guys that have been in the game for 20, 30, 40, 50 years, like old dogs. And I talked to them when I got in the game right off the bat. And I said, what's the one thing that I need to do if I'm going to be in real estate forever. They said, invest in it. I'm like, what do you mean invest in, of course I'm going to invest in it. That's why I got into it. Yeah. Well, I said that to myself for 30 years, I've been in this business and yeah, I did a couple of this and a couple of that, but I didn't create a portfolio of real estate investments that I can say I have now that are supporting me over 30 years of the real estate and this guy had been in it, it was at a brokerage I was at and I just put my head down.

Tim Murphy (14:15):

I'm like, man, how could you be in the real estate business for 30 years? And not say you have a portfolio of assets that are spitting out cashflow because in my mind that was just like a no brainer. And again, I got into real estate because I wanted to be in real estate investing, but that's like just a no brainer because what you're self-employed, you have no 401k, you can invest in SAPs and all these different things. But at the end of the day, it's like, what's your retirement plan for me as a real estate investor coming into a real estate as a real estate agent, my retirement plan was I'm going to buy properties, have cashflow. And whenever they, the cashflow is that's my retirement plan, you know? And so are you thinking the same thing?

Ryan Custodio (14:56):

You know, I, I, you know, everybody's definitely in the real estate business, um, and teaches their own, but I just, personally, I don't want to be that agent that's in my SIG 50, 60 seventies, um, with not anything to fall back on, as far as the retirement plan for myself or my family, or I can't imagine being in my sixties now was still trying to do open houses and, and still trying to, you know, find leads and the same thing you should be doing when you're building your business, when you first get into it. And those investing is going to be the key to that. Just to again, create that foundation.

Tim Murphy (15:26):

Well, Ryan, think about this too. Like, I don't know if you thought about this, but disability, like what happens if you get hurt and you can't sell houses? What do you do now?

Ryan Custodio (15:36):

Yeah, exactly. You know, you can try and shift to do things, but yeah, if you can't physically work, it can't work, but again, owning these rental properties, they're working for you. I mean, you're, you're, you're using using them to help leverage your life and help out.

Tim Murphy (15:51):

All right, man. Well, let's get to the next step here because I really want to tell people about how you and I connected. I think it's a cool story. It's, it's awesome from my perspective. Um, but when you decided to invest in real estate and that was like your passion and, and you were ready to really execute on it, um, how did you decide that you wanted to ask me to lunch because that's really how you started our relationship is you said, Hey, and the, and the best part about it is like, we're in the same. We were in the same brokerage that's at the time and you're opposite right next door. And you're like, Hey man. So would you ever go to lunch? What a kick that out, asked me to lunch and then like, kind of get that going and tell them how that

Ryan Custodio (16:32):

Started. Yeah. Well, I've had a couple of friends that were doing investment properties. Um, and I have a real estate agent friend who's very successful in it. Um, but you know, just watching it, I mean, there'll be in around you obviously being in the office and then following you on social media, um, and just seeing your successes and what you've done. Like, Hey, I got to connect with this guy. So that gave me the drive to to launch, and then obviously asked a bunch of questions and how do I get into this? How do I do this? And, um, I remember at that time, I didn't have a lot of, a lot of cashflow to invest it, but you gave me some tips on that and, um, helped out and no, not her.

Tim Murphy (17:08):

Let's talk a little bit more though, when you were like, Hey man, I'm going to, let's go to lunch. You know, in your mind, obviously, what were you hoping to get out of that conversation when, when we went to lunch? Cause I mean, you're not going to ask you out to lunch and not try to get something out of it.

