S2 2rrebanner
Explore the opportunities in real estate beyond your comfort zone! In this episode, Shannon Robnett has Ross Yeager to talk about how Ross wholesale two deals this year through Facebook Messenger, how he has bought all his properties without even seeing them first, and how he built his team remotely. Ross is a software engineering director at a billion-dollar startup in Silicon Valley, who has turned to real estate to grow his wealth and continue financial freedom. He discusses out-of-state real estate investing and the different ways to finance a property investment and dives deep into why relationships are key, helping you build more meaningful and authentic connections. If you are looking to learn more about investing out of state and building your network and your team remotely, Ross has all the information you need to get there. You're going to want to tune in and hear what he says in this episode.

Listen to the podcast here

Ross Yeager: How To Build Your Real Estate Team Remotely

You are going to take a minute of your time and you are going to give it to us because you are going to want to read what's going to go on here on this next episode. It's season two, Episode 2, and we have changed the format but not the fabulous guests that we have on our episodes. We have got Ross Yeager on the show and he's going to talk to us on how to get involved in out-of-state investing, the different ways to finance property investments, whether that's cash, private money, self-directed IRAs, seller financing syndications. He's going to talk about why relationships are key. You are going to want to tune into the next episode of the show and we bring Ross Yeager to you.
A big welcome to, Ross Yeager. How are you?
I'm doing great. How about yourself?
I’m doing well. We are going to be talking about all things real estate as always but the difference is we've got a guy on the show. It comes from a traditional background, doing the 9:00 to 5:00 all that stuff. Ross, give us a background on who you are, where you came from, how you’ve got involved in real estate investing, and then we will pick up the conversation from there because I’ve got some great questions I want to ask.
First of all, thanks again for having me on the show. You produce great content and it's exciting to be here. A little bit about my background, I am a Software Engineer out in Silicon Valley, doing the whole startup thing, which has been exciting. I have been a part of a startup that started with twenty people and now we are in the multiple hundreds range. It has been cool to see that grow over time but one of the things that as I continue to grow in my career and in success in that career is like, "Where do I take these funds and go to invest that?” What I started to do is look naturally at other successful people and what do they do.
As you would attest to, real estate is a great place to start looking for that. Started just getting in there. Do a lot of reading, listen to a lot of podcasts, and started to learn all the different opportunities that were there. That started to open up my eyes to what's actually possible there, over the path and this was years ago. Over that past time, while working at my W-2, I have added fifteen units, all of them.
I have also started different verticals within the real estate business, such as wholesaling, as well as helping coach other folks to get into their first journey in real estate. I have had helped a couple of people in the past few months there just getting into buying their first deal and getting started on their real estate journey as well.
There are a couple of things that you mentioned that I want to key in on. One, real estate is a team sport. It's always great that people in real estate seem to want to help other people succeed. It's not something you can just do by yourself. It's not that Ross goes down the street, finds a house and you go meet with the owner. You go to the courthouse, you record the documents and everything happens all on its own self.
As you grow that team of people that you are working with, you are experienced, doing your title work, your repairs and all that, you find that in that circle, all these other people come into your life. One of the other things that I did hear you mentioned was the tax benefits. If you are in a W-2, you are probably in the highest taxed area of any of the quadrants. Robert Kiyosaki's four quadrants there. You are in the highest and real estate is phenomenal for helping people out with their tax burdens that come along with a great paying W-2. What are you doing with that in that real estate play on the tax side? Are you using that to your advantage? Are you doing anything special or do you just take a regular straight line?
Real estate is a great place to start looking for success. 
I haven't done anything cost segregation studies on this yet or anything too advance there. In general, one of the reasons I opted into the buy and hold model is the tax efficiency that is associated with that. I also started an LLC to manage all of this. I'm able to capture a lot of like I file a Schedule C for this business. I'm able to write off paper losses onto my own income. My actual taxable income, even though it has gone up substantially over time has decreased every single year since I have owned real estate.
First of all, the income itself is virtually tax-free. There are a lot of factors that depend on that but where I'm investing in the level of rents, I'm able to get relative to the actual value of the properties is a sweet spot there where I'm walking away with tax-free income on that. On the business side of things, I'm able to utilize these paper losses and translate those onto my personal income as well.
It has been a great way to foster these tax-efficient ways that go along well with my W-2 and looking forward as someone with a lot of equity in a startup company in the future. I also plan on leveraging the tax advantages of potentially like an opportunity zone or other aspects like that, where I could save on some taxes as we go forward.
