Andrey Sokurec


Episode 36.

Andrey Sokurec, Founder & CEO of Homestead Road

00:00:00 – 00:02:01

Sometimes you just click with someone and for me, today’s guest, Andre Sukurik, is one of those people. From Belarus and zero dollars in his pocket to building a true real estate empire, Andrea is really an impressive human. I’m Dalton Elliott. This is the real estate of things podcast. Thanks for listening. You’re listening to the real estate of things podcast. Welcome to the real estate of things podcast. I’m your host, Dalton Elliott. I’m joining today by Andre Sacorik, founder and CEO of homestead road. Andrea is also best selling author wrote total financial awakening. Andrei, thank you so much for joining me, my friend. Well, thank you for haven’t may appreciate that. I’m excited. Beautiful, I love it. I love it. We have no shortage of things to talk about, but first I just want to get the bird’s eye view of Andre. You’re in Minneapolis, Minnesota. Talk to me about how you got there, talk to me about homestead road and what’s your mission. Is there all right? So I cam to you asking two thousand and four. I Cam from Belarus, which is eased on Europe, and at that time I didn’t have any money, I didn’t have any credit. I didn’t have any friends and I could barely speak English. I’m still learning it, but it didn’t stop me from believing in my dream, and my dream was to build something bigger and better and create a passive income and achieve freedom of time, money, relationships and high purpose. So, as of today, homestead road it’s is a regional company. We operate in three offices. We do about five hundred fix and flips a year and we…

00:02:01 – 00:04:00

…operate in Minneapolis, Minnesota, Milwaukee, Wisconsin and Tampa Bay, Florida, and planning to expand to Orlando and Miami and Fort Lauderdale this year. We have about eighty nine employees as of today and the revenue of the company about a hundred twenty million dollars. Yeah, that’s incredible growth just for you from Belarus coming over here and an employees and massive revenue. What’s you mentioned Minneapolis, or rather Minnesota and Florida. How did you strike up business in Florida? What attracted you? Well, Minnesota is a nice state, but we have long winters, so isn’t it nice to have an office in Florida? This is true. That is complete, since I think a lot of folks in Phinian’s world feel the same way. Right during covid you saw JP Morgan’s or Goldman. So all these groups opening up offices down in Florida. Yeah, it gets cold up there where you are. We’re just chatting about the weather beforehand. Always curious in May are you still jacket it up and bundled up and Canada goose? But you said, and you can see behind you here, it’s bright, sunny and pretty out there. So perfect time for hammers to be swinging on Rehab projects. Yeah, that’s right, but the truth is, like it’s not only about the weather. But in Minneapolis it’s very complicated process to fix and flip homes. We have a high regulations, we have a high seasonality. So I just read the report recently. So Minneapolis and Milwaukee is from the list of all the like flip markets, at the bottom of the the list because we have high regulations, a lot of snow, like you cannot pay in a house during the winter, and in…

00:04:01 – 00:06:02

Florida it’s much easier to flip homes. Market is bigger and also, like we had a relationship there and we did the joint venture with a local company. We invested in the processes, system technology. We have software company, not software. Will build own software and as a service. So we everything. All the houses come to the platform and everyone can operate from a cell phone. So we decided, in order to protect my freedom of time, money and relationships and higher purpose, I didn’t want to necessarily work more because flipping homes it’s a very highly labor intensive business. It takes a lot of oversight. So that’s why we decided to expand through joint venture relationship where we provide infrastructure to do that cost like millions of dollars and we partner with local guys in local markets who understand the market but don’t have necessary to technology, the processes the systems, because most of the guys, like, probably just some guys do, like about fifty two hundred homes a year and you don’t need to have super like prod aggressive process and systems high and have a really nice lifestyle business. However, when you go to probably about three hundred homes, you have to help process systems. You just cannot operate without technology automations. And we decided to go that throughout and invested the money and now I will plan our four year vision to expand in the twenty markets so far, like we opened our second location three years ago, and like improve the processes, build new processes and now automated everything. So now it will be easier for someone who wants to join our plat form homester road to just use how…

