Ke Nan Wang shares his transition from Navy life to managing and growing a real estate portfolio. Learn his secrets to setting clear expectations, achieving high rent collection, and building new construction homes. Ke Nan also dives into his sustainable investment strategy, effective subcontractor screening, and the power of fast payments to build strong professional relationships.
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All right, everyone. Welcome to the Real Estate Game Changers show. I'm your host, Mike McKay, based in Jacksonville, Florida. And each and every week we do this show with people who are changing the game of real estate all over the country. For anyone who's interested in learning a little bit more about what we do at my company on Load My Home, or interested in learning about how to hit your personal goals, We do a weekly zoom call. It's totally free. Next Thursday at 10 AM, we're doing one on aligning your passion with purpose. And we're going to share some tools with people that we use internally to help them reach their personal goals. So let us know if you want to join, you can check DM me on Instagram and I'll send you the link. This week on the show, we have Keenan Wang. Keenan, welcome to the show.
Ke Nan Wang: 0:44Thank you, Mike. Thank you for having me.
Mike: 0:46Absolutely. So for the people who don't know you, could you tell us a little bit about how you got into the real estate business? And how that's led you to where you are today.
Ke Nan Wang: 0:59Yeah, sure. So I, I think I have to go back a little bit just because I do have a slightly a little bit different background. Basically born and raised in China, moved to the United States. The United States when I was 14 so essentially the immigrant, immigrant background then middle school, high school in the United States, really got into the military saw my the Top Gun movie first sold me to the Navy, sold myself to the Navy. So, Went to the Naval Academy four years, and then somehow then at Academy, they convinced me to, instead of go pilot, I need to go submarine. So I yeah, service like a submarine, went through the nuclear pipeline, then did a eight years active duty in in the Navy. Three years of sea duty on the West coast, then two last two years, who was at the Pentagon in Washington, DC saw the echelon one operation. Yeah, lots of basically how, how the U S government acquire weapons to outfit our military. Then That was at my, that was at a turning point in my military career. A lot of people at that time, usually they think about whether they should stay in because at that time you are pretty much fulfill your. Government, your contract then if you stay in, most people stay in for the, the rest of the 20 years of career. But if you transition out, so you will be either find a, a civilian job, that's the equivalent at, in the, at, at that time in DC, there was a lot of, a lot of my colleagues, so we're getting a government contractor job. Just because the network that we have built in that region, it's, yeah, it's, it's basically you just took off your uniform and put on suit and tie and same, very kind of same, same time for work. So that was one option. Obviously I didn't do that option.
Mike: 3:12Okay. I'm
Ke Nan Wang: 3:16And the reason I ended up here is, um, so my family has already have a, a small mom and pop, a real estate portfolio in St. Augustine, Florida. So my mom found out that I was basically thinking about that transition. And, and she, she essentially just offered me to say like, look, like based on our family operation here, we can afford afford an actual, to pay an actual manager. So essentially she offered me a job to come home and, and that's that's pretty much I, I look, I, I waiting my options. Then I, I actually on the Christmas break, I came home and. And see what the operation was at home, back home here, St. Augustine, before that, I didn't even know what's, what's happening at home, because I was so focused in the military and my mom, like my parents, they don't talk about too much about operations, like what we're doing at home. But then I came home, I said, like, so I realized, like, Yes, there is, it's like extremely mom and pop set up private landlords, just like basically acquiring long term rental properties one or two a year over the last 20 years. So, so basically we do have a portfolio. So I, I, I saw there's a huge potential in, in the family business. So I decided, yeah, I'm going, I'm going to basically at that time, I didn't completely quit the military. I got out of active duty transition into the reserve. So I'm attached to the Naval Air Station Jacksonville. So that was 2019. I came home Then took over essentially, I think, I mean, it wasn't really a, like a title or position, but looking back what I was really doing, I think it's like, a chief operating officer's position. Basically I take care of operations of all the family business. So that's how I started in the so I, I essentially, when I started, it was basically just a property management When I came home, there was a basic, I just I want to in a military you have like change your command. So, so I can, I think I can like know that kind of procedure from the military. So if, if a new CEO come to a command, then you have to do the turnover. So I treat it like that. The thing is you don't want any kind of like, ambiguity about like who's in charge, right? So like the new CEO has come on board, the old CEO is stepping off. So you need to actually set the tone right. So right now we have a portfolio of rental properties with tenants. Then I, I just got out of military, have no experience in property management, but I have to set the tone right. So, so pretty much I just I think I, I remember I I wrote the first letter and send it to all the tenants and say, so I was, that was mid April and I say by May 1st I will be your main point of contact from that on. So that was my first step transition. So started in property management. If you have any questions, so I hear, yeah, you can go ahead. but that was a starting point.
Mike: 6:52some of the challenges of like transitioning from military, right. What you were doing for a long time to civilian work or civilian life.
Ke Nan Wang: 7:02Definitely the big, it's a mind mindset change in the military, especially in the new world, it's extremely black and white. It's like, you have the book, you have the procedure, you follow the procedure to the T, and if anything wrong, then it's like, we actually do a very serious critiques on any of the mistakes because you talk about Potential serious personnel injury or equipment damage, hundreds of thousands or million dollars of equipment damage if you don't follow procedures. So we had the mindset of very black and white that I had initially when I come home, that was kind of my mindset, but overall I adapted, adapted very quickly in the civilian worlds. Yeah, you, you play a lot of in the gray areas and at the end of the day, it is all about getting things down, achieving your goals, and meeting your, achieve your next, next milestone. So, so yeah, we, I definitely have become a much more fluid, more like water with, this is a very much a personal judgment call. It's, it's like you learn this from experience, right? Like same, same as yourself. So like sometimes you, you have to know like what, when to push, when to give. I think my key, my key principle is always I want to achieve a win-win. So, so that would be my. my my end goal for, for pretty much all of the decisions I, Try to make, it's always a try to achieve a win win for all parties. So, so basically that's the end goal. Then I'm always the willing to talk and work out solutions for with people. So. Yeah, you could imagine like when I first came home, like basically my, my tenant pool. So, yeah, I, I was doing a lot of like, if you basically we had about 70 percent of a collection on rent rules. So, So that one didn't, didn't work for me because my, my dad was my dad was the property manager before I took over. And and he's a very laid back. And I, I see there are a lot of mom and pop landlords operating like that. They just, they Don't want to have the hard conversation with tenants and sometimes tenants take advantage of that. I think when I came home, it was too much of black and white, but then later on, I adapted. To how to be flexible because, and like things that happens in life. So, basically, yeah, basically you get, yeah, yeah, yeah, I'm sorry.