It's excellent that you mentioned that. We are doing a couple of opportunities zone deals now and they are hugely taxed advantageously. Everybody keeps thinking, “We’ve got to get in by a certain timeline because then we can't get in well.” That's not true. You can still get in. You lose some of the tax benefits for getting in early but the opportunity zone speaks of a location and a duration.
If you get into a specific location on a project and you are there for a ten-year duration, then at that time, you can deal with the benefits of that coming out later tax-free. There are a lot of things that go with that. One of the things that you mentioned was the returns on where you are investing, and we knew you were going to talk about it because it's similar if you are probably not investing in Silicon Valley. You have had to get good at sight unseen investing or investing in another area. How did you get to where you can build that, speaking of real estate is a team sport to where you can invest outside of the world you live in?
As most people know in the San Jose, San Francisco area, it's literally one of the most expensive real estate in the world. You go out there, you can go buy a 1,000 square foot apartment and you are over $1 million on that. You start to look at those numbers and it doesn't quite make sense, especially if you are interested in cashflow and optimizing tax efficiency. Naturally, that led me to like, "There's got to be other ways to do this because I see lots of successful people doing this." What I started doing is this combination of where can I build the best team and from a list of places where I can cashflow.
That's where I started from. I started looking at places where the rent that's coming in will be able to cover all the expenses plus have a certain number of cashflow resulting in a certain ROI, our cash-on-cash return as some people may call it, based on that investment. What you will find out quickly is there is a range of purchase prices that you need a home in, especially if you are targeting single-families.
There's also a rental market that needs to be strong enough to sustain that. One of the areas I came across was the Philadelphia market. At the time when I first started, it's almost doubled since then in terms of values. We are looking into the $100,000 to $300,000 range for target entry pricing, and then you would be doing some renovation or value add to that.
You would be looking at some of the stronger rents in the country as well. A lot of your readers might be familiar with the 1% rule, which is your monthly net rental income divided by the actual purchase price there. If you are hitting above 1%, that's a great way at a very high level, get a ballpark idea of like, "Is this worth looking at?"
The 1% Rule is prolific out there. It's getting harder to find that out there but started looking into how to, “How can I get involved with this?” First, identify a couple of areas there, and then also tried to identify places where I could start connecting and finding a good group of people on the ground. My first instinct was to go to some of these turnkey providers.
Your roof stocks, there are quite a few institutional players that are entering into this space now. What they do is they provide a turnkey experience, which is, they do all the work, get everything set up, get the renter in there, you purchase the property, and then you cashflow from thereon. It's a pretty pain-free process in theory but your returns are taking a decent amount of meat off the bone from that perspective.
S2 2rrecaption1
Building Real Estate Team: It takes consistency, discipline, and effort to build those relationships and to make them authentic.
Like anything in the world. You get what you pay for and, either you are going to go do the work and get those funds or somebody else is going to do the work and take those funds. At the end of the day, it's about, "Do you want it done for you or do you want a DIY that provides you with a better return?" I see where a lot of people have a busy lifestyle. They want to get involved in real estate.
They start out with this. They make it pretty painless but then again, somebody has got to pay Susan to put the person in the property and sell the property and do all that stuff. It's also a great place as far as a benchmark of looking at, "If I do it myself, they are doing it this way and they are getting an X return. I've got to get X plus to justify my time being involved in." There are a lot of ways to do that but you obviously, didn't go that route. Did you go a different route?
Yes. I started digging into the numbers of those, the different products that I was seeing. I was not impressed. One of the things that my benchmark is like, "If I'm not able to be a 10% total return, then I should be dollar-cost-averaging into the stock market indexes." That's the mindset that I came from, and that's a purely passive effort. That was the benchmark that I came at this with and I take a very numbers-driven approach, especially as an engineer. I started diving in. I was like, "This isn't great but maybe this is the way to do it to get in, and then something else will open up down the road.”
I made an offer on one. I did a lot of research. It ended up falling through, which was the best thing for me. That led me to continue to grow my network and dive in. Once you start to put your money into something, you start to learn even more about it.
As much as research as you want to do before, there's nothing like putting skin in the game to drive you to dive even deeper. That led me to like, "You can do this on your own. Do a value-add project and there's quite a lucrative return that can be a part of that." That led me to build out my own team and doing these renovations and the BRRRR method, as some might have heard it called on my own.
You are saying deals are becoming harder to find and that's true. Cap rate compression and return on equity have been affected by everything that's going on in the world. The fact that you have built out a team, you are a known factor. They are a known factor. You've got people you can reach out to and realtors know that they can reach out to you. "Ross buys. He doesn't just kick tires, make me send him endless flyers, do all these comps, do a video walkthrough and doesn't buy, we know this guy happens.” You are probably able to stay more in the flow than someone who doesn't have a team or is doing it on their own. How has that been a benefit as things have gotten tighter?
