How Smart Investors Walk Away From Bad Real Estate Deals

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In this conversation, Mike Savegnago shares his extensive experience in the real estate industry, discussing his journey from being a general contractor to a full-time realtor and investor. He emphasizes the importance of understanding the market, navigating compliance issues, and building strong relationships with clients and vendors. Mike also highlights the challenges of scaling a real estate business and the necessity of taking calculated risks in investments. Throughout the discussion, he provides insights into the dynamics of property management and the significance of maintaining a two-way relationship with lenders and contractors.

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Michael Savegnago (00:00)
I think, you know, handling that, like you got to know your boundaries and when to say no is important too. And anyone who knows me will say that I’m kind of maybe a robot. Like I don’t really have a lot of emotions in the deal. I think as an investor, you can’t, like you’re not buying the perfect house for you and your family to grow up in. And so you’re willing to overpay. And investment property, it’s like the math either works or doesn’t.

Just get out if it doesn’t.

Quentin Edmonds (01:58)
Hello everyone. Welcome to the Real Estate Pros podcast. I am your host, Q Edmonds. I’m excited to be here. I have another fantastic guest because listen, this guy can approach real estate from so many different angles. Listen, I was going to try to trip him up a little bit, but I ain’t going to even try because he’s going to have an answer for me. So, I mean, he just comes from so many different rich backgrounds. He’s been in the property management, know how to diversify investments, remodeling, investor himself. I mean, just you name it, he’s already done it.

And so I am so happy and excited that we get to peek through the lens of Mr. Michael Savegnago Savegnago yeah, it’s like that, man. How you doing today, my friend? How’s everything?

Michael Savegnago (02:38)
Gotta get that.

doing great just out here hustling but I’m doing good.

Quentin Edmonds (02:48)
Understood

for sure man. Well listen Mike, I want to dive into it. I want to spend our time wisely. So I would love for you to tell the people what your main focus is these days. If you want to give us a little bit of an origin story of kind of how you got into real estate and kind of how you got to where you are. We love origin stories and then Mike, you don’t mind, tell us what part of the world you’re in. And so Mike, sir, you got the floor, man.

Michael Savegnago (03:12)
Great. Yeah, I am coming from Chicago. So my market’s Chicagoland in the city and the suburbs. And a little bit of my background is most of my career was actually as a general contractor. I owned a franchise remodeling company. And so that gave me a lot of great insight on, you know, rebuilding homes, home maintenance, et cetera, which I now use in my career. And so then I sold that business, used that capital to buy flips, to buy holds, to buy rentals.

started getting into the game, investment game, looking, looking at podcasts and all that type of stuff. And then, you know, bought some flips, bought some holds. And then I said, man, I’m pretty, pretty good at this. I think I can help other people do this. So got my real estate license and now I’m a full-time realtor and I mostly work with investors. So I kind of use my background to help them analyze the remodel costs when looking at a flip or a hold. helped them analyze obviously the

the rental cashflow and everything else that an investor looks at and turn on investment, that type of thing. Because I’m an investor myself, I can kind of help them analyze all different parts of the deal. And then I also added on property management pretty recently to kind of my services. And so now I can help them in every stage of that purchase and that hold of that.

that building. you know, I can help them look for it, analyze it, help them understand the remodel costs, even give them out my network of contractors, purchase it, and then, you know, manage it after that. So that’s that’s kind of my my all the things I do. And so I really like working with investors, I like investing myself. And ⁓ that’s what I do.

Quentin Edmonds (05:46)
I love it, man. Thank you, sir. Thank you for running us through where you are, how you got there, what I call like a little bit about your resume. And man, you know, was a GC investor yourself, property management. So obviously you’ve been to different kind of stages when it comes to real estate. And so I have a saying where I say destiny has no wasted moments. Right. Like you’ve been a GC, like you said yourself, you picked up on things to be able to be intricately involved with.

Helping people, you know, when it comes to remodeling, when it comes to real estate. And so I would love to know throughout your journey, throughout the destinations that you’ve had throughout real estate, what has it taught you about yourself? Like has it revealed to you like I’m a hustler or my discipline is on point or my consistency is on point. Like what has this journey revealed to you about you?

Michael Savegnago (06:36)
I just think, you know, it’s no matter what you’re doing, you got to be hustling. Even as a general contractor, you know, you’re in sales, you’re in home sales, you’re selling that person on using you as a contractor to remodel their bathroom. Same thing on a house, you know, you’re kind of selling that investor on why that’s a good deal.

and giving them physical proof. Okay, here’s the cash flow, here’s the rent revenue, here’s where it could be, this is where it’s at, and this is what it will be worth after remodel. So you’re always kind of selling and hustling. And so I think that’s the thing that’s helped me be successful in different kind of industries is because, you know, being able to sell and being able to understand that sales process and being very disciplined and organized on.

you know, even just lead follow-up and those types of things.

