Transcript for “Optimizing Systems, Processes & Contracts with Michael Solitro | The Real Estate Investing Club #28”
Gabriel Petersen 0:02
Hello and welcome to another episode of The Real Estate Investing club. Place investors go to learn tips, tricks and stories from other investors in the field. If you feel we provide value to you go ahead and hit that thumbs up, share whatever it may be. And if you’d like for us to cover a specific topic, let us know in the comments or reach out to us on our website. Today we have a very special guest. So buckle up and grab your pen and paper and enjoy the ride.
Right We are live. Michael, thank you very much for joining us today. How are you doing? I’m doing all right, doing good. Thanks for having me. Absolutely. Absolutely. To get started once you tell us you know who you are, where you’re from and how you got started in real estate in the first place.
Michael Solitro 0:51
Sure, I am from lovely Cape Cod. I work here as an attorney and Associate Broker at Golden Grove real estate just brokerage here, as well as I have a coaching business for other realtors accomplished our eight, where we work are solely focused mostly on systems and process. So as opposed to teaching what to do we look at more of what you’re doing and how we can do it better. So implementing systems implementing process or tightening up the ones that you have in place.
Gabriel Petersen 1:23
Awesome, I love it. We’re definitely gonna have to jump into that more because systems and processes when it comes to building a business, that is one of the most important things that you need to you know, stand up. So I’m glad you’re on the show. So tell us, I mean, you didn’t you know, you weren’t born into real estate. How did you actually get started? Sounds like you’re a lawyer. So you went through law school you got out? How’d you decide to you know, hop on to the real estate train?
Michael Solitro 1:50
Yeah, I think like most people, I came into real estate by chance. It definitely wasn’t by design. I wanted to work in New York City after getting out of college. Went to Syracuse University, a lot of people I knew a lot of my network went down to New York. So that’s what I wanted to be. And I ended up at analytics, market research firm. So my job was to understand everything there was about commercial, industrial residential real estate and provide quarterly trend reports to our clients. And from going from no background real estate to you know, my first day I showed up, I had a stack of papers and a telephone, there’s no computer and it was just make these calls talk to people in the market. I focused in the southeast United States found out well, you know, find out what’s going on so we can kind of build these reports. And from there, I learned a couple things. One really clearly state was interesting and it was something that touched kind of all parts of our lives, whether it was we live where you invest your money, some combination of the two. And I also learned as I was on the phone with these people that these were important people they have things going on. So just listening to my you know, two minutes survey was not top of their My priority list. But what I did learn pretty quickly was information exchange and specific, you know, insights and knowledge about their market, I was important to them, I was something that they want it. So as opposed to just saying, Hi, you know, I’d like to talk to you about ABC, I would kind of get into what was going on with them and have a real dialogue and they appreciate it. I was just some guy from New York calling. And that’s something it’s kind of taken me throughout everything I’ve done in real estate was, you know, information is important. And it’s it’s kind of everywhere, but having that next level, that knowledge that insights to provide having a back and forth is really bad. It’s not as valuable as money in real estate investing. But it’s probably secondary students right up there. You know, kind of after that basis, it was the fifth contract and negotiation. I saw every day real estate deals, like I want to be more involved in that that got me into law school and into where I am today. So I get to see all pieces kind of end to end in the transaction. Life real estate deals and that’s that’s why Focus on a lightning bolt Maisie of it
Gabriel Petersen 4:03
I love it. I love it. So you, you were you’re out in New York, your friends kind of you they went out to wherever you are right now Cape Cod. And you happened upon a analytics firm commercial analytics that you got a job that you kind of got the bug you realize the the importance of data in real estate and you decided that you wanted to be part of the contract side and you wanted to start you know, really negotiating in the deals. So you went and you got a law degree. And after that point, it sounds like now you are a broker and a coach and you also you also invest in real estate yourself.
Michael Solitro 4:45
I do. We have a couple properties here. Mostly though, my business focuses on the brokerage side, helping clients buy and sell and then as an attorney, working on the closing process here massachu It is an attorney state. So we our attorneys are involved in probably 98% of the transactions that to close. So I do get to be involved in the contract these, I advise some clients, I’ve got friends and colleagues who are an investment in the financial planning business that I can’t really consult with to kind of bounce ideas back and forth. As I’m sure you know, the last couple years have been all over the place. So just getting an idea of where we’ve been, where we’re going and what their clients are looking for is they’re, they’re interesting conversations, and they want they’re always evolving and changing. So I like to be involved. I’d like to hear all different kind of perspectives on it. I don’t think anyone has the definitive answers of what we’re going to see in the next 369 months.