It sounds very cliché when you are first diving in, where it's like your network is your net worth. It is true. It takes consistency, discipline and effort to build those relationships and to make them authentic. One thing I see a lot of people get caught up in real estate is networking as a higher-level concept.
They think like, "That's going to a concert or going to this local art meetup that I listened to someone talk." That's not networking. Networking is building authentic relationships, where you are putting in the effort to add value to that relationship. Like anything, the real estate project itself. The more you can bring to the table, the more return is going to be for everyone involved.
I have found that you touched on this at the beginning. In a lot of other industries, people aren't super helpful. I was cautious when I was seeing how helpful people can tend to be in real estate but people do have an abundant mindset in this space. Also, it is a small world. It is a unique category in the sense that you can build some authentic relationships with people but it takes a lot of effort. It takes being authentic and intentional about what you are doing to grow that.
We are dealing with large sums of money. Not that they aren’t, there are grifters in this world in every line of work but the reality is that your title officer and your realtor are there to help. If you don't like them, get new ones. If you have complaints about your realtor, there are a lot of realtors out there. Get good one, seasoned expert, somebody that's there to help you and a contractor that understands, "This isn't a one and done. I'm not taking all Ross's money once. If I do this right, Ross will be back again," and you create a repeatable process.
Do a lot of reading and listen to many podcasts to learn all the different opportunities out there in the real estate industry.
That seems to be a lot easier than in this market because we do understand referrals and repeat business. When you go get gas for your car, you go where it's convenient. You don't go to a certain gas station because you have always been getting at that gas station but we do tend to do that with our real estate professionals and that creates that referral or that repeat business that keeps you going. When you are looking at your out-of-state portfolio that you can build while doing your W-2 for tax purposes and cashflow, what's your end game on this?
Touching on the relationships in team building there. One of the things there that is key is not nickeling and diming people. Realizing that this is a long play. I'm not going to get caught up in trying to negotiate hard with my contractor because I know he's going to help me out down the road. He's also going to be someone who's going to be there.
I also want to align incentives. People are going to do what they are incentivized to do. If you are incentivizing people to know that you are going to be nickeling and diming things, then they are going to be incentivized to artificially raise their prices on you or not want to work with you. Those are some of the things that you build these relationships in these referrals and that may just make it a flywheel so to speak, where you keep building momentum.
That momentum makes it easier to attract good deals, good people and to be able to move quicker. To get to your question of, “What is my end game?” I plan to continue to keep building up this portfolio, one single-family at a time. I could move more quickly but I have been trying to be very intentional and minimize risks while always taking a step forward, and that's in my thought process so far.
You said you are an engineer. It's an engineer that got the joke. The reality is I've got some engineer friends of mine that move so slow. They analyze so much that they can't do this. They have literally talked themselves in and out of real estate three dozen times. The reality is one of the things that you are talking about with the synergy and the flywheel is pretty soon I hear how you've got these things going, and then I also heard you talk about how you have been able to help others.
You've got deal and flow coming through. It's easy for you to hand something to someone. Now you've got a wholesale business. It's funny how real estate starts to build on itself, literally from the foundation up, and the next thing you know, you are doing all kinds of awkward real estate deals in back alleys.
That's how it has been. It has been building on itself. It's an abundant market. It's a category as a whole. If you take that mindset, you are creative and willing to explore different ways to take advantage of that, you can do a lot of creative things. At this point, I have more good deals that come across my desk than I'm even close to being able to handle. “What do you do with those things?” I asked myself that question, and one thing that I saw was I can help other people to start doing this going down the same route that I have done. I enjoy helping people. That's one area I looked to see that there was. Another is wholesale. I have this deal coming through.
I have a network of people I know who would be interested in buying it. Is there a reasonable price for being able to push this deal along towards them? It's like getting creative and figuring out ways to continue to take advantage of that momentum and then use that to build and rebuild. We talk about investors compounding on the monetary sense but from a strategic and systematic perspective, you can also compound your time, your energy, your network as well and I have been trying to take advantage of that.
Nothing leverages you like real estate. You are leveraging money, the bank's money, your contractor's ability to repair, fix things and paint things. Your realtor's network of who's got what in the pipeline and what's coming up. You do learn how to leverage yourself and turn yourself into somebody that can do twelve different tasks that are necessary to get it to closing, and then get it filled and leased.
