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Investing in renting

Jacksonville Wealth Builders has found success in a turbulent housing market through turnkey rental properties for investors

By Wendy Bautista

While many have dubbed 2012 “The Year of the Landlord,” Alex Sifakis, Gregg Cohen and Adam Rigel of Jacksonville Wealth Builders (www.jacksonvillewealthbuilders.com) have been successful “landlords” for the past three years mostly in part because of their unique business model.

The foundation

Childhood friends Sifakis and Cohen always knew they wanted to start a business together, and in 2006 the time was right and they started their real estate company. Rigel joined the team three months later, and the trio has never looked back.

“Essentially, we were ‘flipping’ properties—buying properties to fix up and sell,” says Sifakis. “Then unfortunately in 2007, the real estate market crashed and those people that we were selling to weren’t buying anymore and we needed to figure out a new way to do things.”

They continued to buy property and renovate it, but decided to hold it for themselves as rental properties. That plan was working well until the credit market crashed in the latter 2007 and they couldn’t get refinancing anymore.

“It was about this time we began getting calls from clients enquiring if we could buy and renovate properties for them or if they found the property could we renovate and manage it for them,” says Rigel. “It was then we realized that there was a demand for what we were doing so why not provide that service to everyone and not just ourselves.”

From the ground up

“We figured if it was working for us, then it would work for others,” says Sifakis. This evolved into what their business model is today—turnkey rental properties.

“Every property will already have been purchased by our company, completely renovated and rented with a signed lease and a tenant in place,” says Rigel. “Then we sell it to an investor who is interested in owning a long-term rental property, but we continue to manage the property.”

Essentially, the client who purchases any of the hand-selected, single-family investment properties located in Jacksonville doesn’t have to do much but wait for Jacksonville Wealth Builders to send a check every month from the rental income.

To ensure the best return on investment for their clients and tenants, Jacksonville Wealth Builders only purchases properties in the four to six range on a scale of one to 10. These properties are usually in “blue collar” areas near good schools and amenities.

They also have an intense, rigorous screening process to find only the most extremely qualified tenants and investors alike. “While you can’t foresee all circumstances, it sure helps to try and get it right the first time,” says Cohen.

Making it work

One approach to making this all work is how they divvy up the work. “We all have distinct jobs and know what they are in regards to getting the work done,” says Sifakis, who is in charge of finding and buying properties.

Sifakis admits he finds out about many of the properties because of relationships he has built over the last six years. “Once you’ve closed more than 300 homes, you start to know people and they start to know you,” says Sifakis. “We often get calls from agents who are listing the properties for the banks just to let us know what is coming available.”

“Basically, we find stressed properties that we can buy for a really good deal and then turn it into a revenue-generating property,” says Cohen, who is on charge of sales and marketing. “But it’s not about just selling properties; it’s about building relationships, and we do that through networking, referrals, and on websites specifically geared toward rental investors, where we can have banner ads, marketing partnerships or sponsor newsletters and cross promotions—things more away from traditional advertising. Anytime we can be teaching, sponsoring, speaking, building credibility is optimal.

Rigel, who oversees renovations, property management, hiring of employees and contractors, and is the CFO, adds, “A large portion (70%) of our clients are investors from higher dollar areas, such as New York, California, and the D.C. area who cannot buy property in their area because it is so expensive. They take a look at Jacksonville, and it has three great investment factors: prices are low, rent is high, and the property is in Florida, which is a good area with growth potential and attractions.”

Adding to the mix

The other approach to making this all work is how and who they hire. “We believe so strongly about this team we’ve formed that hiring is such a crucial thing,” says Rigel. “You have to have a lot of trust when you give a ‘hat’ to somebody, so it better be the ‘right’ somebody.”

Cohen attributes their 100% customer satisfaction rating to the fact that they only bring on people who are going to be good fits—clients as well as employees. They have adopted the hiring practice of hiring on attitude and training for skills, and currently that applies to all 13 of their employees.