Quentin Edmonds (07:26)
Yeah, I love it. I love it. No, absolutely. The follow up is key. Absolutely love it, man. And so let me ask you this. Of course, there are times when things get real moment when times get real deals go sideways. You have to pivot fast. Sometimes people leave out information that kind of changed the whole schematic. You like, why didn’t you tell me that earlier? Right. So how does adversely look to you within some of the things that you’ve been through? Have you faced adversity in different deals, not going the way they were supposed to go? You have in a pivot fast.

Like how have you handled adversity?

Michael Savegnago (07:58)
I think, you know, handling that, like you got to know your boundaries and when to say no is important too. And anyone who knows me will say that I’m kind of maybe a robot. Like I don’t really have a lot of emotions in the deal. I think as an investor, you can’t, like you’re not buying the perfect house for you and your family to grow up in. And so you’re willing to overpay. And investment property, it’s like the math either works or doesn’t.

Just get out if it doesn’t.

Right. so, and I’m, and I’m upfront with my investors too, even if I’m a realtor and I’m going to risk not getting commissioned on a deal, I don’t want them to buy a crappy deal. So I’m willing to go, Hey, you know, this came up in inspection. It’s a 15 K, cost to you. Let’s ask to get a credit. If they don’t give us a credit, let’s walk away. We’re done. We’ll, find something else to cashflow is the same without that issue.

whether it be a new roof or a sewer line or whatever came up, I think you gotta know your boundaries when to say no. And so that’s helped me with adversity when things don’t go your way. It’s like, all right, there’s another day, another deal and don’t be afraid. Don’t let your excitement of the deal or the property, walk you in into something that you shouldn’t be doing or the numbers don’t work.

Quentin Edmonds (09:17)
Yeah, no, I love that man. love that systems for having systems in place as guardrails and boundaries is everything and then I love you. I thank you for saying that word boundary because I don’t hear too often when it comes to business like having a business boundary. We have it in our personal lives and relationships, but definitely in business there needs to be a boundary. Has that it has ever any time that you stepped outside of your boundary and you kind of like had to pay the price for it?

Michael Savegnago (09:43)
⁓

I mean, I think, you know, one problem probably actually the first flip I ever did, I chose to actually do the remodel like 90 % myself, like physically, you know, business, I actually had the time to do it. And so I’m like, you know, I’m just gonna do this myself took me seven months to do it. You know, the investor formula, as everyone knows, like flips like getting it out, you know, time is money.

get it done two, three months, put that thing on the market. So no, was just, you know, I’m thinking I’m saving all this labor, but I’m just paying it right back and holding costs. know, so yeah, I didn’t stick to that boundary, even, you know, even though I’m thinking I’m saving all this money and I felt real good, you know, sense of accomplishment. I put that tile up and I painted that house. It looks awesome. And you get the P &L after, you know, closing, I’m like, ⁓ I made like 40 grand, huh? I probably could have made.

You know, 50, 60 had I got this thing done in three months with the crew. And, so, you know, that’s just a small example.

Quentin Edmonds (11:24)
Yeah, man, man, appreciate that. Thank you for the gift of your transparency. and I thank you because like you said at the top of show, man, you walk the walk. And so I, I know it’s going to carry weight to people when you talk about having no systems in place. When you talk about having no boundaries in place, because when you step outside the boundary is no longer boundary and things start to bleed where it’s not supposed to bleed things. So it’s hard to go. It’s not supposed to go. So again, man, I appreciate your transparency, sir. Let me ask you, what’s the next real goal?

What are you looking to solve a scale next?

Michael Savegnago (11:55)
I think, I think, you know, with the team I have of other investment realtors and property management, I think we need to do a better job of like finding deals for people. So I’m almost considering like wholesaling in house, hiring some people to, actually just go out and find the deals because at a certain point you’re so involved in, deals and current, current deals going on or managing properties that it’s harder to like go out and find.

the diamonds in the rough. And that’s where, you know, a wholesaler or just even someone designated to scouring the MLS for the perfect deals or the needles in the haystacks work. So I think that’s something we’re working on for this year to better serve our clients.

Quentin Edmonds (12:41)
Yeah, I love it man. I absolutely hear you sir. And I love how you talked about serving clients, hiring people, talking about building a team. So I want to talk to you a little bit about relationships. And I would love to know what is your perspective when it comes to building relationships within business? How your strategy is to build relationships? Is relationships important? So talk to me a little bit about your perspective when it comes to relationship building.

