Revealing The Top 7 Ways Vertical Integration Can Help Businesses

Summary

The podcast episode delves into the significance of vertical integration in business, emphasizing its role in controlling critical business elements and mitigating risks. The hosts share their experiences with outsourcing and the challenges it posed, leading to the decision of bringing key operations in-house. They discuss the benefits of vertical integration, such as enhanced control, cost savings, improved flexibility, and better accountability across companies. The episode highlights how these factors contribute to a strong business foundation, the importance of teamwork, and the impact on investor experience and company success.

Takeaways

• 🖥 Vertical integration is crucial for maintaining control over nearly all aspects of a business, helping to mitigate risks and enhance success.
• 😩 Outsourcing critical business functions can lead to trauma and frustration due to lack of control, highlighting the importance of internal management.
• 💰 Bringing operations in-house can prevent financial losses and improve the investor experience by ensuring better management and oversight.
• 📊 Vertical integration facilitates flexibility, enabling businesses to adapt and make decisions beneficial to both the company and its investors.
• 👨‍💻 Cross-company roles and shared responsibilities can lead to cost savings and more efficient resource utilization.
• 📝 Accountability across all branches of a vertically integrated company ensures quality and efficiency, fostering a culture of continuous improvement.
• 🛫 Efficiency in communication and operations is enhanced by having all departments under one roof, streamlining processes.
• 🧩 Teamwork and a shared vision across all departments of a vertically integrated company are fundamental for sustained growth and success.
• 📚 The concept of 'Vivid Vision' is recommended for business owners to create a concrete three-year plan, emphasizing the importance of a clear and shared direction.
• 🚀 Vertical integration is presented as a strategic approach to business management that can significantly reduce risks, enhance investor relations, and support robust growth.

Q & A

What is vertical integration and why is it important in business?

Vertical integration is when a company controls or attempts to control nearly all elements of its business, from production to distribution. It is important because it allows for greater control over the supply chain, reduces dependency on outsourcing, and can lead to cost savings, increased efficiency, and improved risk management.

What challenges did the company face when outsourcing certain aspects of their business?

The company faced challenges such as loss of control, financial losses, lack of flexibility, and poor quality of work from contractors. These issues led to frustration and a negative impact on their reputation and investor experience.

How did the company respond to the challenges of outsourcing?

In response to the challenges, the company decided to bring the outsourced aspects of their business in-house. They gradually acquired or established their own property management, renovation, and acquisitions divisions to regain control and improve their operations.

What are some benefits of vertical integration mentioned in the script?

The benefits of vertical integration mentioned include increased control, cost savings, improved flexibility, enhanced accountability across companies, and better teamwork and coherence within the organization.

How does vertical integration help in risk mitigation?

Vertical integration helps in risk mitigation by allowing the company to control and address potential issues more directly and efficiently. With more elements of the business under one roof, the company can respond quickly to challenges, make necessary adjustments, and ensure that all parts of the operation are aligned with the overall strategy.

What does the script suggest about the importance of having a strong team in a vertically integrated company?

The script suggests that a strong team is crucial for the success of a vertically integrated company. The team's ability to work together, share a common vision, and hold each other accountable contributes significantly to the company's ability to overcome challenges, innovate, and achieve its goals.

How does the company ensure transparency and communication in its vertically integrated structure?

The company ensures transparency and communication by using shared systems and tools for communication, having regular meetings with cross-functional teams, and fostering a culture where all companies within the group prioritize the needs of the whole over individual interests.

What is the significance of the company's decision to bring property management in-house?

Bringing property management in-house was significant because it allowed the company to directly control how properties were managed, ensuring higher standards of care and service for both the properties and the tenants. This decision was a key factor in the company's ability to address and solve problems more effectively.

How does the company's experience with vertical integration serve as a lesson for other investors?

The company's experience serves as a lesson for other investors by demonstrating the advantages of having control over various aspects of a business. It highlights the importance of mitigating risks, ensuring quality, and maintaining a strong, cohesive team to navigate the challenges of the market.

What advice does the script offer to passive investors regarding vertical integration?

The script advises passive investors to seek out companies that have implemented vertical integration, as these companies are better equipped to manage risks, control operations, and provide a more secure and efficient investment experience.

Outlines

00:00

📈 The Importance of Vertical Integration

This segment explains the concept of vertical integration, emphasizing its significance in maintaining control over critical business processes to ensure success and avoid the frustrations and inefficiencies associated with outsourcing. The speakers share their journey towards vertical integration, motivated by past traumas and challenges faced due to lack of control over key aspects of their business. They illustrate how taking matters in-house, step by step, aligned with their business ethos and was essential for preserving their reputation and enhancing investor experience.

05:01

🛠 Challenges and Solutions in Vertical Integration

The speakers delve deeper into the specific challenges they faced with outsourcing, particularly highlighting issues with renovations and property management that led to financial losses and operational inefficiencies. They recount the strategic decision to bring these functions in-house, hiring skilled personnel to lead each newly integrated division. This move was crucial for regaining control, ensuring quality, and directly addressing problems, thereby protecting their business and investor interests.