Ryan Custodio (17:22):

No, I just think I want to ask you, I'm asking you, how did you get started and what, what did you do? I remember asking you, what books are you reading? You know, what are your habits? What are you, how are you doing? This is, I know it's not just, um, there's, this doesn't fall in your lap. So what, what things have you done? How, what work have you put in that I can mimic or follow or learn how to do if I don't know how to do it. Um, and we're at the time, I think you had just bought a property and, and, you know, figuring out if you're going to rent it or flip it, you know, just all those logistics. And when you can read so much and get it from information, but being able to physically talk with someone and pick their brain. So that was my, my main goal in that conversation, or that launch was to hope you'd go and then be able to pick your brain about how you started. And then we talked about now your days, you know, you talking for when you played hockey and, and you know, you eliminate your dad's basement and then what you did and how you did things and structured it just to try and get an idea of how I can create that in my life.

Tim Murphy (18:20):

From that. What would you say, you know, with my responses, would you say like that? Because this is a great situation. I think there's so many people out there that they're scared to ask for. Someone's time. Number one, especially someone that's been quote unquote successful. You know, if they look at them and I'm like, okay, that's where I want to be. That guy is successful, but oh, why is he going to talk to me? Like, he doesn't want to talk to me. I think, I think people in their minds that that's, that's something that goes through their mind all the time. And it's, it's disappointing because that's all that is, is a confidence situation. But you, you are, I mean, you are confidence. Hell. So you're like, Hey man, let's go to lunch. Like, I'm not scared to ask this guy to lunch. I'll and I, and you know me, I was like, dude, I'd be glad to tell you whatever you want, ask the right questions and you're going to get some good answers, I think. And so why should people not be scared to ask for that help?

Ryan Custodio (19:19):

Do you need to? I think, I think people are afraid that, you know, they may get a rejection or that they, you know, I think it is you open yourself up. I mean, in that conversation and we both opened ourselves up a lot, you know, just with the personal information and everything. Um, and I think people might be a little bit afraid of that. And I just got to say, you know, don't be, I mean, if you, if you, if you have a good feeling about someone and you see their success, there's a reason for it. Um, but I knew if just asking the right questions and then you helped me out, helped me a lot with answering them. And you're honest and shared your mistakes. You've made like, do it, don't do this. Or this was really good. Or if you want to get lined up for this, these are the steps that you just are taken. And it was, it was very, I appreciated it a lot, you know, it was good. Yeah.

Tim Murphy (19:59):

And I think, I think what you did right there, man, it wa that's really like the first step. And, and that's why I wanted to sit down with you again. And this is going to be an episode in the beginning of the podcast that I'm putting together here at value-driven investor, because one of the big things is taking the first step and asking for help and finding a mentor or a coach or whatever you think is the right fit is taking the first step. And so Ryan, you took the first step, you said, Hey, man, let's go to lunch now after the lunch, what do you feel like your, you know, cause I know I go to a lot of meetings with a lot of people too. And then I do the lunch. I, you know, I'm on my way to the car and I'm like, man, how did that lunch go? What were your thoughts after you sat down for that lunch with me walking into the car and kind in the car, go into your next meeting or whatever you're probably doing, you had to be reflecting on it. What was it?

Ryan Custodio (20:53):

We did it, the big thing was I was like right away. Just kind of take it back, you know, even think with anything, if you look at the whole entire picture, it can be overwhelming. So I immediately took notes, wrote down key points. I had remembered from our conversation and just kind of built on it from there. Um, I think anytime you talk with someone who's very, you know, it can be successful or is successful that like you can just become jumbled and it's like, all right, like I got to essentially have a game plan for myself, scale it down to work and work for me and you know, figure out the right steps and um, just start taking action, start, start a plan and a roadmap.

Tim Murphy (21:27):

What was it? Okay. So what was the first three steps that you wrote down? Or what in your mind, what was the next thing you had to do after that meeting?