Gabriel Petersen 5:47
No, absolutely. And do do you focus mostly on commercial or do you also do single family residential, multifamily, non commercial, stuff like that?
Michael Solitro 5:57
Now being here in Cape Cod, it’s pretty much single family. Residential is what we look at, we do have a lot of seconds and vacation properties. So there’s really the investment piece comes in. But I think upwards of 80% of the residential here on Cape Cod is single family. So that is mostly what I see here. Gotcha.
Gabriel Petersen 6:17
Well, I mean, I love the breadth of experience. Sounds like you’re you’re you’ve got your hands and quite a few things when it comes to real estate. I haven’t had anybody on the show yet that has focused that is a lawyer that has focused on the legal side. So I would love to delve into that side of your business. I mean, obviously, real estate investors are the ones that are going to be listening to this show. And so they’re, I mean, especially speaking from my own perspective, when I first got into real estate, I didn’t, I didn’t really understand the contract side of things. When I looked at a PSA, a purchase and sale agreement. I saw 30 pages of just words. So I didn’t I didn’t understand what was going on there. So speaking from somebody who is just take the perspective of somebody that is you know, Jessica Getting Started in real estate, looking at contracts, what is it that they need to know about, you know, purchase and sale agreements? You know, addendums, anything like that? What is it they need to know to to execute a good contract? Besides obviously everybody should be taking it to their their lawyer.
Michael Solitro 7:20
That’s that’s a, that’s a big question. And I want to make sure I don’t get into the weeds here. And I kind of leave it as this is actionable and helpful. There’s a lot of things that you want to consider. And as you say, it’s helpful to work with someone who’s not aware who is familiar with contracts, because while language can be boilerplate, there’s a lot of different ways they can go and depending on how clauses and attendance are set up, they might cancel each other out if they’re in conflict or so. So, how are laid out But the big thing with the contract is want to first understand what as a buyer seller investor, you understand what is your responsibilities, what is being asked. You. So that’s the basics, making sure that what was discussed with during the offer during the back and forth that that actually becomes part of the purchase and sale. That’s the one thing that I see that we’ll get to toward closing right there and saying, hey, during the offer they said they were going to do ABC at that just hasn’t happened, we look back and say it was overlooked. So if something’s agreed to before, make sure it’s in make sure that the dates of the timelines milestone. Second, when you will see a lot here, at least Massachusetts is the standard contract, then we’ll have a Delta afterward. And sometimes the agenda is in conflict with the standard boilerplate of the purchase and sale. So if something says, you know, a will happen by this date, or buyer can walk out of the contract and then the agenda, it’s not exactly clear. A lot of times the agenda is going to control because that is more specific than the actual boilerplate link. So if you see things that are in conflict, new purchase and sale, ask about it. Sometimes they’re just overlooked other Other times because one side is like, I’m not sure that we’re going to be able to meet this deadline meet these requirements, let’s put kind of gray vague language in a case it doesn’t have to be can negotiate or we’ve got a way out of the contract. And while that you know, or design on ethical, we could say, it is a way to make sure that if you’re looking at a contract that is just as black and white as possible, and unfortunately, contracts aren’t always black, white. That’s kind of the third thing I do want to highlight is that, again, now’s a good time to think about it is that you want to plan for as many reasonable contingencies in your contract as possible, but you cannot plan for all of it. So trying to, you know, plan. Let’s just use the example of when you’re going to inspect the property. You want to be specific, but you don’t want to say I want to inspect the property on this date at this time. Let’s say something happens and you can’t make it at that time. Now all of a sudden, you’re you’re locked in at that date. So plan for some contingencies leads to gray areas and also understand that you are not going to be able to foretell the future, something may happen that is not going to be in your 10 2030 page Purchase and Sale no matter how diligent No matter how much time you put into it. So you either want to be as specific as possible, where it’s, you know, if this happens, we’ll do this or you want to be general where here’s some general guidelines, if things of these sorts occur, this is going to be the framework for how we’re going to behave. And I found that is more useful. You know, working with other attorneys, that’s kind of one of the areas that lawyers like to work together here is just real estate contracts, they understand things change and that we do need to work together or things like that. So having the ability to be flexible and to not deviate, but to kind of make the right decisions when nothing’s changed, or things that are unforeseeable to occur.
