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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Joao Macavilca, a construction company owner and real estate investor. Joao shares his journey into real estate, emphasizing the importance of adaptability, networking, and continuous learning. He discusses the balance between construction and investment, the lessons learned from overcoming obstacles, and offers valuable advice for aspiring investors. Joao highlights the significance of research and building connections within the industry.
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Joao Macavilca (00:00)
realized I’m losing so many years of my life. And by the time I retire and the price is going up and there’s people today that are retired and their retirements aren’t enough for them to survive. So.I needed to make a change, I needed to take a pretty big leap of faith, and I pretty much took it on me.
Michelle Kesil (01:52)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Joao Macavilca, who has a construction company and is a real estate investor in the Carolina area. So excited to have you here today, Joao.Joao Macavilca (02:12)
Thanks, glad to be here.Michelle Kesil (02:15)
Awesome, so let’s dive in. First off, for those who are not familiar with you and your work yet, can you share what your main focus is?Joao Macavilca (02:23)
So my focus is just buying more properties, improving them, doing value add strategy, and just continue to grow and learn.Michelle Kesil (02:33)
Awesome. And so can you share about how you got into the real estate industry?Joao Macavilca (02:38)
So, kind of the real estate industry by reading the book, Rich Dad Poor Dad, that was one of the first ones that kind of made me shift my mind just because I had, I wasn’t the smartest kid in school growing up. I wasn’t getting the best grades. I just didn’t catch my attention. I wanted to make money, so I jumped from job to job and tried to my way up and do things, I guess the way we were taught the right way to work with the corporate ladder and get promotions and get more pay. And while I did get promotions and higher pay,It was never enough to live the life I want or that I dreamed of. It was always just maybe one vacation a year, a couple days off, maybe a nicer car, nothing crazy. And
realized I’m losing so many years of my life. And by the time I retire and the price is going up and there’s people today that are retired and their retirements aren’t enough for them to survive. So.
I needed to make a change, I needed to take a pretty big leap of faith, and I pretty much took it on me.
Michelle Kesil (03:46)
Amazing and so you took that leap of faith and then how did you begin to invest? Did you do courses or you just took action like what did that journey look like?Joao Macavilca (03:57)
So I only had maybe $10,000 to my name at that point, and reading the book, which said Poor Dad, Real Estate was one of the biggest things. So I started researching, learning, books, going on podcasts, listening to audio books, going on forums, and just reading, and saw that multifamily was a big way to go, just real estate in general. So I took my only 10K and I bet all on myself. My biggest ⁓ anchor, if you would, was the comfort. So I lived in New Jersey at the time, and…I realized if I didn’t change my surroundings, I’m going to be comfortable and stuck. So I forced myself to move out of state somewhere that I was going to be appreciating over the many years to come, but also has vast opportunity. So I moved to South Carolina and bought a duplex and I didn’t know much about appreciation back then. I had to research that. I just knew, okay, it’s a good price. It’ll make money. It’ll go up a little bit.
and I didn’t know how to force appreciation. So I bought a duplex, house hacked it, took me about a year to wait for it to appreciate or force it,
and then refied it, did it again, refied that one, and then I went to real estate conferences, other like-minded people, investors, entrepreneurs, and just being surrounded by that many people that had similar goals or bigger goals was beyond inspiring, because I’m…
I can’t speak for anybody else, but for me, around my social group, there aren’t many entrepreneurs or people out there at risk too much. It’s dangerous, it’s, are you sure? You’re have a family, this and that. It’s just the way you’re brought up, like, it’s more secure to have your nine to five and do this. I understood that, but I didn’t want that. If I failed, okay, I’ll go back to my nine to five. ⁓ But realized I need to take that risk, so I did. I took that last money, it helped out. ⁓
and going to these conferences actually opened up the next door for me. My goal was invest single family little stuff for 10 years then go to commercial. But I met other partners and other like-minded people. We connected and then I want to say six, seven months later we bought our first building. Five months later another one and just kept opening more and more doors. So it was a ⁓ risk I took and so far it’s paying off amazingly.
