GI309: Building Brokerages While Investing In Real Estate with Joseph McCabe

GI309: Building Brokerages While Investing In Real Estate with Joseph McCabe

Joseph McCabe is an entrepreneur, US Army Veteran, and CEO and founder of the Surefire Group. His company partners with real estate firms to provide a suite of services to their clients, including mortgage, insurance, and settlement services. Joseph is also an active real estate investor and a managing partner in multiple home care agencies and assisted living facilities, while being a passive investor in several other asset classes.


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Transcript:

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Joseph McCabe. He is an entrepreneur, US Army Veteran, and CEO and founder of the Surefire Group. His company partners with real estate firms to provide a suite of services to their clients, including mortgage, insurance, and settlement services. Joseph is also an active real estate investor and a managing partner in multiple home care agencies and assisted living facilities, while being a passive investor in several other asset classes. Thank you so much for being on the show!

Joseph:
Yeah, thanks for having me all, man. I appreciate it.

Charles:
Awesome, awesome. So can I give us a little background on yourself? You’ve done a lot in real estate from being on more of the brokerage side, which you’re still on, going into what you’re in as well as in the investment side. So if you can give us a little background on yourself, both personally and professionally before investing in real estate and also launching your company now, the Surefire

Joseph:
Group. Sure. Yeah. I yeah, I was in college in December of 2015. And, and about six months prior to that, I was gonna graduate in December. I had a start date with the Philadelphia Police Department. And within that six months, I was training a guy at LA Fitness, and he was a realtor in Philly with Long and Foster, and he got me on the typical real estate thing, joined my team, you’re gonna make a billion dollars. And, and I did. I didn’t make a billion dollars with him. But that made me realize how much opportunity there was. And in six months I made the police salary and, you know, I told my dad, and he’s a cop, and we’re typical Irish Catholic, everyone’s a cop. So I was a cop in the military. I was like, all right, I, I kind of got that fix.

Joseph:
Let me ride out this real estate thing for a little bit a year later. I had, you know, I kind of got the bug and I had opened my own re max franchise because I, I like to say they were the only franchise award that would take a credit card from a 22-year-old and give ’em a, give ’em a franchise with, with no experience and no broker’s license at that time. But born and raised in Philly my whole life. Two years into college at Penn State. I enlisted in the Army. I was going the officer route initially. And then I finished at Cabrini College which I get to say now as Villanova. So Cabrini College was not as as great as Villanova. And then you know, we really started to just kind of build our own mortgage and title company. And I, I was great at copying and so I copied what a Keller Williams did that I was at in Philadelphia. Did it really well. And local competitors and, and national, you know, people started to talk and say, Hey, can you do this for us? You know, it was semi ironic because we were running a re max franchise, but, you know, the big players didn’t see that as, as competition. They saw it as a value add.

Charles:
Interesting, interesting. So can

Joseph:
You tell

Charles:
Us a little bit about what your company does on that side? Because it’s very interesting. I was reading over your website in preparation for this and a couple different interviews that you’ve been on, and it’s something I really haven’t run into before. And I think back of when I’ve purchased, let’s say residential housing and how it was structured and how myself as a real estate agent, I don’t really use it, I just use it for referrals here and there. But the thing though was that you know, when I’ve purchased before and you see how people, it was usually referrals, nothing was really done in house. And maybe this is just because I was dealing with smaller brokerages, but if you can just like let us know what your firm does and how you’re providing value and what you really copied from those large brokerages.

Joseph:
Yeah, and you know, it’s, it’s market specific. We’re in a lot of markets now where joint ventures don’t exist, especially the attorney states like Georgia, Delaware. Now, there’s no reason you can’t run a title company in those states. It’s just traditionally they haven’t existed. So in the past couple of years, a few things happened. One, they were always popular in Pennsylvania, and if you didn’t have one, it was pretty odd. We knew you weren’t making money, so we could pretty easy to get our foot in the door there. But, you know, after COVID, after this interest rate hike, after inflation, the volatility the builders were experiencing, we started to do some re research and we realized one out of the top 200 builders, the majority of them, more than 70% did not have announced mortgage and title as a realtor. You know, you know, if you go into a Toll Brothers showroom, you leave your business card, you’re getting paid, they’re using Toll Brothers mortgage and title company, you don’t have a choice, right?