Gabriel Petersen 10:49
I like it. I really like that perspective. Being both specific and vague in your contracts. You do have to have specific dates you have to have, you know, your inspection period needs to be a certain number of days. That’s Very specific number, but you also want to leave in some gray areas in order to give the contract just a little bit of flexibility. So both parties can, can take the contract to close. So on top of that, do you I know this is kind of a loaded question, but do you have any specific contingencies that you that you recommend all investors put in their contracts?
Michael Solitro 11:23
is kind of a loaded question. I like to kind of stay away from all always. But whether you’re on the you know, if if you’re purchasing a property for investment, and this is kind of taking a step back with my clients, one of the most important things that we work on before we even get to that point of it is having a pretty thought out plan as to why we’re purchasing this property for investment, what the, what the use of the property is going to be, what the ideal return is going to be and how that’s set forth. So one thing that I like to see throughout the life of from looking at properties Making the offer and then go into purchase and sale to closing is that we stick to what we originally set out for because unfortunately what happens is we’ll get someone, for example, here in Cape Cod is looking for a second home, vacation home where they’re going to rent it out for the main season from July through September. And then as we go through the process, it either ends up that they don’t find the exact property or they’re spending a little bit more money and they’ve got to downsize their home and now they are deviating from their their income plan is when they were going to rent the property out. So now that we’ve kind of deviated from the main plan, we’ve got to make sure that we adjust either in contracts or in terms were both to match up with where they are, because we want to be six, nine months after the close and realize hey, I was expecting this return. And I don’t have that because we ended up spending more money on a different area or I’m not getting the weekly or monthly return on on what I thought my investment. So one thing that I think is important in any contract for investment or kind of even just if it’s a main purchase That set out a plan even before you start looking at properties and try to stick to that as much as possible and incorporate those terms into your contract. You it’s very easy to get kind of the romantic part of real estate because there is an emotional piece where there is no way you’re living there. vacation home type thing, we might forget that this is an investment isn’t there’s also a very large financial piece. You want to have a thought out an actionable plan that you carry through the contract where you can kind of just throwing, throwing things away because this is something that you want you’ve been looking for longer than you thought. So what exactly is your question? I do think it’s important to kind of have a plan stick with your plan and make sure that your contract protects you to reach those milestones and reach the the return that you’re looking for in the type of perfect property that you’re purchasing for investment.
Gabriel Petersen 13:53
I like I like the answer. Have a plan, stick with a plan and then your your purchase and sale should should reflect that plan that you’ve already seen. sent out at the beginning. So I like I like that framework going into it. So this is kind of an oddball question. But it’s happened to me a few times. breaching contract. So what do you do? What do you recommend people do when there are small breaches of contract, for instance, this has happened to me a few times where I didn’t get earnest money in on the set date, just you know, things happen, whatever, for whatever reason, I forgot to put earnest money in and I put it in, you know, two days after the actual set date in the contract. In those in those instances, I never really did anything I just went forward in the person sale. And obviously, you know, that’s not a huge breach of contract, but it still is a breach of contract. In things in instances like that, what do you recommend people do? Is it something that you should bring to the attention of the seller? Or is it you know, one of those things that you just kind of let fly under the radar
Michael Solitro 14:54
and ask the question, my general rule of thumb on something like that, even if it’s it’s minor Anytime that you’re deviating from what’s on paper, the two things you do is disclose, memorialized. Just because if something does change down the line, you don’t want to give anybody an out of the contract that you’re counting on, especially when there’s so many moving parts as a purchase and sale or purchase of real estate. So if the date is missed, if a milestone or something is supposed to happen, it doesn’t disclose memorialized is generally the best advice I can give. That way there is that fallback, there is something that you can add to your contract saying, Hey, we talked about this happening and didn’t talk about it. And we agree, this is how it’s gonna happen instead. As I mentioned before, you know, attorneys sometimes have a not the most collaborative experience with each other, but generally in real estate, that’s not the case because we understand how many moving parts there are. So as long as there is that upfront that communication piece, and it’s not, you know, I’m doing this to try to get a benefit for my client or I’m trying to rework or fee agreed terms of deals where it’s more of a kind of example that you gave, hey, this happened. Here’s what we do instead. That’s, again, maybe just write it down and make it part of our deal.