10:03

🤝 Enhancing Efficiency and Accountability Through Integration

This part focuses on the benefits of vertical integration in fostering efficiency and accountability across the company's various divisions. The speakers share anecdotes to illustrate how having renovations, property management, and other services under one umbrella facilitated seamless operations and improved problem-solving capabilities. They emphasize the role of effective communication, shared systems, and a unified team effort in achieving these outcomes.

15:03

🔍 The Detailed Advantages of Vertical Integration

The conversation highlights the multifaceted advantages of vertical integration, including cost savings, enhanced efficiency, and improved accountability. The speakers discuss how shared resources and responsibilities across companies under their umbrella lead to operational savings and better service delivery. They share examples of inter-company collaboration that exemplifies how vertical integration supports their business model and contributes to their overall success.

20:04

🌟 Teamwork and Vision in a Vertically Integrated Model

This segment emphasizes the significance of teamwork and a shared vision in the success of a vertically integrated business model. The speakers reflect on the evolution of their team dynamics and how concerted efforts across different departments have been pivotal in realizing their business goals. They stress the importance of clear communication, mutual support, and alignment with the company's vision as key factors in their continued growth and success.

25:05

🏗 Building a Strong Foundation Through Vertical Integration

Here, the speakers outline the structural benefits of vertical integration in building a robust and resilient business foundation. They argue that controlling critical aspects of their operations has enabled them to weather market shifts and challenges more effectively. By illustrating their approach to risk mitigation and problem-solving, they make a case for the superiority of a vertically integrated business model in the real estate sector.

30:06

🔑 Vertical Integration as a Strategy for Success and Risk Mitigation

In the final segment, the importance of vertical integration is further underscored as a strategic approach to managing risks and ensuring business success, especially in volatile markets. The speakers discuss how having control over key business processes allows for better adaptability and problem-solving capabilities. They advocate for vertical integration as essential for businesses aiming to thrive in challenging environments, highlighting their own company's experience as a testament to its effectiveness.

Keywords

💡Vertical Integration

Vertical integration refers to a company's strategy of taking control over multiple stages of its production or business processes. In the context of the video, it's highlighted as a crucial approach for gaining control over all critical aspects of their business, which was driven by negative experiences with outsourcing. The script illustrates this through a narrative of transitioning from reliance on external parties to bringing operations in-house, thus ensuring greater control, efficiency, and quality in delivering their services and products.

💡Trauma of Outsourcing

The 'trauma of outsourcing' describes the intense frustration and difficulties the speakers encountered when relying on external companies for essential business operations. It's portrayed as a painful learning experience that prompted the move towards vertical integration. The use of 'trauma' underscores the severe impact these challenges had on their business and the urgency it created to regain control over their operations.

💡Investor Experience

Investor experience in the video pertains to the overall satisfaction and outcomes that investors achieve by engaging with the company's services. The script emphasizes the company's commitment to improving this through vertical integration, suggesting that controlling more aspects of the business allows them to deliver a better, more reliable product to their investors, thereby enhancing their experience.

💡Reputation

Reputation is mentioned as a critical concern for the business, directly linked to their decision to pursue vertical integration. By bringing essential operations in-house, the company aims to safeguard its reputation by ensuring high-quality outcomes and avoiding the pitfalls associated with relying on external vendors. This illustrates the connection between operational control and the perception of the company in the eyes of investors and the broader market.

💡Turnkey Company

A turnkey company is one that provides ready-to-use products to its customers, requiring no additional work from them. In the video, it's the starting point of the business before it expands into other areas through vertical integration. This concept is central to understanding the company's business model and its evolution towards controlling more aspects of its operations.

💡Renovation and Property Management

Renovation and property management are identified as key components of the business that were initially outsourced but later brought in-house as part of their vertical integration strategy. The script discusses the challenges faced with external contractors and property managers, such as cost overruns and mismanagement, which led to the decision to control these functions internally to improve efficiency and accountability.

💡Cost Savings

Cost savings are highlighted as a significant benefit of vertical integration. By managing multiple business operations under one umbrella, the company can allocate resources more efficiently, share overhead costs across different departments, and negotiate better prices for materials in bulk. This theme in the script demonstrates how vertical integration can lead to operational efficiencies and financial savings.

💡Accountability

Accountability in the script refers to the increased responsibility and oversight possible when operations are managed internally. It illustrates how vertical integration enables the company to enforce higher standards and direct accountability across different segments of the business, leading to better outcomes and addressing issues more effectively.

💡Efficiency

Efficiency is discussed as a direct outcome of vertical integration, with the script mentioning how having all operations under one roof allows for quicker decision-making, faster problem resolution, and streamlined communication. This is portrayed as essential for responding to challenges promptly and ensuring the business operates smoothly.