Mike: 10:09No, you're
Ke Nan Wang: 10:09a question.
Mike: 10:10How did you, so like, obviously 70 percent collection rate isn't great. Like how did you, like, what were the steps you took to increase that?
Ke Nan Wang: 10:20Well, it's basically for me it was eviction.
Mike: 10:24Okay. Yeah.
Ke Nan Wang: 10:25I, yeah, I, I mean, there were, I, I did kicked out a couple of tenants where I think like in today, I probably wouldn't kick them out. So, but, but basically I was black and white, like, so if you're not paying rents, I filed the I post a three day notice and. If you don't meet the deadline, I'll file eviction. So luckily, St. John's County, I, yeah, in the first couple of years into the business, I did a lot of evictions. So, so I'm like, I have no problem with doing evictions. And, but nowadays I rarely do evictions. I have, I don't even remember the last time I did an eviction. Just because And right now there's, I have a hundred, a hundred percent right connection. I'm a much more effective landlord now. Just just a way. So, yeah,
Mike: 11:21What did you change to be able to get from having to do all these evictions to at a 70 percent collection rate? Now you've got 100 percent collection rate and you can't remember the last time you did an eviction. Like what changed in your process to allow you to get there?
Ke Nan Wang: 11:36No, first is a definitely a much better screening. Screening. And I also, I, I have tweaked that process as well. Before I basically, I took the black and white approach. So I set my requirements, the credit score, income, eviction records, all that. So if you. Don't need that requirement that I say, bye bye. And I know there are a lot of property management like that. That's not nothing wrong with them because I do manage property for other people. I think it's much easier if you manage for other people, you set requirements. And then if people don't meet that requirement, instead of taking on the liability of a rent commence, a bad tenant to a property owner, You just, just, just have them say bye bye, right? But for us, like private landlords, we have much more flexibility on our decision making. And I do believe that just based on my experience, I say 90 percent of the people are always trying to do the right thing. This is based on my experience. Sometimes people get stuck in the rud. Yeah. Then at that time, you do have to see like their, their, the personal history, right? If, if someone who's gonna do their best to, to make payment and sometimes something bad happens and they can't make it, that's a decision point that you have to make. They say, okay, this is kind of like a one time thing. I let them, I work with them. But if you see someone who's trying to take advantage of you, try to play the system, and then I have no tolerance for that. So, so that is the black and white, if you don't meet the deadline, you gotta go. So, but right now, just because I, During the tenant screening I, I basically, I don't, if people have problems, I always put it in the, in the description where I'm willing to negotiate with more deposit paid upfront. So. So basically if I, if I'm taking on the risk, I want to reward it for that risk that I'm taking. So basically I look at like, so the, the advertised rent is for a tenant that meet my requirement. So that, that's the, that's the return on investment that are assigned to a, a certain amount of risk. So if I have someone who is less qualified then I will always see their, like why they're less qualified. Usually I can, I can, right now I'm good enough, I have a good read on people, that I can just tell, tell doing the showing. I use the showing as a, as an interview process. A lot of people don't know that. Like I just, like I set up a showing, then at the showing, I just casually ask there some questions, like, why are you moving? Where are you from? What do you do for work? And you can, that's actually my interview but people don't know that. yeah. yeah, yeah, yeah.
Mike: 14:57yeah.
Ke Nan Wang: 14:59yeah. And, and then people like if they talk about if, if they, like, a big reflect to me, it is if they talk about the, the past landlord then I, I I, I basically, yeah, like, how they complain about their past landlord That that's that's a, I mean, I do have a lot of people complain to me about their past landlords. I, I, I always play with them. I say, yeah that sucks but I'm mentally writing them up.
Mike: 15:36Interesting.
Ke Nan Wang: 15:37But one is, one is a a very I guess a robust screening process. And then another thing is a set the tomb, right. from the get go. So I'm, I'm more about having the tone right. And if we start to have a relationship, then I can be more flexible. And usually I'm, I'm always very nice about cordial about things that like, so it say like, if a first tenant, I just placed in, and I know the month the rent is coming up. And then if a lot of people actually proactively ask me about rent payment, how to set up payment, those things that I always put a warm and fuzzy in my heart. But if, if someone I placed in, I don't hear from them. And then when the first come and then I don't see the payment and then the Like they'll know the first and then I will start texting them just a very friendly polite like hey It's the first I haven't seen the rent So what's do you have any issues with our payment? Software platform or something like that So yeah, so because sometimes people, when they, a lot of people, they, they sign the lease, they think because you always have that grace period of five day late fee grace period. People were thinking that five day, the fifth day is the deadline, which in the beginning, a lot of my tenants are operating like that. Right now, none of the tenants are operating like that. Like on the first, if you don't pay rent, you're going to hear something from me. And. And I know just as a, if I'm a tenant. I probably don't want my landlord to contact me. Like, I want to live my life. So I'd rather pay on time, just avoid that conversation. So,
Mike: 17:41before, so let's say you have someone come in and there's like, maybe something's off, right? Not a total red flag, but maybe it makes them a little bit more risky. So you're saying that. Your rent that you set with, I guess, a one month security deposit, that's like the rent for the person who meets all the requirements. And then if they maybe are on the edge, like they're, they're kind of missing some of them, but you might still consider them. You take a larger security deposit and is the rent more as well for the kind of additional risk that you're taking or
Ke Nan Wang: 18:17That depends on the interview. If it's, if it's like a little bit high end of a property. And I, I see like, If like some somebody will come in and say, I'm sorry, like, I have a really bad credit score because of this, but I can pay you six months of rent up front. Okay, so I see this person has cash, then I'm not gonna take the six, that doesn't mean anything to me because I want to sniff now if there's a problem. So if, if someone going to pay six months, all they do is they just kick the can down the road, maybe you're going to have a problem on the seventh month, right? So I don't, I don't take that. I just say how, like, I don't, I don't, I view advanced rent as a, Low on my priority, like people sometimes will say, I'll pay you three, four months as I don't take the advanced rent. The advanced rent, I only take it on the back back end. I don't put it on the front end. And, and I sometimes I don't even take it. I just say, How about you just give me double, double months in security and don't pay me because, because if they give me double rent in security, that actually covers both the rent liability and the property damage liability. If they if they give me advanced rent, that only covers the rent liability. I still don't have any coverage. Like I do have a couple of tenants. They kind of move out, didn't destroy the property, but for me to put a property back onto market, I have to spend 10, 20 grand, essentially the last two years of rent is into the renovation. I mean, that, that one month rent is not nearly enough to cover the cost for that. So, so pretty much the main concern is the rent, risk on rent collection and risk on property damage. So if I can, So, so I always opt to be, to, to be more in the security deposit. I, my, my default is double security deposit. But if I kind of like, if doing the, the showing interview, I feel like this person is kind of like barely meeting that financial requirement, but I feel like they, they have a like good heart, try to do the right thing. I, I, I want to place them but I do want to cover my risk. Then at that time, that maybe double rent insecurity could be too much of a hurdle for them to overcome. But I will settle for 50 percent more on security that usually for a problem 50 percent more on security is like my bottom line. If you are a problem person and you can't put 50 percent more on security, then it's not going to work for us.
