Building alliances with other professional teams and groups of like mind is a key component in scaling your business quickly. Rick Melero sits with partner and investor Matt Kelsey of Deployed Capital Group discussing a recent six-figure profit opportunity.
Rick: Hey guys, Rick Melero here with His Capital and I’m here today with really one of my good friends Matt who’s a partner with us and the first thing I want to do before I talk about this if you guys remember just recently we were at a project in Saint Pete where we’re talking about a project we’re going to be developing now. One of the most popular questions that I get is Rick, how can you scale your business and do all these deals because you’re doing stuff everywhere.
Matt: I understand the question. I asked the same thing before we started hanging out and I got to know you better.
Rick: Yeah, It’s a little crazy right they ask these questions right how we do it and truly the secret sauce is while we do some projects internally we find guys like Matt who are serious. They’re real, they’re men of integrity and we partner with them so that we can scale our business and it creates a win-win for us. That’s exactly what we’re doing with this deal so today what I want to do in addition to plant that seed of how you build alliances to make money. What I want is Matt now kind of share the story of how we found this deal. How we’re making money on it and so that you get a better understanding of the whole project.
Matt: So deals around here happen very fast Rick as he mentioned. Great friend, great business partner as well and we also look to partner with people that know they’re doing want to scale and understand the value of relationships and leverage. So, this is something we acted on very quickly within about one hour so if you can’t get much quicker than that right so it was a deal from somebody that we have out there looking for lots for us to acquire. The lot we acquired in this area we got for $87,000 off market. That’s the key right now. Market stuff is very competitive and I don’t want to be the person competing with 20 offers.
I want to be the person that’s direct to the seller or working with a wholesaler that’s direct to who wants to sell the property so for this particular lot we got it for 87 grand. It’s very unique because it has a specific zoning on it where you can build a single family house and something called adu which basically is a mother-in-law suite if you’re familiar with that type of idea so we can either build one larger house or we can go with one large house and an adu. So this deal works two different ways which is what Rick and I liked about it and why we decided to partner because we can either build it to sell it.
It’s easily going to sell for $500,000 with our projected profits and returns on the $500,000 that it would sell for, I think that’s low but we always try to be conservative on our investment analysis. We’re easily going to clear $150,000 profits on this deal if we just build it to sell it exactly but it also works from what we talked about. You know we could short-term rent the back unit and long-term rent the front unit. It just depends it’s in a booming area in Saint Pete so we’ve got plenty of extra strategies for this and you guys actually saw the lot earlier so things around here happen quick but we’re very excited to get started on this and break ground as soon as possible.
Rick: All right so as you can see this is just an example of the type of projects we’re looking for specifically deals that have multiple applications meaning that if we decide we don’t want to sell. We can still cash flow, we can really mix a lot of strategies here so that it mitigates our risk and one last thing I want to mention and this is what’s really cool a lot of people see these kind of deals and they are like well man these are hundreds of thousands of dollars millions of dollars. I can’t do it but what’s cool is even in our partnership then investors can join us for as little as five thousand dollars in the fund and be a part of these actual deals as well.
Matt: Agreed and you can still go do your current job and go make money to invest more money because lot of people as you know they get distracted thinking of all the ways they can invest their money when putting it with someone like you in your fund is a great opportunity they can keep doing what they do best and keep producing returns on their income.