💡Teamwork and Vision

Teamwork and vision are presented as foundational elements that enable successful vertical integration. The script emphasizes how aligning the team around a shared vision and collaborative effort across different business units strengthens the company's ability to execute its strategy effectively. This highlights the importance of a cohesive team and clear direction in realizing the benefits of vertical integration.

Highlights

Vertical integration is when you have control over nearly all of the elements of your business or are attempting to do so, which is crucial for maintaining control and ensuring success.

Outsourcing critical business functions can lead to trauma and frustration due to lack of control, emphasizing the importance of bringing operations in-house.

The decision to integrate vertically often comes from negative experiences with external vendors, leading to a strategic shift towards in-house management.

Flip and Danny discuss their podcast 'The Freedom Show' and their journey towards vertical integration, initially stemming from accidental steps.

Vertical integration has been key to their 'gigantic amazing Champion style success' and attracting investors by controlling critical business elements.

An early inspiration came from a successful business owner who emphasized the importance of owning the property management component for better control.

Loss of control and financial losses were significant drivers for Flip and Danny to start integrating their business vertically, starting with turnkey operations and moving into renovations and property management.

They discuss the trauma and challenges of relying on external contractors and property managers, leading to financial losses and poor investor experiences.

The decision to bring operations like renovations and property management in-house was also a response to poor quality work and financial mismanagement by external parties.

Vertical integration provides the flexibility to make unique offers to investors, such as fee adjustments, which wouldn't be possible with outsourced operations.

Cost savings emerge from vertical integration by sharing resources across different business units, such as personnel and materials.

Accountability across different business units is enhanced with vertical integration, allowing for better problem resolution and quality control.

Efficiency gains are notable in a vertically integrated business, with improved communication and system access across units.

Teamwork and a unified vision are critical components of successful vertical integration, helping to align all business units towards common goals.

Vertical integration has been a crucial factor in mitigating risks, especially in unpredictable market conditions, by providing more control over critical business operations.

Transcripts

vertical integration is uh when you have

control over nearly all of the elements

of your business or you are attempting

to do so vertical integration is

incredibly important because we were

going through trauma Outsourcing to

other people and I say trauma as a very

very serious word like the pain and

frustration that you go through because

you don't have control over something

that is so critical to your success into

the investor experience is

traumatizing um and you know there was

just um some you know real pain um

involved in those scenarios and so one

by one we are just like we have to bring

this in house we cannot allow this to

happen this is not the way we're

building a business this is not who we

are um this is not the product that we

represent and just bit by bit we're just

like bring it in bring it in I don't

care I know we're going too fast but we

have to do this for us our reputation

and our investor

[Music]