Mike: 21:23Do you ever change the amount of the rent based on like how risky you view a tenant?
Ke Nan Wang: 21:31Not recently. I think I may have done it once. Because the most of the time is Yeah, yeah, most of the time it's either they are struggling. So, so I, I basically, I just, I just have them pay a little bit more on security. Yeah.
Mike: 21:53So I know we haven't touched on this yet, but you know, obviously you came back, you started managing the family's portfolio, but now you, you build a lot of new construction homes. St. John's
Ke Nan Wang: 22:05Yes. So, so. I mean, when I got back, there was a lot of soul searching. I will say the first year, I, like, I, I, I want to do something basic, but I don't, I just don't know where my heart is. Because like, you, you think about like when I was in the military, I got off as a lieutenant commander. Basically we're operating 2 billion nuclear submarines that was on the sea duty. And, and then, and then I work in the Pentagon in the two star general's office. We are ma we're making like, like a multimillion dollar acquisition decisions. So it's a lot of high level and now I'm coming back and I'm dealing with still tenants.
Mike: 23:00down the rent.
Ke Nan Wang: 23:07had a lot of. Really crappy, uh, crappy rental properties because those are the properties that cashflow really well. Like mobile homes, trailers, we had a lot of those. So there was literally, like I had a few incidents where we have to like knock on doors and kick squatters out. I had one incident that this is a little bit more recent. Where basically I, it was during COVID we evicted a tenant and I'm, there's probably some shady things going on and the the husband like rushed back. You hear the tire squeezy squeaking. It's the truck like flew back because the wife was at home and the sheriff was like about to kick her out and she called her husband back. And the husband just flew back to the house and was calling me my names and the sheriff was like called backup. So there were like six cop cars show up within five minutes and they put that guy in handcuffs. Yeah. Yeah. I was dealing with this kind of thing. So, but but yeah, it's not the first year I was really trying to figure out like, what do I really want to do? Um, wait, wait, with the business. So first number, number one for I was kind of working, I mean, we, we were operating our portfolio, but also investing in real estate. So we, we look at deals at that time. That means deals like for retail investors. Now I, I work with wholesalers, like you guys to get better deals. But yeah, but we we're working with, so like. Realtor real estate agents at the time. Basically it's just to either acquiring new deals or offloads on old properties in our inventory. And yeah, I was looking at how much the real estate agent is doing, then how much commission she's collecting. Back then I, I thought like, Hmm, maybe I can do this. So, so I first, I got my real estate agent license, which is something pretty easy to do So, so that, that kind of started at the real estate sales agent side of things. Then I was both like operating a family portfolio, but also tried to become a real estate sales agent. Retrospect, I didn't like that. I didn't like to be a sales agent. Then then we, we came across a, a really nice deal where there was a property was I, I show you this. There was a property, there's one house sitting on the middle, but it's four buildable lots. For some reason, nobody saw that one. Back then it was 150, 000, the Lewis listed 150, 000 for four lots. And it was on the market for a year. So, and we saw that, we just made, made an offer 120 and there's, and the seller So to us, so 124 buildable lots, then so that, that, that kind of started our, my development interest. Oh, sorry, before that I did a one flip. I did a one flip because I want to know the business. So, so for this flip, I specifically tell myself, like, I'm going to do everything possible like hands on, hands on wise. So I, I pretty much only saw about the things that that. I have to sub out, like all the specialty trades then, but everything that if I can do it, I don't need the license, then I was going to do it. So, so I did that one flip. At the end of that project, that one, like two things I learned from that project is one, I don't want to flip old houses anymore. Because I like, because at the end of the day. You, like number one, you're, you're walking with a floor plan the, the footprint of the house and, and it's, and that was designed like in the sixties there are lots of inefficiency in the floor plan, but you're, you're, but you're, you're kind of constrained by that. So you can't, there's nothing you can do about it. So you're walking with a constrained floor plan and then And then the another thing is the drainage is old, so we realized that the old drainage after we already putting everything brand new, and now the sewer is backing up. So that's the biggest problem lessons I learned is if I have to do another flip of old house, definitely inspect the health of the sewage system. Yeah, spend the money to do the inspection, because that's normally not part of a home inspection. Yeah, the inspector doesn't inspect the sewer. So yeah, just yeah, make sure that, yeah, if we have to put in new sewer, definitely put in that that's worthwhile. investment. Much better than after you're putting everything shiny, brand new, now the sewer is backing up. That's a nightmare. Then a second main lessons I learned. Is that, um, I don't want to do the hands on operation because, um, because I do have a lot of people that's around me, they do the hands on basically that, like, they, they think it's saving, saving the laborers if they can just put in the, put in the trims themselves something like even easier, like paint, a lot, a lot of I think back then my parents used to paint houses, paint our own rental property. When I got back, I, I painted our own rental properties because I thought it was saving money. But then I realized during that whole process is that basically there are people live their life specialized in this trades and they could do a much, much, much more efficient and they enjoy doing it. And they can do this until they, until their retirement. And if I have to learn. That then I'm like way behind on the, on the curve and it's not something I even enjoy doing. So, so pretty much yeah, that like the, the, the hands on flip, I, I learned what to how to appreciate. So that's the big lesson. So that, that was the flip. And then with the, then we start looking to new construction and that when you compare the pros and cons between flip overhouses and doing new constructions if the conditions right for the, the, the investor, New construction is a no brainer. But there is some prereq, like criteria. So you have to meet one is capital. It's a much harder to have the capital to pull off a new construction project versus a flip. Yeah,
Mike: 30:35you started like, you know, I think, was that your first project that I met you at that time where you did those? Was that four? Was that the one you were talking about?