Ryan Custodio (21:35):

Uh, well, first thing I needed to do was, um, just wanted to clean up some finances pieces we had talked about, you know, I'd had a few things, um, you know, a little bit of credit card debt. I think, you know, we all go through that, especially as real estate agents. Like I want you to do this, um, you know, talk to a lender friend, figuring out how to, how to do that piece, if that was going to be it. And then another thing too was, um, you know, talking about you'd share with, if you don't have the cash up front, you're like, dude, you just go find the cash. You know, find someone who will help you invest in the property, help help them. You know, if you can draw out a plan and give them a good game plan, you can start investing in real estate with really little though, no money down on your, out of your pocket. So that was really critical. I'm like, all right, I need to find that I need to find that stuff, you know, that income or that piece,

Tim Murphy (22:18):

This, I guess, leads us into the last thing I really want to talk about is that next step that you and I took. I mean, after that launch, you know, trust is a two way street, you know, and you started the relationship by saying, Hey, let's hook up. But after I sat down with you, I can really tell him. And that's, I mean, I've sat down with a lot of people and I I've shared as much knowledge as I can with a lot of people and I will share it with a lot of people. Cause I that's my way of giving back through the value driven investor. Um, but the thing was that, you know, the question I always walk away with when, when I sit down with somebody and they ask me for information and then I walk away, I say, is he gonna use it?

Tim Murphy (22:56):

Like, is he really gonna use it? Because like that hour of my time I could have been looking for a deal, but I don't care if he uses it. Like then that hour was more better spent sitting at lunch with him than doing anything else if he uses it. And that was the big thing is I'm like, man, I think he might actually use that information and do something with it. And so the next thing that was in my head, just like you were sitting there scratching no notes. I was, I was thinking in my head, I'm going, Hmm, let's see if he's going to use it. And so my, one of my goals was, is I'm going to give him an opportunity to get into a deal. At some point, I don't know when it's going to be, it could be six months, eight months, 12 months a year, two, three from now. And I'm going to give them an opportunity. I'm going to say, Hey Ryan, I got an opportunity for you. And isn't that what I exactly what I did when I reached out to you and said, Hey Ryan, I got this deal that I, uh, over in Shakopee, Minnesota, which is a smaller flip that I'm going to do. Do you want to invest with me? You remember that? No. Yeah,

Ryan Custodio (23:59):

Absolutely. Yup. And I was excited.

Tim Murphy (24:02):

I can paint the picture for everybody. So that was a rambler. Um, and Ryan actually, he's the one that brought the deal and he's like, Hey man, I got this deal. And I was thinking about it. He goes, well, do you want it? You know, you can just buy it as an investor, blah, blah, blah. And I'm like, oh yeah, you know, let's see it. I checked it out. And then I was like, well, how about we do this deal together? And you're like, well, let's do it together. Okay. How's it going to work? Right. You remember that? Like tell her how you got the deal. Like explain that story

Ryan Custodio (24:30):

At the gas along, filling up my car. Um, I think I reached out to you left you a message or text or something and you'd call back and say, Hey, you know, Tim, I have a friend who has this property. And um, I, I think, uh, the people they just want to sell to an investor just needs to be done. And um, you know, you're my first call. I, again, kind of from our conversation or lunch, I knew, I, I knew you, I trusted you. And uh, I'm going to pass it off on a, pass it off to a buddy. And then when you said, Hey, let's do this together. Well, cool. I, you know, I, I didn't think of that piece, but then, um, yeah, we, we came up with terms, figured out how to do it and

Tim Murphy (25:08):

Well, and the thing was is that, you know, I said to Ryan, I'm like, Ryan, why, why don't you do this deal? Ooh, I don't know. I don't think I'm ready for, I don't think I'm positioned right financially. You know, just, it wasn't the right time. Which, I mean, there's so many times I can tell you that, that wasn't the right time to do a deal, happens all the time. And so then I said, well, okay, I'll take this deal down, but how, how can I get you involved? I mean, you brought this deal to me. And that was the big thing is I was thinking in my head, you know, I was like, God, how do I get him involved? That's I want to, I want to get him involved. I got to get him to jump out of the plane and take that leap because if I can get him to do that, then I can keep getting them to jump out of the plane and do the next step in the next step. And so I said, I said, what can you do? Can you put any money in the deal? And you're like, well, I got some money I can put in the deal. I'm like, are you willing to do put money in the deal? Do you trust me enough to put money in the deal? And we worked out that number. What was that final number that we kind of worked out that you're like, you know, I can put this much.

