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Show Summary
In this conversation, Carl Schiovone shares his extensive experience in real estate investing, discussing his journey from early investments to becoming a coach and educator. He emphasizes the importance of understanding the market, the role of seller financing, and the challenges of flipping properties in today’s economic climate. Carl also highlights the significance of building a solid foundation for any investment business and the value of mentorship in achieving success.
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Investor Fuel Show Transcript:
Carl Schiovone (00:00)
And that’s really what I focus onas a business coach, because I know that building a foundation is really at the heart of your success. And it’s really important to get those basics down.
Dylan Silver (00:37)
Hey folks, welcome back to the show. Today’s guest, Carl Schiovone brings four plus decades of experience hands-on in investing, ⁓ development and portfolio management experience across the real estate space. He’s become a trusted coach, educator, known for translating complex strategies into clear, actionable guidance for investors at every level. You can find him at carlschiovone.com. Carl, thank you for taking the time today.Carl Schiovone (02:15)
Well, Dylan, thank you so much for having me. I’m really excited about this event here and really looking forward to the opportunity to kind of share some of the things that have gone along the way.Dylan Silver (02:15)
You know, I know you’ve got really a tremendous amount of experience. I’d like, if we can, to start at the top. How did you get started in real estate investing? Well, interesting question.Carl Schiovone (02:40)
Well, interesting question.This all started with my childhood friend, Ron Rickard, and who I was a partner with for nearly three and a half decades. And we were floating around our pool. We were still in high school and we were really contemplating where we should go with our life. And a few years later, after we were in both corporate America,
Carl Schiovone (03:10)
we decided thatCarl Schiovone (03:12)
we’re going to become partners together. So we then took the plunge and really made a focused effort on buying as much as we can, as fast as we can, with little preparation and a lot of chaos. And that kind of set the stage to say, you know what, there is really a great opportunity here thatCarl Schiovone (03:38)
there’s not a lot of platforms to help people do what we did.And that’s really where I started coaching about 35 years ago and also instructing.
Dylan Silver (03:43)
I’d like to, if I can, ask you about that, those first deals. I mean, you’re talking four decades ago, right, with your friend. Where were those first deals? What area of the country? You know, were they on market, off market? How did you find those deals? How did you pay for them? Well, let’s also remember at the time frame that we’re speaking aboutCarl Schiovone (04:07)
Well, let’s also remember at the timeframe that we’re speaking about, thisis far before the current platform of the internet, right? In fact, we barely had any type of technology help online. And what we really did was at the core of our interest on the construction side was this old house. We just love
Carl Schiovone (04:35)
that series and we used to take all of the things that we were learning there and applying it, goingto library, getting videos, and really shooting from the seat of our pants, to be perfectly honest with you. And I don’t encourage anyone to start that way today with all of the options available to you. So we were finding deals through our network.
Carl Schiovone (05:49)
The one thing that we were both good at is we had a lot of connections in business.And ultimately our first deals came from a local realtor that was trying to sell a very difficult property. And it was in Mastic Beach, New York, and ⁓ it was a very ⁓ big family.
and they had this huge house that they were trying to sell that was really devastating.So we went in and actually negotiated seller financing, which is kind of bizarre on our first deal, right? But we ended up pulling it off. And of course we surrounded ourselves with, you know, a good attorney and things of that nature. So from a legal perspective, we really knew what we were doing, but it was kind of bizarre that our first deal.
was so creative. So we ended up ⁓ turning that around. It wasa huge renovation project, which we did the vast majority of the work. a number of years later, we sold the property. So that was kind of our first thing. And we continued to build our local resources of people that were helping us find deals.
You know, we didn’t have the benefit of knowing about direct mailing and door knocking and things of that nature. ⁓ There were no real estate investment groups that you could leverage off of at that time to any great extent. So it was really a tough journey. But the one thing that we’ve learned from that is that we were nowhere’s even close to being prepared to do what we were doing.