experience

welcome to the freedom show you got

phlip and Danny here we're live in the

studio live live live live haven't done

that in Forever uh but welcome to

another exciting episode of our podcast

the freedom show yeah so flip and I um

wanted to come to you today and talk to

you about vertical integration um I know

that we do a lot of banter usually at

the very beginning but like I want to

dive into this topic because it's so

incredibly important um and it's

something that we did on accident

um but it's proven to be um that it will

be the reason for our gigantic amazing

Champion style success right um and why

we attract so many investors to work

with us um and why um we are achieving

all the things that we're achieving

right so before before you start though

I want to say something that you don't

even know I'm G to say yeah is I

remember when we started the company in

our house yep in Westchester and you

showed me a video Yeah of the guy in

Florida I would don't need to say his

name but but anyway he ran a company

that's very similar to what we're

running now and he took a video and he

walked up and down the hallways and he

walked into each office and showed

introduced everybody that was in each

office yes and when he went into the

property management company he

introduced the people that were running

the property management company and when

he left and he walked back in the

hallway he looked right in the camera he

says he says always make sure that you

own your property management company

because no one will take better care of

your properties than you and I'm like

wow that's so amazing and and just like

wow this guy is so awesome he got all

these companies all Under One Roof man

oh if we can only get there

someday little little did I know less

than six years

later yeah I love that so this is

something not a lot of uh people talk

about and the reason they don't talk

about it is because it's very difficult

to do um it takes years and uh to like

we've done it in six and um that was

crazy insane like most people would not

be able to do it in six um I thank our

team the reason that we've been able to

do it is because of the team and people

that we've got um we always say people

are our greatest um asset um we aren't

here U because of flip and I we are here

because of the team uh that we have

brought into the company and the care

that they have uh for what we're doing

um the vision um and how we are helping

other investors um so vertical

integration is uh when you have control

over nearly all of the elements of your

business or you are attempting to do so

so flip you want to share uh when we

start of the company and and uh you

don't have to share why we did it just

share like the order of the companies as

we built them and what each one each one

does yeah so we started out with the

turnkey company yeah uh because that was

the the meat and potatoes uh and uh we

immediately went into renovation he said

not to say why we did right uh so we

immediately went went into renovation uh

and then after renovation we were sort

of forced to into Property Management we

were heading that direction we just were

moved there faster than we had

anticipated um and then uh then

Acquisitions yep um and well I I think

that's the main U parts of this that

that as far as I mean we also have

brokerage uh which came as well as the

uh uh property management company yep um

and then I think that's it yeah yeah the

fund and syndication funication that's

not really a part of the vertical

integration but it is just our last

company um yeah so you nailed it uh so

uh as flip went through that you could I

could see if you're watching on YouTube

I could see the gears turning in his

head like he he was remembering the

stories and the trauma that we were

going through yeah that was that was

hard to sift through so quickly and why

we built each of those companies so this

is exactly the point vertical

integration is incredibly important

because we were going through trauma

Outsourcing to other people and I say

trauma as a very very serious word like

the pain and frustration that you go

through because you don't have control

over something that is so critical to

your success and to the investor

experience is

traumatizing um and you know there was

just um some you know real pain um

involved in those scenarios and so one

by one we are just like we have to bring

this in house we cannot allow this to

happen this is not the way we're

building a business this is not who we

are um this is not the product that we

represent and just bit by bit we're just

like bring it in bring it in I don't

care I know we're going too fast but we

have to do this for us our reputation

and our investor experience and so one

by one and we just kept on hiring the

right people to come in and lead each

company so it wasn't all on flip and ey

I mean flip and I were juggling a lot um

but we did have people in each company

that we could lean on so that we would

sit down and we would collaborate and we

say here this is the vision this is what

we want to build um let's let's talk

let's figure out um how we need to do it

what's the game plan and as we bring um

uh this into uh realization uh let's

talk about the challenges that we're um

facing and solve them them together and

so literally it was flip and I and each

team member as we brought every single

one it would it' be constant here's our

challenge for today and here's how we're

going to solve it here's our challenge

for the next day and every single day

there's challenges um when you get to uh

when you're building a business you have

to understand that um uh the winds are

sometimes hard to uh feel because you're

you're face with challenges over and

over and over and over and if you don't

have the vertical in integration piece

then you're faced with a challenge that

you can't solve you've got no control

over it yeah right well well put yeah so

um that's why it's so so important so

before this podcast we wrote down seven

things that we felt was um just right

off the top of our head because this

pain is real and it lives in US of what

we've gone through and what we've

created um and we want to share those

seven things with you um and there's

also three things at the end that that

kind of results in um those seven things

all coming together so um we're going to

go ahead and hit on uh number one you

want to start yeah so well I mean I sort

of touched on it before you know what

that one guy said is you know always

make sure that you're in charge that you

own the property management company

because no one will take better care of

your properties than you will yeah uh

and that's number one loss of control

yes yeah so not having that control um

uh was going to cause flip and I to fail

at building what we were um uh dreaming

about what we wanted to build and at the

very beginning I don't even know that we

had this dream um the dream kind of grew

um bit by bit but it was partly because

of oh we had to bring that in all right

so if we're bringing that in probably

down the road we're going to bring this

in um because we can see how control is

helping us um and it it it just happened

um naturally but that la la loss of

control would have meant failure to us

and at the very end we're going to bring

that full full circle because the other

people that were affecting our business