Ryan Custodio (26:06):

Yeah. So what we came up with is we decided on like on cash, on cash. And I remember saying, Hey, I want to be involved. You know, kind of from a standing back perspective, just watch the ebb and flow of how this goes together. And you're like, yep, Nope, cool. You can involve as much as you want. And we decided on the cash on cash deal. So, um, I put, um, 60,000 in and you promised me at 20% return on it. Um, so yeah, when we were sat and done, I got a check back for 72 and it was great.

Tim Murphy (26:36):

Yeah. Yeah. And that was the thing, you know, you CA you relationships every single day are built on trust. And I'm like, man, I like this guy. You know what? I think he's a go getter. I think he's actually going to do it. I want to get him out of the plane. He's got to jump. I want to be the guy that, you know, because my philosophy Ryan is, you know, when you're a new investor, it's like jumping out of a plane when you're skydiving for the first time. And most of the time when you're going to do that, to actually jump out of the plane, well, number one is for safety and risk. You're usually attached to somebody that's done it a thousand times. Right. And so I think it's a great analogy because I said, I want to attach them to me, sit at the edge of the plane.

Tim Murphy (27:15):

And now I'm asking them, are we going to jump, jump? And you were like, you didn't really hesitate. You're like, God, yeah, man, let's do it. And like you said, okay, let's do it so that we did it. And we said, Hey man, give me $60,000. You'll come in as a passive investor. I will give you a return on your money. Here's what the return will be X. I think the project is going to take approximately Y amount of time. And I think, I, I think that project took us, ah, I want to say it was like four months, maybe three months, four months, something like that. Yup. Yup. And I said, it'll take about three, four months, but I go, you have to understand. It could take a year mean this is real estate investing in my last name's Murphy and anything's possible. Right?

Tim Murphy (27:56):

So you're like, no, I get it. I get it. I'm totally cool with that. And then I also said, you know, I want you to embrace the opportunity. Cause that's another reason why I wanted to do it with you. Is that like embrace the opportunity to see the processes, ask questions because really at the end of the day, that's for me being a mentor, that's what it's all about. Like, like you said, you can read it in a book. Robert Kiyosaki writes awesome books. But if you have somebody that literally you're living the deal with, you're living through the deal, you see the adversities, you see the carpenters, you see the painters, you see the plumbers, you see the project get demoed. You, you, you know, and that was the, that for me honestly, was, it was awesome. It was absolutely awesome to, to have those conversations with you, walk you through the problems and the solutions and be in a live deal.

Tim Murphy (28:43):

And then the best part also for me was when I was able to deliver exactly what I told you, I would deliver. Now that's the risk for me as a mentor. It's like, but what if I don't like, what if this goes wrong because I had deals not go right? And now all of a sudden this sucker goes wrong. And I look like a complete idiot. That's my risk. But you know what, again, when you're a value driven investor, man, you got to be willing to give and you gotta be willing to take some chances. And we were both willing to take that chance. And honestly it worked out as good as it possibly could have worked out. What were, I mean, do you agree with that? I

Ryan Custodio (29:19):

Agree with it. You know, I, I think, um, you know, you did a great job with, I think prepping me for, you know, the wins and if they're already falls. Um, I think one of the big attributes taken out of doing the first deal, especially with someone you get to walk side by side with, is this just feeling the emotions of it, um, and how to really delegate those emotions? Cause I mean, there's highs, remember there's projects and there's of the project where I was just gonna be a little bit more or we found this while we have to crack this. We weren't budgeting for that. It was just interesting to see and how to put the pieces of the puzzle together. But, um, no, it was, it was, uh, a great experience and I'm so thankful for it because it was awesome.