Joseph:
As a consumer. So we started building that for builders. And then on the broker side doing the same thing because between the NAR settlement, the fact that rates were higher volumes were down. Agents want more commission, want more services for paying less commission somehow. And they, you know, they want all that to happen. And the brokerages are just left with needing to bring in ancillary income. And, and the only meaningful ancillary income that you can get is on title mortgage. The rest of it’s kind of BS transaction management. You know, some people have these home warranty things you’ll make 25 bucks off of. Like, it’s nice as the agent, but for the real estate brokerage itself, for a hundred million dollars brokerage and, and depending on the state, you know, most, most of the time the realtor from the buyer representing the buyer controls title recommends a mortgage company a hundred million dollars worth in buy-side volume, could be a million dollars in profit to that brokerage next year. And it gives them an opportunity that to, in most of our structures, w with realtors go and say, Hey, alright, you know, we’re the managing partners Keystone State Abstract or the, or the Shore Fire Group, there’s 49% equity left. Typically the broker keeps 30% of it, 20% of it goes to their agents. And now you, you do that for the top 20% doing 80% of the business, and you’ve got golden handcuffs and, you know, possibly life changing money for the broker, for the broker owner. Yeah,

Charles:
That’s a very important thing because that was one question I was gonna ask you about how the settlement changed, and since you touched on that and how the changes have been, I imagine this is welcomed with open arms at many brokerages because it’s like you said, another additional income stream, which not all brokerages have, so you’re keeping some of the agents kinda locked in there. But also, as you know, people, I don’t know the number is, but most people don’t buy more than a few different houses in, you know, in a any lifetime. So by the time they’re buying another one, seven years later, let’s say eight years later as their life changes, they probably forgot everything they did eight years ago. Right? So it’s having it all under one roof, so to speak, you know what I mean? Where it gets passed here, then it gets passed there, then it gets passed there. The cost doesn’t really matter, right? It’s just a convenience factor.

Joseph:
Yeah. The cost doesn’t matter. And, and you know, when we set up our mortgage companies, we do them as brokerages, right? So everything we do is super regulated. I mean, we’re not a retail lender. We can’t mark up our rates, like when we enter into a partnership with, with these real estate companies or builders, we’re not, we’re not like, you know, a guaranteed rate where it’s like, all right, we’re gonna pay you 1%, but really what we’re gonna do is mark up the rate by 1% to make up for that. We’re still a just a broker, right? It’s a separately licensed broker shop. We get set up with wholesale lenders and the rates are competitive. And so that’s, that’s a really big thing is like, we’re not hurting the consumer by doing this in any way. Even title rates in most states, title rates, and in some states you’re split with the underwriter is regulated.

Joseph:
So we’re in highly regulated, highly audited businesses that, look, this consumer’s gonna go somewhere to get this done. And NAR surveyed consumers and, and 86% of them want a one-stop shop, right? They want to be able to go to a real estate broker, like you said, they’re gonna purchase very few homes. They wanna know that their agent can solve everything for them. They don’t want to be a professional or, or passive investor, right? That that’s not their goal. And frankly, some investors, you know, want that too. They want to just say, Hey, I’m deploying, especially the more passive ones, I’m buying this property. You know, you get, get the inspection done, get mortgage entitled done for me and, and I’ll see you at closing.

Charles:
Right? Yeah, it makes perfect sense. So the sum proposition is that you know, you’re, you’re adding all these value add services to the brokerages and then also to their clients. Now, how do you, you, you touched on it before, how do you really find these potential, you identify these potential brokerages to partner with? Is it really just sorting ’em out and mainly going to them and saying, you don’t have these services, would you like these services? Because I mean, I guess in the past they would just do a referral out, is that correct? And they wouldn’t get paid on that. I don’t think you can really get, as a real estate agent, get like legally paid on a mortgage, right? I mean, there’s all that stuff from 2008, right?

Joseph:
Yeah. Well, you know, a little bit has changed on that front. So in, in 2022, and this is just, you know, when you think about like the regulatory landscape, and in my opinion, a lot of the goofy things that happen like this NAR settlement, it’s hurting consumers. And some states are starting to say, this doesn’t make any sense. Like, and they’re starting to regulate against this NAR lawsuit and the settlement that happened and just ha I think it was Alabama that was like, no, you don’t have to sign a buyer agency agreement to see a house. That’s insane. So, you know, we’re starting to see the regulations there, but in 2022, the CFPB removed the dual comp rule. So, you know, in California and, and I call it a gimmicky market, every realtor was also a loan officer. And, and a lot of them still are, but you could, you could only get paid on a conventional loan.

Joseph:
So maybe that was attractive in California, but for the rest of the country, 60% of mortgages, maybe more are government backed VA or FHA. So what we are, what they actually did was say, look, we’re, we’re taking that away. So it gave us an opportunity for the broker owners to say, look, you, you might potentially get to keep your 49% entirely. You don’t have to give anything to the agents. ’cause What we’re gonna do is get them dual license as a loan officer, they refer the business to our senior lo that senior LO closes it, make sure it’s priced right, compliant, all that stuff. And then the realtor just has to maintain their, their loan officer license. So it’s interesting ’cause that changed in, in 2022, despite all of this additional regulation in this attack on, on commissions for realtors. So it was pretty interesting to see that happen.