um were going to lead us to number two

which was they're causing us a loss of

money and they're not only causing us a

loss of money but they're causing our

investors a loss of money so um where we

were affected in the loss of money was

the contractors um and the rehabs so we

would go in and we'd get the bid we put

the put the contractors under contract

we'd have the scope of work um and they

were so horrible they'd have to do

things over they would miss something

and go oh we need to change order oh you

know this happened they wouldn't show up

the timeline went longer um than it was

necessary um uh materials and things

were being stolen from the property so

the renovation piece was hurting us in

terms of money so number two loss of

money the property management piece was

hurting our investors in terms of loss

of money because there was uh property

mismanagement there was Financial

mismanagement we would look at numbers

and be like oh no and we would have to

go to bat for our clients um on behalf

of them just because we're like this is

ridiculous this is not right you know

and we knew it like we're in the

business so that we knew how to read the

financial statements we knew what was

wrong we knew what needed to be fixed so

so we just went to bat um for um the

investors and that was really really

really crazy and it got so bad we were

actually we made complaints to the board

um to the realtor board we actually

sought out an attorney we started having

some meetings about what are we going to

do we ultimately um sent out an email to

all of our clients when when we got to

this point and said hey this is what

we're doing and this is why this is not

to throw anybody under the bus bus or

point fingers or assign blame that's not

what we're here for um we're not here to

trash other companies what we're here is

to take control and fix the problem and

so we brought everything in house and

fortunately we had um uh um Chris was

part of our team at that point in time

and so he was ready to take in all of

that um business um and then not too

much longer we actually uh acquired

another property management company

because what some people don't realize

about property management it's not a

money-making

business and you're serving two masters

you're serving the owner and you're

serving the resident um so it's very

hard to keep both of them happy all the

time um so it's a very very tough

business to uh to take on and so uh

because it's not a money maker um it

involves a lot of people and a lot of

help to be able to do it well and so

your overhead ends up being a far

greater than your Revenue when you only

have like less than a hundred doors you

know even 200 Doors I think you're

probably close to breaking even between

that that you know 200 to 300 um

depending on what you're charging and

what other fees that you have and we

didn't believe in fees you know we

didn't want to nickel and dime are

investors we just wanted to be a better

property management company than all the

other ones that we tried Outsourcing to

um so we ended up acquiring another

property management company so that we

could get our doors up um to a point

where it made us profitable so that we

could hire more people and just do a

better job and that was its own

adventure of bringing on another

property management company um and those

people um it was all a big big learning

experience but um for the sake of this

podcast we just want to say number two

is loss of money and it wasn't just us

it was also our investors right so as

two of the point importance of vertical

integration so number three flip lack of

flexibility yeah so um lack of

flexibility is really how many times um

have we uh been talking to a investor

and they're like okay well you know this

happened or this is what I need or or I

need help with this and and we are able

to do something unique because we have

all companies right right in house Under

One Roof whereas um let's just say

somebody bought um 10 properties at once

and they said hey I would really like a

break on my property management fee

because I bought the you know something

in bulk oh we can't go to our property

manager and expect them to do that but

we have everything um in house and we

can expect our sister company to say yes

I would be happy to do that because we

both have the same vision of a great

customer experience for our investor I

don't think they have a choice yeah yeah

no I'm just kidding they do they they

push back on me every now and then um

and sometimes I let them win because

they're right right you have to be in a

position and you have to be a leader

that's willing to let people push back

and and go oh yep yep yep you made a

really good point there so good point

I'm gonna back off um uh but yeah we

still have that flexibility we we have

the opportunity to sit down with team

members and talk about things and have

all of our interests pointed to the

investor and the company and so whatever

decision we make if it's a win from the

investor and a win for the company we

get to do it and we get to do it easily

as opposed to bringing somebody else in

um so that's that's the flexibility

piece um so vertical integration um uh

uh number four is you have cost savings

um and so what I mean by this is we've

got all of these companies so guess what

when our with our overhead you should

see our overhead tracker it's hilarious

um we have an overhead tracker and it's

got companies and tabs on every on on on

the overhead tracker and every single

company is a different Tab and then we

have a summary tab at the very very

front and um we've got people who work

across all the entire family of

companies um so that's the advantage is

uh you get to hire one person that can

help maybe one two three four maybe all

six it doesn't matter and so you have

one salary that gets split among the

companies that that person is working

for um so there's lots of different ways

that you can do this but we won't go

into all of them um the key here is that

we have more control over being able to

hire more people because we have more

places to put them and save money

because um for example um our main

Freedom uh uh marketing company that's

marketing our TurnKey product doesn't

have to um carry the weight of a salary

if that salary can be shared by three

other companies right so when I talk

about our overhead tracker like if you

look at all of our employees um and team

members uh then you're going to see like

um Tiffany's our transaction coordinator

and so it'll be Tiffany and she works

60% in this company and then on the next

tab is a different company and Tiffany

she works you know 30% in this company

and then another tab she works 10% in

this company so we we look at that and

we're able to take Tiffany's uh you know

uh salary and uh allow every single

company to share 60 30 10 of her salary

um so it's it's just carried you know

throughout those companies so the cost

savings um are huge um we have other

opportunities like because we have

property management and we have

Renovations we've got opportunities to

buy materials in bulk um and we have the

opportunity to store a warehouse with

the materials that we use to renovate

the property so the property management

company can very easily replace things

because we have everything um uh in

storage and in the warehouse um so

keeping those Property Standards in line