And that’s really what I focus on as a business coach, because I know that building a foundation is really at the heart of your success. And it’s really important to get those basics down.
Dylan Silver (07:45)
You know when we talk about seller financing it’s amazing that your first deal was a seller finance deal because I feel like right now there’s a lot of people in the single-family space and multifamily buying businesses that are talking about acquisitions through seller finance offers.And so today, you you must talk with, I’m imagining and correct me if I’m wrong, you must come across people all the time who are asking about seller financing. Well, I do. And the interesting point of it is that strategy can work or not work based on some of the geographic restrictions you have.
Carl Schiovone (08:25)
Well, I do. And the interesting point of it is that strategy can work or not work based on some of the geographic restrictions you have. So, for example, in New York,
It’s not a very easy strategy to deploy only because the foreclosure laws are so difficult to navigate through. But when you start going south and out Midwest,it is a very, very common strategy. And once you start even getting involved with ⁓ commercial real estate multifamily, it’s extremely common.
especially when there’s a property that’s not performing and it will not be able to sell with traditional financing.Dylan Silver (09:08)
Now, there’s an element of these creative offers, right, which is you’ve got to find a seller who maybe is distressed enough to be willing to accept something creative. But then also, too, you sometimes find very savvy sellers who themselves may be investors and they want to mitigate their tax burden, right? So that’s astrategy that I’ve seen for folks who are looking to make seller finance offers really as a way to not have to come out of pocket so much. Is there any one lead source or marketing strategy ⁓ or even segment of real estate that you would advise folks start in if they’re looking at making seller finance offers?
Carl Schiovone (10:35)
Well, if you are targeting that, one of the great sources is purchasing lists, right? So there are companies out there like ListSource, for example, that put together data. So if you target out of state owners that are free and clear, your conversion rate is going to be much better than any other segment of the population. When you start looking at how long an owner has held the property, there could be a great opportunity for them to leverage seller financing to your point, to help defer the capital gains taxes and maybe spread that burden over a number of years.Dylan Silver (11:09)
Now, pivoting a bit here, Carl, one of the things that I’ve noticed, and I’m licensed in Texas, so this is where this is coming from. I’ve noticed that because there’s so much new construction in certain markets of the country,that you’ve got to start, especially if you’re in some of these states like Texas, Oklahoma, Florida, you’ve got to start looking at how to be involved with developers if you want to stay active. Otherwise, it can be trickier to fix and flip when you have some national builders that are putting up homes in some of these places for like $240,000 out the door. Do you have any experience in the ground up construction and in the development space?
Carl Schiovone (12:05)
Well, I do have some basic direct experience in the building a part of the business. And the thing that you do need to be careful with is this is not something that a beginner investor should right out of the gate consider. Building properties up from the ground is a completely different model than buying good old grandma’s house.some renovation into it and now all of a sudden be able to flip it or to rent it. And, you know, to your point, yes, there are many, many states that you are competing with developers, but there’s always going to be a segment of the population that still may not be able to afford a total new cost of that property, because obviously the cost per square foot to buy it and maybe renovate it is going to be much lower than a new construction. So and I feel your pain that you’re talking about because I also am in Florida as well as well as New York. And Florida is exactly what you’re talking about. Florida still has the highest number of open permits in the country.