Gabriel Petersen 16:10
Perfect. Awesome. Well, I, I loved talking about the contract side, I do want to get a little bit into that your coaching side of the business where you talk about systems and processes. Because I mean, in the end, as a real estate investors, you know, once you have more than one or two properties, you are running a business, that is what you’re doing. It’s not a hobby anymore, and now you have a business. So kind of take us into how you coach people about systems and processes. This is, I mean, it’s something that everybody needs to know so so tell us, tell us about your basic process when it comes to instructing people on how to develop processes.
Michael Solitro 16:48
Yeah, this is something that I’ve gotten to just the last couple years and I have been really pleasantly surprised how positively it’s been received by other colleagues other real estate brokers. kind of all over the country, I’ve been all over the Northeast. So I do have a network that’s outside of where I work mainly. But what I find in common when working with other others me business is that there’s many different approaches to what happens successful outcomes. And then in talking with these professionals looking into what has worked, is all over the map. So what I try to do is different from most coaches that I’ve had experience with, I’m not trying to tell you you’re doing anything wrong, tear down what you know, has worked with might not be working, it’s just taking a step back, simplifying or understand that business model, and then start measuring where we can. Here’s what you’re doing. What is the return on your time, your your money, your efforts, all of those things? And is that what you were looking for? Because the answer I get from most of the clients that I work with as well I don’t know. But you know, it Why are you doing x if you have no idea if it’s working? Well, you know, it kind of rearranged. From, I feel like I should be doing something with my time or this is what I see other people doing. So the big thing that I like to focus on is first is having an understanding of what you’re doing and then what is kind of coming back into your business or how that is the return on your time and money. So that’s a conversation that I have kind of up front that I’m not trying to teach you how to do your job you’re most people that I work with, they’re already successful. This is a way to kind of lean out things that aren’t working well or to kind of just understand what minor changes we can implement to either scale up put in a system and make it you know, a great return on on what you’re doing.
Gabriel Petersen 18:39
Awesome. I love it. And you said two words that that really rang true for me. You said simplify and measure and when it comes to to hit, you know, nailing down your processes. I really feel that that is that is the that is the crux of it. Actually, when I before I got into real estate, I was in corporate and I was process improvement consultant and so that’s What that’s what we did is we, we broke everything down into seven steps. And then your entire business model, you break it into seven steps. And then you break those individual steps into seven steps. And you keep going until you have a full process. But so the crux of it, just as you said, simplify and measure, figure out everything you’re doing, and and figure out what the what the very core of that process is. And that will give you a little bit more clarity. And then you can put KPI around those individual steps. And start slowly but surely improving those KPI over time. So I love I love that simplicity of the advice, simplify and measure.
Michael Solitro 19:36
Yeah, my background is also from corporate and process improvement. So we’ve got that in common as well. And that kind of guides me seeing the corporate environment, things that kind of work in that big, big corporate environment versus things that there are missed that working with a smaller business, you can kind of implement that a little bit quicker and you can get rid of things that are working at a much faster pace. Looks like that’s the experience. You got it.
Gabriel Petersen 20:03
I love it. I love it. Yep. All right, so I’m gonna, I’m gonna shift gears just a little bit here. We’ve talked a lot about, you know, your experience in the legal side in the process side. And I want to go into your actual experiences and your stories now. So it sounds like you’ve had a fair number of experience, you know, a fair amount of experience in real estate. And we all know that real estate’s a roller coaster, you go up, you go down, sideways, left, right. And, you know, throughout that process, there’s lessons that we learned. So kind of take us to one of the lower parts, you know, one of the one of the hard things that you’ve went through so far in your real estate experience, and give us the lesson that you learned out of that.