Michelle Kesil (07:08)
Amazing. And so what do you feel have been some of the main keys that make the biggest difference in allowing your business to be able to grow and run smoothly?Joao Macavilca (07:10)
It’s like, you know, it’s a little bit of change.So the main keys I would say would be adaptability. I have yet to go on a project where everything goes according to plan and perfectly. Something’s always gonna happen, something’s gonna change, whether it be material delays or shipment delays or some subcontracts aren’t showing up or they took out another job and delay the person behind them. So many things. So you have to make sure you have backup plans. have to make sure sometimes you’re the one doing the work as needed. I can’t tell you how many times I’ve made a…
supplier run myself and to pick things up or have to go do some demo work myself or know dump runs whatever the case may be you have to make sure you’re adapting ⁓ never going with just your budget if you have $60,000 budgeted to one project you need to flex at least 10 % just because something you don’t see behind that wall or something may fail on you or cause issues or the subcontractor may mess
mess something up. The drywall guy may puncture one of your wires or your plumbing pipes and that’s a new expense. Always make sure you’re covered rather than being really tight on that budget and having something go wrong. can really derail the whole project.
Michelle Kesil (08:30)
Yeah, absolutely, that’s important. And so you’re also doing the construction. How does that kind of coincide with the investing? Are they like separate or they work together?Joao Macavilca (08:42)
So they work well together. I would say it’s a little mix, if you would. So they work well together for my partners because obviously we get preferred pricing. I what I pay is what they pay. So when you see that, it’s an amazing cost. just an example, if Sheetrock cost me $25 to hang print finish for my guys that I worked with for years, and the average market rate is anywhere from 45 to 50, it’s a big savings. They know it’s gonna get done. it’s, I feel…When speaking to my partners, it’s a relief for them where they don’t have to worry about the deadline or is it happening or what went wrong. ⁓ I am very appreciative they know things go wrong, but they don’t have to worry about it. So, you know, they gave me a few apartments to do or knock out. They’ll know within a week or two they’re done. No issues that they have to hear about. If they want to find out, can. Sometimes they ask me how to go. Well, we had these 10 issues. But at the of the day, got done. ⁓
We stayed on budget or below budget, whatever you want to call it, and we got it done. they love that. That’s the great part about it. The only bad part about it, I would say, just being honest, is other people who are other investors want, who aren’t partners, want the same pricing. it just, at that point, it doesn’t make sense for me or other construction workers.
It’s, you know, we’re giving this pricing because we’re partnering to deal together that we have similar equity in or that we all have skin in the game.
I can’t give that price to just another investor because they want that price. It doesn’t make any sense. And I’m just losing time holding my guys up and there’s no return for anybody except the investor. So it’s a little give and take. I sometimes I’ll help out just because I can or I want to, but sometimes I’m booked up or I have a job that is paying that makes more sense for
Michelle Kesil (11:10)
Yeah, definitely that makes a lot of sense. And so when you’re doing the construction, like, what does that look like? Is it just typically renovations or ground up?Joao Macavilca (11:24)
So we’ve doing lot of renovations the last seven, eight years so far, and we’re actually breaking ground on our first ground up construction next month. We was gonna start with just one, but my other partner who’s also a builder has, I think, 21 years experience building. I’m gonna team up with him and kind of learn off of him and see how it goes. Once the main work is done, from there it’s pretty much just rolling on through. So we started with one contract, and I think as of yesterday, he called me and said we’ve got four on the contract now. So.He’s already completed two here in the Carolinas. He’s from Jersey originally. So we’ve got ground happening really soon. Hopefully the next six months we’ll have a lot of them completed and just keep moving from there.
