Podcast Details

Episode 1

Taylor Brugna

In our first episode, we talk with Taylor Brugna, a 29-year-old partner at Hall CPA and real estate investor with an impressive portfolio of 134 properties. Brugna shares the story of how he got started in real estate, highlighting the importance of building relationships in the industry. From humble beginnings to becoming a successful entrepreneur, Brugna provides valuable insights and practical advice for anyone interested in real estate investing. He also reflects on how the current market may present different opportunities and obstacles for aspiring real estate investors. Whether you're a seasoned pro or just starting out in the world of real estate, you won't want to miss this candid conversation.

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Key Takeaways

  1. Real estate investing requires a long-term perspective and patience: All the speakers emphasized the importance of taking a long-term perspective when investing in real estate and being patient in building a successful portfolio. It takes time to build wealth through real estate, and it requires a willingness to weather market fluctuations and navigate various challenges.
  2. Leverage is a powerful tool, but it must be used wisely: Using leverage, or borrowed money, to invest in real estate can amplify returns, but it also comes with risks. It's essential to use leverage judiciously and have a solid understanding of the risks and rewards associated with different financing strategies.
  3. Diversification is key to managing risk and maximizing returns: Diversifying across different asset classes, geographies, and investment types can help reduce risk and increase returns. The speakers suggested considering different types of real estate, such as short-term rentals or commercial properties, to diversify a real estate portfolio.
  4. Networking and building relationships are critical in real estate investing: Building a network of industry professionals, including other investors, real estate agents, and property managers, can help investors find deals, gain valuable insights, and build a successful portfolio.
  5. Education and continuous learning are essential: All the speakers emphasized the importance of educating oneself about real estate investing and continuously learning to stay ahead of the curve. This includes understanding market trends, new financing strategies, and emerging technologies that can impact the industry.


Brandon Hall [00:00:44] Welcome to the Hacking Real Estate podcast, where we dive into the stories of seasoned hands on and tech savvy real estate investors will learn the strategies and tools they use to maximize returns and minimize hassle, all while navigating the rapidly changing real estate market. I'm your co-host, Brandon Hall, and managing partner of Hall CPA. And I'm sitting alongside my co-host because Gupta, CEO of Zeebo. With our combined 15 years of experience in real estate investing and entrepreneurship, we're here to help you up your real estate game. Let's get hacking.


Brandon Hall [00:01:16] Today, we have Taylor Bruckner on the show with us. He's a CPA and a partner at my accounting firm, the real estate CPA. Taylor has a pretty large real estate portfolio, so really excited to bring him on and have him tell us his story, how he got to building his real estate portfolio and just kind of where everything's at today. So, Taylor. Welcome to the show.


Taylor Brugna [00:01:36]  Thanks for having me, guys. Really appreciate it.


Brandon Hall [00:01:39] Give our listeners a rundown on just who you are, what you're all about, and how you got to where you are today.


Taylor Brugna [00:01:46] Yeah, absolutely. So as Brandon mentioned earlier, CPA and partner at CPA. And what I do is I lead up our accounting department for real estate investors here who are clients at the firm. How I got into real estate, I actually kind of stumbled upon it kind of by chance, to be honest. So the long story short is my current wife, my it was my girlfriend at the time had an eBay store together in high school and college, and we started to sell clothing, whether it was Nike, Adidas, and what we would do if we would go to outlet stores, buy in bulk. And then we had this whole big eBay store and we were fortunate that it took off, did very well. But once we graduated college and I started working, so I was I got a CPA, she was in finance. It was just too much to actually juggle both kind of a business and a full time job at once. So what we did is we looked for more passive income opportunities and we actually stumbled into real estate kind of researching what kind of passive income we could generate. And we just kind of drove in, took a chance on an out-of-state market, had zero units, Our our property manager had zero units as well, and we just kind of fell in love with it that that first unit was purchased right after I graduated college and just kept growing ever since. So loved every, every minute  of this journey so far.


Brandon Hall [00:03:16] So tell us a little bit about the like that initial capital, because you said some cool things in there. You were in college and you were flipping apparel. So talk to talk to us a little bit about how you did that. And in is that still doable today? Because I know that there is like I think you mentioned to me one time that there was some sort of shift in the market where these outlet stores started. They started creating apparel specifically for they all the stores say you are you that right?