um all are uh have to do with cost

savings so that was number four flip

what's number five well before we go on

I think Tiffany is going to start to get

a complex because we're always we're

always using her as an example we know

she's always listening to the podcast

yeah that there's there's also more than

60 other team members but Tiffany just

happens to be the one that's she's

always top of mine I wonder why um all

right talk to her a lot yeah uh number

five is accountability across all

companies yeah so this is a big one I'm

trying to think of a Funny Story um

Chris I talk about Chris a lot too I

talk about the people I talk about are

the people that I interact with so much

um uh Chris and Steve are going to be

the the ones that we tell the story

about here so um Steve uh when he was U

moving up into uh in the company he was

first our punch list um guy and then he

moved into the renovations manager um at

the time Chris was managing IPM so uh

than think of it this way so uh

Renovations is taking care of a property

and doing all the renovations and

they're passing it off to the property

management company property management

company then has to put a resident in

that property um well uh Chris or

somebody on his team is walking a

property and going oh yeah no no this is

not done um there's thing there's issues

here and then there's that oh but we're

one family of companies I know I don't

want to call somebody out um what do I

do how do I handle this and we have

gotten to the point where we just don't

care yeah and literally there's like

this you know nope it's not ready push

it back and then Bulldog ends up getting

it back they have to go back out they

have to fix whatever happens um and then

there was one time where it was the

opposite Bulldog had handed off the

project it was good um uh uh Property

Management they didn't have time to get

somebody out there and in between the

time that they got somebody out there

and the time it was handed off was

enough time that something happened to

the property and so um I I can't

remember exactly what happened to the

property it might have been a storm or

something like that but something

happened um and uh so uh when they went

to push back to our Renovations company

the renovations company like uh uhuh you

ain't pushing it back to us you guys

signed off you said this was done you

passed your quality check we are out and

so guess what IPM our property

management company was now held

accountable to what happened to that

property to get it fixed so we can get

the resident in there um so um that

accountability across companies is

fantastic cuz can you imagine us going

to an outside property management

company and try to hold them accountable

oh yeah oh what a pain in the butt and

we I think we did try that with five

different companies we did uh we'd be

eating all the cost 100% of the time

right but now it's a shared

responsibility and each company has to

stand on their own as far as

profitability and what they're doing

what their expectations are so they know

oh crud you know I screwed up and that's

now going to cost our company um and

that you know when we look at our p&l um

we go hey what's going on over here IPM

or bdr what are you guys doing um and

they start evaluating the challenges

that they had that last quarter and

start fix ing them so um that

accountability across companies is

pretty huge all right so did you do that

one I did that one done I do the odd

numbers okay all right number six that's

funny is isn't it though okay number six

um is efficiency um so uh an example of

of efficiency is what we always say

right you can run down the hall yeah

exactly you run down the hall and say

hey property management company or hey

Acquisitions team or hey Renovations

team you know every everyone's right

Under One Roof yes and it's just so nice

to have it that way it is um also our

systems right like podio as one example

almost every single company uses podum

and so our ability to communicate within

in the team also Google the the Google

Suite we have Google Chat and Google

meets um our ability to communicate

across all companies is huge um uh

because everybody can you don't have to

call up the property manager to go

what's going on with this property what

have you done you can go just tap into

the system and just go oh okay I see or

you can run down the hall and just ask

them if you can't tap it into the system

same with bulldog you can access the

spreadsheet that says um here's where

we're at on the renovation here's how

long we anticipate it's going to be um

so that the sales teams knows what's

coming down the pipeline so when they're

talking to investors and they go oh you

know I'm just looking at this sheet it

looks like in the next like two weeks

we're going to have this or this um

because we'll have people calling and

saying hey I really want a multif family

property so do you have one and the team

can just look and check it out so that

efficiency across the board of

communication and ability to serve our

investors because we can just jump in

into the systems and be able to see

mostly everything and what we can't see

we can run down the hall and and and

find out what it is or jump on a very

quick you know video chat um with

whoever it is because everybody

prioritizes the family of companies

they're not like I work for property

management and I'm not going to make

time for you Mr renovation company right

they know that we're we're One Umbrella

we're one team and everybody prioritizes

the team as as as whole because that's

what serves our investors that's what

serves our company and the success um

that we're um going well even the the

meeting we had yesterday in that meeting

yesterday we had uh a member of FFC um

sorry the yes right yeah yeah yeah so

it's it's freedom family Investments the

but the fund and syndication he's part

of the fund and syndications you had the

CEO the cro the vice president of uh

client uh or investor relations uh uh

what what's his title now yeah yeah

Chris we're going to kill you because

your title is so

long vice president of customer

relations and asset manager that yeah so

he was there uh we also had uh one of

the heads of the Bulldog which is the

renovations company y we also had uh an

integral part of IPM which is our

property man that was in one meeting and

the financials uh um the fund a fund

Financial accountant um he was in there

oh yeah yeah and he was there too and

they're all part of the team yeah you

know but all in different companies but

all in one meeting because in that

meeting we needed different uh pieces of

the puzzle how hard is it to get your

attorney and your tax um guy together

right into one meeting go they're

they're like they're like two sides of

the of a magnet you can't push them

together sorry for those of you that

just listening and can't see me I'm

trying to put my hands together yeah

yeah um so yeah so that's a perfect

example of you know how difficult it is

to work with an outside company and get

them all in one place where all we have

to do is set meetings on a calendar and

everybody again priority number one is

the family of companies not your company

so we all jump into whatever meetings

that we need to be in we make that a

priority um for the company as a whole

for our investors as a whole and then

