Subscribe via:
Show Summary
In this episode of the Real Estate Pros Podcast, host Michelle Kesil interviews Rich Montano, CEO of Lifting Mountains, who shares his journey in the real estate industry, focusing on flipping houses and small apartments in San Diego. Rich discusses his background, the challenges he faced, and the lessons learned while building his business. He emphasizes the importance of community impact through real estate investments and shares his current strategies for scaling the business, particularly in lead generation. Rich also offers valuable advice for early investors looking to start their real estate portfolios.
Resources and Links from this show:
-
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Rich Montano (00:00)
I can’t tell you how many times I’ve.built or rebuilt a small apartment building and I’ve had neighbors come over to me thanking me. In one case, in one neighborhood, we had the worst property in the entire zip code and there were drugs and prostitution and all kinds of things, dog breeding. It was just really, really crazy situation where even when I went on site, I had an armed guard with me. That’s how bad the situation was. But the neighborhood didn’t deserve that property. And so we went in and fixed it up. I literally had
police officers stop by, just pull in and say, hey are you the new owner? Yes, thank you so much for what you’ve done here. We couldn’t do anything in this place and you came in and cleaned it all up. And now it’s a beautiful, you know, well done. We built it from the sticks, you know, we tore it not totally down but we went down to the studs and then rebuilt from there. And now there’s a lot of families that live there, there’s kids playing in the courtyards in the back area. And so we, you know, we loved
just improving the community one property at a time.
Michelle Kesil (02:29)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Rich Montano, of CEO of Lifting Mountains, helping flip houses and small apartments. So excited to have you here today, Rich.Rich Montano (02:49)
Thanks for having me, I appreciate it. This is a great opportunity, I’m looking forward to chatting with you.Michelle Kesil (02:54)
Yeah, definitely. Let’s dive in. So first off, for those not familiar with you and your world, can you share what your main focus is?Rich Montano (03:02)
Sure.Yeah, for the last almost 20 years, we have focused on purchasing small residential properties in San Diego and Southern California. We buy anywhere from single family homes, condos to up to 20 unit apartment buildings. We’ve done value add projects throughout San Diego County. We’ve also done new construction. So we’ve built apartment buildings, single family homes, and we are continuing to do that and growing our
our business.
Michelle Kesil (03:31)
Awesome. And so are you only operating in the San Diego market or are you operating in other zones as well?Rich Montano (03:37)
We primarily focus on San Diego. I would say 90 % of our business is here. We’ve had some transactions and opportunities in Orange County, Los Angeles, and even Seattle, which we are trying not to focus too much of our attention there, but mostly Orange County and San Diego is where we’d like to focus our time.Michelle Kesil (03:57)
Awesome. And how did you get started in the real estate industry?Rich Montano (04:03)
yeah, that’s a long answer, so I’ll try to make it concise. When I grew up, our family was pretty poor and my dad would say things like, there’s no more real investment than real estate. And he was a fireman and he, with every little extra penny he could, he would invest in real estate. so, know, their couple of modest investments kind of built a nest egg and a foundation for me to actually haveeducation and to have opportunities for myself.
Unfortunately, I guess fortunately and unfortunately I chose to focus on engineering. I’m a math guy. I love math and science and, and so in school I studied physics and, and aerospace engineering. I’ve got bachelor’s degrees in both those. ⁓ and so I worked for government for about 10 years. so I’m, really good with spreadsheets, really good with larger complex systems. And, but all the meanwhile, I was investing in real estate. So because my family had kind
instilled these ideas with me. focused a lot of my side, and I don’t want to say hustle because it wasn’t a side hustle, it was a my personal business that I would do on the side. I was investing in smaller deals, you know, small condos in San Diego and trying to buy rental properties for myself.
And so that was going pretty well, slow and very, very modest. But as you can tell, the engineering and physics degree and I got an MBA as well. I promoted quickly, so I was making pretty good money for a young guy. So a young guy, single, kids. I was able to make some pretty fun investments. And eventually people were asking me to help them.
They said, can you help us do this? Can you help me and make these investments? Or can we do them with you? And so I started bringing in partners, cousins, family, different people, close friends, and we’d do a deal or two together. And then eventually it kind of expanded. And then at some point I got really bored with the work I was doing with the government. And I was really excited about doing more real estate deals with partners and investors. so I left that company and started ⁓
my own business, which was a huge jump because my income dropped significantly and the security with it, right? But I was really motivated and I had a lot of good people around me. I’d built a good network. This is also time not too long after the crisis in 2007, 2008. So that was like a really interesting time because a lot of agents and investors were running from the industry and I was running into the industry. So what that allowed for me was a lot less competition.