Taylor Brugna [00:03:42] Yeah. So that business was kind of born honestly kind of out of laziness. So I was a three sport athlete in high school that spring season of my senior year. I was kind of done with sports, so it was more just kind of on to graduate and getting ready for college. I didn't want to go work a minimum wage job like kind of most high school kids did. So what we did is we kind of just saw these Jordan investors. Yeah, they were at Nike and they were on sale. And we just decided to just kind of buy five or ten of them and just see if people on eBay would buy them. So it was a great business at the time because a lot of the stuff in the outlets was actually what they were selling on the Nike website or in the Nike retail store. And there were other brands that it worked for too, like Adidas in North Face, all the popular kind of mainstream brands. You think about the sales managers of these stores loved us, actually, because we would hit their sales goal in like a day for what they had in an entire month. So it was really cool that I was able to build relationships kind of with these companies. I'm sure some managers didn't love that I did it as well, but there was a little bit of kind of a challenge there as well. But that's where the capital came from to invest in the real estate. I mean, it was really just born out of I didn't want to do what everybody else did, kind of working at a clothing store, at retail or at a fast food place. So I wanted to try to kind of find something that I could scale up a bit more and and kind of leverage my time there.


Brandon Hall [00:05:10] Did you do it on purpose? Like like you said, it was born out of laziness, but did you did you know that there is this arbitrage opportunity almost of being able to pick up apparel from, you know, these outlet stores and then flipping them on eBay?


Taylor Brugna [00:05:24] So the idea originally came from my wife, who likes to kind of just, I would say just generally hustle kind of sell things on Facebook, garage sales, things like that. And it was you know, it was really just taking a chance on it. And what we found was that a lot of the country and other parts of the world don't have access to outlet stores, how some major cities do. So if you're in a major city, chances are there's kind of some big outlet complex by you and they've exploded ever since. But a lot of those international customers couldn't get that stuff at a discount. They actually would have to pay on the retail, regular nike.com and things like that. So that's where the market was. And to answer your question, it was kind of just discovered by chance. We didn't go into it saying, Oh, this is going to work, or we have a good idea, right? You know what? These are cheap. Let's just try it and see what happens. And we sold like five of them in the first like three or four days. So we're like, okay, I think we have something here.


Speaker 3 [00:06:19]  That's a pretty incredible story. I think I think I want to come back to this, but I'd like to get into some of the real estate background. Of course, there's two things you said that really jumped out to me: that in your initial investment you went to an out-of-state market and with a property manager who also had zero units. So. Tell me about both of those decisions. Why out of state market first and why a property manager who didn't have any units under management?


Taylor Brugna [00:06:46] So two, two excellent questions. So the first one is answered pretty easily. I was from New York City, so any kind of long term rental investment in my back yard, I just wasn't going to work. I mean, we didn't have the capital to buy $1,000,000 place or anything like that. So that kind of ruled out New York, even though I knew the areas very well. I knew that from a returns perspective, we weren't going to be able to get what our target was. So my in-laws actually retired down to Sarasota, Florida, which is kind of the southwest Gulf Coast area. And Tampa and Saint Pete are actually is the closest major city to it. And we went her and I started to research what top rental markets were as far as kind of population growth, economic growth demand, Tampa fit that bill. So that's the kind of first reason why we chose an out-of-state market. To answer your second question, I think this is one of my kind of favorite pieces of advice that I gave to the clients. People I talked to is that I try to align myself with people that I'm going to, that they're going to really value my business. And I met this property manager on bigger pockets. He was a realtor at the time. He wanted to get into property management and we kind of hit it off, had a good conversation, but I knew that because I was going to be his first customer, that I would be a priority for quite a while. And still to this day, eight years later, I'm his largest client, kind of started at zero. Now we're, I think 130 something hundred 34 units. And it's been nice to have that level of service throughout the whole journey.


Speaker 3 [00:08:26] How did you go from a. Presumably digital. Bigger Pockets conversation, too. We're going to get into business together. Yes.


Taylor Brugna [00:08:35] Good question. So we were chatting back and forth on bigger pockets kind of via their their messaging system. And I just decided to ask for a cell phone number to pick up the phone and say, hey, here's exactly what happened. And I pretty much explained the exact same story that I just mentioned. You have this cool eBay business where we're kind of over it because it's just taking up too much time and we're hoping you can help us find some some property. And just he he seemed to understand exactly what we were going for. It kind of showed us some lower priced, lower risk properties for us at the time, because worst case, they they frankly weren't that expensive. And if we messed up, it was an expensive learning experience. But thankfully it went the other way and it went to working out great for us.


Brandon Hall [00:09:22] You were learning at the beginning, you meet this property manager, you take a chance. How has that relationship changed to where you're at today? Because you said he's still managing for you and it sounded like you said you're one of, if not the largest client that he has. Yep. So how has that relationship kind of evolved? What were some of the growing pains?