Joseph:
And in a lot of these states, I mean, you do see where it, it’s very, it’s very, very strict as far as what you can accept as a referral what you can pay for in marketing services. You know, Texas is a state where it just doesn’t, you can’t, you just can’t. And, and there’s a crazy case in Washington state where they got fined $10,000 a title company because the cheeseburgers they gave out should have had somehow been branded for the title company. Really goofy things. But there’s one thing that’s really clear under respa, which is, you know, that document just says there’s a safe harbor provision. And as long as you’re a shareholder, and this is a true separate standalone title company, standalone mortgage company, it’s got its own expenses, its own website, it’s a real company with real people running it, a license and all that stuff, then, then you’re really protected.

Joseph:
So when we do talk to real estate companies all the time, we hear, oh, we have a jv. And I’m like, well, hold on, let’s qualify that. What does that mean to you? They pay us $10,000 a month. Like, yeah, that’s not a jv and that’s definitely not what you’re paying in rent for that office space. So it’s not fair value. And so we, we try to educate them and then we show them the numbers and the numbers typically you know, speak for themselves. So when we’re identifying these, these partners, we have one entity that we allow individual agents, teams and small companies into. So this would be anyone’s sub, say sub a hundred million in volume, typically at least 10 million in volume. Could be a loan officer, could be a wholesaler, could be an investor that’s got, you know, we’re looking for years’ worth of business.

Joseph:
Not like last year I bought 10 million in property. All right, well we wanna see multi-year track records. ’cause Once we add you in, you’re an owner and you’re kind of a sweat equity owner. We’re expecting that business, you know, time and time again. Now for the brokerages and the builders, we’re looking for 200 million in buy side volume to be available. We’ll go to a hundred million depending on the market. So 200 million is kind of like what we say, but you know, in Texas or Arizona or any escrow state on top of a generous title premium, you’re also getting escrow fees. And then if we can bundle, I always, whenever I say that, I think of bundle home and all that, but whenever, if, if we can bundle mortgage and title with that brokerage then we might even go a little less, right? Then we might go to 75 million because we’re getting paid on both sides of the deal.

Joseph:
And then we’ll do one or the other. Like we just partnered with a builder in Tennessee, in Knoxville. We did a mortgage company with him ’cause he already had a title company and then the inverse in, in Minnesota and Wisconsin partnered with a builder there who already had mortgage with a high school friend. And then we did title. But the great thing is, you know, if that relationship falls apart even if, you know, they’ve already got a jv, we like to get a performer in front of them anyway and just say, look, keep it in your back pocket. We don’t charge management fees. It’s a true company, a true partnership. We either win together or lose together. And you know, we put it in front of ’em anyway. And, and a lot of our great joint ventures have been people who left their, their current partnerships. Interesting.

Charles:
Yeah, that’s a fantastic value add service to brokerages, which obviously are under fire from Selma and the changes. And and also the other competitors that are in the market, you know, not to speak with all the other technology people out there that are, you know, people who are, might be searching for houses through and not going directly to an MLS listing or to an agent. So very interesting there. Can you like moving on to like the investment front side of it, because you know, there’s a lot of people, you went from brokerage to adding value-ad services to brokerage and then you went to becoming a real estate investor and you know, you have single family multifamily, mixed use, assisted living facilities in your portfolio. What was what was the reason? ’cause Most brokers agents that I’ve met before don’t go to the investment side, right? They stick on that brokerage side on that. Why make the switch over other than just seeing all the money that was made over there? Yeah,

Joseph:
I mean, in fact, most never make money. I mean, you know, they, they, a lot of these brokerages that we see and, and I’m in, I’m a re max franchisee, I see it. These guys don’t make any money. We may be very few of the re max franchisees out there that make money, but it’s because of mortgage and title, right? It’s not because of the brokerage. And that’s a big misconception. You make a lot of money in sales, you’re not gonna make a lot of money owning a franchise unless you bolt all these things on. And so I think you know, I’ve always been good at copying, right? I was gonna be a cop. I was in the military. I, no one in my family has, has money. Just super middle class average. We don’t have any sob stories, but that, that was us, right?

Joseph:
And so when I got into real estate there was this guy at the gym that I knew Bob Maser. And he just, he literally just passed away. But I did everything that guy did because he was kind of the first guy I ever met with money. And so when I got my license I went to him in the gym and I said, you know, Bob, I got my real estate license and the typical stupid pitch of like, if you’re ever looking to buy, sell, invest. And he is like, well, he is like, I actually you know, owned 5,000 units at my height. And I was like, wow. Had no idea. Didn’t even really know what that meant. And he’s like, why don’t we go get lunch? And we went and got lunch and he said, look, I’m gonna give you a listing of 99 properties and but you gotta go sell 25 first ’cause I don’t want you to screw this up.

Joseph:
So he had me go sell 25 homes for someone else. He gives me this listing in 99 properties, $13 million listing in Philadelphia all single family scatter site portfolio. And I would watch him spar with people when it would get close to closing. Like he would fight for every penny. And we lost like three or four buyers. And I finally had this idea where I said, you know, Bob, if, if, this might sound crazy, but if you, I would give you the 14 million, but we gotta get creative, you know, you would have to sell or finance the entire package to me and then I’ll refinance it. You manage it, you keep all the rents. Like, I don’t want anything from it. I’ll structure the refi and then, and then give you the money. His partner killed that deal, but it, it lit a fire under me.