00:06:02 – 00:08:03

…it technology and our processing systems and create the same kind of branch and lifestyle. That can be build a passive income and passive income. What I mean probably for a lot of listeners, that’s what I wanted to do and a lot of rule state investors wanted to do, is to create a passive income. Passive income gives you freedom of time. And what I mean by passive income when you don’t need to work every day to support the current lifestyle, so you can focus on your kids, you can focus on unique abilities and also help offer people on the way to build the same thing. Yeah, you, you are a builder right, and talk to me about how you got into real estate investing right, because you said you came over to the US didn’t have any money and you have built really an empire for yourself. So how how are filling the gap there? How did you get from from A to B, A to Z? Really well, thank you for your compliment, but I cannot take cresit for building the company myself. I have a great partner, but also I have great partners inside the organization. Like now, like we have like eighty nine employees, like and like. People been with me from a lot of people from day one, and so they helped me along the way. So how get how it got started? My background is finance and counting and back at home I was working as a financial analyst at large bank and I start I love the numbers and when I came here, it’s kind of weird, but like I was basically unemployed. I don’t I didn’t really speak English, I didn’t have any work experience. So I had to work in construction and swim the hammer like foot three months before…

00:08:03 – 00:10:03

…adapting, and that was a very humbling experience. And then I decided to to go and start doing loans. I don’t know if you remember, but at that time I was super like popular profession to be a loan officer, and I still remember close my first loan and walk away with Sixteenzero and Commission I remember, like I did Alan with a negative emortization. You can charge three points on front three points from back, and I was thinking that American dream is right here. Like I already achieve it. I can close three loans per months and, like I make a lot of money. It didn’t last long. When the market crumbled, my commission fully disappeared and I had to find something else. And I like what Winston Churchill said. He said an optimist, seeing an opportunity in every challenge, and I saw that real estate crumbled and start buying rental property. So I part I and my partner and I we bought about hundred rental homes in like bad part of towns, transitional part of towns, and we didn’t have the money, so we had to go to harmoney guys and paid forty percent interest, which is ridiculous amount. Like the interest. However, you buy a house for cash, you stabilize and then our plan was within six months to refinance with the local bank and get normal, like five percent rate at the moment, and build a lot of joint venture partnership, knock on a lot of doors, find people who want to invest with us. That was a lot of knocking on door activities and the time no one wanted to listen about real estate because people burn out. But I think if you don’t step forward, you always in the…

00:10:03 – 00:12:01

…same place. That and we had to build that rental rental perfle and created really create passive income and real nice lifestyle. Like my goal was initially to buy a calculated that I like what’s Sevin cove is said. You need to start with the end in mind and my dream income was at that at the time, I wanted to buy ten rental properties so it can generate when it’s paid off, I can generate thousand per month in that income, make ten grand a month and that was a good income. But, however, your lifestyle expenses changes over time. Like kids go to private school and like do you go to nice and neighborhood and like you want to have better vacation. So it changes over time. Is So I need to buy, not to need to but I wanted to buy more houses and have a nice lifestyle. But I also believe that it’s important to have a budget in place and live below your means and if you don’t have the money, don’t spend the money, because like being alone ups or saw so many people making good income but they buy expensive cars, they buy houses and they basically like one pay check broke and that’s what exactly situation that I describe like my journey how I transition from being alone officer to become real estate investor in the in in my book, Total Financial Awakening. Just it has a the same blueprint the process what I’ve done transition from a loan officer to real estate investor and then build in the business. Yeah, you have to watch out for that lifestyle. Creed I for most of my time we were in capital, where I currently work.