So it gave me an ability to step in and, you know, kind of struggle without as much competition. And, and that was really good for us because, I was able to build good systems and I built systems that kind of coming from like the aerospace industry, really thinking about efficiencies of systems and things like that. I came in and kind of built really efficient systems. So our team is small. and that’s a funny way to say it, but small and mighty, we are competing against big companies.
companies, bidding against companies that were much, much larger than us with huge teams and we were winning. And for quite a few, quite a many years, we were batting a thousand. We were profitable in every single deal we did. And then our business just expanded from there. Sorry, I told you it was a long answer.
Michelle Kesil (08:03)
No,don’t be sorry. That’s great. That’s awesome that you were able to expand from there and yeah, grow your real estate business. What are some obstacles or lessons that you have overcome on this journey? And now looking back in hindsight, you can kind of see the bigger picture lesson.
Rich Montano (08:23)
Yeah, yeah, I mean there’s there’s quite a few I mean gosh I don’t even know where to start but I think as a CEO of a company if I just kind of think about from that perspective, you know When I was building the business in the beginning I didn’t really know Where this was going I kind of had an idea of where it was going But the the big idea that I had was that it was this all-encompassinghuge business that was property management, realty services, investment side.
And so I built this business over a couple of years and it was just a lot in one bucket. So I ended up splitting out the business into a property management company as a separate entity with a different operator. I brought in ⁓ another operator for the brokerage side, separated that company out as well. then, so I had the three businesses and I ran those companies as a leader with operators in place. I was the operator of the investment side, but I had operators in the others and I ran those companies for quite a few
years like that and I think it kind of diluted my focus and I said so as one of the lessons I would say I can that I learned from that was if I had just focused on the investment side I think I could have expanded my business a lot faster
then back then because it was a slower expansion. So not until I would say about 10 years ago did I sell off the first company. And then about five years ago, I sold off the other company. And so five years ago, I really focused on just this side of the business and ⁓ it’s been great. So I think one of the biggest lessons is just focus on what’s important and ⁓ then you know the other stuff you can help others as well. So I’ve the property management company, I’ve mentored.
I
mentored the the new owner of that company I have another company that I work with closely that I helped them when they were in the early phases of their business starting the property management company I still really Send business or associate myself with the other brokerage So I you know, I still like to help them build but you know as the company name says like lifting mountains I think also like lifting tides lifting tides or rise, you know raises all boats So I’m really a big fan of that like everyone else can do well. It’s not
a scarcity situation, you know, or some zero game. This is a game where everybody can win if we can all like support each other and everyone can do really well in their spaces. So I’m a big advocate of that. So I just want to focus on my stuff.
do well here, even competitors. I don’t even mind helping out competitors. I had lunch yesterday with a competitor and we’re sharing ideas and ⁓ concepts and helping each other out. So I’m a big fan of lifting everything.
Michelle Kesil (11:29)
Amazing. And what like investment strategies are you most focused on right now? I think you mentioned flipping and like small apartments, but can you expand into what that looks like for your business?Rich Montano (11:41)
Yeah,yeah, so the investment focus right now is we’re looking for value-add opportunities. So there’s a lot of properties out there. You you’ve got a lot of boomers that are moving out of their homes. A lot of these homes have deferred maintenance or in some cases, like just really, really poor condition. So, you know, we’re looking for those. We’re not looking for the things where we can put in 10 $15,000 into and try to make another five, $10,000. We’re looking for
properties where we can make significant differences and not not just for ourselves that make more Because you know, this isn’t a really profitable business. I mean, this is not I think people are ⁓ Misled when they think this is a huge Profitable business because it’s not when you look at the gross Rate of returns. It’s not that big but but I think for us, you know We we have a lot of people in our in our office that love doing what we do so there’s there’s a lot of good emotional feelings there
We help the community, we improve small community areas, one house at a time. I I’ve had,
I can’t tell you how many times I’ve.
built or rebuilt a small apartment building and I’ve had neighbors come over to me thanking me. In one case, in one neighborhood, we had the worst property in the entire zip code and there were drugs and prostitution and all kinds of things, dog breeding. It was just really, really crazy situation where even when I went on site, I had an armed guard with me. That’s how bad the situation was. But the neighborhood didn’t deserve that property. And so we went in and fixed it up. I literally had
police officers stop by, just pull in and say, hey are you the new owner? Yes, thank you so much for what you’ve done here. We couldn’t do anything in this place and you came in and cleaned it all up. And now it’s a beautiful, you know, well done. We built it from the sticks, you know, we tore it not totally down but we went down to the studs and then rebuilt from there. And now there’s a lot of families that live there, there’s kids playing in the courtyards in the back area. And so we, you know, we loved
just improving the community one property at a time.