Joseph:
And I went out there and my first real estate transaction that I purchased, which I was only about two years into real estate, it was probably 2018. Yeah. So about two years into real estate, it was 2018, we took down 75 properties in Pittsburgh and then another 30 in Chicago and then maybe another 20 in, in Detroit. And we sold all of those properties kind of at the height. And we sold the Pittsburgh group to BlackRock. They were doing a ton of single family acquisitions. But what I loved about the real estate side of things was, you know, I just copied what, what Bob did and single family, single family. It didn’t, I wouldn’t say it cash flowed. Well, you know, I I, but I think the biggest opportunity in real estate is that if you get the right deal, the right property at the right price, you know, you can have appreciation, depreciation, you can take advantage of cost segregation studies.

Joseph:
You can, you could have cash flow, but at a minimum, you know, if you can hold that thing long term and it can pay off its own debt and and appreciate, you could walk away with a nice chunk of change and maybe cash flow is not you, or you know, your goal, you don’t need any more cash. And maybe that’s why you’re in real estate to begin with because you’re already a high earner. So, you know, I liked it because it kind of touched a lot of different facets. And I was kind of using my operating businesses to bridge the gap to get me in into, into real estate. And you know, one pet peeve I always had was especially around that time in real estate, I mean, YouTube and real estate channels started to become really popular and everyone was a freaking wholesaler or real estate investor.

Joseph:
And I saw these people that they didn’t really have any income they were trying to get into. They were basically trying to go from nothing, no sales experience or anything, straight into owning homes, flipping them, renovating them. And, and they were calling themselves investors. And I was like, you know, the big thing about the guys that actually make a lot of money in real estate is that they, they’re typically deploying money from a, a strong operating business or a fund or whatever, right? And, and so a lot of these guys would be short-lived because they tried to shortcut. And so I’ve always focused on, you know, try to make a great deal. If I can make a great deal like a seller finance situation, awesome. But my priority has always been grow these operating companies, park that money into real estate that I can do a cost segregation study on and take all the, you know, the tax benefits of it. And I don’t focus on cash flow as much as I focus on will it cover itself. And I’m focused on kind of a long-term appreciation. Yeah,

Charles:
No, that makes perfect sense. That’s the I didn’t episode like a year or so back and it was called like zero down doesn’t mean zero money. And I think it’s one of those things where, you know, people are, it’s a whole different thing. Like, you know, if you put anything up there that says zero money down, you’ll get like so many clicks on it and so much, but it’s just click bait because it’s not the right way of doing it, the right way of doing. It’s actually building a business. And when you’re investing, like you said back in the real estate that’s where you have people that are like, oh, I’ve gotta, I’m gonna make this much money per month. And that, and you don’t have reserves, right? You’ve gotten really high leverage loan to value kind of debt on it. I mean, this is just a recipe for disaster that happens over and over every 10 years in real estate, you know what I mean? And they’ve

Joseph:
Been trained, I gotta have cash flow, I gotta have cash flow. So, you know, when they lose that tenant or when they, you know, they’re only making a hundred bucks a month, they go and sell it possibly underwater. And it’s like, but that was never, that was never the goal, man, keep that, pay off that debt for 10, 20 years, refi it if rates go down and just keep it forever. And, and eventually you’ll cash out on 200, 300, $400,000 and, and you stay. But a lot of people use it as like, I feel like there’s this huge focus on getting out of their day job

Charles:
Or getting out of their, and it’s like, dude, you’re 20, you have to, you’re 30. What are you do, what are you doing that for? Like, worry about, I mean that’s, I think that’s part of my generation is this, I was probably one of the few kids that wasn’t traveling the world and backpacking and doing stupid stuff. I jumped right into business in the military and I wanted to learn and make money. A lot of people were more focused on work-life balance you know, and they, they never really got the work part down. Yeah, no, that makes perfect sense. Yeah, it’s one of those things where when you’re buying properties or you’re investing, I think it’s had this older investor tell me years back, it’s like the, you know, get a hold of it for 10 years. If you can hold your properties for 10 years, you’re gonna do well.

Charles:
You start, you start getting cute and trying to shortcut that. You can’t hold the property for 10 years, whether it’s a debt, whether you don’t have money for reserves, that’s when you’re gonna lose money. You know what I mean? The surefire way is really 10 years hold onto it, make sure it, you know, make sure cash flows, all this kind of stuff, these things, it covers the expenses at least. And it’s a wealth generator. Then you’re gonna look back in 15 years and go, oh my god, the value that nothing I really did. I just managed the property, this business I bought, right? And now it’s like worth so much. It’s tax deferred and that’s the whole point about it. Then you, you know, you bought something for a half million, then you look at it and you go, bucks this thing’s worth like 1.5, you know what I mean?