Tim Murphy (29:55):

You know, and Ryan, I remember one of our conversations was also about price, right? Because that was, you brought that deal to me and you're like, well, what do we think you can sell this for? And like, what do you think the rehab cost is going to be? Um, and I started going into all that and you were kind of like, really you think we can really sell it for that? You sure we can sell for that much Murph really? I'm like, yeah, dude, we get that all day long. And you were kind of like, you're apprehensive, like man, 3 75, I don't know the comps are this. And the point to that is you're, you're a hunter. I would be doing the same thing. When I first got into real estate investing. I was very skeptical that I would ever reach the max price that the other investors that I was working with at the time thought we could get, because you have that anxiety, you have that you're scared about the risk.

Tim Murphy (30:45):

You're scared about taking the chance. You're literally sitting at 20,000 feet. Some dude strapped to your back that says, Hey, I've done this a thousand times and you're about to jump out of the plane and you don't know if you're going to live because that's what it feels like when you do your first deal and that's right. Yeah. Risk reward, man. And so that's kind of where we were at and you were like, I'll never forget it because you're always just like, man, and you really think we can get 3 75 for this like Murph, I think maybe three 50 and like, you know, it's uh, uh, blah, blah, blah. So anyways, that was pretty cool because we pretty much, I think we nailed that thing for 3 72. Uh, and, and I had gotten an offer for a lot less and we rejected it and I was like, Nope, we're not dealing with that. They're they're crazy. The house is worth more than that. Uh, and then we got another offer and it was boom right where we needed it to be. And I remember you going, dude, we nailed that. That was great.

Ryan Custodio (31:40):

That's success. That's right.

Tim Murphy (31:42):

And so that's, you know, that's one of the experiences is that, you know, when you're about to jump out of the plane, man, one of the biggest decisions when you're doing a deal is will it sell for this price? What price can you get? Because when you run your numbers, you reverse engineer it from that purchase price all the way back to what's it gonna cost? What are holding costs? What are all our expenses? What's our net going to be? And then when you see your net, well, what is left? They're like, do we have enough safety margin? Because it doesn't always work out the way you want to. And if you have to drop the price 5, 10, 15, 20, all of a sudden you drop the price 30,000, cause you really screwed it up and you might be making no money or you might be throwing money back into the game and nobody's happy. And so that is one of the number one best. Well, number one, determining factors when you do a deal and what was enjoyable with that is that your real estate agent of, you know, eight years you understood pricing, right?

Ryan Custodio (32:41):

Yup. Yeah. It was, you know, obviously looking at the comps and what it was. I know, uh, I think we were pushing the envelope, but it's the right time, right

Tim Murphy (32:50):

Time. Okay. So let's go on to the next deal right now. We are working on, well not we, you are working on deals. So it's funny because the first time you brought the deal to the table, we worked something out. I wanted to get you involved. The next deal was a wholesale deal that I found off of, uh, some lead-generation I'm doing on the internet. And I was like, man, this deal isn't good for me. It's a moneymaker, but it's just like, I got other projects that I'm doing. This one just isn't going to be the right projects for me right now. Who can I, oh, I know who I'm going to talk to you. And I was like, dude, I got to hit up Ryan and see if he's interested and maybe I can wholesale this opportunity to use. So tell them a little bit about that wholesale deal that I had sent over to you. And you're literally right in the middle of flipping it.

Ryan Custodio (33:36):

I am. Yeah, actually I'm working on it this weekend again. No, I'm already giving me a call and you said, Hey, I got this opportunity coming up, townhouse in Eagan, um, two bed, three bath, one car, and you said, Hey, we gotta, we gotta close this date and would you be interested? And of course he said, yeah, I'm in, um, I remember I was driving home from up north and you don't want to talk to my wife, like, Hey, we're buying a place. That's gonna be our first one. And then she's like, what? Yeah. And, um, no, obviously we closed down. It it's good. I am right in the middle

Tim Murphy (34:09):

Of let's rewind. So you said, Hey, I'm in, I mean like literally that's exactly what you did. You didn't even hesitate again. No, that's a hurdle. Like how come you didn't hesitate? How come you were apprehensive? How come you weren't nervous?