Taylor Brugna [00:09:42] Yeah, so great question. So in the beginning, I feel like I was one of the only priorities because we were kind of both growing our business together. I am a super happy for that company, and it's grown significantly since we started. So there has had to been kind of systems built to leverage his time as well. He has employees now that I also work with, it's not just one person anymore. So the relationship has gotten less personal, but over time we've learned to build systems out that kind of take up less of our time because he's got a growing brokerage and property management company. I obviously work full time, so to be honest with you, I want to spend as little time as I possibly can to get us closer to 100% of the results that I want. And it's never going to be 100%  if I'm a passive investor. But I try to get it at least 90% plus. And that is enough for me to keep this business going and keep it growing.


Brandon Hall [00:10:42] So tell us a little about where you are at today. Are you still in that same geographic location? Have you expanded out? Has the type of asset that you're targeting changed at all? T to us a little bit about that.


Taylor Brugna [00:10:55] Yeah. So I started out with these four condo units and actually, I don't have a single condo unit today. Those were the only ones that I wound up selling. And I did a 1031 to change into a four unit multifamily. But that's a conversation for another day. But I really only focus on 2 to 12 unit properties. So they're kind of that small multifamily space. And why I like them is because a lot of the purchase prices that I typically try to target are too small for these larger institutional investors, but they're also too large for someone just jumping into it for the first time. So like someone who is who's just trying to get into real estate the first time probably isn't going to go buy $1,000,000 unit building or something like that. They'll go start with a single family home, maybe a duplex. So I really found my sweet spot in that kind of like middle market type space. I guess a little smaller middle market. But and to answer your question about market. I've stayed in Tampa and Saint Pete just because I've had a system built that I like and I know it works at some point, I love to diversify out of it. So I live in Dallas and I've been looking in Texas. It's hard to make things work in Dallas because of how high property taxes are. But at some point, I love to diversify. I kind of take that same system I built over the past eight years and just try to replicate it elsewhere. I just haven't had the time to do that, So I am excited for that at some point, but not now.


Brandon Hall [00:12:22] I want to come back to why a different market? Why not just keep going all in on the current market? How many units do you have?


Taylor Brugna [00:12:31] 134.


Brandon Hall [00:12:32] And how old are you?


Taylor Brugna [00:12:34] I am 29.


Brandon Hall [00:12:36] Damn dude! That's amazing.


Taylor Brugna [00:12:39] Thank you.


Brandon Hall [00:12:39] Wow. Okay, self-funded. Or did you take on any investors?


Taylor Brugna [00:12:44] Yeah, so I'd say it's probably 75% of it is self-funded. I've taken on partners strategically here and there for a certain building. So for example, maybe a really good building came up and I was like, Melissa, this is my wife. I have to have this.


Taylor Brugna [00:13:17] But if there's a building that came up, I said, I have to have this. I don't have the funds right now. I would try to partner with either for friends, family, things like that to get some of those deals done. So it's been nice though, because the majority is owned by the two of us and we ultimately have full control over everything. So it's been nice to have partners that have really kind of helped us grow. So.


Brandon Hall [00:13:41] So I just want to point out to our listeners that, you know, you are the real deal because I know that you can go on social media and you can see all sorts of young guys and women that are trying to, you know, build a brand around building this big real estate portfolio. And Taylor does not do that. He doesn't really go on social media and talk about what he's done. But most of these people that are going on social media are raising capital, right? So they're like raising capital to build a little fund to invest in syndicates that somebody else is operating. But you just heard it from the man himself, young guy, a lot of property, 75% self-funded. Really incredible, Really incredible story, especially for where like how old you are. I mean it's it's amazing. And your partner at a CPA firm, I mean I mean most people don't make partner at a CPA firm. You know, they're like 38, 40 years old. So so you've got a lot going for you at a very young age. It's really impressive.


Taylor Brugna [00:14:42] I'm flattered. I very much appreciate that. I've definitely had some good fortune along the way. I certainly didn't predict that the whole real estate market and and and Tampa would explode and kind of double or triple in value. I know that had something to do with it as well. But realistically, how how we got here was kind of the most boring, simple approach you could think of is that I'm fortunate that I had a good a good day job paying the bills, that I didn't need that rental income, profit to live and pay bills, and I would just reinvest like literally every single penny into that. Right? So my the first time I took money out was really to buy the current house that I'm living in now, but we only bought it two years ago. So really everything was just reinvested. If we did a cash out refinance. It would go to the next property and we had a $20,000 profit a year from this rental cash flow. It would go into the next property and there was just slow and steady. And I kind of think it was I think the first year we had, I don't know, 8 to 10 units or something like that. The second year we had 30, the third year we had 60. And it's kind of kind of going up, then up that curve.