Michelle Kesil (12:07)
Awesome. And so what are you most focusing on solving or scaling to next in your business?Joao Macavilca (12:15)
Just finding someone that can help out with the time aspect of it, whether it be invoicing, whether it be administrative tasks, whether it be ordering supplies, or communicating with subcontractors or teams to make sure we’re on these timelines. I’m kind of taking myself out of that picture of getting 50 phone calls from eight in the morning to 10, and then they do it on the down, but just trying to get a better streamlined process where…I don’t have to be the main point person for every single trade. And maybe that’s a foreman, maybe that’s a personal assistant. Just some more diving into to see what I can do to free up my time more to focus on analyzing more deals, potential deals or bigger projects versus the admin stuff.
Michelle Kesil (13:04)
Yeah, definitely. That’s exciting to be able to hand that off.Joao Macavilca (13:09)
Yes.Michelle Kesil (13:12)
What is like an obstacle or a hurdle that you’ve overcome as an investor that now looking back you can see the lesson in it?Joao Macavilca (13:12)
What is playing off?Then it costs to make more sense. So lot of investors will make a, let’s just say a budget of 40K for a project. And as long as the all in is us in that, they’ll go forward. But understanding those numbers truly and what it is helps out a lot. So once you understand in this area, I’m just going to say Greenville County and South Carolina, I shouldn’t pay more than a dollar 50 a square foot for labor. As an example, you can apply that to many different areas and just
make it easier overall because that flooring may only have to cost you $4,000 but if you have just a budget of $40,000 and you’ve got $8,000 left, you tell the flooring guy, I can’t go above $8,000 or your price is probably going be $7,000. He’s going to make a little more. If you understand what each one should cost, understanding this complexity in some of them, so you may say, about 1,000 square foot of flooring, let’s say $1 square foot is $1,000, but you didn’t include the stairs. You didn’t include
any bump ups, including transitions. There’s so many things, or your floor is uneven. There’s so many things that aren’t part of that that you need to understand as an investor. Making the budget is great, but understanding why your budget is what it is and actually diving a little deeper into that can make or break the deal. I mean, I had one job two weeks ago or so where it was 30 sheets of drywall to be hung up and we have the price standard drywall hang.
The issue is the framing is original for a house. So the house has settled, it moved, it wasn’t plumb, it wasn’t straight. So we can put it up. It’s just not gonna be straight, it’s gonna be wavy. First the framing’s gotta get fixed so everything is straight and leveled. And that was not included in the original bid.
So things like that they didn’t understand and just gotta look a little more into it and it’s not as quick as a DIY video on YouTube. just.
getting down those calls and making sure everyone understands what it is or at least getting a better idea of it.
Michelle Kesil (16:02)
Yeah, definitely. I think that’s a mistake that people often get into in the beginning.So are there any opportunities that you’re looking forward to in your business growth?
Joao Macavilca (16:19)
Opportunity wise, it’s always been kind of like on a scale. As I want to grow the construction side for the general market, I’m also getting more internal deals if you would or potential partner deals. So that takes a lot of time as well. And I guess just finding that balance of which one makes more sense of, I want to make a couple, some money on this project for a standard person or do I want to…partner up with this person to make money long term if it all works out well I guess it’s just that balance of what makes more sense overall long term and for me at the moment I guess as well just a real estate you know you can flip a property and make I had one I just I’m refining now I would have sold it I would have made about $85,000 but since I’m keeping it as a rental I’m walking away with I think $58,000 and then
year over year appreciates 6%. So it’ll keep going up in value. Just balancing strategies and kind of sitting down at the table and realizing what works today that worked last year, what isn’t working today, or is there appreciation in some areas that are not worth holding on to? Which units are costing more capital expenditures or you’re bleeding money? And just seeing what makes more sense.