number seven is you yeah and it all

comes down to teamwork it's the teamwork

the vision uh and I like the the word

the the coherence you know it's making

well because you can have a team but if

the team doesn't work together it's not

really a team just a whole lot of

individuals yeah and learning lessons

like uh remember back in the day where

it did seem like we were fighting

against each other a little bit oh yeah

back in the

day when I rode my horse to work uh yeah

no but we've we've built the team and

it's taken it's I mean today's team

compared to when we first started it's

it's much different it's much more uh

coherent I guess since you use that word

you know it's it's uh we're much more of

a team than than a lot of individual

players yes yeah and that's been um uh

the nature of the team itself very many

times somebody in the team will say hey

can we do this as an exercise and it's

meant for the entire family companies um

I think there was an exercise where we

put uh what do we want to stop doing

start keep stop start yeah yes so we

made a list of what things we want to

keep across the family of companies what

we like that's happening um what things

do we not like and we want to stop doing

and then what things what ideas do we

have that we want to start doing and so

everybody you know had their list and bu

it out and then ultimately we looked to

see how many times something came up and

those were be you know key factors that

we would go oh whole lot of people are

saying to stop this so let's Circle that

and ditch it um uh and you know quite a

few peoples had REM had recommended to

do something um and a lot of people said

you know keep and so um doing exercises

like that for the family of companies

that teamwork um our parties even

amongst the US team and the virtual team

and the virtual team is not just in the

Philippines but they're you know across

the US I think um we've got uh gosh

Georgia we've got I think North Carolina

coming on Missouri coming on um we just

have people we're in Florida but our

offices in Ohio indana yeah Indiana

that's right um uh Georgia there's two

people in Georgia um

so so yeah so just uh you know that

teamwork you know even virtually like

we've just done a really really good job

of making sure that um Everybody

communicates really well no matter where

you are in the world um and that that

Vision we're getting better and better

at the vision I think that's something

that um uh CEOs have a hard time doing

is making sure that the vision isn't

just stuck in their head right right

that the team actually knows where

they're headed um and then there's

there's a book called Vivid Vision so

for those of you who are um are business

owners um or have an aspiration to

become a business owner um read VI Vivid

Vision it's a really great way to put

your brain on paper of what you see over

the next three years and when you talk

about Vision it's really hard to to set

a vision 10 years down the road you know

so many things change in in a few years

even five years is tough but 3 years not

so much it is you can you can get

realistic about three years is it going

to be perfect is it actually going to

come true no um but it will give you a

Guiding Light right you say here this is

the direction that we're going and then

as you go down that maybe within the

next six months you something happens

you go we're just going to tilt it you

know a little bit this way um uh but the

point is is just to have a you know that

Lighthouse saying this is where I'm

going um so I think that that um that

piece of the vertical vertical

integration is really really powerful

because you're only as strong as the

weakest member of your team um so uh

it's just really important that you're

working together and that you build this

really strong Foundation um I recently

recorded that 12-part video series that

right um is probably going to get

released soon either via um YouTube

email or app or a combination of all of

the

above so stay tuned yeah so that 12-part

video series was really meant to be

short video segments that kind of said

hey like for those of you who don't know

us or those of you who do know us but

don't understand what we've built here

let us show you what this vertical

integration looks like let us show you

the foundation that we've built that is

so freaking strong just try and Topp us

over you can't um because we're so super

strong and we've just built this

Foundation that we are able to control

all the pieces to the puzzle um and not

every single piece but most of the

pieces I would say the most critical

pieces

um and why this is important is because

these seven things that we just went

over um is ultimately the the the reason

you succeed or the reason you fail y

right so at the very beginning we said

we could have failed because of the

people that we had outsourced things to

um uh if we would had kept it in their

hands we would not have made it this far

we had to bring it in house just the

first two alone yes renov Renovations

and prop management that's right and

that goes to risk mitigation when you're

building anything when you're investing

in anything you always want to mitigate

your risks when I'm on the phone with

investors I tell people why we do volume

why because it was a risk mitigation

piece for us it was I know in real

estate things are going to happen and

it's gonna suck we're GNA peel back a

wall and go crap um and it's G to add

5,000 to our you know our rehab budget

or 10,000 or whatever it is we've had um

septic you know issues we've had

Plumbing issues we're just finishing up

a two Plumbing issues at two of our

apartments that were um unknown and we

had to get the city involved in perit

and it was just insane that's going to

happen that's real estate folks so if

you want to be an active investor and

deal with that crap um join us it's

crazy it's a wild ride um if you want to

be a passive investor and you know let

deal with deal with all that stuff um

that's actually who we serve that's what

we love we love the passive investors

because we're willing to go through

those things because we've gone through

them enough um it's normal to us we know

we're waking up we know we're getting

exposed to the challenges and we know

that our job in our business is to be

problem solvers all we're going to do is

get up every single morning and solve

the problem and solve another problem

solve another problem and that's how we

keep on growing is making sure that the

companies are in a good place our

investors are in a good place um so

that's how you mitigate risk is because

we did volume we said we know it's going

to happen you know and uh uh crap's

going to hit the fan see look at me

holding my tongue um uh and so uh when

it does who cares because we do volume

so if eight out of 10 deals are good and

two out of 10 deals are bad it does not

matter so it doesn't phase us we don't

get EXT incredibly emotional it used to

get really emotional when things went

bad but now I'm just like ah you know

whatever it's part of it's part of the

game you know you just know and

understand that it's going to come you

wait for it to come you address it you

fix it you move on um so risk mitigation

vertical integration is a big piece to

risk mitigation you're listening to the

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what you guys are enjoying all right