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Brandon Hall [00:16:34] How old were you when you started your eBay flipping business?


Taylor Brugna [00:16:37] So how old are we as seniors in college? I mean, in high school.


Brandon Hall [00:16:42] 20, 21.


Taylor Brugna [00:16:44] What, 17, I guess, in high school.


Brandon Hall [00:16:46] So I. 18, 17.


Taylor Brugna [00:16:48] Yeah. Yeah. So.


Brandon Hall [00:16:50] So you started in high school?


Taylor Brugna [00:16:52] Yes.


Brandon Hall [00:16:53] Okay, So, so just want to point out just an observation that I'm making. This is not been a get rich quick thing. Yes. Taylor is 29 years old. Yes. He owns a very large portfolio, but he's been working at this for a decade and has benefited from the market run up. Because if I just heard you correctly, you said you you do cash outs to fund the next acquisition, Right. So that's been made. That's a great strategy over the to deploy over the past seven years. Yeah but the key is is that you know he started a business when he was still in high school and he's been in he's been running little businesses, I guess not little enough to fund a portfolio since then. So it's not a real estate, it's not a get rich quick scheme, but it compounds. I mean, this is a very clear example of compounding, especially when the entire market's running up, if you can use debt appropriately to acquire more real estate. And as long as everything's cash flowing, you can build a pretty sizable portfolio. So really interesting, really interesting story. But just wanted to point out that, you know, it's not like Taylor was working a job until he was 28 left and then acquired 150 units. I mean, he's been at this for a while.


Taylor Brugna [00:18:14] Yeah, absolutely. I was always into math, finance, things like that, as even even in high school. And it was it's kind of always a joke that I knew I'd be in accounting or finance ever since. But the one thing I really learned early on is that the time value of money is just one of the most powerful things you can learn at an early age. And I learned that  if I took on some pain in those early years,  there's nothing I can do at 35 or 40 years old that's going to be able to make up for that. I can make a really high salary at that point, anything like that. Still saving money when you're 18 years old? 20 years old. I was very fortunate to be able to do that. And it's just over that ten year period, like you said. Brandon Yeah, it's been it's been slower, but it's compounded to the point where eventually it all kind of paid off and it came together.


Brandon Hall [00:19:12] Man, I know that there's those like gurus out there, the coaches and stuff like life coaches that say, Ah, work life balance, man in your twenties, like, go and explore, live your life. But when you do, you you lose a lot of that compounding. I'm the same way because I started sort of my firm when I was 25. Man, I'm glad I did because now, now I've got kids and I'm looking back and I'm like, I don't know that I would have pulled the trigger at this point to do all of that work. I'm so happy that I did all that in my twenties. And I'm sure you're the same way when you're still in your twenties. So I'm sure you're the same way. Like, man, I'm so happy that I kind of did all the grindy stuff when I when I had way more energy than I have today.


Speaker 3 [00:19:58] I mean, not just energy right now like it. It's also just at a certain point, you get married, you think about kids, you want to buy a house. It's hard to keep that personal burned down. Yeah.


Brandon Hall [00:20:07] Exactly.


Speaker 3 [00:20:08] Yeah, You're 18. Like, you don't have all that other stuff. Generally speaking. Plus, especially for men, you're living standards generally are pretty low.


Brandon Hall [00:20:19] Right right your cash burn's like a thousand bucks a month because you're sharing a four bedroom apartment and you're eating macaroni and cheese from Safeway. That's my story. So it's like, you know, I can't fall very far if I screw up.


Taylor Brugna [00:20:32] Now, I'll never forget senior year of college, I lived in the baseball house and I was not an athlete, but I had a buddy who was out and it was like $300 a month. Like the ceilings would leak from the upstairs shower and just there was holes everywhere. The beer was on the floor. And I had all these Nike shoe boxes in my like $300 amount room. And I will never forget living in those accommodations, just being perfectly happy. Kind of looking back at that. It's just hilarious


Brandon Hall [00:21:03] I mean, very similar. Senior year story. I lived in a house we saw junior year. We had lived in the nice apartment complex, brand new. We were the first tenants. Yeah. Senior year and my roommate's wanted to move off campus that we could throw big keggers, which we ended up only ever throwing like one, but we drew straws for the rooms. And so, of course, I drew the short straw. I just have the worst luck with that stuff. My room literally could only fit a bed. So it was like a closet. But I mean, the rent was super cheap and it was nice, you know, great, cozy.


Taylor Brugna [00:21:36] Exactly..