And we see this all over the place and even in situations where it’s not as drastic as that, we see things like we fix up a house, we put it up for sale at cells, it’s really a great process, but then we’ll we’ll notice neighbors painting their houses, redoing their landscape. So it’s kind of this, we do give a lot back to the community and just the effort of doing the work.
So yeah, I don’t know if that answered your question fully,
Michelle Kesil (14:05)
Yeah, amazing. Love that you’re focused on community and serving that. So what are you most focusing on solving or scaling to next in your business?Rich Montano (14:59)
Yeah, think scaling right now, the biggest thing that we’re focusing on scaling is lead gen. So we want to scale our lead generation. We have…great underwriting team. we have a great renovation team. Our operations are solid. Our disposition side, which is the sales side, is solid. Right now, our focus this year in particular is we want to expand our lead generation side. And so we’re looking to build relationships with more agents because we kind of looked back and about 35 % of our deals last year came from
agents with their own listings or with other listings off the MLS. And so we thought, hey, why can’t we like, you know, put some more energy into those people, help them grow their businesses, while also on the other side, when there’s an opportunity that they see that is for us, you know, a property that has significantly deferred maintenance, they can bring that to us, they can still earn a commission, they can transact faster because we’ll come in with a cash offer.
we’ll close in anywhere from 10 to 14 days. We can even close faster depending on the circumstances. We’ve closed in days before, just a few days. So ⁓ we can help them in their business. They’re trying to earn commissions and grow their portfolio of sold homes. So we can help them move through that faster on some of these particular homes. And for us, in exchange, we just say, hey, think of us when you show up to your listing appointment and the property is in significantly deferred maintenance and you say, okay, well, this is going be difficult for us to sell on the MLS.
to a end user buyer. Hey, by the way, I know this guy Rich over at Lifting Mountains and I can call him in 30 seconds later, he’ll have a contract in my email for cash offer. And so that’s attractive to some sellers. like I said, we bought quite a few last year in that way. And those agents, by the way. ⁓
they continue to bring us deals. They continue to come back to us. And so what we’ve done is we’ve sort of built a system to train these agents on how to look at deals from our perspective to see if there’s a deal that actually makes sense for us so that they’re not wasting their time or their sellers time. So we help them evaluate these deals, look at it the way we look at it, get the information we need.
to evaluate it faster because if they’re good at their job and they tee the deal up for us and they send us the information, we can move through it faster than we actually already take the time that we already take. So we can get them a response with an offer, a solid offer, so a legitimate offer that we would actually move forward with within 20, 30 minutes easily.
Michelle Kesil (17:34)
Awesome. And so is your focus typically on these more like distress situations. ⁓Rich Montano (17:40)
Yep.Yeah.
Yeah, we’re looking for the distress situations. And, you know, and I would say, you know, we’ve had a lot of deals that came from foreclosures and divorces and, you know, different situations that are distressed that, you know, sellers need to move fast. We’ve gotten quite a few of those as well that have some deferred maintenance, but not as heavy as some that we’ve seen. And, but their circumstances were distressed and they just needed to sell quickly. We’ve had a few of those.
over the last six months or so, and we’ll do those as well.
Michelle Kesil (18:10)
Awesome. And so when you like work with these people, you mentioned that you’re looking to grow your team. What is like, what are those roles look like in supporting your team?Rich Montano (18:24)
Yeah, yeah, so we’re expanding our team internally. We’re going to be adding a couple of team members over the next few months. One role is our disposition side. So we want to bring somebody in who’s dedicated and focused to just selling our assets. And ⁓ that’s something, you we’re,not aggressively looking for it because we’re not just gonna hire anyone, so we’re putting it out there. We’re looking for some organic interest. We’ve had quite a few people reaching out, asking how they could join the team. We’re pretty strict here, but within our rigid processes, a person can be very successful.