Ke Nan Wang: 30:44yeah, yeah. Yeah, that's the first time we actually met.
Mike: 30:48Yeah. And then. But from there, like, you've really, you've grown the building business a lot. I know. Are you still doing, are you still building a lot of them to rent or are you selling some of them or what's like the model. This year
Ke Nan Wang: 31:03Yeah, in the beginning, we were doing a lot of the, um, the cash flowing properties in Class C area. I, I mean, there are a lot of builders, the Tractone builders that build houses like us. The difference is they build houses to sell, and we build houses to hold. So, yeah, we build them and rent them. Yeah. That that's a big difference. So in the, in the first couple of years basically we kind of like replace our, the crappy properties in our portfolio with the new brand new ones. So, so I think, I think that's one of the things that we did to our portfolio. So our portfolio is even though a number of property. really didn't change that much, like compared to when I got back to till now, but our profitability on each property is It's like two or three times more than what, what we used to do. And our headache is dramatically less because almost no maintenance. And the, the right part of new construction attracts the very good tenants from the get go. And, and, and it shows really well. One, one thing is kind of like, you don't kind of know this and most of people don't factor this in is the. It's the time between you listen on the market and rent it out. So new construction. So we will always take professional photos, no matter what. Even, so the new construction, the difference between professional photos and reality is almost none. The property shows exactly like how it looks on the photo. So if most of the people come, they are attracted by the photos. And like our conversion rate is extremely high for new construction. With older properties, a lot of people attracted by the professional photos, which that means the professional hotels have done their jobs attracting prospects, but a lot of people kind of see the reality. There's a difference between reality and the photos. So, so we, we do work. A bit harder on the older house on tenant placement than new construction. So, so yeah, we, we definitely love the new constructions in our portfolio. Um, so yeah, I
Mike: 33:45what would you say is like the time difference or recently, like how long does it take to lease a new construction versus some of your, you know, older homes that are still in the portfolio? Really?
Ke Nan Wang: 33:56think these the time in St. Augustine is, it's always very good. As far as rental goes, I, I read, I never had a properties that's more than three weeks on the market. since since I come back in 2019. Yeah. So, and doing COVID, I'm talking about like, I listed a property I, I haven't rented out. Over the weekend, but now we are going back to like the two, three weeks mark. But I never had any property sit on the market for more than a month. And if, if like in two weeks, if I don't see the actions, I like the activities I like, I'll, I'll load the rent. Until I see the activities that like but as far as yeah, you're asking the time difference. I think most of the new constructions, I, I pretty much like, I, I signed, I, I come, I convert on the, like on the first show. The only people that I wouldn't confer, confer is if, if they don't qualify. So, so that would be the people, like, I never had people come and then turn it down. So, so that, that is, that is the big difference where in the older homes, where I had people come and then it's not because they don't qualify, but they, they think they have other options elsewhere. So, but that's a big difference. So usually for older homes, I definitely do like. Maybe three, four, five times showings where on the new construction is pretty much the first one, the first one who qualifies that I lease it right away.
Mike: 35:43Yeah. And when you're building these, because I know, I mean, I know you build some for other people, but when you're building them to rent, are you putting certain, like, I don't know. What comes to mind for me is like, are you building them in a certain way to be more durable or more te tenant proof, as people call it?
Ke Nan Wang: 36:02Yes, for sure. First it starts with the design. So we, we basically, we have architect that I, we gave them requirements to design it. In the most efficient way and we, we tweak it, we tweak our designs for every bill we do. Not now we take less in the beginning, we took a lot more. So basically they, they are designed to, to be three bedroom, two baths, 1250 square foot condition space. And we designed it to maximize. Like every square inch of the condition space. So a lot of one of the, a lot of the favorable comments that we got from everyone look through our house is they definitely feel like our house is a lot bigger than 1250 because a lot of people, they live houses that there's like 1300, 1400 square foot. But when they come to our house. Even though it says 1250, but it's feel like it's bigger than the 1400, 1300 square foot houses, just because we, we're maximizing efficient use of every square inch in the house. So that comes with the initial design and, and our houses are designed for this purpose. So, and then on the material selections yes, definitely all the, the tenant friendly selections that that's why we don't, we always advertise. We want one thing for me to drive revenue is is we allow pads. We always put in privacy fence and. I always hope tenants come with pets because we, we, we just upcharge them for new construction. I upcharge 75 a month for for pets. People are more than willing to pay that for their pets.
Mike: 38:07Yeah
Ke Nan Wang: 38:09so yeah, and, and, and all, like all the materials that we use. So we don't, we don't mind. There's, there's nothing they can destroy about. that property that we can fix. I mean, most of the damage will be cosmetic. There's nothing they really can do to, to hurt the structural, plumbing, electrical, mechanical side of things. So all of them is like drywall, trims, doors. So, but those things are easy fix for us. So yeah, pretty much, yeah, I answer your question. Yeah, we start with the design that's most rental efficient and then selection that is pretty much tenant proof.
Mike: 38:56And we were talking a little bit offline. We were talking about like, how do you, you know, obviously you're, you know, building a bunch of homes and you're not building them yourself. So you have to attract and, you know, make sure you screen subs to make sure you're working with good quality subs. It seems like you've got a good job about doing that. Like how, what, what's your process to do that? Yeah. Yeah.