Brandon Hall [00:21:36] Cozy. Had a little cut out of a window way up there. So that could qualify as a room. Yeah. Yeah. So do the grinding stuff early. That's the summary of this snippet, I suppose. Yeah. So it's going to get back to the the script here. So you cashed out, you do these cash out refinances, you pull money out, you buy new property. What would you say along the way has been one of your biggest like "aha!" Moments, maybe one of your largest failures, that you were like, I can't do that again. Yeah, talk to us about like some of the pain.


Taylor Brugna [00:22:10] Yeah. So it's really interesting. That big aha moment kind of came from a came for me in this past six months. So it was thinking about the past eight years of, of kind of what I've been operating this business, it's been historically just incredibly low interest rate environment, which means that because of all the appreciation, because of the the low interest rate that I can refi pretty much anything at any given time and get some cash back out, because what would happen is the prices would go up. The loan amount is a certain percentage, of course, of the value, and you can just take it out and reinvest into the next thing. So what that meant for me was that the operations of the portfolio actually weren't that important. So if I lost five grand a year on the rental income and expenses, cool, I didn't really care because I was taking out a hundred grand on a refinance or something like that. But the past six months and there was a couple of interest kind of interest rate periods in that eight years where I here was like 6% or something like that. But really it's been extraordinarily high the past six months or 12 months, whatever it's been. So what that means is that you really can't do that anymore. You can't just refinance at any given time because: one, values are holding,  the loan amounts are actually not making sense because the interest payments are a lot higher. So what I've shifted focus to is now operating the portfolio more profitably, more efficiently. And I think a lot of investors in today's market are more focused on that now as opposed to the hypergrowth cash out refi. Keep going. I'm very grateful that I got into the market at that time, but right now it's just not a repeatable strategy. So I really shifted focus to being more efficient on my operating expenses. So like insurance taxes, I'd like to appeal to those keeping repair and maintenance costs down, keeping property management costs down. All stuff like that has been key in the past 12 months.


Speaker 3 [00:24:12] So what are you doing differently with respect to what you did and your property management manager did or how you two work together today versus. I say three years ago that you switched your focus from sort of expanding the portfolio, taking advantage of the macroeconomic environment today, really honing in on the operations.


Taylor Brugna [00:24:33] Yeah. Yeah. And I would say with certainty that my property manager has always had my best interests at mind. However, I feel like in the beginning the time was split between growth. So like going to find new properties, going to look at new ones, seeing if it made sense and actually managing the portfolio. So like if a unit went vacant, I might not care if it was vacant an extra week because he was focused on buying me the next building or something like that, where today it shifted that I am much more hyper-focused on the vacancies, on the turnover cost and on the fee structure, things like that, which it's not as fun as growing that huge, huge portfolio. But at some point it's going to pay dividends for everybody because that portfolio is operating very efficiently and I can take those profits and actually start growing even more.  I'll grow just grow in a different way. I'll grow from the cash flow as opposed to the refi proceeds, which are really two different things.


Speaker 3 [00:25:37] Got it. And earlier you had said that you think you're sort of operating at 90% efficiency. Is that sort of where you are today or is that like today you're trying to get to 95 or like how like I guess you said you made that decision to, you know, you're willing to be at 90 and use a property manager like help help the listeners sort of. Yes. Think through that decision if that's a decision that they're facing.


Taylor Brugna [00:26:02] I think if you're going to invest passively, there is a chance or actually there's a certainty that your property manager is not going to do things 100% the way that you want them done. It's not going to be perfect. But the fact that you're getting started and you're getting involved is way better than doing nothing at all. So to answer your question, I'm probably somewhere around that 90% happiness range of like things being efficient, maybe 85, 90. And I want to get over to that 95 threshold because it's not perfect, but being able to do what I've done while spending limited time while kind of focusing on my full time career has just been invaluable. And I think kind of long story short, getting started is way more important than having it perfect from the start.


Brandon Hall [00:26:55] When I learned how to underwrite property, I was I learned that you must always include the property management fees in your underwriting, even if you are going to self-manage it because you want to make sure that the deal pencils out in case one day that you don't self-manage it and you do put a property manager on it. But now that you have a property manager, I mean, what are the other options? Like like what do you do? What would you do? Would you self-manage or would you just try to vertically integrate or something? What what would be the next step?


Taylor Brugna [00:27:27] There is a certain  scale where I think you could hire someone full time to work in that portfolio. And over the years I have developed very good relationships with kind of third party contractors, different plumbers, electricians, things like that. There's always another property manager if, say, if something went wrong or that business retired or something like that. I think self-managing is really interesting. If you have enough scale to have an employee work for you, because I think having one full time employee kind of managing a 100, 130 units, whatever it is, is actually probably less stress than having a couple of employees managing a 400 unit portfolio so that there's pros and cons. But I think having the scale that I have fortunately opens up a lot of options that a new a new property manager would love the business, but also I could hire a person or two part time and get it done as well.