It also takes that thought process of, "I want to help others to get outside that box, to get to the next step." Ross, in the new people that you are helping, where do you see the Ross that had trouble getting started? What do you see that a lot of investors have that may have been your hang-up to launching into this whole thing to make in that first step? What would you say that was?
You touched on it that real estate, we are talking big numbers here. You are not just going and buying a car. You are not buying a candy bar down at the stop. You are talking like $100 million, $200 million, $300 million, $400 million deals that we are dealing with and not all of it is your money necessarily all the time. The stakes are pretty high.
S2 2rrecaption2
Building Real Estate Team: Networking is building authentic relationships, where you're putting in the effort to add value to that relationship. The more you can bring to the table; the more return will be for everyone involved. 
If it goes wrong, they will want all of it back from you so it is your money.
Never get that twisted. That's an initial risk that holds people back but, even more importantly, they get too caught up and this has to be the perfect deal. Especially as a numbers guy, you can go down that route. Take an example, if I wouldn't have bought anything and waited along for the perfect deal to come a few years ago or whatever when I first started, I would be kicking myself now in terms of all the equity, the cashflow, the networking. That compounding interest of all the things across the board on what I have been able to build in that time. The lessons learned in terms of how to run a business and how to grow a business on its own.
Even if it's not perfect, I try and encourage people to like, "Let's get in. Let's cover our costs in terms of the big items that could go wrong but let's not get nitpicky with $1,000 here or there on a quote from a contractor." There are many different things you can get tripped up on and it's easy to do so. One thing though that does help is if you have someone alongside you who can say like, "You have checked off the big items here. This other stuff is up to you but let's not get too caught up in it."
That's where it has been helpful. I had someone like that for me in my first deals. I'm trying to provide that to others. I want to make sure that they are also invested in this and want to succeed because success is going to be a matter on both ends. Someone who is coaching you or mentoring you is not going to guarantee your success.
At the end of the day, you are responsible for your actions and your results. It's important to have someone alongside you who can help at least check off the big boxes and make sure you are not falling into the big things because everyone is going to make mistakes. You want to minimize those mistakes, be able to get rebound from those, learn from them, and then eliminate them from happening again.
When you think about it, everybody thinks that the contractor is going to screw them. Everybody is looking at that and they get tripped up on it. It's not that it's not $1,000. It is $1,000. The reality is everybody needs to make money to be there for the next one. If you do approach it with that mindset that, "If I can understand why this cost $1,000, then I can know when I buy the next one, what to look for to make sure that I don't have any more of these unforeseen $1,000 items.” At the same time, make sure that your contractors making money, make sure that you are making money. That at the end of the day, when you call the contractor and go, "I’ve got a warranty item."
You are in Silicon Valley and he's clear across the country but at the same time, you are creating that value that, "I know why I'm being charged this. I know what I'm getting out of it and the relationship is part of that." A lot of people forget that, "The contractor is screwing me." A lot of times people get hung up on the dollars and cents of it all, and they forget that there's going to be another deal. There's going to be another thing that you are going to have to do. There's another item that's going to happen or another link in this chain of relationships.
Even on the contractor, a lot of times, if something seems a little more expensive, but then you go somewhere else and it's, "This is cheaper." At the end of the day, it might end up being more expensive. They are trying to appease you by giving you what you want on the pricing, for example. It's important to establish that relationship with that person, and when once you trust that person and you are ready to go, don't get too caught up in trying to nickel and dime on different things, and then also just do what you say you are going to do. That's another important thing.
A lot of times, people forget that time is also a commodity. Time is something you purchase. You may get a great price and the tile guy is going to take fourteen days to do the tile or you could pay a little bit more and you get a guy that does it in three. Now you've got eleven days of rent to talk about here. You are talking about, "Can you even afford the cheap guy?" People forget that other component of time that goes into all of these equations because we are dealing with money, rent and interest.
It's the same concept as the tax savings. You are deferring it. There are not many free lunches in the tax world but deferring it is a huge thing. What you can do like the opportunity costs with money and time is something that people totally forget about. If you keep that in mind, the slightly more expensive but faster and good relationship, and someone who you can rely on going forward, what does that value and what will the compounding value be down the road?
You are creating this in multiple areas of life, whether you realize it or not. You are doing it with your contractor but you are also doing it with your wholesaler because now your realtor is saying, "I can go to Ross. Ross has always got a home for this. It may not be Ross,” and then you are building that relationship with the people that you are working with.