Ke Nan Wang: 39:18Yes. So definitely work through a lot of subs. Also a lesson, a lot of lessons. So with that too, so, so my, my process of. I've refined, like, right, basically, right now, I'm in the position, it, I think it works both ways. So, I mean, you, you got to be a, a good contractor to attract quality stuff. They want to work for you. So in the beginning, it's basically a word of mouth in the beginning, because I didn't know anybody. So basically just ask around you, you, you started with Just like people who have done things usually start with one sub. Then if you like the subs work, then you can ask that sub if they know anybody who does other things. So, so, so pretty much that's how I started with my team of subs. And then that overall, and then the couple of things like you. I always hear a lot of podcasts, the contractors, they always use the word you got to treat yourselves well. What does treat yourselves well mean? How do you convert that to an actionable item? I never heard anybody actually talk about what is treating themselves well, like what action items. That you, that you take and, and the thing is, it's not always a black and white. Every, everybody is different. So, so you, so there are like, for instance, there I had, I had a sub that worked for me for two, two years. Very good, very good. No problem. Very good pricing. And then, all of a sudden the new bids, they come in, I see there's a price, a price hike. Then I I talk to them, like, oh, so what, what, why, why is why are things getting more expensive? Then I usually this, I mean, I, I'm kind of like the same because I'm a general contractor, so I deal with homeowners. So if, if, if my price increase, the homeowner ask me, sometimes I give them the real answer. Sometimes I, I make up an answer and say why this is the the reason. So, so I can tell that when the subs like do that to me too, they can they can just say, well, you know, the material is material has the price has gone up. So I, I saw, so every time you should, like, if there's a price hike, Then I, I started to talk to other subs that's kind of like for, for my like solid, like good quality subs. I, I kind of usually, I don't always check on, on the, on that price. But sometimes if I feel it's a necessary, there are some trigger points or one trigger point. is if they increase my price, then if you're going to increase my price, I'm going to shop around. Then, then there are subs who are okay with you shop around, but then there are other subs who are not okay with you shop around. So everyone is different. And sometime in the beginning, like then I have like subs are calling me in a very hostile tone and say, I know you started using other people, you say, they said, Oh, what, do you know what happens to other builders who start shopping around? They're going to see a price increase. Then I mean, in my mind, I say, okay, so, so I'm not using you because your price is too high. And now. Now you're going to increase my price more instead of like pulling me back with giving you a better deal. But now you're going to increase my price that sure is going to push me away. And in the, in the beginning, I, I was ha I always have kind of concern like when I'm putting all my eggs in one basket that I, I, I was very relying on a lot of key subs. So that, that was kind of like my concern, like, okay, so what happened if this stops to stop working for me? Would I be able to replace them with another high quality subs? But after going through a few drills like that, I basically. That you even had good people Quit on me because life's happens, people change. I've, I've, I've been through enough and now I'm, I'm much more confident with looking for basically getting the, the leads on the subs and then screen them throughout my, with my process and make sure they they, they meet the quality meet the standard of our operations. And, and then the. Basically nowadays, so there's because I do treat myself so well. So, okay. So here are the action items for what treats yourself well is to pay them fast. So that is one action item is to pay them fast. So I'm, I have a great reputation. In St. Augustine to pay people fast. So, so now there are a lot of people actually want to come work for me. So I got a lot more phone calls for people. They, they said, Hey, do you need this? Like we do, we specialize in this. Do you want to do this? So, so just, just being a good general contractor. And now you are attracting more subs to want to work for you. But I didn't have this luxury when I started. So, but, but still like, I think it's, it's, it's the same complaints or like, like you guys can't get enough needs. So there's a, the homeowners always want too, too much, too much for the on the wholesale deals. Basically on the subset, like if people complains about not finding good quality subs, it's just mostly because they haven't interviewed enough subs, for that job. So that, yeah, so, yeah, go ahead.
Mike: 45:37I was gonna say, what are so paying them fast? What are some of the other action items of trading? Sounds well.
Ke Nan Wang: 45:45So you have to understand how subs makes money. Um, in the beginning, I didn't, I didn't have a clue and nobody was, uh, telling me this. So I had, I had a very good son that even he, I don't know why he, he didn't tell me this. Maybe he just assumed I know this, but from military to civilian, I didn't know the construction industry, like how people making money. So right now I'm extremely conscious about, about making sure that, The, the initial, so basically in an, in the military, we always, when we carry out a procedure, always say initial conditions are met precautions, the red and understood, and then follow procedure. So the initial condition is a very important step. So when you, when you have to stop, start on a project. you need to make sure all the initial conditions are met for them to start. That doesn't mean like the initial condition are met 90%. That, that's one of how I operated in the, when I started, like sometimes I have 90 percent of the material on the job site. I say, how, how about coming here, do 90 percent of the work and then finish off the 10 percent when I have 10%. Yeah, so I didn't know. I say, like Hey, I got 90 percent of material here. Why are you not showing up? So that, that's kind of the things I didn't know. Nobody told me that. So I thought, well, if I have 90 percent and you say you're going to start today, then, then you can come here, do 90 percent of the work. And I usually in my mind, I think, okay, if this is like a two day job, then then if I have 90 percent of the material here, then you can at least come here to knock out one day. So work, right? Then just come back on the second day. That's how I thought how I was thinking before. And then I definitely have. Pushed away some of the, the stuff that I like to work with in the long run just because my mistakes and nobody showed me the road. But after just I actually done a few other workshop, not construction related, but we have we have done a workshop. It was like, Public speaking workshop was done and we had a like general contractor there and just accidentally they talked about this and I'd learned from them is that the subs make some most of the money when they, when they can come in, knock it out and leave and get paid. So, so if you operate like that and people can give you a good. a very good deal because because they understand that when you call them in, everything's going to be ready and they can come in, knock it out and leave. So, so then, then they get paid. So, so that's so that's how I operate now. I'm extremely conscious about when I schedule subs, I need to make sure Like, I mean, I can't, I can't, because one of the things that we operate our operation good on the good side is we, we build houses very fast. Building houses fast is just a basic operating with no gaps. We don't rush people, but we just operate with no gaps. So to operate with no gaps, if the subs are scheduling out one or two weeks out, then you have to schedule them. But you have to be extremely conscious about making sure it's ready. If, if the moment you know it's not going to be ready, you'd rather call them. And rescheduled them because if it's not ready, it's my fault. I know some people, they are, they don't want to lose that spot because they think if they call them and say it's not ready, then the sub's gonna push them out. one to two weeks down the road, and they don't like that. So they rather keep that spot until the last minute. And then if it's not ready, or maybe 90 percent ready, and the subs show up, you're not ready, then they, they're not going to be happy. And sometimes some subs that they, they got their foot in the door because they gave you a good deal. So if they gave you a good deal, and you can't run an efficient operation, and then they don't make it, money than in the future. They just either give you a higher price or they're just not gonna work for you anymore. They don't answer your call anymore. So, so pretty much like for me, if, if I schedule a subs and it's not ready, I'm totally okay with they, they schedule me out to whenever the next spot is so that that's on my side. And the thing I, I asked for my subs is if they show up, they don't leave my job until it's done because I know some subs that they, they have like a one day opening. And they want to, they want to keep their guys busy, but they actually have another big job schedule on the following day. So they come here and do one day's work, and they go on to the next job, and do that job, then come back. So I don't, so, like, I don't work with sub that operates like that. So I, I, I basically, I tell them upfront, I say to work on my job, like, I'll, I'll make sure, like what I can promise you is you come to my job, everything's gonna be there, ready for you. What I'm asking you is that you don't leave the job until it's done. So, so that's, that's the, the, if, if they can commit to that, I mean, some people may, I don't, I never run into issue like this because most of the time people just, yeah, yeah. Oh, yeah. We'll do that. So, so, I like, if they're going to do that then that's a mental check for me. I mean, I'm still gonna pay them. And when they, when the work is done, but then they just not gonna be. One of my top tier subs on the future jobs. So, so maybe I only gave them the job that's kind of like. Too busy for my, my team, a 18 or B team. And now you get the leftover jobs.