Michael Solitro 20:44
Sure. Yeah. As I mentioned, I start off in New York, and I grew up in Massachusetts, came back to Boston. So most of my professional career was that’s where I started working Boston. And for the most part in real estate in the corporate world. It’s a meritocracy. If you’re good at what Do if you provide a service you provide a product to your clients, you’re going to do well. And that was kind of the lesson I learned from, from being in those markets that worked hard to do well provide a product or service people want, and it’s going to be in demand. In transitioning, I’ve been here in Cape Cod now for seven years and worked here for almost five. And what I have realized it was kind of difficult to friend for me was that being kind of better being, you know, providing something of value just wasn’t enough that it was a market that also kind of relied on and this was strange coming from, again, process improvement that it was, this is how we’ve done in the past, this is what I’m accustomed to do. This is what I like. So just because you’re telling me you’re good that just because you’re telling me you’re better and even if you have results to prove those things, I don’t care because I’m uncomfortable with how things are working or I’m comfortable I’ve done in the past. So for me, that was surprising. And it was also a real big change. And it was something I had to learn to adapt. So As far as the clients I work with, hear that word of mouth, the, you know, what have what has ABC board, they told me about you people that I know people that have worked with people that I trust that is as important if not more than the service and the product that you’re providing, because it is that kind of marketing. So that was hard. And that was that was a real change for me. And, you know, real estate is ultimately hyperlocal because you’re buying a piece of property that sits in one place most of the time. So that that’s one thing that, you know, as far as difficulty was that I was very surprised that it’s, you know, unfortunately, it’s not always the best quick is what you’re looking for that is better necessarily is going to kind of win out in the end if there’s multiple things that compete for business here, and the market and kind of understanding all those things was that was a little bit of a change for me.
Gabriel Petersen 22:57
Yeah, absolutely. I’m pretty sure It’s got to be 100% of the guests that have been on here have in some way shape or form said that real estate is first and foremost a relationship business. And so that is sometimes when when you know that you have a good product, it can be hard to hard to realize that, that that’s not all always the case that that is the most important thing, you also need to have relationships in order to move that to to the market. So I’m glad that you know, it’s a good lesson learned. And then once you go that you just keep going. So we’re getting on to the end here and we do try to keep these around 25 minutes and so I want to ask one more question. You know, it’s uh, you said it yourself. You’ve been in real estate for sounds like seven years now or a little bit more. And so going back to the Michael that was, you know, seven years past and you know, he’s just getting into real estate you just got into your, your corporate data side of things. If you can go back to him and give him one piece of advice going forward. What would that be advice be?
Michael Solitro 24:03
So it’s been a little more than seven years. But one piece of advice that kind of would have been helpful that and still helpful now is just remembering in a relationship in a client driven business, that it’s not about you. And going back again, that first day where you show up with just a telephone stack of papers. I don’t want to make these phone calls. What are they going to say to me? It doesn’t matter what I think it doesn’t matter. You know, it’s, who am I calling? What value can I provide to them? And how can I improve this transaction from their point? So and that, that is how that has helped me so much, and understanding that, you know, approaching clients here, notice, I don’t want to go to this event, I don’t want to have you know, I’m nervous about this. Turn around, think about where they’re coming from what they’re looking for. And all of a sudden, I’m not as nervous. I don’t have as much pressure. It’s like, I can actually do something. Let me let me think about it from from this point of view, and it makes it easier to me and it provides more value for that. So understanding that We’re really helpful. And something still that I need to remind myself No, I don’t want to pick up the phone I’m scared nervous about this get not about you think about it from how you can benefit or provide value and put yourself in their shoes. So that’s, that’s something I always need to remind myself that would be good to know. But earlier on,
Gabriel Petersen 25:19
I love it. That is a great piece of advice and something that I’ve been, you know, you know, even to today, I have to remind myself, you know, it’s not about you. In the end, we are you know, we’re serving people we are serving, you know, helping people in their own lives. And, and whenever you feel that, that tinge of fear or whatever it is that hesitation, because because of your ego because of or just fear in general. You got to remember, it’s not about you, it’s about the other person. It’s about helping people. And so just keep pushing through that and try not to make it make it reflect back on yourself. So Michael, I want to say thank you very much for coming. Went on the show. I’m sure I can speak for everybody listening and watching that we appreciate the wisdom that you shared with us today. If somebody did want to get in contact with you, what would be the best way to do that?
Michael Solitro 26:11
Yeah, I’m on LinkedIn. That’s probably the easiest way. You can also find me at Welcome to cake on Instagram, and Facebook. And we are relaunching our accomplished RV website. So that’ll be launched soon. But LinkedIn is probably the best way.
Gabriel Petersen 26:27
Perfect. So you heard it from him. He’s got a website, but LinkedIn is the best way to go. I will put that in the show notes. So if you want to get in contact with Michael reach out there. Again, Michael, thank you for coming on. And for everybody listening and watching. We look forward to seeing you on the next episode.
Unknown Speaker 26:43
Thanks, Dave. Appreciate it.
Gabriel Petersen 26:48
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