Your coach or mentor is not going to guarantee your success. At the end of the day, you're responsible for your actions and results.
You are continuing that process on multiple levels, whether you recognize it or not. Kudos to you for that because you are seeing the value of being an answer to multiple people's single questions. "What do I do with this thing?" "We will call Ross. Ross, we will get rid of it, buy it, sell it to somebody else and wholesale it. Ross will do all of those things that a lot of people don't because you can see things on multiple levels.”
That's opened up a lot of opportunities.
Where do you see this going for you? You are continuing to pick up a single-family and to move forward and grow. Are you seeing yourself going more into the mentorship side? Do you enjoy that or are you going to stay helping your friends and family wholesale a little bit?
I'm planning on continuing to even more so ramp up. I have somewhat slowed down because of how hot the market has been and because of how well things are going on that side. I have been mainly started to focus more on the flip projects. I have been starting to look into those. I foresee myself as the market continues to be hot like this. It's another sit on the sidelines type of thing but if you can take advantage of a hot market, go in and do fix and flips, for example, and continue to wholesale, one of the things on the whole side of the things, I started getting a virtual assistant, starting to grow and talk about leveraging your time.
It's something I have been like, "I need to always do this. I have been waiting on it. I don't know if it's worth it." It's one of the things is once you jump in and do it, A) You realize how much your time gets multiplied and B) You are going to see what opportunities open up for you to not work in the business and work more on the business.
That's allowed me to start to now think of like, "How can we start to automate, process, and scale some of these things? One of my goals is to grow the wholesale side of the business to not just me doing deals here and there as they are coming buyers but they have a whole team that's working to do that. That's one of the big things I'm looking at and also, looking to get into some of the smaller multifamilies as we go forward as well. That's where I see the growth part of my business. It’s pretty exciting on that front.
As you probably know, I'm a voracious reader. I love reading but have you read The 4-Hour Workweek, Tim Ferriss?
Yes, I have.
That's a book that I tell all my employees, “You have to read this.” Everybody is thinking, "Why do you want me to read this? That’s just going to teach me how I don't need to work for you." I'm sitting here going, "If you can do the job in four hours, if you can do the weeks' worth of work in four hours, why don't you go enjoy your life? I will pay you the same."
It's amazing what happens when people understand how that leveraging of your time, how to combine tasks, how to use other people's time to get things done helps. I hear you on that, how to outsource. It's when I get the bill for the virtual assistant and I have to pay my regular employee. I don't think you quite interpreted that quite like I did. As we wind this down, I appreciate you coming on the show and giving us this information but where can people get ahold of you in the way in the World Wide Web?
S2 2rrecaption3
Building Real Estate Team: It’s important to have someone alongside you who can help check off the big boxes and make sure you're not falling into the big things because everyone will make mistakes. You want to minimize those mistakes and eliminate them from happening again.
I have a website that introduces people to the coaching also, is a place if you have a deal that you are interested in getting rid of. I'm happy to take a look and see if it makes sense and that's, www.EngineeredCashFlow.com. Engineered Cash Flow is the real estate business that I have.
He's an engineer with a sense of humor, plays on words right there.
It's all about building that cashflow and then building that wheel up. We are also on Facebook and Instagram with, @EngineeredCashFlow as well. We also have a Remote Real Estate Investors Facebook group that Bo Kim, the Founder of Bigger Cash Flow and I have founded there. We are in there helping other investors who are looking to invest outside of the state across the country like I have, most people with W-2 and looking to get started. We are super excited to help people out from that perspective as well.
Ross, I want to thank you for coming by. He's working with a $1 billion startup in Silicon Valley yet, he chooses real estate as his exit plan in his future. If you can learn anything from Ross, take it from him, real estate is the place to be. Thank you, guys, for joining us. Thank you, Ross, for being with us and thank you for tuning into the show.
Don't forget to like, share and subscribe to the show on Podchaser, Spotify, iTunes or wherever you get automatic updates. You will also find us on Instagram and YouTube. Leave us a review. I would love to hear from you. If you like what Ross had to say, go ahead and give him a follow, on Facebook @EngineeredCashFlow or Instagram @EngineeredCashFlow or his website EngineeredCashFlow.com. Thanks again, Ross.

Important links

About Ross Yeager

Ross yeager
Ross is an engineering professional in the San Francisco Bay Area who has recently moved his focus to the real estate industry.

His interest in leveraging his professional income outside of the traditional and risky stock market and non-liquid 401k has allowed him to take charge of his future through passive income real estate sources. He is excited to help others achieve the same thing.

He currently focuses on the acquisition and management of single family and multi-family properties, accumulating over $1MM in assets under management in just under two years. He is always buying properties and looking to continually grow his portfolio.

Partner with Engineered Cash Flow to create the future you dream of.