Charles:
And I was literally just collecting rent on a few units for 10 years, you know what I mean? So that’s where the really powerful is isn’t trying to make $200 a month per unit, which I know people don’t wanna hear when they’re looking for cash flow, but that’s the true thing, you know, building wealth through real estate. You know, family offices aren’t buying real estate to, you know, make a couple hundred bucks a unit, right? They’re doing it for long-term wealth, for tax advantages. And like when you start following that business model, I feel that’s where true wealth comes. Yeah. Yeah, that’s true. And even, even in that scenario, right? You buy that 500,000 house, say the neighborhood tanks, but you could still sell it again for 500,000. It wasn’t your money and you didn’t pay the interest on it anyway, the the people living in it did. So you didn’t have $500,000. So if you can wait 10 years, maybe you sell for 500 again and you free up $300,000 that you never had. And if you were making 70 grand a year, I mean that, that’s a pretty good, good nest egg. You can sell that in 10 years and park it in some other more passive investment. Even more passive investment vehicle. Like a money market. Exactly. Exactly. So Joseph, Let’s Talk about now,about your current investment strategy. You were talking about doing,some seller finance deals. Getting into that, finding that that was a, a great niche. Ucan you talk a little bit about,what your investment strategy is, the

Joseph:
Type of properties

Speaker 3:
That you’re really focusing on currently?

Joseph:
Yeah, the majority. So once we sold our single family portfolio, the majority of what we own now are buildings that we own or occupy ma mostly commercial space. So all of our healthcare companies we own the buildings that we’re in typically they have, you know, two to three units. So it’s never like a one unit deal except for one of our real estate buildings where the we’re the sole owner. Frankly for the past two years, I haven’t seen a lot of great deals out there. I’ve seen very, very compressed maybe even more than two years. But I’ve, I’ve seen these really low cap rates deals that I wouldn’t touch. And I, I think a lot of these people, you, you probably see it more than me, but a lot of these people are now getting stuck holding the bag on something they can’t, they can’t refi and, and people are starting to hurt a little bit from a valuation perspective.

Joseph:
So I guess my, my biggest thing right now is I’m, I’m kind of holding tight if, if we don’t own or occupy it, if it wasn’t something I was gonna pay rent on anyway, I’ve been kind of sitting out the money that I have been parking, like with our partners that are builders, a lot of them have funds. So I’ve been partnering with those guys on any new construction. ’cause New construction is, is just a huge demand. And then I have a couple of friends that are in the multi-family space. They, they focus on their full-time job is acquisitions and they have good deals. So I’ve been parking it there. My direct investments though, the things I’m gonna buy on my own, I’m, I’m waiting. I think we’re, we’ve still got a, we’re in a weird, very strange market and I see it on the real estate side.

Joseph:
I mean, you know, the whole, I was excited when rates went up, which sounds like, you know kind of weird for a real estate broker to say, but when rates went up, I finally thought, okay, this is gonna fix the affordability problem we have. And I, whenever I, I think of the market, I think of the normal guy and I think of like, okay, my brother’s a cop. Can my brother buy a $500,000 house with a wife? That doesn’t work ’cause she’s home taking care of two kids. The answer should be no. But people are, and I think they’re doing that by draining their entire savings. They’re doing that by selling properties that they should just hold. They’re really hurting themselves to kind of keep up with, with this market. And so I was happy because I thought, okay, rates are gonna go up, it’s gonna drive prices down.

Joseph:
That did not happen. And now we’re at a total standstill. Now, rates are up, prices are up, everything’s unaffordable in, in most markets. And, and I, I don’t know, you know, I think if they lower rates now, I don’t think it fixes the price problem. I think it puts more, you know, it makes people able to afford these assets, but only because of the rate. And so it’s a really strange place to be. But I’m waiting for some type of correction to happen if that’s, if that is rates fine, you know, maybe I’m a buyer again. But I’m gonna be looking for the sellers that made a bad deal when they bought two, three years ago at the height. And maybe there’s a little blood in the streets and I’m gonna be looking to make a killer deal. Yeah,

Charles:
I agree totally that we haven’t bought a syndication deal since the end of 2022. So I mean, we’re going on you know, two plus years with it. We’ve just reffind the deal that we bought at the beginning of 2022. And just, I’m gonna give you just a couple things that I’ve heard and you can kind of gimme your feedback. So I read something like yesterday, 49% of homes are underwater, right? Residential homes are underwater. We just refinanced the deal, like I just said in 2022, it was in one of our complexes about 45 minutes outside of Atlanta. And our broker, a mortgage broker at the time said it was the only deal that he sold or financed or whatever in 2022, they got a cash out refinance. So that’s how telling you how tight stuff is, which is this is the cash out refinance is supposed to be, we should have done it sooner.