00:12:01 – 00:14:01

I’ve built out our mortgage breaker channel and a lot of have heard a lot of stories over the years of folks who were, you know, a countrywide other shops before the crash and they tell a similar story of, you know, whether it’s themselves or people, that they were around making well into the six figures. One Guy told me he was like, if you were making less than a quarter million dollars a year, you were just not showing up for work. The money was just being printed. But that’s it is like a lot of these folks were spending it in one pocket and then immediately out, and so keep those fixed monthly expense is low. Being mindful and knowing that, especially in this space, if you’re in real estate it is cyclical. Right? It’s not. You know the the crash showed better than any other point that you know there are ups and generally it’s going to be up into the right but they’re going to be downs and you have to prepare for a rainy day and if you’re not, you’re going to be in a world of hurt whenever that rainy day comes. Yeah, that’s right. Like I think we are. We’re blest to leave in this beautiful country, because comment from another country and as a key they lived in Spain and they tilly like and in my home country people still making five hundred dollars on average per month. And if you think about all that, people thinking, okay, how can I save additional amount of money? Well, just like set ups, set aside like ten, twenty percent, twenty five percent of your income, create automatic deductions and build a budget and monetory a budget, or start invest in early and think about the power of compound interest. I like the rule of seventy two. So basically, if you invest the money, let’s…

00:14:01 – 00:16:00

…say a ten percent, and use you divide seventy two by by your interest that you gets in, it will show you the number of years when you investment will double. Example will be if you invest money ten percent, so seventy two divibe by two hundred and ten. It’s seven point two. So it means that in seven point two years your investment will double. Well, what if you invest money twenty percent? At twenty percent, your investment will double in in three and a half years if you use compound interest. So that would help me really to start sets in money aside early and understand the power of compounding interest and put the like excel spreadshet. The early you start, like if you have any young people show that’s the advice that they got from my mentors. A like start buy and that trontal propers early, like if you twenty years old and you buy a one property per month and by thirty you already have ten properties, but can be easily paid off. Like if you if you have your mortgage probably will stay the same or but your rent goes up and if you ever need the money you can catch out re finance and pull the money tax free. And that mentality really if you see the the end game, like when you build passive income for yourself, it’s like you should start doing early or have a discipline to set the money aside to build, to live within the budget and like probably don’t don’t have don’t buy the things which you cannot afford. Like when you can afford them, go ahead and buy whatever you want. But they see a lot of people, as soon as we start making a little bit money, instead of buy and rental property, buy a nice cars, which is depreciates an asset. In my mind, like buy a more expensive home right away. Well,…

00:16:00 – 00:18:03

…like, what if you buy a rental property instead? So that was the mindset that helped me to propel in my investments. Yeah, there’s some delayed gratification there right, which is not always it’s probably never the most fun thing. It’s not always the easiest thing, but yeah, you always have to have a weary eye the horizon. You can’t. Yeah, you just completely live in the print. It there and all on now. So switching gears a little bit. You, you have really been a rocket ship and the growth continues. So these markets you’re expanding into, what markets excite you the most right now? And we’re in like in our current climate, it’s it’s strange, like housing is very strong. There’s a shortage of units. Construction hasn’t fully caught up with that. You have rates rising. There are so many more variables that are just wonky and all over the place compared to, you know, the last you know, call it the five ten years pre covid. Now it’s it’s all over the place. So what markets are you most excited about? And then kind of a follow up question. Are there any markets that are starting to be of any concern for you or you’re tightening? Maybe you’re tightening your kind of underwriting approach there when you’re looking in that market? Yeah, that’s a great question. So for me, my goal is to work less. I don’t want to work more. And I also learned the less I work, the more I make. Learned from the guy, the gentleman, name then Solivan, strategic coach, and he has a great, great mess for my group, sces, you coach that I highly would commend, and been in his group for many years, and what he…

00:18:04 – 00:20:03

…taught is, I okay, how you can work yourself out of your opperations and work and free create freedom of time. So, to answer your question, I’m not looking into a new markets like I only want to go through expansion, like doing Jav’s with our people and help them to generate. Let’s say every I mean every location, probably can make from five hundred thousand dollars to two million dollars as a branch. And if you have proper it’s like a recipe. If you have right recipe for a chili soup, you’re going to make it right. And if you try to do it yourself and you don’t have your help, you have all the ingredients but you don’t know the sequence. So what we did build we build a recipe for expansion and my goal is to fulfill my personal personal my personal mission statement is to help other people achieve define freedom of time, money, relationship and high purpose and create a partnerships. I like to do JAV’s with people. We do gvs with wholesalers where we partner with them on a deal, we finance a hundred percent and we split the profit and I like the kind of deals. I don’t like to do it all myself, because you can have a hundred percent of your small pie or you can have like a little, a lot of small pieces of a much bigger pie, and that’s what my my philosophy right now is not to work more because it takes a lot of time and efforts to build something from growned up, but someone who like the prospect would be for us as a partner, someone who has a corporate job, makes good money, knows how to run a business, but we can give all the processes…