Speaker 3 [00:28:25] You talked about vendor relationships. Have you seen a shift in sort of. Not necessarily the leverage per se, but sort of the priority that you get from vendors as you went from four units to 30 units to 134 units? Yeah.


Taylor Brugna [00:28:42] Absolutely. So one thing about being remote that I don't love and I was actually just in Tampa a couple of days ago, right in the middle of tax season. But unfortunately, these are things that I have to do sometimes. And kind of what I mean by that is some vendors need to be kept on their toes. And sometimes you look at bills for work, not performed. These are things that no one likes to talk about, but they unfortunately happen no matter how large your portfolio is.


Brandon Hall [00:29:10] So tell us more about that.


Taylor Brugna [00:29:11] Yeah.


Brandon Hall [00:29:12] How do you how do you know? How do you  audit that?


Taylor Brugna [00:29:18]  I can tell you an interesting story  from this last trip. And this is exactly why I go down sometimes. So they're Saint Pete and there's Tampa. Tampa's like 40 minutes away from Saint Pete. There is a landscaper who has a who has a contract with us to mow all of the Tampa lawns. And they're supposed to do it every week. I go and there's a weeds on the property that that it looks like they haven't it hasn't been cut for three months. Obviously, you can see that would be frustrating. Now, the property manager that I work with is based in Saint Pete. I don't expect him to drive over there and check if the law is cut. He had no reason to go because it was fully occupied. Everybody was paying rent. There was no complaints. So I can't blame him. But I had an unfortunate conversation with the landscaper who's no longer working for me because they took advantage and these things happen. It could be an AC service call that the AC that the service isn't actually there and there could be lawn maintenance, there could be pest control is another big one here you have to worry about because the pest control company shows up, the tenants don't let them in and no service was done and you got billed for it anyway. So there are things like that that are is a reason why I have to go down sometimes.


Brandon Hall [00:30:37] Also, how did you get clued in to the landscaping thing? Like somebody tell you? Or did you just do random? You were just.


Taylor Brugna [00:30:42] Traveling. So I flew down to Tampa and kind of one of the things I do every, every time I go down is I'll drive every single property. It's it's actually it's a lot of fun, but it's an exhausting trip. So I drove to the property. The lawn looks like crap. I go to the next one.


Brandon Hall [00:30:58] Wow.


Taylor Brugna [00:30:59] The lawn looks like crap and these aren't bad neighborhoods. So it's really it's an issue after I'm surprised actually, a tenant hasn't complained the stuff before, but anyways.


Brandon Hall [00:31:12] Really interesting because I presume if we do our podcasting well, we will have a lot of tech workers listening to this podcast. And tech workers are based in California, typically looking to invest outside of California because California landlord laws are not very good and properties are just super expensive. Cap rates are really low.


Taylor Brugna [00:31:34] Yep.


Brandon Hall [00:31:35] But this is a really interesting like thing to keep in mind, right? If you're investing out of state, you've got to go walk your property every once in a while. How often would you recommend it?


Taylor Brugna [00:31:43] So I have committed starting this year to go quarterly. Quarterly to go every quarter. A smaller  portfolio may not require as much oversight as that. But the really nice thing about technology, though, and you just mentioned that kind of tech workers are a big piece of this real estate investing community. There's plenty of technology that can solve a lot of these problems. So what we're doing now with the lawn care company is requiring them to upload a video to the property management software. They're setting a recurring task every week. Please mow the lawn at 123 Main Street. They upload a timestamped video. I know it's done. Now that might sound like micromanaging, but that also might sound like it saves a tech worker a trip to go out to visit their property. So there's things you can do to mitigate some of that.


Speaker 3 [00:32:36] I mean, that's what I did with my gardener. So I was out of country they just sent me before and after pictures, and I'll Zelle you the money.


Taylor Brugna [00:32:44] Exactly. Exactly.


Brandon Hall [00:32:46] You have experience doing that too.


Speaker 3 [00:32:48] Just for my house. I was out of the country, needed the gardener come back. I said, Hey, like take a before picture and take an after picture and I'll Zelle you the money. Like, you can text those, right? You don't need anything more sophisticated than that. But obviously for doing at scale putting it in the the property management system makes a lot more sense. I think. I think what was I think what is great to highlight  for listeners Brandon  is as you had mentioned too is now. Taylor has a large portfolio. He's got a property manager who he's worked with for a long time, but he's still personally going out there, walking the properties. He's monitoring the maintenance spend. He's monitoring the requests. It's not 100% passive, even if you have a property manager.


