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Show Summary
In this episode of the Real Estate Pros podcast, host Micah Johnson interviews Justin Escajeda, a successful entrepreneur in the business acquisition space, particularly within the construction industry. Justin shares his journey from real estate investing to acquiring businesses, emphasizing the importance of cash flow, understanding company valuations, and the challenges of managing multiple businesses. He discusses the significance of maintaining a routine and the lessons learned from both successes and failures in business. The conversation highlights the interconnectedness of real estate and construction, the value of relationships in business, and the need for discipline in decision-making.
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Investor Fuel Show Transcript:
Justin Escajeda (00:00)
And like I said, it was, was one of those aha moments where, you know, I spent so many years building my storage unit business, building my mobile home park business, building my real estate portfolio, building a masonry company. Those ground up companies took so much time, took so much energy, right? And the fact that I strove to check for the purchase of this roofing company that somebody has already previously done all that work and built a great company.Micah Johnson (00:17)
Mm.Justin Escajeda (00:29)
It was it was like wow the return was day after closing and that’s that’s one of my things I want to make sure we’re making money day after closing because I’m not gonna buy a Company that I need to fix up I already know how to fix up a company right and they can go bad Just when they’re good too, but at the same time too I’m trying to make the best decision to just step into the old owner’s shoes and do exactly what he did same name same employees same customers same pricingJust that’s that’s what you should be buying
Micah Johnson (02:31)
Hey everyone, welcome to the Real Estate Pros podcast. I’m your host, Micah Johnson. And today I’m joined by Justin, who’s been making serious moves in the business acquisition space. Justin, welcome in, man. Glad to have you. Absolutely, man. I’m excited. I’m excited for today’s talk. I think our listeners are really going to take something away from your journey overall, how you’ve gone fromJustin Escajeda (02:44)
Thank you for having me.Micah Johnson (02:53)
where you began in construction all the way through to what you do now and business acquisitions in the construction space. I think it’s fascinating and they’re going to get a lot from this. So let’s dive in. So for people who may not know you yet, what is that main focus right now and what markets are you operating in?Justin Escajeda (03:09)
Right, so ⁓ my main focus right now is business acquisitions. 90 % of our companies are construction-based, and we have one insurance brokerage, but…It’s mostly construction. here’s the thing too, it’s construction and real estate are synonymous with one another. One affects the next very, very many times in life. We deal with a lot of real estate brokers, real estate investors, property managers, ⁓ and I was a real estate investor myself for a number of years.
Micah Johnson (03:45)
Well, it is intertwined. That’s the interesting thing about real estate to me is I called it the spider web. When I was going, especially building relationships, making sure I knew the right people to call. It’s like what all touches real estate? I mean, you get her out to those outer levels are all kind of things that feed into it that if you don’t have that, it doesn’t work out.Justin Escajeda (04:03)
Right, right, not at all, not at all. I’ve had every experience possible, good, bad, and in between with myself and our companies and different investors. The more education investors have on the cost of construction, all the better, right? And different plans to lay out for them to maintain their investments.Micah Johnson (04:26)
Let’s dig into that for just a second, because again, that’s your long range experience. You’ve been in construction a long time. This is something you’ve done personally, paid attention to deeply. So for an investor that’s listening, what is a good way to make sure they’re ensuring they know their costs, they understand what’s going on?Justin Escajeda (04:43)
Well, to know what they’re buyingtoo. Here in Pittsburgh, I know we have a lot of old architectural buildings and houses, Millionaire’s Row, all these big Victorian crazy houses. it’s great flex to say like, hey, I bought this and I’m restoring it, right? But like, just as an example, you buy an old historic house like that, ⁓
Do you even know anyone who can do that type of carpentry, can do that type of masonry, can do that type of roofing, right? B, do you know what the cost of access is too, right? Like, I don’t know how many times I’ve done a crazy 12-12 slate roof on these big old houses and, you know, they’re just blown away by the prices or the chimney, right? The chimneys.
60 feet in the air or same thing with hey same thing with property managers. There’s good property managers, there’s bad property managers too right? It’s like you know stuff it 10 feet off the ground is not going to stay the same cost to stuff it the same scope 200 feet off the ground right? So just things like that but it’s all experience and it’s all education.
Micah Johnson (05:50)
Right?And I come from a historic area too, down here in St. Augustine, Florida, and there we have areas downtown and I’ve met folks like that. You’re absolutely right. You get into one of these older style properties or something that’s unique and the trades people that you need changes. It is not the same. It is something very different. If you want to maintain the level of beauty, just the whole aestheticism of it, like, or the aesthetics of it to make it keep staying that way. Your guy out there throwing up.