Michelle Kesil (17:44)
Definitely. Is there any advice you’d give to someone that’s just looking to get started as an investor?Joao Macavilca (17:54)
Research, do a lot of research, read a lot of books, listen to the podcast, go to the network events, meet other investors that are in the spot you want to be or ahead of you. I have yet to meet an investor no matter the level, whether it be brand new or owns hotels and buildings, I won’t take the time to sit and talk with you and just have a conversation. I’m part of four masterminds right now and the point is these guysAnd I’ve done it too. I’ve lost maybe $75,000 worth in my, probably more, when I first started to today, that I tell new investors what to look out for, what to avoid, what to be careful with, and they do the same. They’ll say, hey, you if I got a problem, I’ll face one of my mentors, say, hey, I got this going on, what do I do? He’ll sit down and walk me through it if he’s been through it. If not, he’ll connect me to somebody that has, and you know, you’ll learn from their mistakes. Like, everyone wants you to succeed. There’s no one I’ve met yet, and I’ve gone to events and
New Jersey, Pennsylvania, Ohio, Florida. They all want to succeed. You succeed, they succeed. you know, just go to these events, meet the people, talk to them, ask questions. And it’s risky to put money on somebody else, but risk it on yourself. You know, if you really want it, you’re not going to fail. You’re going to find a way to do it and just believe in yourself. I mean, it took me a while to do it for me. It was scary, but…
based on what I have now and what I’ve been able to do and see the world, I would do it 10 times over again even sooner.
Michelle Kesil (19:32)
Yeah, that’s awesome. I think that those risks and taking that action is the most important aspect.Joao Macavilca (19:42)
yeah.Michelle Kesil (19:45)
So how do you usually like find the right deals?Joao Macavilca (19:51)
So how do you use your what?Michelle Kesil (19:53)
Like find the right deals. Is there any sort of like lead gen strategy that’s been supportive?Joao Macavilca (19:58)
So I’m terrible at Legion. I had Deal Machine for a while and it was a great tool. I just, I’m not good at it. I’m not good at talking to sellers that potentially yell, is a good house and a good area. Do you want to sell to me? And I’m not good at that. I’m told I’m too blunt sometimes and it’s not great. So I’ve actually, I work with wholesalers or wholesaling companies and they’ll send the deals and I’ll underwrite them and see if it makes sense. I’ll visit them if they pass the…back the napkin rule and then go look at it, make an offer and do it that way. I I lean on the MLS. Sometimes I go to Realtor or Zillow, put in a filter for more than 60, 90 days. He was still sitting out there. One new trick I learned, well, I wasn’t new, but it was new to me, is you go to Zillow Realtor, look as if you’re going for a rental. If you know the market rate in this area is $1,000,
You see some renting for six, $700. Most likely it hasn’t been updated, hasn’t been renovated. So call up that owner and see if they buy, if they’d sell. They probably don’t have the capital or don’t wanna update it and they’re just dealing with it to get it filled. So maybe they see their competition around the area, make an offer. The worst you’re gonna get is a no. So that’s something I learned recently. I wanna say it worked so far. mean, they…
Two people did ask me for an offer and we just didn’t align. But it’s something to try.
Michelle Kesil (21:34)
Yeah, absolutely. The trial and error and the experience of different ways will always be important. So thank you for sharing your perspective.Joao Macavilca (21:46)
Of course.Michelle Kesil (21:48)
Awesome. So before we begin to wrap up here, if somebody wants to reach out, connect and learn more about what you’re up to, where can people find you and connect with you?Joao Macavilca (21:58)
Instagram would be my first name, J-O-A-O, then M-A-C underscore S-T-F. Facebook is my first name, last name, and I think that’s it. Yeah, and I’m on LinkedIn as well. So different options, just my name, it’ll pop up.Michelle Kesil (22:19)
Perfect. Well, I appreciate your time and your story. Thank you so much for being here. Of course, and for those tuning into the show, if you got value, make sure you have subscribed. We’ve got more conversations coming with operators like Joao who are building real businesses, and we will see you all in the next episode.Joao Macavilca (22:24)
for having me, appreciate it.