Charles:
That’s the whole plan, obviously. ’cause Everything happened, we’ve pushed that back a little bit, but still three years into it, we did it. And it’s one of those things is that that’s the business plan for all these deals, right? That’s how they can push double digit returns is by having the refinance penciled into the proforma. So that’s one of the things happening. And then the other thing is that you know, like you said before, with the interest rates, I mean, we’re pushing so many people into rentals and I just, it’s I mean, how do you see like this turning out over the next few months? Like you said, it might be fixed by rates, but the thing though is that I mean we’ve had, we just started this year with a decrease double dig decrease in new deliveries, which is gonna continue 20 26, 20 27. And that’s when every person that I’m in passive investor with that’s had issues, they keep on telling me, we’re selling in 27, we’re selling, well, okay, well, I don’t know what’s happening in 27. And they have like a down to the month. I have one group that told me we’re selling in July, 2027. I go, that’s a very exact, all right, we’ll, we’ll see what happens. But like, I mean, what do you think about that? And

Joseph:
The rates are a bandaid again, it’s like, all right, we drop, if we drop the rates. I just think like eventually you just have to get to the point where everyone’s a millionaire because how everything is still unaffordable. Like I, I just, you know, and that, that part drives me a little crazy is that things have gone and there’s always the neighborhoods, the pockets of wealth that, you know, okay, those are always gonna trade for high valuations. But you know, when a row home in northeast Philly is appraising for $300,000 and it’s a thousand square feet, it’s like

Charles:
Those people can’t even

Joseph:
Buy that house. Like the New Yorkers buy that house and then they, they section eight it, or they hold it as a rental, they think it’s a great deal. But then, you know, then you end up becoming New York. So I, you know, I don’t, I don’t, I don’t know the right answer there. I mean, I almost think there needs to be a massive correction. I thought we were getting close there two weeks ago. But I, I feel like something has to happen within the markets to correct these prices because I think you can lower the rates, but I think you’re just band-aiding that bigger issue which is, you know, this inflationary problem we’re seeing. And also too, I mean, you know, it is kind of a double edged sword for me because the longer that prices are high, the longer that margins are compressed, the longer that builder costs are high, right? The more these people need our services. But at the same time, I think it’s hurting, hurting the average person that’s just frozen and sitting on the sideline of, of these markets. And everyone now says the same thing. People that aren’t even educated in real estate, it’s like, okay, I could sell for, you know, 1.5, but what am I gonna buy and what’s my rate gonna be? You know, and they’re just like, I’ll just wait for something to happen. Yeah,

Charles:
The rate, that’s what everybody brings it down to. There are certain things in real estate, like we’re talking about your settlement services. When you look at that closing statement after you say you buy a house and you tell ’em what somebody, you tell somebody what you bought a house for, the next thing they ask you is about the rate, right? It’s not about what did you pay for, what was your title

Joseph:
Service. Yep. And most of it’s up here when you really run the map on the rates, like, you know my brother’s an example. He is, he is owns a couple of nutrition stop shops in Jersey and we talked about it. He is like, Hey, I heard rates went down, I wanna do a refi. And I said, well, look, I’ll certainly look at it for you. And he was at like eight point half percent, but, you know, bought up a height. So even going to 6.75, I’m like, dude, you’re gonna, you’re gonna pay all these costs to close the deal and then you’re gonna save $75 a month. You know, so even the rate doesn’t impact things as much as the purchase price. And obviously you hear a lot of sales pitches out there and, and realtors and loan officers say things very, very differently. But in reality, when you really run the numbers, I’d rather pay less and the rate is not gonna impact me as much. If we could fix that underlying asset inflation problem, I think, I think rates could happen later. Yeah. Instead

Charles:
Of looking for a deal to shave a couple extra basis points there, it’s, it’s easier just to spend more time in your business and pay down your principle. Right? I’ll save that $75 there. But how do you, you know, one of the things that you mentioned, and before we wrap up here a couple asked questions. I had something on the show before that was talking about triple net leases, and I said before that I thought it was a good idea that people buy their own buildings that are in my family had fa growing up, my family had some family friends that own restaurants. They had like three or four of ’em. They bought ’em, they sold the businesses, they kept the real estate. You said that you own it mostly owner occupied commercial properties. And then I’ve also heard from people, well, it takes away the focus. I mean, if you’re triple net lease and you buy the property, you’re still managing all that stuff. You still have, right. You know what I mean? So what is your take on buying properties, say maybe I’m talking about small, like mixed use properties, owner commercial properties for like offices like you’re doing versus somebody renting it. You know what I mean? I mean, what is, what do you, where do you see that? Yeah, I

Joseph:
Mean, I think like most of the time, you know, when you’re renting those office leases anyway, you’re pretty much responsible for everything anyway, like a triple net. So you’re responsible for the taxes, the insurance. I mean, you might as well take the bulk of that and pay down the principle. And so we, you know, we own a property now where we’re gonna sell the business that’s inside of it. It’s the exact situation you’re talking about. And the new owner is signing a lease for a thousand dollars more plus taking over the taxes, the insurance on this property, and all of the maintenance. And the roof is brand new. So, you know, at the end of the day, I think that’s a great deal. Plus he’s got, he has to buy the, we rewrote it, we wrote it into the contract that he has to purchase the property from us within a certain time period at a specific price.