Brandon Hall [00:33:33] Yeah, and I tell you, we've been doing this real estate tax and accounting thing for a long time, right? So my firm, we only work with real estate investors and I would say probably at least once every 1 to 2 years you hear about some property management group that just implodes in. Typically it's in the Midwest because there's no accountability, because nobody's coming out to check on the property. So they're buying like junk properties that they never actually fill. And they're just it's like a Ponzi scheme. I take on the next investors money and I pay off the old investors with faux rent. You got to be careful. You got to you have to implement accountability and you have to let the people that are working for you know, that you're going to show up otherwise you're not going to get priority.


Taylor Brugna [00:34:16] Yeah. And to to also put a positive spin on it and to kind of answer that other part of the question of are there vendors who do give you preferential treatment? The answer is absolutely. And there's a lot of lenders that will do great work for me, go way above and beyond. And I really do appreciate that. And the size of the portfolio allows for that. And it doesn't always have to be that  one investor owns the whole portfolio and you're getting great service. It might just be that the the property manager has a great relationship with a certain company and they give great service to all of the property managers, clients. So there are situations on the flip side of this, but that kind of also benefit from scale and from having a property manager.


Brandon Hall [00:34:57] So I think this would be good now to transition back to different markets because we're talking about investing out of state. You mentioned it's just sort of shifting focus to the Texas markets. Why?


Taylor Brugna [00:35:08] Yeah, so it's really just for diversification. So from a personal finance perspective, ideally in a perfect world --and this is just an arbitrary rule that I set for myself-- this is not there's no math behind this, but I like to have under 50% of my net worth in one specific asset class. And the asset class, it could be it could be rental real estate. It could be my primary residence, it could be the stock market, retirement accounts, other assets, whatever it is. So ultimately, real estate is a large portion of my portfolio, of course. But to diversify further into that, then you would one have to go to other assets. But then another way to diversify is to get out of that one specific market. Now, every market has its own pros and cons challenges. Tampa has climate change risk, hurricanes. Texas has tornadoes, and I just moved to Dallas a few years ago. I never knew that was a thing. Every couple of months a tornado sirens go off and unfortunately, it's caused some  real severe damage for people out here. But every market has a risk. And I just think being spread across multiple ones is helpful.


Brandon Hall [00:36:24] Is there anything that you're looking for in a market before you pull the trigger on investing?


Taylor Brugna [00:36:28] Yeah. So the number one thing that kind of gives me pause on some of those Midwest markets that are generally lower cost. And believe me, I'm not an expert in any of those markets, but it's really rental demand. So kind of what I see in Tampa and St Pete is that I could list a unit. It can have three applications in the next three or four days as long as it's priced appropriately in some of these smaller markets where on paper things look awesome, it might take you two or three months to find that right renter for that property. And I've also learned that vacancy is one of the largest expenses you could have in the portfolio, but it's not a real dollar amount expense. So population growth and rental demand are really the two ones I focus on the most.


Speaker 3 [00:37:19] You talked about you just real quick talked about pricing, I think. How has, I'm curious to know, like how has your experience being, you know, growing in one market for a long time sort of informed your ability to price properly. And then how would you take that and apply that to a new market?


Taylor Brugna [00:37:42] Yeah. So are you talking about the price of the actual buildings or are you talking about like, a rental listing price for the unit?


Vikas Gupta [00:37:49] Sorry, the rent, the actual rent amount.


Taylor Brugna [00:37:52] Yeah. So over over time, kind of one of the biggest benefits of being in one market is you get to know it really well. So where I am kind of at the point where I'm not going to say block by block because Tampa and St Pete's pretty big, but pretty close to block by block as far as knowing kind of where certain issues are or where there is great neighborhoods or where there might be a problem in this area in a specific section. So being able to price things appropriately  is huge because kind of like I was saying earlier, vacancy is one of the largest costs that the entire portfolio has. So if I could avoid that, great. And I will price things appropriately to get them listed quickly. Now, applying that to a different market, to be honest with you, I really haven't figured that out yet because it takes a lot of time and effort to be able to know each of these neighborhoods and be able to price appropriately. Now, thankfully, there is great property managers all throughout the country that have that knowledge and can help you through it. But that's one of the main reasons why I haven't really kind of diversified out of Tampa yet, is because I'm not comfortable with the individual areas. I can talk about the Dallas as a whole. I can talk about Oklahoma or whatever as a whole. But knowing one specific town is really hard to learn.