welcome back we're so excited to be

talking about vertical integration today

um it's been a really um Hot Topic in

our minds of something that we wanted to

bring to the table and start talking

about more um so that people got

educated on why it's so important to be

working with a company like ours and why

this builds such a strong foundation for

us to be able to continue to grow and

continue to add on more companies um

that allows us to serve us as a company

and serve our investors as well it also

allows for simpler communication and

transparency so um we always say that

we're transparent and authentic um

that's just first and foremost part of

our core values it's who we are to

what's what we believe in it's our

character um and in order to have that

um uh transparency H you it it you need

to have vertical integration you have to

have all those companies because it's

really hard for us to look in somebody

else's system or look and see what

somebody else is doing if it's not in

house um but in house we could get to

dive into everything and we get to

really see what happened what went wrong

how do we fix it um and that allows

communication between us and our

investors to be so streamlined um

because we can say we know exactly what

happened now we know how to fix it and

now we're going to fix it here's the

solution and this is uh the result um so

those things are incred uh incredibly

important so the reason that we thought

vertical integration was so important to

talk about today um is because over the

last year as the market has shifted we

have seen um number one uh projects fail

um whether it was um Fix and Flip

investors um or hard money lenders um

having defaults on loans from Fix and

Flip investors

or multif family syndicators um uh

struggling with their deal because they

underwrote it and they thought it was

you know good but they got a bridge loan

um or they thought it was good but they

didn't anticipate this uh the inflation

environment they didn't anticipate the

rising material costes they didn't

anticipate the rising interest rates um

and um there's a lot of things failing

and I'm not here to point fingers um and

say that those are bad investors because

you simply don't have a crystal ball

right um but the better investors the

people that you want to be aligned with

and working with are the ones that are

taking control of as many pieces of the

puzzle as possible so that when things

like that happen it's not that hard to

fix there's so many levers that you get

to pull because you have all the pieces

in house um that you're able to get

through through challenges so we still

have challenges but we are able to get

through them because of our volume

because of our vertical integration and

um I we have Partners in fact on on a on

a building in Mississippi and they have

uh I think over 2400 probably up to

3,000 units now multif family and uh

they said um uh we were Outsourcing to

other property management companies and

every single one was failing to our

underwriting standards um and so we had

to bring it all inhouse and this is

during her pregnancy even um and so she

was like what a wild ride but at least I

didn't have to think about the fact that

I was pregnant and what am I going to do

there's a child coming they were just

Silver Lining yeah they were working on

hiring and then building that whole

entire property management team inh

housee vertical integration that's they

they said after this is after 3,000

units they went we have to do this this

is critical to our excess we have to

bring it in we have to have control um

and we have another friend uh he's in

our Mastermind um that the reason that

he is succeeding he attributes it to the

fact that they brought Property

Management in house they're bringing

Renovations in house um so this is so

critical that we thought hey we're going

to be the people that are going to start

shouting vertical integration from the

rooftops and start talking about it

talking about the risk involved if

you're not vertically integrated talking

about the advantages of being vertically

integraded so that you can get more

educated um if you're an active investor

you can start thinking about how are you

going going to control and mitigate

these risks if you're a passive investor

you can start going oh you know I don't

want to work with somebody that doesn't

have control over all the pieces of the

puzzle I want to make sure that I'm

working with somebody that I trust that

has a track record and does have

everything in house and can solve

problems faster and can identify what's

going wrong and be able to fix it at

their control and desire as opposed to

relying on somebody else um so it's just

a powerful powerful topic and I really

thought it was important to share today

um so uh flip yes before we end this

episode okay I want you to think of

something fun okay remember I bring the

content you bring the fun oh I have to

say this out loud yeah yeah okay I got

you well this episode's going to uh air

uh right before Christmas so uh what

what do you want for Christmas oh crud

see this is

fun I this would be fun I think it's fun

for me I'm not really good at the whole

Christmas thing I like to give but um um

I don't I'm so blessed that I have

everything that I possibly could want um

I think what I always end up asking for

is I go on like Amazon or something or

an audible and I start listing all the

books that I could potentially read and

I say okay here's like 10 books that you

can choose one

choose one yeah okay because I have so

many fols and I'm still catching up on

them um but yeah all I want for

Christmas is my two front

teeth I don't got nothing and all I is I

want a hipot for Christmas sorry um no I

just want some Rudy's breakfast tacos

that's all so much okay yeah yeah yeah

that's going to be fun we're going to be

in Phoenix and Texas um spending

Christmas so um yeah all right very cool

okay so that was pretty fun thank you

for doing that oh wait let me throw it

right back at you what do you want for

Christmas uh Rudy's breakfast tacos I

already said oh right right I thought

you were gonna say something about a car

I always expect you to want a car or

sunglasses or shoes I didn't know that

was in on my choices so let's can we ask

me that again ask me that again no no no

no no no we're done so we're super happy

to have you guys here thank you for

joining us for this episode um we are

super excited about the next episode

coming up um we enjoy bring our Network

to you and talking to these guests man

we've had some really powerful episodes

so stay tuned join us next Wednesday um

and until then uh Happy investing bye

everybody

[Music]

bye nothing on this show should be

considered specific personal or

professional advice please consult an

appropriate tax legal real estate

Financial or business professional for

individualized advice opinions and

information on the show are not

guaranteed all investment strategies

have the potential for profit or loss