Joseph:
And that price increases 5% every year. So, you know, we owe 450,000, he’s already agreed to 1.3, he just can’t do the deal now or it’s going on market. So I think it’s a, it’s a good strategy and you know, I think it’s a good opportunity to, you know, if you’re gonna pay 5,500 a month in rent anyway, well, your mortgage is gonna be 3,200. And so it’s a good opportunity to pay yourself pro possibly the same ownership group and, and earn that equity back as opposed to giving it to a landlord. So I’m a huge fan of that. I guess the only reason I wouldn’t do that is if you know, you were unsure of a, a business model. You know, our, this specific company that I acquired five years ago has been in that building since 1979. It’s mostly up to date.

Joseph:
So it’s kind of like, it’s kind of an important asset for the, for the business anyway. And also too, I never wanna get kicked out, right? I mean, that building should be there. That is, everyone knows that company and that building has been there across from the Burger King. Everyone says has been there forever, right? So, so that’s important to, to it. Anyway, so I guess there’s, there’s some other things that they gotta look at there, some intangibles, but but I think it always makes sense to own the real estate. You’re gonna pay it anyway. Yeah,

Charles:
No, the lease option’s a fantastic idea. Don’t, I think for people starting a business, purchasing’s probably incorrect, but you know, talk to your, your broker and try to get that lease option put in there like you’re working with it so they have the option of purchasing it. They have the option of, you know, growing their business through there, whatever it might be. But also they’re not locked up if something happens with their business and I think that’s, people say it’s one way or the other and it’s no, you have a little bit of both. In between there by structuring, that’s what’s one thing that’s great about real estate is you can really structure the contracts any way you want. I remember my dad years back he’s partnered with buying a property and they negotiated an old BMW into the contract somehow. So using it as a down payment. So that’s the one thing in real estate is you can get very creative in buying real estate and financing it and doing deals. But Joseph, one thing how do you maintain focus while running multiple businesses? You have, you know, you’re owning property, you’re planning on buying more property, you own businesses with joint ventures you know, all this different stuff. How do you, how do you do

Joseph:
That? You know, I, I try to take time to realize, like, you know, I just kind of went through this, this project now I let go of a guy who was supposed to be a chief of staff, really wanted to be a COO for us. I let him go and I realized that he had never really taken tasks off of me that just didn’t energize me. You know, I should be focused mostly on shareholder relations, looking for new deals, making sure we have enough capital, hiring great team members, you know, things that drive us forward. And I’m really good at all the other stuff I can, I can build the operation out, but then I’m not gonna be as great on a sales call. And it, and truthfully, I feel drained at the end of the day is when we, when we do that, like I love to get the quarterly financials for all 60 companies.

Joseph:
I will go line by line with the general ledger and make sure that they’re all categorized correctly. But if you call me that day, it’s gonna be a very different tone, <laugh> in my voice and that, so the way that I maintain focus is, is through one routines, two hiring people to take those tasks off my plate. And so thanks to Doge because this guy worked for South com Southern Command, he was our fractional CFO for us. I brought him in as our full-time CFO, but mostly chief of staff. And I said, look, these are the things that frankly I hate, and you love ’em and you do them. And obviously I’ll, I don’t, you know, some people worry they lose power over those things. I mean, you’re still the owner of the company. I can do whatever the hell I want, but I want someone else to do that stuff.

Joseph:
Who’s better than me? Who likes it, who’s energized by it. And I can focus on the things that, that drive the business so that we don’t ever hit any speed bumps. And it, it’s all about team the teams that you have. And then there’s those routines. I mean, people, I struggle with this sometimes ’cause I’m in a group with called R 360 and a lot of the guys that are in this group, even highly, highly successful, the average family net worth in this group is like 400 million. And even some of these people like fall out of their routine. It’s like they’ll ask all the time, how do you get to the, how do you stay motivated to go to the gym every day? I’m like, I’m not. I just go, it’s <laugh>. I just go to the gym every day because it’s a non-negotiable, just like waking up, getting my coffee at Starbucks and working is a non-negotiable, right?

Joseph:
I mean, there’s, so I guess sometimes you’re not gonna be motivated, you’re not gonna be focused, but that’s where if you have that routine and you are in a rut and you can stick to that and you know, you’ll be all right. And then sometimes it’s just, I forget who says this, but you know, sometimes it’s okay that, you know, your routine breaks and and you lose focus for a day. But, but just get back into it the next day and get back as quick as you can. I think people just kind of get discouraged, sit on the sidelines and think they can’t fix it. And it’s like, no, man, just do the same thing you did when everything was working right. Just try to remember. The worst thing I ever hear from team members is like, they’ll call and complain about an employee. And I’m like, well, what did you do at your previous company? We did this, this, and this. I’m like, why aren’t you doing that? They’re like, oh, that’s a good idea. I’m like, no, it’s not. It’s a you’re thinking too much here. Like, you know what works already Do it again. Don’t think you need to do something different.