Michael Savegnago (13:04)
Yeah, absolutely. I mean, we work with a lot of different vendors, know, lenders, every lender wants to be a Realtors best friend, right? But you know, it’s it’s I always ask them, what are going to do for me? Because I’m going to give I’m going to give you a crap load of clients. So what are doing for me? So I think two way street is super important. And that’s one that’s usually a one way street and I don’t like it. And that’s why I

I call my lenders out right away. If they haven’t given me a lead in a while, I’m like, dude, I just brought you four closings. Like, what have you brought me? You know, there’s millions of lenders out there. So knowing that though, too, on the flip side, I try to give in other relationships where maybe it’s the opposite, where they’re mostly giving me and I can’t give them as much, you know, contractors that we work with, they give us a lot of their time and stuff like that. so.

you know, lot of them have been like, Hey man, I want to do flips and stuff like that. And it’s like, all right, dude, I’ll help you find some flips, man. You know, just, just be there when I, when I call you and I, know, three in the morning and we got a leak. Like you better go out there and I’ll be, I’ll help you out. You know, so two way street, and given and respect is so important and all the, the, different relationships you have in this business. And, people remember, you know, I, I have a short list and you can call me petty, but.

I have a short list of every realtor who’s ever done me wrong in a deal. And man, if I see them again, you know, it’s gonna be a little bit more of difficult transaction for them. so, you know, I think it’s, really important for the trust and two way street.

Quentin Edmonds (14:42)
Listen, man, don’t sound petty to me. It sound like a boundary. That’s what it sound like to me. This is my boundary. I remember you, old boy. It’s going to be a tough sell on this next go around. Probably not going to even work out for us, especially if it’s just been a one way treat. So I feel you, Mr. Mike, is there any topic that I did not bring up that you would like to talk about? Or is there any kind of motivation, inspiration, education that you want to leave to people?

If there is, man, I would love to hear it.

Michael Savegnago (15:55)
Yeah, I think, you know, talked a little bit before about just like different threats in the market and stuff like that. think compliance and and really looking into local laws, regulations is super important in the real estate investing world. Every county, town, city, state has different rules. And, you know, like I can give you an example. One town out here in Chicago or Chicago suburb, Schomburg, you know, they keep tightening their

their short-term rental regulations. you know, before it was just, you had to get a license. Okay. No big deal. Then you had to get inspections. Okay. Let’s make sure everything’s safe. I’m cool with that. Then now you can’t have another Airbnb within 750 feet of another Airbnb. So good for me because I have one. So it’s, it’s helping not have competition. ⁓ A new entry. It is harder for people to enter that market. You know, so

Really check that out, especially in those higher risk investments. I would consider Airbnb higher risk short-term rentals because of the regulation and stuff like that. And so yeah, kind of know your boundary. If you’re willing to take a risk, ⁓ to have your, you know, city shut you down and then hold that for a couple of months before you pivot or sell it. Don’t do that deal. Do a more simple deal where maybe it’s a townhouse that you’re renting long-term or a single family house or a four unit that cash flows really well.

you know, hedge your risk based on the position you’re in with your liquidity and that type of stuff. But, with that, you know, also dream because, you know, nobody becomes wealthy and don’t become successful by not taking risks. So you do need to take those risks. but I think calculated risks and maybe build that risk threshold as you get more experience and more successful.

Quentin Edmonds (17:46)
I love it, man. Great nuggets, good nuggets for people to glean from. Mr. Mike, if someone wanted to reach out to you, connect with you, collaborate with you, learn more about what you’re doing, how can they get in contact with you,

Michael Savegnago (17:59)
Yeah, you can just hit me up through any of my socials on Facebook or Instagram. Email me as well or call me. I’m always here to help people out. No problem.

Quentin Edmonds (18:09)
Absolutely. Well, listen, I want to say three things to you, sir. First, thank you for your time because you know time is our most precious commodity. You could have been doing anything in the world. So thank you for being here today. Secondly, man, thank you for your story. Thank you for your narrative, for your transparency. You know, the way we tell our stories greatly impact other people. And so that’s why we love having people like you on to be able to share your story, to help other people. So thank you for sharing your story. And lastly, man, thank you for your perspective.

for your mindset, man. Thank you for bringing that mindset to this platform. I greatly appreciate it,

Michael Savegnago (18:44)
Thanks, yeah, I appreciate you having me on and I appreciate it. Thank you very much.

Quentin Edmonds (18:49)
Absolutely. Well, listen, you heard Mr. Mike check, check the show notes, get in contact with him, but definitely make sure you are subscribed here because I promise you we’re going to continue to bring up amazing people just like Mr. Mike. So sir, thank you again. And everyone else. Y’all have a fantastic day.

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How Smart Investors Walk Away From Bad Real Estate Deals

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