20 shingle roofs a or a week. She doesn’t know how to do that stuff. Your normal carpenters, they don’t know how to do those typical things. So that is your experience too. I think that’s fascinating.
Justin Escajeda (07:15)
Mm-hmm.Yeah, absolutely. And ⁓ it’s a shock. It’s a real shock. you know, what are you going to do? Like you’re screwed. At that point, you bought the property. You know, it’s yours to maintain now. And I don’t know. That’s how you get over leveraged, I suppose.
Micah Johnson (07:30)
Right? Right.Yeah.
Yeah, it is. It again. It’s I, there’s a quote. like that, especially in real estate investing deal finders, not deal manufacturers. You get into things and the more that needs to go right for it to work and the more that it has a chance to go wrong, right? The too many things need to line up.
Justin Escajeda (07:57)
Right?Micah Johnson (07:59)
It’s like, I said it the other day. It’s like, we’re at the end of football season. When you’re a team that needs three other people to lose one to win, and you don’t have any control, that’s not good, right? That’s you are no longer holding your destiny in your hands.Justin Escajeda (08:06)
Here. Uh huh. Uh huh.Right, right, absolutely, absolutely, right?
Micah Johnson (08:15)
So you mentioned that you were in real estate investing and then you shifted more into business acquisitions. What did that shift look like and what have you learned along the way so far?Justin Escajeda (08:25)
Well, like I said, was, was, we started with a masonry company, grew really fast, you know, became one of the bigger, players in the city. And there was a guy he, he, that we worked with sometimes we would, we would sub some work off of. He owned a roofing company and offered, offered to sell it to me. And, and I did. AndAnd like I said, it was, was one of those aha moments where, you know, I spent so many years building my storage unit business, building my mobile home park business, building my real estate portfolio, building a masonry company. Those ground up companies took so much time, took so much energy, right? And the fact that I strove to check for the purchase of this roofing company that somebody has already previously done all that work and built a great company.
Micah Johnson (09:07)
Mm.Justin Escajeda (09:19)
It was it was like wow the return was day after closing and that’s that’s one of my things I want to make sure we’re making money day after closing because I’m not gonna buy a Company that I need to fix up I already know how to fix up a company right and they can go bad Just when they’re good too, but at the same time too I’m trying to make the best decision to just step into the old owner’s shoes and do exactly what he did same name same employees same customers same pricingJust that’s that’s what you should be buying
That’s the way I feel like you should buy I don’t know why you’d buy something that you got to spend more money and i’ll keep my money, you know
Micah Johnson (09:50)
Right?Right.
Well, it lines up with to the fact you’ve done it. When you’ve walked the road of building a company and multiple from the ground up, and then you see like, okay, I don’t want to do that part anymore. Like that part’s great and all, but that’s not what I’m after now. It shows that natural graduation of investors in general, where it’s like, okay, what is that part that I do want to do? What is that that makes sense to me? And then your rule of, I want cashflow day one. I want it to be making money day one. Okay.
Now we can back off from there. Which one will let me do that? And you, that aha moment where the roofer brings it to you. And again, the value of a relationship right there for them to approach you that way. Hey, that shows in general, like behind the scenes of how you’re going about what you do anyways, cause it’s not everybody just walks up to someone and offers them to sell them their business.
Justin Escajeda (10:45)
Yeah, yeah, yeah, and like I said, there’s things that we look for. ⁓ Obviously, financials is first and foremost, what’s your tax return say? I don’t care what your Quickbook reports say or Excel spreadsheet says. I want to see what you told the IRS that you made, right? ⁓ Because there’s no arguing that, right? And then the second thing is, how…how longevity of ⁓ how long you’ve had your employees, how an owner talks about his employees is a big thing, right? ⁓ Is this company a great standalone?
Micah Johnson (11:22)
Interesting.Justin Escajeda (11:26)
Or is it only profitable because it’s going to be in my holdings now and it’s getting work from my other companies, right? It has to work standalone as well. Don’t get me wrong, we sub each other work all the time and share numbers and share leads, ⁓ obviously, but it has to be self-sustaining.Micah Johnson (11:32)
Gotcha.Which makes sense for your overall goal because you’re trying to eliminate chance and eliminate instability. And if it can’t do its own thing, then again, it’s not lining up with cashflow day one. Can you do this and maintain yourself? And lines up again with you’re not trying to build that first section anymore. There’s this new section you’re trying to live in. What are some challenges you found in this space?