Ryan Custodio (34:22):

Um, again, I trust, I trust you. And I knew that if you ran, you know, I know you ran the numbers knowing you. And I remember talking to you about, um, new chairman with you, what you thought the cops would be after it's old, um, and what I'd be buying it for. And I remember we got a chance to get over there, to take a look at it so we can at least get an estimate on construction costs, rehab costs. Um, you know, I did some homework, uh, reached out some contractors and just started, you know, reversing my numbers and then saw that. Okay. Yeah. You know, that was it. But one of the initial piece, it was like, you know, you're like, you know it right. You, you you're either in, or you're not, I get it cool. But I gotta, I gotta reach out to the next guy on the list. So I was very happy and fortunate to be the guy that you call first. And thank you for that. But I just, um, again, you got a little bit of risk there and I think you gotta be willing to strike when the iron's hot.

Tim Murphy (35:10):

So what did you think in that deal? What do you think that house is going to sell for? Because again, let's start there, man. I mean, I think I had a number and now what's your number.

Ryan Custodio (35:20):

So I'm thinking it's going to be between, uh, like two 20 and two 30 as well. So maybe coming up to 25.

Tim Murphy (35:28):

Yeah. And you know, I got that deal for 140 and I sold you that deal for 165 and then there's obviously some costs in there. So, I mean, if you hit 2 20, 2 30, you're going to make a decent penny, aren't you?

Ryan Custodio (35:43):

Yes. Yep. Well, I think, um, I think we were all in for like 1 69, 5. Um, I'm trying to budget, you know, I'm trying to stay around 20,000 for the rehab. It might push 25 cause I'm doing a few extra things. Um, but the place is going, gonna be awesome. It's going to be completely redone when it's, when it's done and you know, we've come a long ways here. Even we close on that November 2nd. And it's what, uh, December 4th. So, I mean, yeah, just, just moving along and I know I reached out to you for a couple of things, you know, just like, Hey, you're the contractor for this. Right. You know, I got a second opinion and I think that's another great thing. You know, obviously having a relationship is networking. Like, Hey, you got somebody. Or my guy is busy here know time is, time is money and you got to get it done. So,

Tim Murphy (36:25):

Yeah. Right. And especially in today's economy, I mean, there's one thing that's fact, and that is subcontractors, especially good ones, especially ones that you can trust are busy. And so if I needed a subcontractor, I like to reach out to investors I trust and be like, Hey man, do you got a recommendation? And usually when you get that recommendation, that Saab's is going to be like, well, was the dude good? And if they vouch for you, that sub will be like, okay, fine. Because the sub doesn't want to go work for someone that he doesn't know. There's two things, a sub wants. He wants to get more work from somebody that can give them consistent work and he wants to get paid and he doesn't want to have to beg people for money. That's not supposed to be his job. Um, and so when he gets a good recommendation from someone he knows, okay, I trust Murph.

Tim Murphy (37:09):

He gave me a recommendation, could be good work. Plus this guy's an investor might be more work. And number two, if Murph's recommending them, odds are, I'll probably get paid because if there's one thing that can ruin relationship, it's when you find out that the dude doesn't do what he say is says, he's going to do. And number one, if you, if the guy says you're going to pay somebody who doesn't pay him, that, that burns bridges, man, I've lost awesome relationships because I've borrowed money and they've said, yeah, I'm going to pay you back. And I haven't gotten what I was supposed to get. That's the number one killer of all relationships. So, um, that's super cool. That what, so like, I mean, everybody wants to know this, this is a real estate investing, right? Like what are you hoping to make on that deal? 20,000, 30,000.

Ryan Custodio (37:54):

I'm hoping to make between 25 and 30,000 on it. That's

Tim Murphy (37:57):

Awesome, man. That's awesome. That's any, and you're going to flip that. What in 30, 60 days, something like

Ryan Custodio (38:05):

That. Yeah. Um, so we closed November 2nd. I'm hoping to have it on the market. Um, probably second week of January.

Tim Murphy (38:14):

That's awesome, dude. You know what, uh, you know, obviously on our website and stuff, I want to, would you be willing to share like some pictures and maybe we do some pictures and stuff? Have you done any before and after?