Mike: 52:26What are you doing to, what are you doing? Well, you said there's two parts of it, right? So you have to find the subs and then you have to screen them. So, outside of just asking your existing subs for referrals, how else are you finding subs?
Ke Nan Wang: 52:43Pretty much. There's just a list. I think the referral is the best that, that is because I do get a lot of high quality subs from before. So nowadays my referrals actually. Sell me because like one, my, one of my subs are calling their other buddy and they, they put in like a great word for me. Sometimes I, I just like, they just call, like call their buddy in front of me or they, or their buddy will tell me, Hey, so and so say like, like, you know what you're doing, you pay really quick, like, like pay quickly. That is, that is the key. Like the easy on. Like a lot of people probably in our position as investors that don't understand how paying quickly, it's a huge to those subs. That's why I'm also very conscious about like actually pay them very quickly, like, because I understand how people like view, if you, if you say like, I'm sorry, this thing's come, I essentially say if they, if they are expecting a paycheck on Friday. And then maybe something that's not convenient to you that come up that you can't pay them conveniently. Maybe to you, you think how about I just pay you on Monday? I'm very conscious about that kind of excuse. Because I, I would think, especially for people who don't know me that well yet. Then I will probably. It's probably. not a good look. So, so if, if something is inconvenient coming up that for me to pay them, like I will go out of my way to pay them. So that I won't use my inconvenience to delay other people's paycheck. So that's how I operate. And that's, apparently that's like a big deal in this industry, which sometimes I feel like the standard is kind of low which so if I'm, by doing the right thing, then, then, then, yeah. So,
Mike: 54:59Yeah, we've, I've had that policy for like five years. I say you finish, you finish what's on the job, you get paid today. You know, I got to go and check it, right? You got to give me notice that it's going to be done today and my project manager will go check it, but you'll get paid today. And it's amazing what you're saying is how far that goes and how people will prioritize your job first because they know if they do it, they're going to get paid as soon as it's done. I found at least.
Ke Nan Wang: 55:28yeah, yeah, because I do have a subs that they work for is with the more like large scale companies and a lot of them have net 30,
Mike: 55:39Yeah. Yeah. Yeah. Yeah.
Ke Nan Wang: 55:41probably your audience probably don't know net 30 Basically just you're sending the invoice. They have 30 days. The, the the contractor has 30 days to pay. Usually the subs know that when they sign up for the job. So sometimes they're like if they work for like Toll Brothers or DL Horton's big contractor, they have the net 30 policy. And when you bid on the job, you know, that's what you get into. So you, you. organize your operation to operate like that. So, but to us, if it's if the jobs are done, will you get paid right away? It's a big deal to them. They don't have to wait 30 days.
Mike: 56:22who wants to wait 30 days to get paid? So if
Ke Nan Wang: 56:26there's, there's some like, last, Less sophisticated companies, they also operate at 930. It's something like a ridiculous stories I hear from myself, so where they, they like some kind of like problem that company has and miss the pay. And now they have to wait another 30 days, which is. ridiculous to me. So, so myself, I had to wait like 60 days to collect a paycheck.
Mike: 56:55That's crazy.
Ke Nan Wang: 56:56Yeah. Yeah.
Mike: 56:58I mean, obviously now you have the referrals because you've established yourself, but like if you weren't at that point yet, like probably some of the people listening to the show, how would you go about finding those subs if you didn't have the option of all the referrals that you have now? Yeah.
Ke Nan Wang: 57:16Yes. Um, it's a pretty, the, the basic way, um, you basically Google, um, Then drive around town, like basically see any jobs that, um, like a lot of people put out a sign, the Google thing. I'm a little bit, um, have a precautions against because of Google, you only, you are only finding the companies that are tech savvy, but there are lots of good quality subs that they're not good. At the tech knowledge, maybe they never have a Google business. So if you only stick with Google, then you kind of like missed out on those high quality, low tech subs. So, so, so those type of people, yeah, basically. I mean, you do have to be conscious about this visiting job sites because I know that general contracts don't like people to visit their job sites, as long as you're not going to have caused any problem, then visit job sites and other people's job sites and see I mean, you can even just if they have trucks that have numbers or like along the, when you drive around, see trucks around and. Like quickly snap a picture of the trucks. And so I would say, yeah, pretty much you just Googled and, and then just looking around outside of referrals. But I, I can say even referrals of people can. It's, it's not just referral from subs, but also referral from family and friends. One thing about referral that you do have to be conscious about is the scope of work. it's, it's like, not, not everyone is good at, good at. A lot of things maybe like they come, they come from referral because they are, they did a really good job on this specific area. But some people come, they want to take on a lot, they take, want to take on more than they can chew. So then Yeah, then the things that you, you want to screen them for the specific scope of work that you want them to accomplish obviously, if someone refer that to like a family of friends who refer them to you, that that's a testament to their character, at least, so at least they're like an honest person But but make sure that because sometimes the referrals and not also domain good, if, if the scope of work is beyond their capability,
Mike: 1:00:03Yeah, so once you've kind of got, you know, introductions to all these subs or you've attracted them, right? Like how, what is your process to screen them?