⁓ So we’ve, as I mentioned, we’ve been very slow with that and we’re open, we’re looking. And then the other position that we’re gonna be filling is ⁓ another acquisition person. We’re looking for another analyst to help us look at more deals. As we expand our Legion, we’re gonna be having more properties brought into.
our office and right now, you know, we have two acquisition people would like to expand and have one more and allowing us to again with our with with our processes and my my training these these analysts will be able to analyze more deals than the average person per hour. So that’s what we’re looking to do right now. We may be after that we may be looking later this year to expand in our lead generation side. But right now those are the two focuses that we have.
Michelle Kesil (19:41)
Awesome. And what maybe advice would you share for investors that are early on in their journey that you wish you had?Rich Montano (19:51)
gosh. have, well, it depends on the type of investor. One type of investor, I would say if you’re early on and you’re trying to start your real estate portfolio, you know, you want to have rental properties, my advice would be to buy a two to four unit property, get homeowner financing, move into one of the units and rent the others.and use that as your pedestal for the beginning of your real estate portfolio. So you can expand from there. you know, once you are ready to move on from that place, you rent your unit, you buy another duplex to fourplex, you live in one unit. Maybe it’s a front house and you’ve got three houses in the back or three apartments, you know, a little structure in the back. And then you start expanding your portfolio that way. I think young earlier investors, if I were to do it all over again, I would do it that way. I wish somebody had told me that when I was starting my investment journey.
Instead, what I did was I just was flipping and trying to turn and create cash flow at a faster rate by flipping homes, which you know kind of worked out, but you also pay a lot more in taxes. So my portfolio, I think, would have been larger. My personal portfolio would have been larger if I had done what I just said.
As far as for an investor like myself who’s flipping homes, I would say you have to have a very realistic.
understanding of what you’re getting into. It is a very stressful job. It is the margins are very narrow and so I think people come in and they think they’re gonna flip and they’re gonna make you know 50 % 100 % they’re gonna double their money, you know overnight. They’re gonna go in and invest into a flip and not put any money down. I know there’s a lot of programs out there that say you know those types of things but the risk that they take on when they do that is very very high and
They’re personally guaranteeing loans with no money down and you know if their profit margins are say like 30 to 80 thousand dollars on a house you know an 800,000, 900,000 dollar house all you need is a couple of hiccups, a couple of mistakes, a couple major items that go down that you weren’t prepared for. There’s a foundation, there is a slab leak, there’s a you know we had to tear a wall down.
⁓
and rebuild it. There’s a whole slew of things it could And so in one deal, you could lose all your money and have debt that you have to still deal with later. And I’ve seen this happen a lot. So I think when people come into this business, they have to have a realistic understanding of what they’re actually getting into. Because this is not you know some TV show, Flip This House or whatever that you see on HGTV with all the
lamb glory of some teachers who have like a million dollar budget and flip a house and make two, you know. So it’s just, I would say, be patient and realistic. And to do that appropriately, you need to have mentors around you, people who’ve done it many, many times to help guide you.
Michelle Kesil (22:38)
Yeah, absolutely. That is very important. Thank you for sharing all of that. So before we wrap up here, if somebody wants to reach out, connect, learn more, where can people find you and connect with you?Rich Montano (22:50)
Yeah, yeah, so we have our website, lifting mountains.com, lifting as in, know, lifting your shoulders, lifting the mountains, lifting mountains.com, can get our contact info is there.My email address is richard at lifting mountains.com. So somebody could easily email me with our, our, Instagram handles lifting mountains capital. So anybody can easily go there there. can also see a lot of our flips or before and afters. You can see a lot of the things that, that we get into. ⁓ there’s a lot of exciting and fun, ⁓ videos and photos on that Instagram account. So you can go there and check that out and, they can message us there as well, and share ideas or, properties if they’re
If they have something, you know, a family member or neighbor is selling a property and they don’t want to go to the market, they can reach out to us on Instagram and say, here’s the details. What do you think? So yeah, that’s how they can reach us.
Michelle Kesil (23:47)
Perfect. Appreciate your time and your story. Thank you for being here. Of course. And for those tuning in, if you got value, make sure you’ve subscribed. We have more conversations with operators like Rich who are building real businesses, and we’ll see you on the nextRich Montano (23:51)
Thank you, Michelle, really appreciate you.