00:20:03 – 00:22:03

…and the Ip how to do the business. So that’s what that’s the model I see that can can can flourish. Yeah, and talk to me about your appetite right now for rehabs versus rentals, or you you kind of solely focused on bi fix rehab side right now? Yeah, right now, Dalton, we we sold our rental portfolil about like probably a couple years ago. We had to pay a lot of income tax. That was the first realization. My second realization I went to Ecuador and did I ask and like spend two weeks in the tribe and kind of look back and like okay, what, what’s the next step? And I decided that the best way to to to grow is not to do, not to not to work more, but to work class. So then that’s what I want to do. I’m going to take your brain about that or all right, like we happy to share. Yeah, I love so talking about Minieapolis, right, I’ve never been to Minneapolis. From what I have heard, when I can see the little bit behind you, it’s like an absolutely beautiful market. But talk to me about like what do you love about it? Where’s the market heading? Just give me the rundown Minneapolis show. Mineapolis is a very strong market. We have a lot of fortune, five hundred companies like target, best by three am health partners and a lot of Norwegians moved here a couple hundred years ago.

00:22:03 – 00:23:59

And it’s a strong market. But also it’s it’s hard for from a fix and flip perspective because a lot of regulations and seasonality. That’s kind of like, like we like to flip a home, like you have to have a point. It’s called truth in housing report. You have to the city will inspect your house and they will tell you what you have to do. And as soon as they inspect your house, you have to pull the permits for electric for planning, for everything whatever they say that require permits in work you have to do. But other than that the market is very, very strong. A lot of people, in spite of cold weather, come here because those conglamorates attract a lot of highly kyle skilled workers. So in terms of rentals, like this market is very strong and rental market, but cap rates not so strong. That’s why we decided to sell our inntals and not to kind of not to buy anymore. But what we expected that market is going to correct itself, but it didn’t happen and we had the use of capital to invest money into our business. But now, with the market like potential recession like nine, two, eights and months from now, no one knows for sure, that will create a lot of opportunities, like if you think from that standpoint, as soon as you don’t get that’s our straight as. You don’t get into a long term projects right now, because if we still believe real estate will be really strong, but we don’t want to go into like one year long projects. We want to go into shorter projects and when market corrects itself, like then we can replace them into a really easily sell them in Tory, like if you need to sell them at let last…

00:24:00 – 00:26:03

…and replace with with cheaper inventory, and you have to do it really fast and like. I know it, because if I bought my first property in two thousand and five and at that time I was thinking I got my American dream. Did are you are you look at this little more cash now then you would normally just with your either the horizon and where you feel that we’re going as a as an economy. Yes, like we have a substantial cash reserves. Like we don’t need the money right now, but we put put together to funds, one fixed and fixed rate fund, but we advertise to public. Another one is equacy fund. So when the time comes, like we already prepared to buy rental propers, because would love to buy more rental propers. But the CAP rate get compressed so much it’s not worth from my spelling point standpoint, in my local market. Probably other markets have much stronger cap rate, but Mineapolis, is like five percent cap rate. Like, I don’t truly excited about five percent cap rate, but if we get prepared, if we’re going to have price correction, we could will read it to buy, like probably would buy thousands of homes if the CAP comes back. So like eight percent, nine percent, would like. I still believe real estate the best investment to L A financial till you can last. Yeah, no, no disagreement there, and I just from a personal standpoint, agree on. Yeah, more cash on and now as a percentage, as opposed to twelve, twenty, four, thirty six months ago, just so, so much uncertainty. And you know, I think. I don’t think anyone’s expecting a drop off the cliff for housing, right. But but the last…