Ryan Custodio (38:25):

I have been. Yeah. Kind of like [inaudible], you know, but yeah, I took the first day that we closed and ran over there, took a bunch of photos of it as was, and then, um, you know, as the rehab process has come together, I mean, you know, when the carpet got tore out and all the flooring, you know, took pictures of that and we've, since we painted all the cabinets inside and out, um, that's one thing that I never, you know, I think we've all seen when you're doing a flip, we'll say, when you go to a property and they paint the outside of the cabinets, but they don't paint the inside. So always be feeling. But yeah, I had, um, there was a, um, a shower, a small leak upstairs. We found that it was just something easy, but just the overflow for a tub. So I had the sheet rock repaired way it's installed. I mean, I just ordered all the court's countertops the other day under mounds and yeah, just going to town on it, new sliding glass doors getting installed. But,

Tim Murphy (39:15):

And your budget you said is your goal is 20, but you think it might get to 25.

Ryan Custodio (39:19):

One of you might get to 25 and I just read a couple of extra things. I mean, I just, I, you know, I feel just going through it. I mean, you know, the next, um, either person or family that's going to live there. I just want it to be great for them.

Tim Murphy (39:32):

Dude. That's value driven investing right there. See that's the big difference because there's a lot of investors out there that all they're worried about is their ROI. And then they half asset and then they produce a crappy product. And then really all they're doing is shooting themselves in the foot because they're getting emotional about, um, you have to, you have to be emotional about the numbers. So I'm not telling you that you should ever blow your budget because you want to deliver an awesome product for the consumer. And then, you know, put yourself at risk. No, I'm not. I don't ever agree with that, but you should always go into the project with a healthy enough budget that you're delivering a quality product, because I will tell you all day long that if you deliver a product, that's superior to the competition on the market, which you already are superior because you're flipping the project and it's going to look nice and new.

Tim Murphy (40:24):

But if somebody walks through or, or a seasoned agent, like Ryan walks through one of my projects and he, he sees crappy work, he's not going to tell his client. Oh yeah, I know Tim Murphy, this is awesome work. When he knows in the back of his head, they're going to move in and who are they going to call when they find out that the cabinet door just fell off or that the vinyl flooring is appealing or that the paint is crap. You know, they're going to call Ryan and Ryan's going to call me and be like, dude, what did you sell my client? Right. And again, it's about, it's about relationships. You know, it always comes back to that. So I commend you, man. Cause we've had conversations about that. I'm like, you know what, if it's a couple thousand dollars and you can afford to take that chance, I always take the chance and lean towards delivering a better product.

Tim Murphy (41:12):

Um, so I commend you for that, man. That's awesome. Um, so what else would they want to know? So they know what we bought it for. They know what your construction cost is. They know what your, uh, the prices, um, the other thing we didn't really talk about is that it is a townhouse. Um, so this does have an association, which is a little bit of a wrinkle in, uh, in investing. I prefer to invest in single family, residential properties. That's another reason why that wasn't the perfect deal for me, but there was so much margin in there. It was like, I wasn't going to pass up on it just because of that. Um, but it is another reason. What are your thoughts on the association involvement in your flip there?

Ryan Custodio (41:48):

Um, so quick story on that, um, reached right out right away. You know, obviously being an agent and understanding how the associations work and whatnot. I reached out right away asked for, uh, my welcome packet and trying to get that from them. Uh, didn't didn't come in time or I didn't come at all, you know, kept reaching out. Um, so we ended up having, just to try and get the association fee set up and paid, finally got that done. Um, but just, yeah, just pay November or December is here and it's a little bit of a wrinkle. Yeah. Cause you got to deal with, you know, getting that stuff set up. But I just kind of plan on that in the budget as well. Um, that I was going to have that again, if I plan to have it in January, I've only got three months in, but just part of the deal.

