Revealing The Top 7 Ways Vertical Integration Can Help Businesses
Summary
TLDRThe 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
📈 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.
🛠 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.
🤝 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.
🔍 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.
🌟 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.
🏗 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.
🔑 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.
Mindmap
Keywords
💡Vertical Integration
💡Trauma of Outsourcing
💡Investor Experience
💡Reputation
💡Turnkey Company
💡Renovation and Property Management
💡Cost Savings
💡Accountability
💡Efficiency
💡Teamwork and Vision
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
freedom show with f and Danny um it's
just us today we don't have a guest
we're talking about vertical integration
but um don't leave yet because we are
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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
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