Charles:
Interesting. One last question before we get information on how to reach your company. What leadership advice would you give to someone looking to grow a business or a team?

Joseph:
Well, I would say that, you know, again, the biggest thing about that is a save all of the money that you can in the business. Like so many people start a business and immediately think now they’ve gotta have the BMW and the Rolex. I, I told a guy, someone, someone told me one of my realtors that people would take me more serious if I had a Rolex. This guy’s never owned a company. And so I was like, you know, so be careful who you’re taking your advice from. You know, the worst thing as a realtor, right, is when, when Uncle Joe who rents shows up at the home inspection that guy’s never owned a house, and now he’s gonna advise your client that this house is, is beat to death. So I always say just be extremely careful about who you’re taking advice from, and if you wouldn’t trade places with those people, then you probably shouldn’t be taking their advice.

Joseph:
And the other thing is let the, give the business room to breathe. Like there, keep the money in the business, invest, reinvest in your business. Don’t be afraid to hire people and delegate those tasks away from you. And yeah, there’s gonna be p and nothing’s ever below you, by the way. I mean, if, if the trash is full, take it out. But, but make sure there is someone to take out the trash and, and make sure that you know, every day you’re, you’re not gonna have, you’re not gonna have work life balance if you, if you’re gonna start a new company and you goal is to build something actually meaningful and big, and you’re also gonna try to find work life balance at that same time, you’re not gonna have it. You’re gonna have work life choices and you’re gonna have to make choices.

Joseph:
And that might mean that you miss things on what you might call the balance side, right? That might mean that you don’t get to hang out with friends as much, or you, you don’t get to spend as much time with, with your family. But that’s how it’s gonna be. I mean, I mean, you can’t read a single biography of any person, whether it was a general politician or a business owner that doesn’t talk about how, Hey, I missed, I missed these things and I wish I had gotten to spend more time with, with my kids. And you know, you can find some sweet spots there, but I think you have to be willing to go all in and that balance is gonna come with time, and that balance is gonna come with, you know, that, that time where you look at the bank account, you take a deep breath and you feel calm and you’re like, all right, I can, you know, I can hire people to do some of these things I don’t like to do now and I can spend more time with my family. But I think people go into the business thinking they’re gonna find that upfront. That I think is a huge mistake. Yeah, no,

Charles:
That’s great advice. It’s one of those things where I had mentors tell me, it’s like you have to give the business to X amount to actually bring in like a really good manager, someone else that you can really delegate to, not just like assistants that you can pass stuff to, which is like in the beginning, right? You get your bookkeeper assistant here taking stuff off and you’re saving an hour here, hour there, and it’s fantastic, right? You get a little bit of your life back. But once you like, hire someone that’s like high level that can come in, that’s like really the goal. And once you do that, that’s when you can start kind of having a little bit more of that balance. But you gotta get the business at that point sustainably, you know what I mean? That’s kind of what I found. So how can listeners learn more about you and your business, Joseph?

Joseph:
So they can go to the, the surefire group.com. So if they’re interested in any of the title or mortgage joint ventures that we have or even if they just want to try us out and see if we’re, we’re licensed in a, in a state where they need, you know, title work. Most of our mortgage stuff is residential. It’s, it’s, we’re not a big commercial shop. But they can go to the surefire group.com, homefront loans.com, or, you know, if you do have any direct questions feel free to shoot me an email, joe@thesurefiregroup.com. Okay.

Charles:
Joseph, thank you so much for coming on today. We’ll put all those links into the show notes and looking forward to connecting with you here and the near future.

Joseph:
Awesome. Yeah, thanks man. Appreciate it. Thank you.

Links and Contact Information Mentioned In The Episode:

About Joseph McCabe

Joseph McCabe is an Entrepreneur from Philadelphia. He is the CEO and Founder of The Surefire Group, which has interests in multiple real estate brokerages, Mortgage companies, insurance companies, over 80 real assets.

The Surefire Group Made the INC 5000 List for 2022 and is considered one of the fastest growing companies in the United States. Joseph is also managing partner in multiple home care agencies, and assisted living facilities, spanning the nation.

Joseph has many LP investments in the Technology, Artificial Intelligence, and Healthcare sectors. He’s a proud veteran of the US Army Military Police Corps a Philadelphia native, graduating from Father Judge High School and attending Pennsylvania State University and graduating from Cabrini College. He is a founding member of the National Museum of the Army at Fort Belvoir, VA, a Founding Partner of R360 and the Co-Chair for R360’s Rising Leaders Committee.

Joe is the author of ‘Maintain Your Gear’ an entrepreneurial, self-help, guide. Joseph is an IFR rated private pilot and leases an airplane to a flight school in Philadelphia. Joe enjoys traveling with his wife, collecting historic American art, flying, and powerlifting.

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