Carl Schiovone (13:31)
But that doesn’t mean you can’t do well in the renovation part of it by buying an older value-add property. There’s always going to be a buyer for that.Dylan Silver (13:32)
Now, I’d like to, if I can, ask you about the acquisition of those rehab properties, because it felt like maybe for, you know, a five year stretch from like maybe more than that, from like 2014 to like 2020 or sometime around there.that you could buy a deal wrong and things would get sorted out just through the sheer appreciation of these properties and rates were lower and deals were flying off the shelves and they weren’t sitting. But then over however many years you’ve seen that change to know now you could really at least pencil it you think right but then conditions can change and materials can increase. The property can sit on market for months and now you’re in a different
situation and if one thing happens, you know, if there’s a foundation issue that you didn’t see, well, now you’re on the verge of losing your shirt. So right now, if folks are getting into flipping right now, what would be your feedback for them if they’re looking at, you know, making their first flip? Well, first of all, I believe that if you’re beginning to start thinking about an investment business, the very first thing that you should do
Carl Schiovone (14:46)
Well, first of all, I believe that if you’re beginning to start thinking about an investment business, the very first thing that you should dois to build your skill set. You need to understand the risks that are involved in this business and be able to mitigate it the best you can. And an example of that would be making sure that you are aligning yourself with the right contractors. You understand what a statement of work is. You are incorporating a contingency budget into this. You know, it’s a real shame I get this question all the time. Is there a site online that I could figure out my renovation costs? Well, the answer is no. Even though some people try to create this, the only one who should be giving you a cost of renovation is the actual person who’s doing the renovation. And that to me is among one of the biggest problems that new investors face. Or maybe their uncle is a contractor that lives in Kentucky. Right? Well, what bearing does that have on the local cost of business? So that’s going to be number one. In touching about the value and how that could fluctuate. The one thing that you have to be concerned with is you have to get your equity going into a deal. If you are hoping for the appreciation, well, that certainly may not happen over the life of a flip. It certainly can happen over the course of a whole to rent. But you need to know if I create this product and I’m going to be on the market in three months. Well, what is that market looking like? Right. We already know that nationally there was some markets that are in a downward trend with value, right? Florida is one of them, right? Where the number one or two, depending on what source you look at for foreclosures. So the short sales are ticking up, the foreclosures are ticking up, the values are dropping. Even the developers are providing incentives. But the bottom line here is here is you cannot rely on appreciation in terms of getting you out of a hole that maybe you should not have been in. Now that’s completely different than being a low cap rate you cannot rely on appreciation in terms of getting you out of a hole that maybe you should not have been in. Now that’s completely different than being a low cap rate market investor. So we know, for example, New York City is trading at about a 4 % cap rate right now, a little bit less depending on where you’re looking. Those investors know they’re not gonna get cash flow.
and they’re hoping on the appreciation. But these are usually institutional or very sophisticated investors. The one-off investor doesn’t have the ability to play that kind of game.
Dylan Silver (18:34)
Yeah. you can’t afford to be negatively cash flowing in New York or New York City. That can be very tricky. then plus too, you’ve got different, you know, landlord-tenant laws and all different types of things. I know there’s quite a few lenders and flippers and ⁓ folks of that sort that I know who tend to stay away from, you know, the New Yorks and places like that for that exact reason. We are actually coming up on time here though, Carl.Are there any new projects that you’re working on? And then also too, what’s the best way for folks in our audience to reach out to you or your team? Well, right now I’m really focused on getting my own homes up to date and where we want them to be. We’re renovating simultaneously a home in Florida as well as New York. So the one thing that I do want to say is my most exciting
Carl Schiovone (19:07)
Well, right now I’m really focused on getting my own homes up to date and where we want them to be. We’re renovating simultaneously our home in Florida as well as New York. So, but the one thing that I do want to say is my most excitingprojects is when I’m working alongside of my coaching clients. You know, this is really what gets me out of bed.
And, ⁓ you know, the one thing that I want to share with everyone is just make sure before you start
thinking about buying an investment property that you build the foundation of your business because that’s exactly what you’re doing. And that’s really important.I can be reached at carlschiovone.com, right? And if you do a Google search, I’m all over the internet. So
So ⁓ that’s really all I have. ⁓ If you have anything else.
Dylan Silver (20:34)
No, Carl, I appreciate you for coming on today. Thank you so much. And again, it’s been a pleasure. Thank you for coming on. It’s been a pleasure here as well. Thank you for theCarl Schiovone (20:41)
It’s been a pleasure here as well. Thank you for the opportunity.