Justin Escajeda (12:42)
Well, how about, how about the ⁓ overvaluation of all these companies, which like I said before, it’s not, I don’t blame, I don’t blame them, but whenever you give me five years of tax returns and you’re showing a loss on every single year, like why?Where do you get five million bucks at whenever half of it’s goodwill in your assets are rusting out in your shop with 10 trucks and a few pieces of equipment? Where’s the five million dollars come from? Where’s the 10 million dollars come from? And if I’m gonna finance it, what bank is gonna say okay to that? Maybe a Shylock or some one of these like…
Micah Johnson (13:16)
Right.Justin Escajeda (13:26)
undercut like these little capital firms that middleman like crazy interest rate, know, mezzanine loans and everything, but that’s all semantics and it’s too much, it gets too hairy with that. Like let’s just make it simple. Like this company’s not worth it, you know?Micah Johnson (13:44)
What has been the way that you’ve been able to show that? Like in terms of when you’re working with those people, is there an owner that tends to come around and is there one that you see really quick like, no, we’re not even gonna try to do this.Justin Escajeda (13:57)
⁓ well, I, I, I’ve learned things over, over the years too. You know, I, every, every DO I learned more and more. ⁓ but you know, I, I think I now what I try to do is, is, is lay out, ⁓ at least a range of what I think the company’s worth, you know, we’ll get a formal valuation done for sure. But at the same time too, you know, that formal valuation there, there, I mean, there.Micah Johnson (14:01)
ThankGod.
Justin Escajeda (14:24)
don’t always trust those either to tell you the truth right listen is if i’m i’m if i’m taking a loan for a company right does my debt service or does that company support the debt serviceAm I gonna be underwater on my cash joint? It’s very simple. It’s very simple, you know what I mean? Or, okay, if I’m spending all my money on it, right? If I’m financing the whole thing myself, just using my own cash, like, all right, how many years is it gonna take for me to get that money back and then start making more, right? Like, it’s simple as that.
Micah Johnson (14:57)
simple like know your numbers and then be able to explain it. Now what have you found in terms of owners you work well with like when you’re identifying a company you mentioned it for a second like how do they care about their employees I think that’s an interesting thing how are they talking about them that’s fascinating what other things have you identified that like okay this could be worth pushing further this might be the kind of company I want to buy.Justin Escajeda (15:19)
Yeah, the, ⁓ the, the… I like the owner that doesn’t give me, doesn’t seem to be in need of money.You know, that’s that seems to be a trend. He’s like, OK, well, we don’t have to sell now and that’s no big deal. I’ll just keep keep doing this or or or or guys who will who are kind of savvy enough to know that if they’re trying to make a tax play, they’ll they’ll they’ll break it up into seller finance payments. Right. You know, that’s that’s all that that’s beneficial to me if I especially the if I keep the banks out of it or I don’t got to spend all my money all up front. That’s
Micah Johnson (15:30)
Interesting.Justin Escajeda (15:57)
That’s great. know, those guys seem to be, you know, they’re pretty level headed, but there’s other, you know, I’ve had, I’ve had a couple of guys where I bought it outright and, and they’re still working there and they’re just, you know, they’re, they’re awesome. And you learn so much from them, man. You know, some of those guys have been operating construction before I was born and, and that you’re, never going to, it’s invaluable with the, the, the, stuff that you get, the pieces of information you get from them from time to time, you know.Micah Johnson (16:13)
Right.I couldn’t agree more. Like there’s nothing like being around somebody who knows. And it’s almost like that aha moment that you had where when, you could just buy that company, seems so obvious when those, when those really noddable people drop it on you, it is always like that, like same kind of thing. Like, man, that is so true. How didn’t I see it before? And it’s cause you never could have seen it before. That’s your, that’s your blind spot. It requires that other humans experience to be like, well, this is what I went through and here’s what I’ve learned.
Justin Escajeda (17:10)
Yeah.Right?
Micah Johnson (17:35)
And that’s where to me, man, life’s a learning process until it’s over. You’re learning something along the way. If you’re paying attention.Justin Escajeda (17:42)
Absolutely, I’d way rather learn from somebody else’s mistakes than my own, I can tell you that.Micah Johnson (17:47)
Right. It took me a few years to understand that better, but that has been the big last change in the last decade of my life is you don’t have to do this the hard way. There is no glory in struggling. And it seemed like I was taught that growing up, like the harder it all is, the more glory there is like, I do not buy into that anymore. That’s how you have a miserable life.Justin Escajeda (17:49)
ThankRight? No.
Right,
right, correct.