Ke Nan Wang: 1:00:15pretty much the, in the beginning is all because I'm I'm, I'm general contractor soft out to, uh, all the work, so I need to make sure they have insurance and workers comp that's like, a minimum. So pretty much like I need to, the first thing is like, I just I just text them or send them. I say, this is my email. Send all your business documents to my email. And then, so usually you'll find that there is a, a group of companies that, that they have their stuff together. And when you ask for that, you receive it right away. So that's, that sets a good impression. Then you have people that, that drags, drags, drags, and you have to keep asking them. So usually you just know that. they probably don't have the documents that you want them to have and they kind of just try to get them now. So, yeah, so, so the first step is to make sure they have the, their insurance and workers come. And then the, the, The second step is basically to have them send me recent projects for the scope of work that I want to do. So that on that part, and I can almost immediately tell that guy's an expert or not. Obviously like if someone asked me to show my recent project, like I can, like within seconds, just send them like what I've done. If I'm experiencing this field, if I'm not experienced, then I probably make up some excuses of why I cannot show them the, some of the recent projects. So for them, it's the same thing. Basically, if I want this scope of work, then I just say, just give me like, like some. Two or three jobs of, of one that that's come, that's already completed. And I was, I usually, I assume that usually the good guys that they're always busy, so they should be working right now. So I just like, or any jobs that you're working right now, I can come check it out. So, so those are one of the, yeah.
Mike: 1:02:36So you ask them for the scope of work for the current job and then, and then you go, go there and check it out with them.
Ke Nan Wang: 1:02:44No, I, I, I basically tell, usually the conversation is I tell them what, what the scope. I need, I just say, show me. Yeah. Yeah. Yeah. Show me, show me something that you have done similar to the scope I need. Then usually some, some good people, they will just like bombard you with some like project they have done. And some people just not so much, like depend on the task, depend on the task. If it's a highly specialized, And I'm paying a lot of money that I definitely want to experience if something that's like less specialized. I know somebody can learn it very quickly. And if that person is someone new I can basically, I can take a chance on something that's less technical. So, but for the highly specialized, I definitely a very strict on. On looking basically reference. So I need to see their reference. And then the last step is usually for new people, yeah new people, I'll walk, walk with them on the job. Basically I tell them exactly what needs to happen because there's a lot of things, something very simple tile work. So tile work, like say, if you go tile a shower there are different levels of initial conditions. So when the subs that they. You need to tell them exactly what the initial condition is, like, the direct hon it's the waterproofing done the like the mop pan that's already built, or do they need to do that? Or do they need to building a niche or the, or the niches already built for them or they just come lay the tiles. So, so pretty much I always. Walk with them on the job, on the, then I tell, I just tell them, I say, look, this is the initial condition. Then I show them a picture. This is the end result. Give me a quote that will take this to this. And then, then, then I, yeah, yeah. Then that I do tell them that I will supply all the. all the design materials. So anything that the customers see that I supply. So for tile job will be the tiles, the marble, the grout, and the trim, like the Schluter trim. So those, those things I supply, I say any of the material that Nobody gets to see that you supply that means thinset pretty much the thinset and the mud. So I have my tile guy build the mud pen. So they have to bring their own mud to build that. So, so pretty much I just tell them, yeah, I, like when you come to the job, they basically all the tiles will be there. Then you come with your own sense that because, you know, how much sense that you need. So I don't, I don't want to like ask how many senses you want. And so that's, that's pretty much one how we set up as far as the tile job goes.
Mike: 1:06:06Yeah, and so that's kind of the process. So you show I do like that. How you show them. This is the initial condition. And here's what I wanted to look like. Give me a bid to get me there. It's very specific.
Ke Nan Wang: 1:06:19And, and, and that's very efficient too, because I, like, sometimes if I, if I have to get multiple on a one job that's a very quick way. To, to compare apples to apples, because sometimes the people bet on things, if they don't understand the, the hundred percent of scope some people gave you a higher bid, but but you have to know that higher bid, maybe, maybe included more things where the other person gave you a lower bid, where they didn't say like, maybe they give you a high bid. The tile shower, the niche is included, and the other person gave you a lower bid where they didn't include building the niche. So, so you need to make sure that you compare apples to apples on the, on the quote.
Mike: 1:07:10Yeah. And then are you kind of giving them like a, like a small job at first? Is that how, or do you have any way that
Ke Nan Wang: 1:07:18Oh, yeah.
Mike: 1:07:19people out early? Yeah, yeah,
Ke Nan Wang: 1:07:34that I have no option of if I do have the option, I always start them with a small job a small, low risk job, preferably is my job. Then I test them out. And then, yeah, if they do, if they do right, then then I, I'll, if I have the opportunity, I always want to test people on my job first before I start using them on customer's job.
Mike: 1:08:00Any other tips that you have for people if they're thinking about hiring out some of their own subs?