Brandon Hall [00:39:16] That makes sense. I mean, you have a competitive advantage in Tampa and St Pete, whereas you lose your competitive advantage if you move into a different market. So, like, I don't I don't know how you figure this, but moving into a different market. The benefits would have to outweigh losing the competitive advantage. Right? So like either you assign a lot of risk to the lack of diversification and thus that is the benefit of moving to a different market and that does outweigh your competitive advantage. Or you're like thinking, you know, Dallas, Austin, whatever, can appreciate way faster. Right. But that is interesting to think about. It's like you you probably know that market way better. I mean not probably you do know that market way better than anybody else. I remember looking at a deal with you and you just rattled off what the rents could be. I mean, that's like. That's huge, right? So you lose that when you go into a new market.


Taylor Brugna [00:40:17] And you may have actually just framed it better than I did when I was trying to explain that. I like to have less than 50% in certain asset classes because. What I'm realizing is that I can compensate for that market risk in being in one place in other ways. I don't need to compensate for that risk by going to buy real estate elsewhere. I can and it will it will work, but I can compensate it also by taking some of that cash flow and putting it into the stock market or putting it into some other asset that's not related to Tampa real estate. So there's ways to mitigate that risk without having to go kind of learn the whole new system and reinvent the wheel.


Brandon Hall [00:40:56] All right. So let's start closing this episode out. This has been a really awesome episode. Thank you very much for sharing your story. We have three last questions for you. Gotta come up with a cool moniker or something where that, you know, like the I think think other podcast you like the fire questions or something. Anyway, we have three ending questions for Taylor. The first is what is your favorite book can be anything doesn't have to be real estate related. Doesn't to be business related. Could be. What's your  favorite book?


Taylor Brugna [00:41:31] Trying to think, the most recent one I read and just the one I came back to. You actually sent us a copy of the culture code that I've actually read multiple times. Oh, really? Yeah. I I'll be honest with you, I'm not a huge reader, but that one stuck with me, and I read that one multiple times.


Brandon Hall [00:41:49] Good luck.


Taylor Brugna [00:41:50] Trying to kind of build teams because not only applied in my job as a CPA, but my job trying to manage property managers as well. So just trying to create a space where people kind of want to work for you and are motivated to achieve that common goal has been has been key.


Brandon Hall [00:42:09] Awesome. What do you think is more important? Cash flow or appreciation?


Taylor Brugna [00:42:16] This might be controversial.


Brandon Hall [00:42:19] It's definitely controversial.


Taylor Brugna [00:42:20] And I think appreciate got to pick a side. I think appreciation will dwarf any cash flow on a long term rental investment. And I also even think on most short term rental investments, too. But that said you can't always count on it. So I'd say cash flow is more important, but I think appreciation has the most impact, if that makes sense.


Brandon Hall [00:42:45] Would you kind of say like, right then I know you can't really commit to this, but this is sort of the way that I think about it. And so I'd just be curious. Get your take. It's, you know, you buy property that can cash flow a little bit, you know, cover your debt, cover your expenses maybe a little bit on top. But the real money is in that appreciation. So if you want a cash flows that you can hold for ten, 20 years because you're going to win if you can do that.


Taylor Brugna [00:43:09] Right. And I think a lot of your listeners are fortunate to be in that position where they're probably working a full time job and kind of want to get into this for other reasons, maybe have some passive income from diversification and they don't need the whole money. You can hit a single or a double and do great. It just takes longer. But I think real estate is slow as it is, so I don't think there's anything wrong with that.


Brandon Hall [00:43:32] Love it. All right. Final question. What final tip would you give to our audience if they are trying to expand their holdings? So maybe they have a small portfolio already and they're looking to buy more, you know, take into account the current market. What's one big tip that you would give to somebody looking to expand today?


Taylor Brugna [00:43:57] So they already have a portfolio or something just getting started. Okay. So. Kind of what I've shifted to you over the past year. Basically making sure that everything that you currently have is as efficient as you possibly can before you start trying to expand the portfolio. So I think kind of where I was eight years ago, expanding at all costs worked out great given the market that we were in. I think now you have to make sure that everything you're holding is stabilized and efficient prior to kind of getting into that next deal. So really just evaluating that current portfolio.


Brandon Hall [00:44:35] Taylor, appreciate you coming on. Thanks for sharing all your wisdom. Incredible story. Loved hearing it. If people want to contact you, how can they do so?


Taylor Brugna [00:44:45] So the easiest way to contact me is at thereaslestatecpa.com.


Brandon Hall [00:44:50] All right. There you have it, everybody. That concludes episode number one of Hacking Real Estate podcast. See you next episode.


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