Micah Johnson (18:10)
So looking ahead to 2026, what’s on your horizon? What are you out there paying attention to, any particular goals you have?Justin Escajeda (18:18)
⁓ I don’t know. Look, in the business equity, now we, have goals that I’ve worked with for each company with the guys who run them, right? Like we have our own set of goals for each company, but from a ⁓ holding standpoint, I would never put a…you know, some kind of like, we got to buy three companies this year. We got to buy two companies this year. We got to buy five, whatever it is, because it’s, it’s, you have no idea when the, when the right deal is going to come. I’m just going to keep, keep looking at them. And when the no brainers come up, that’s, that’s, that’s when I’m going to, that’s when I’m going to try to, ⁓ you know, attack it and, ⁓
Micah Johnson (18:41)
Good.Justin Escajeda (18:57)
They’re few and far between. There might be two in a year and there might be two in 20 years. I have no idea, but you you get that, you get that angst of like, Hey man, I haven’t done anything for a while. So, so it’s, it, I pray for a lot of discipline when it comes to that, where it’s like, Hey, just, just, just have that, that temperament of not just buying something that’s for sale when you’re bored, you know, like, or that, that new shiny object. It’s, it’s like, is thisMicah Johnson (19:02)
Right.Right.
Justin Escajeda (19:25)
Do my kids recognize that this is a good deal? You know, like…Micah Johnson (19:31)
It’s true, man. that can get with that can. I appreciate you saying that because I feel a lot of times arbitrary numbers get put on a year, especially for unique style of investments where you can either beat yourself up or make a huge mistake based on just some silly number that you put out there said that we, we got to get to this or we got to get to that. And there was no real reason why, except to let’s just do it because I’m bored. the older I’ve gotten,Justin Escajeda (19:54)
Mm-hmm.Micah Johnson (19:56)
the more I realize how good boredom is. Out of boredom comes the good ideas, comes the reality of like, this is a no brainer. You gotta be bored to see it as a no brainer. If not, you’re just putting fires out all the time.Justin Escajeda (20:01)
Mm-hmm.Right, right, yeah. I don’t get as angsty as I used to get maybe like in my 20s or 30s and I’m 43 now. So, but I still at times I’m just like, know, and especially with counting, I have such a high ⁓ importance on accounting in my companies, right? Like, hey, I think, I…
Roofing company. I think the accounting in a roofing company is just as important as the shingles laid, right? Absolutely. finished product is just as important as the accounting because one represents the other. And there’s a lot of ways in accounting that I’ve come to find out, especially in the last few years, that it can make things look good when they’re really not. you have to, know, accounting is a language and you have to understand it and weed through the bullshit because there’s a
Micah Johnson (20:54)
HmmJustin Escajeda (21:01)
of business brokers, ⁓ real estate brokers. mean, they can alter things to make things look really good when they’re really not. So I’m very weary of that type of stuff.Micah Johnson (21:15)
Well, it makes sense. And I want to ask a question around. So you have 11 businesses now in your portfolio there. What’s it like to be the guy at the top now? What’s your week look like when it comes to spending time with each business involvement with it? Because it’s, there could be a misidea that you buy businesses and then you just sit back, do whatever you want. But in our pre-talk, that’s obviously not the case. There’s still things you need to be involved with. Can you dig into that a little bit?Justin Escajeda (21:42)
I, yeah, absolutely. So, I have a very strict schedule. Every week, very strict schedule. I meet with every single company at a certain time. ⁓some of them multiple times a week, right? And I check in with all the controllers three times a week to check on bank accounts because there’s two things that, you know, in a business there’s productivity and profitability and then there’s cashflow. Two are completely different, right? You know, I could have a great month from my work in progress from a construction company and I won’t see that money for 60 days, right? So I have to make sure, you know, all our receipts
Are coming in our billions are coming in correctly, you know, so there’s there’s there’s different things in that nature But I’m also talking to every single president every single day that runs each company and it’s funny you bring this up because I was just Girlfriend and I were coming home from dinner last night and I was telling her I said, you know, there’s something I really need to start thinking about If we buy more companies, you know, where’s that time gonna come from right? Like I just
There’s very little time left to efficiently, right? You know what I mean? I don’t just want to be a person there. want to make it efficient, right? So that’s stuff that I work on, but no, it’s full. I don’t care if I’m, thank God for this. Hey, thank God for these Zooms and Teams meetings and Google meets because like, if I’m traveling anywhere, which I never travel anywhere.
Micah Johnson (22:51)
Right?Yeah, you’re at 11.