“I believe in hiring the right fit for the right environment,” says Rigel. “With us having such a large focus on customer service, you need the right employees with the right attitudes in those positions—you can always teach them about real estate. Hire the best and give them the tools they need to succeed, and you will succeed.”

“True customer service is something that seems to get overlooked in businesses today,” Sifakis adds. “Taking care of clients’ needs when they approach you is one thing, but to be proactive and build relationships with customers/clients is something entirely different.

“Customer service has proven in the past to be one of our best possible marketing strategies,” says Cohen. “People talk and it is amazing what word-of-mouth can do for a company.”

Looking ahead

“In the last few years, we realized there is a specific type of client we were looking for and many clients are not a good fit for us and we are not a good fit for them,” says Cohen. “The better we got at realizing who our ideal clients are, the better our business became—revenue increased, bottom line increased, but more importantly, our business has become so much more enjoyable and fun because we truly love our clients and our clients love us.”

Rigel adds, “Just because you have money and want to invest, doesn’t make us a good match. We realized that it was OK to let potential clients know if their goals weren’t in line with ours and if we were not going to be able to work with them.”

“That mindset shift happened a few years ago and it has made all the difference,” says Cohen. “We are always planning ways to make our clients successful and we know in long run that having the right clients will pay off.”

Sifakis adds, “There really aren’t any other companies doing what we are doing—where all we focus on is turnkey rental investments—and that laser focus enables us to better serve our clients.

Wendy Bautista is the editor of Advantage Small Business Magazine. She can be reached at Wendy@advantagebizmag.com or 904-222-8140.

 

:

Gross annual revenue

2006—$683,000

2007—$857,000

2008—$526,000

2009—$2,883,000

2010—$4,266,000

2011—$5,919,000

 

Business vitals

Owners: Alex Sifakis, Gregg Cohen and Adam Rigel

In business since: 2006

Projected growth: “We are going to continue to grow exactly what we’ve been doing, but with a reigned in focus to do one thing and be the very best at that one thing. We will always look for new opportunities, but they need to be the right opportunities and not be something to distract us from our ultimate goal. Basically, we need to get good at turning down great opportunities, but the opportunity has to make sense to the betterment of our company.

One thing we will do is to look at what some of the big institutions are doing. When one that normally does apartment complexes is looking into single family homes and sees the opportunity, we know we are on the right track and will be here awhile.

Our goal this year is to sell 168 houses with gross revenue of $15.3 million—and we are already a quarter of the way there—that would be more than 28% growth! This year, we are confident on buyers so we need to buy more inventory and may branch up from our usual four to six zone, but not in near future.

We’ve recently started in new construction and are currently building eight homes with another 17 to18 on the horizon. We also bought a lot of 21 brand new houses from a local builder that was foreclosed on and those new home rentals have been phenomenal investments for our clients.

How you can do it

“Having all of our business aspects—buying, selling, property management, rehab, renovations, etc.—under the same roof provides seamless communication and accountability. We have one phone number, and that is what all clients, vendors, tenants, etc. call. Most time problem solved before owners know.

If you see something not working, you have to be able to change on the fly and feel confident you can change on fly/ be ready for change. It’s a team effort and you are not by yourself. Oftentimes, the team can make better decisions than just one and it is usually for the betterment of the business.

Constantly focus on your cash flow. We meet every week to discuss cash flow and projecting out for the future. Include what’s coming in, what’s going out, and funding which project. Basically it is a real-time budget as things come in.

I can’t stress enough on not hiring from experiences, but hire for capabilities. You can teach the business side of things to anyone so it is best to hire for a personality fit and a culture fit. Bring someone in for their attributes, traits and personality. If you don’t enjoy hanging out with them every day, then it won’t work, try to hire someone better than you at one of your weaknesses. Don’t be intimidated and be happy that you are bringing in someone that contribute to the team and adds benefit.”


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