Ke Nan Wang: 1:08:11Probably right now. So yeah, I think I'm working efficiently. Basically, get them paid fast and, and one, yeah, one of the thing is that don't get too comfortable with your subs. It is a business relationship. Sometimes the subs that gets too friendly, they want to be your friends. Like, I'm, I'm a nice person. I can, I can be very friendly, but still, I'm not your friends. Yeah. Yeah. Yeah. So, so the you're always So the, the, the subs you want use, you want to be surrounded with are the ones that have a, a healthy mindset where they, like, they do work, they offer a, they asking for reasonable price and then and then they don't mind competition. I had, I definitely had a few subs that did. They do mind competition where I, some of them, I lost them temporarily. Some of them, I so far lost them permanently. Maybe until later on, they come back. Just because they, they don't like The thing with me is if like, I don't, I understand loyalty because there are things, some, a lot of things that you don't, a lot of people like us don't see, maybe there are subs that they took care of something. They did some extra, extra stuff on the job that, that you didn't see, or they didn't tell you. Or maybe they mention it it didn't register in your brain that that's kind of like they Went out on the limb that they didn't have to do that But they did it for you. It didn't charge you extra So a lot of subs that they did that for you In return they want to have some reciprocity With that if they do you some favors, they want at least a priority to take on the future jobs Sometimes there is a mismatch between the amount of favors they did for you, think how much you owe them in terms of favor, and from your perspective, how much, how much, what's the price tag you put on the loyalty. So, so I have I understand them more. Now, I appreciate them more now than before because I have a lot of subs that they do a lot of extra for me. Sometimes they, they don't charge, they don't even charge me if they, if it's easy for them to do. They could have charged me, but they don't. And then there are, there are subs where they, they took care of some small jobs on this job and they, and they, they know, like, I'm very good at paying them. So they just say, okay, don't pay this, don't pay me now on this thing so small. How about just throw it in on the next job? bigger paycheck, which I always do. So, so pretty much if you operate like this, you, you get a lot of the small things done with high quality subs, because a lot of people, they, a lot of high quality subs, they don't like to do small jobs. They don't get paid the time's not worth it to do smart jobs, but if for, for me right now, basically they, they know they're going to get paid and on a bigger job. So, so they don't mind do some smart jobs for me with that though. They, in their mind, they're, they're doing the tally, like how many favors they're doing to you. So, so in the future that they're expecting to get the, the work So if you're not conscious about that, you probably would dismiss this when you compare, when you're getting multiple bids in the future jobs. And then maybe this sub who's loyal to you is a little bit higher price tag than the other, maybe newer subs that they tried to get the job. So, so there is a price tag for that loyalty. The thing is that how much price tag is that worth? And at the end of the day is, so my best interest is, is my business. So whatever things I do is I do it for my business. If that's the interest of my business is to keep this relationship, then I will keep this relationship. But if you come in at a extremely high price tag, then other people then expecting a loyalty from me, then, then I'll, I'll say maybe in this, in this task, this scope of work that your business operation is. It's not set up to where I need it to be because there is an efficiency sector where some people can just operate more efficiently than this guy. Yeah, that is another thing. Yeah, loyalty. And it's not a black and white
Mike: 1:13:42Yeah, I think that's not, that's a really good point. We're getting close to the end here and you know, there's always two questions that I like to ask at the end of the show.
Ke Nan Wang: 1:13:52Yeah.
Mike: 1:13:52one is, what is the craziest or most uncomfortable situation that you have ever experienced in a real estate deal?
Ke Nan Wang: 1:13:59I think there are a few sectors because I, I'd have them poverty management, I have construction and I have the real estate sale. Which sector do you want to hear the most?
Mike: 1:14:13the craziest one.
Ke Nan Wang: 1:14:17The craziest one is definitely the, the six cop cars. That, that, I mean, because nothing beats it when you actually like feel for your life, um, because I'm a lot at that time. So it's like not life threatening. So I mean, yeah, you lose money, but you can make money in the future, but you only have one life. So there, there are some definitely. I have encountered some very shady operations in my property management experience. One of that is the, the cop cars where it was sound like, yeah, the, the husband was driving his pickup, like screaming back to to the house. And I was like, right after he got off, he was calling my names and there was only one sheriff. That deputy sheriff but but immediately he got, he got it under control. So I, I think I have definitely dealt with some of the really low of the low in the real estate. sector. Yeah. Yeah.
Mike: 1:15:34Well, the second question I like to ask for the newer people listening to the show is if you could go back in time. And give yourself one piece of advice when you were looking for your first real estate deal, knowing what, you know, now, would you tell yourself?
Ke Nan Wang: 1:15:53I think this is, this is more like a retrospect advice. But I would tell myself focus less on cashflow, more on appreciation. I have a different perspective now, which I, sometimes I try to educate my, Investors, my retail investors but a lot of them still can't get their minds around it in my right now, because there are some operation in my rental properties when the tenants turn before the tenant turnover, I was collecting rent, so the return on paper looks great, but so I was collecting rent for two, three years, but then at turnover. And I have to fix to make sure the property is in the right condition, either to rent them a game or sell it. I usually spend like 20, 30, 000 just to fix the property for some of the the tenant didn't maintain that standard. So if you, If you are someone who look at it from that point of view, you say, Oh my God, I just lost last two years of rental, then this is not worth it. So, so, but then if you look at it from a different angle where right now the property appreciated 50%, and if I sell it. Then it's going to make a lot more money than that tiny little cashflow that you're making doing the, the holding period. So right now, my, my investment strategy has shifted before there was all the cashflow mindset is like, I need to do the 1% the 1 percent rules the higher percentage rate. ROI is the better. But now I viewed it as like the cash flow just allow you to hold the property to indefinitely. The only thing about real estate is you don't want to exit at a point where you didn't, that it's not to your best interest. So you want to exit at the right time. So if you exit at the right time, you need to have the cash flow to sustain. That the whole period so the cash flow to me right now is really the sustain this the sustainability. Of course, if I can make some extra cash that I'm happy, but I view the whole cash side as sustainability. My main focus is the. The appreciation side. So that's the mindset shift that I changed now. And as far as the investment goes, I will, that's what we're doing. And so we pretty much exited the, the lower income sector. So we do, we do the class C for other people now but ourself, we don't invest in that area anymore. And the only, the only thing that we didn't get to talk about this is the co living. The only thing I invest in this class C is the, the co living space. About other than that, we don't do the typical 3 2 in the class C neighborhood anymore. But definitely focus on higher quality real estate, like in the, near the beach, in the prime area and operate some kind of figure out some kind of business model that will, Allow you to sustain that holding period and let the appreciation makes the most of the money.
Mike: 1:19:41Yeah, I think that's a, that's a great piece of advice, Keenan. If people wanna reach out to you after the show, if they have questions or maybe they want you to build some homes from them in St. John's County,
Ke Nan Wang: 1:19:53Yeah,
Mike: 1:19:53about reaching out to you?
Ke Nan Wang: 1:19:57I'm the weird guy. I give out them my number. I was never too busy. So 9 0 4 5 4 0 2 1 2 6. Text texting is preferred. But I, I answer my phone call too.
Mike: 1:20:14Cool. Well, awesome. Thanks for being on the show. This is great.
Ke Nan Wang: 1:20:20Thank you. Thank you for having me.