Tim Murphy (42:30):

All right, man. Well, I think we've shared a heck of a lot today about our relationship together, which, you know, what I really value it, man. And I can't wait for what we can do in the future. I think we've talked a little bit about the deals that we've done and I appreciate how candid you've been, uh, about our relationships. And, and I appreciate that, you know, we still have that trust and I think that trust is only going to get stronger in the future. So I got a couple of questions, you know, I just want you, and please answer this candidate because I don't, I'm not here to try to manipulate you in any, any way, but you know, would you do another deal with me?

Ryan Custodio (43:04):

Oh, absolutely. In a second. Yeah, I know we will. I mean, that's, that's my feeling. I mean, it's just finding the next one.

Tim Murphy (43:12):

Right? What would you say to people out there that are looking for a mentor in real estate and real estate investors?

Ryan Custodio (43:20):

Um, I would say obviously someone you feel comfortable with, um, but don't be afraid to ask somebody if there's no friend colleague, you know, somebody that's, you know, I mean, and everybody that's investors, aren't always real estate agents. I mean, if there's someone you see any, they're doing something that you want to be doing, don't hesitate to ask because that's the first step.

Tim Murphy (43:37):

And then the final question I have is after doing deals with me, do you feel comfortable saying that I do what I say I would do

Ryan Custodio (43:45):

A hundred percent awesome. Really got a plan. You, you, uh, totally hit the goal. So absolutely.

Tim Murphy (43:52):

So the last thing I want to do to conclude this podcast is Ryan custodial. I want you to tell me between now, today and in the next 5, 10 15. And if you're like me, the rest of your life, what are you hoping to do? I know you have a short-term plan the next five years. You want to have 10 rental properties, cash flowing, rental properties, uh, but bigger, let's go bigger. Like in the next 10, 20 years, what do you want to do when it comes to real estate investing? What's your vision? What's your plan?

Ryan Custodio (44:25):

Uh, wow. Good question. Um, no plan is, I mean, continue investing in residential real estate, um, down the road within 10 years. It'd be nice to have, you know, I want to start, I guess, within residential, the next piece here, um, would like to step into some duplexes tries like, you know, I'd like to get into some quads someday, stuff like that and just start to scale and as opportunities come across, I mean, yeah, I mean, uh, I, uh, thought about apartment buildings and things like that, or just, just keep scaling and

Tim Murphy (44:55):

Is your main objective cashflow or creating a bigger net worth or flipping in and accumulating more cash? I mean, what's your ultimate goal?

Ryan Custodio (45:07):

Um, a little bit cashflow is nice, I think to help out, but the big thing is, is just, I think creating the net worth, just having that, I still feel that's a foundation, you know, to be underneath that, to help out, to, to just go to the next level. Um, as again, it is it's Y way of looking at, you know, my retirement per se and having those there and to fall back on when it's retirement age, you can decide what you want to do. I think if you have some, a lot of them and you want to retire, maybe you sell off a few, but then you keep a few because it's still no, um, you know, just income that's coming in for you and continue paying. And I just feel like you're just, you're just, it's a lot more control of what you can do. I want it,

Tim Murphy (45:47):

Well, Ryan, you know what, at the end of the day, we call that life on our terms, on your terms, you know what we call that financial freedom. Uh, those are the things, those are the things that we call it here at value-driven investor, that those are aspirations that I, why I got into real estate. Um, you know, and, and the biggest thing for me as just a person and why I'm so thankful that you came on this podcast. I'm so thankful for everything that you shared with our audiences. Like at the end of the day, man, part of giving back is part of me becoming my best self. And I have all this knowledge in real estate. And I'm just so thankful that I'm able to give it to you and you're able to take it and run with it, man. And I can't wait to have you back maybe in a year or two or whenever it is to tell us more about you reaching that goal of, you know, five, 10 doors in five years, man. So thank you for coming on the value different investor podcast. It was an honor.

Speaker 3 (46:45):

Thanks for listening to the value driven investor podcast, where we lead by giving for more information about our community and what's new visit value driven investor.com. The value-driven investor podcast was produced by digital legend media in Minneapolis. Build the or legend digital legend media.com.