00:26:03 – 00:28:03

…couple of years have just been wild. It’s probably the easiest word to attach to it. From an HPA standpoint, rent growth has been absolutely crazy and almost every market. And now we’re starting to see just as a global economy, more headwinds rear in their ugly head. Whereas it was it was shooting fish in a barrel, it felt like, for the last last couple of years, in spite of in spite of a global pandemic, housing and real estate did the opposite of what people thought it was going to do. I remember the first couple of weeks and months whenever covid hit March, two thousand and twenty, April, May. Wasn’t really until June that I think the industry started to feel comfortable and like all right, this is a health care issue. This is like oversimplifying, right, but this is health care issue. This is not a housing issue. COVID is not a housing issue. People were looking back to two thousand and seven, eight nine, as soon as covid hit and lenders halted lending, everybody went to walk down. Everybody was waiting for the shoe to drop and it didn’t. The exact opposite happened. It was just, you know, fueling the fire and housing went up into the right so it’s, I think, the only thing that anybody knows. The next said ten, twelve, twenty four months. It’s going to be interesting and it’s anybody’s gas so exactly how that plays out, but it’s going to be it’s not going to be like the last twelve, twenty four months. Think that’s probably the only close to certain thing you can say. Yeah, that’s right. From the other hand, like we still have a lowest amount of supply of homes, or like we operate in the first time Home Barre cancegory. So we have right now five months of supply balance.

00:28:03 – 00:30:03

Market considered five to six and people still need to find the way we’re to invest the money because, like to simplify, like there’s a global, global economist situation, like if we had the healthcare issue, we had a social issue and then we because of the Covid, we have so much constrain on supply chain. The Big Corporation. They didn’t produce the results. Because of that, everyone like look at like ones, like financial reports, and because they don’t produce the financial outcome, the stock market goes down. And now we see another causes of the crisis is a China lockdown, the war in Russia Ukraine, and that will obviously, like will lower down the expectation and you see, like stock market went down, but people need to invest somewhere. So we’ll look. We just no one knows for sure, but we really cautious, and I would say what hours the rateergy is to be prepared, like we we can have like oops, okay, if the market goes down, okay, what’s your risk mistigation strategy? What’s the plan? Be Plans C and plan Z right, like we have infrastructure to convert the properts in to rentals. We start negotiating terms on a long term financing with our banks and now if we cannot sell a houses market drops significantly, we can convert our fix and flips in to rentals and we already have negotiated pre negotiated terms with the banks full long term financing. So I think it’s important right now, like people who didn’t go through the ups and downs for two thousand ten crisis like and think that real estate only go up like you should have your strategy in place. Yeah, backup plan and backup plan, backup plan…

00:30:03 – 00:31:48

…as always, like you said. So, Andre, I cannot thank you so I can’t get think enough for joining me. We have we could go on for hours. I feel like I’m going to pick your brain after this episode a little bit too total financial awakening is the name of the book. Go get it, read it and thank you again, my friend, and I’m going to have to have you backbone and catch up later in the year. Just see how things are going for you in the team. All right, they’ll don’t waste my pleasure to be here. Thank you. Thanks so much. Thanks everybody for listening. Take care. Are you a real estate investor looking for the right lender that can finance all your deals and help you scale Lima? One capital has the best suite of loan products in the industry bar none, whether that’s fix and flips, fix and holds, building new construction or buying rental properties. They have incredible financing solutions for it all. A reliable common since Linder is one of the most important parts of your investment team, and that’s exactly what you get with Lima one. Let Lima one capital show you how they’ve helped thousands of real estate investor scale and increase their wealth. Check out Lima onecom or call eight hundred two five nine zero five ninety five to speak with the consultant and preparation for your next project. Thank you for joining us today on the real estate of things podcast. Subscribe and tune in weekly for new content from the industry’s best while we continue to unpack the nuances of this dynamic market. Follow US across social media for additional insights and analysis on the topics covered in each episode, and remember to rate, review and share the show.

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