Justin Escajeda (23:13)
actually going somewhere next week, ⁓ I can still stay, you know, I can work at home a lot of times, is cool, you know what I mean? And that definitely helps out. It keeps me in contact with people.Micah Johnson (23:27)
think it’s one of the best things that came out of COVID was the normalization of a Zoom call, where even if you’re, I’ll talk to my friends sometimes just FaceTime Zoom call, because it feels like you’re hanging out. Like you actually feel like you’re together. And that was not the case pre-COVID. These were very weird to be on. You were just like, I don’t know what’s going on here. Now it’s as easy as just, it’s normal, talking to people. ⁓ That’s one thing I built an office in my backyard so I can just come out to my.Justin Escajeda (23:33)
Mm-hmm.Yeah, right. ⁓
Mm-mm.
Yeah, yeah.
Micah Johnson (23:55)
Stay home. I like to be home. like being around and build a space where I can mess with the whole world from here, man. It’s beautiful. Travel around when you need to and capitalize. I think that’s what’s cool for our generation, man. We have to experience a whole level of efficiency. Most did not like, and you nailed it there with your, you’re starting to hit max time. I mean, what a question to ask yourself and honestly, to be soberly honest about where, where will the meeting time come from? If I add more, where will this come from? And it’s like,Justin Escajeda (24:01)
Yeah, yeah, yeah.and
End.
Micah Johnson (24:23)
That’s a real problem that a lot of folks just skip over. They just want that next, I want to say I own 12. I want to say I own 13 versus I actually want them to cashflow and I actually want them to do what they’re supposed to do. And I also want to enjoy my life.Justin Escajeda (24:36)
And dude, remember, this is a monotonous life that I have, very monotonous. it’s, managing any one business is like a diet. It is maintenance, it is constant maintenance, right? Because it can get away from you like you wouldn’t believe.Micah Johnson (24:42)
Mm-hmm.Justin Escajeda (24:57)
in real fast too. So just like a diet or a workout regimen, you want to stay healthy, you want to stay in shape, like, okay, you’re going to the gym every day, you’re going to the gym five times a week and you’re not eating garbage. Same thing applies to managing businesses.Micah Johnson (25:12)
It’s what can you do for the long run? How long can you just keep doing the same things over and over and over? And that’s, that’s who you see become the best. That’s why Tiger Woods was Tiger Woods. That’s why Michael Jordan was Michael Jordan. It’s why you can’t imagine the thousands of times, millions of times at some point where you didn’t see them practicing. You didn’t see him hit the same shot over and over and over. And everybody loves the glory reel. We all want to be on sports center, but it’s, you don’t get any of that.Justin Escajeda (25:24)
Mm-hmm.Right?
Micah Johnson (25:41)
unless you do exactly what you’re doing. And I think that’s where a lot of, there’s a lot of misunderstanding in that space that to truly do this well, you are working yourself towards boredom. You’re working yourselves towards a very established routine, but from that routine will actually come the life you really want. It’s how it works. It doesn’t feel exciting all the time. There were times where it did upfront and that’s what we typically compare it to, right? You get a lot of guys that keep redoing.They love that beginning because there’s that thrill in that rush, but there’s no long-term true gain from
Justin Escajeda (26:13)
No, no, it’s, it’s, it’s, and there’s a lot of pain. A lot of pain goes into it too. lot of lessons and pain and, and, and, and to be perfectly honest with you, it’s not a, it’s not, you’re not winning any popularity awards amongst the people you work with and in your, your, in your friend zone gets a lot, a lot smaller. I could say that for sure.Micah Johnson (26:19)
YeahYeah, that’s true. Well, man, I really appreciate your time today. Before we wrap up, if someone wanted to follow along with you, learn more about what you have going on. What’s the best way for them to find you?
Justin Escajeda (26:47)
Yeah, you can find me on Instagram, LinkedIn, ⁓ Facebook, and my ⁓ Escajeda Holdings page is on all of them as well.Micah Johnson (26:58)
Excellent. Well, we’ll make sure those are in the show notes for everybody that’s listening to find so you can reach out and learn more about Justin. See what he’s got going on again, man. I really appreciate your time, your story, your perspective today. It’s, think, I think we need more folks out in the space doing it like you’re doing it intentionally. There’s a reason behind everything you do. It’s very methodical and I appreciate that. And all the people that work for you, I’m sure appreciate that. It creates happy lives, man. So great job.Justin Escajeda (27:08)
Yeah, absolutely.Micah Johnson (27:24)
For those listening, if you got value out of today’s episode, please like this episode, share it around, subscribe to our podcast. We’ve got more conversations coming up with operators, just like Justin, who are building real businesses that are gonna last a lifetime. So thanks again for joining us. We’ll see you on the next episode.
